Last weekend leaders of the richest countries gathered in New Delhi for the G20 summit. Here’s how they plan to shake up the world’s economy
The outlook for the G20 summit seemed bleak, but finally the bloc reached consensus.
While the West ended up yielding to softer language on the Ukraine war in favour of global problem solving, the Global South solidified its emerging position and is changing up the power game.
Here’s how the summit’s main five outcomes will shake up the world’s economy.
New India-Middle East-Europe transport corridor
Perhaps the biggest, most ambitious revelation was the economic corridor linking India, the Middle East and Europe via rail and sea that was announced on Saturday.
The project was unveiled by Indian prime minister Narendra Modi and European Commission president Ursula von der Leyen, who said the rail link would make trade between India and Europe 40% faster.
The “real big deal”, as Joe Biden described the initiative, might challenge China’s economic clout in the region. The US president seeks to counter Beijing’s Belt and Road push on global infrastructure by pitching Washington as an alternative partner and investor for developing countries.
No binding financial commitments were made but the parties agreed to come up with an action plan over the next 60 days.
African Union joins the club
The African Union (AU) leapt from its position as an invited international organisation to a permanent member of the G20 on Saturday.
The 55-member bloc represents a continent that is home to the world’s largest free trade area. On top of that, Africa is vastly rich in resources needed to combat climate change. It has 60% of the global renewable energy assets and more than 30% of the minerals key to renewable and low-carbon technologies.
This membership is a step that recognises the continent as a global power in itself, making its voice harder to ignore.
Until last weekend, South Africa was the only African country part of the G20. The AU’s transition to full membership also means it joins the European Union as the second intergovernmental organization in the club.
Countries stayed too cool on climate
Last weekend’s summit produced “insufficient” outcomes on climate change, French President Emmanuel Macron said on Sunday.
The members of the group altogether emit 80% of all planet-warming gases, but there was no overarching commitment in New Delhi to phase out fossil fuels. Instead, the G20 members pledged to triple renewable energy sources by 2030.
History was made when all leaders agreed for the first time on the amounts required to shift to clean energy.
Up to 2030, developing countries will need €5.5 billion to meet their climate goals. An additional €3.7 billion will be needed every year until the end of the decade if developing countries are to reach net zero emissions by 2050, the members concluded.
However, no action plan was drawn up to achieve the target of ramping up renewables.
On Saturday, Modi launched the Global Biofuel Alliance with 19 countries including the US and Brazil. The initiative aims to serve as a platform to foster global collaboration for the advancement and widespread adoption of biofuels – which are not always a source of clean energy, depending on how they are produced.
A bigger role for the reformed World Bank
US and India’s presidents urged G20 leaders to expand the World Bank’s lending capacity to offer developing economies an alternative to loans from China.
Efforts to boost the balance sheets and reform the governance of the Washington-based multilateral lenders were a central issue at the summit in New Delhi.
In its second session, Biden appealed to leaders to make the institution “stronger, capable of providing resources at the scale and speed necessary to address global challenges and meet the urgent needs of the poorest countries”.
“We need to expand the mandate of multilateral development banks,” Modi said during the third session.
India shone bright
Against all odds, in the end all countries agreed on the joint declaration, allowing India to claim diplomatic success. Experts say it was a foreign policy triumph for Indian prime minister Modi as he pushes to increase the country’s influence on the world stage.
The leadership of the G20 has been a year-long opportunity to showcase New Delhi as an influential economic power and drive investment and trade flows into the world’s most populous country.
It has also provided Modi a platform to boost his standing at home as he seeks a third term in office in elections in the next several months.