Is the G20 prepared to deal with a crisis like the coronavirus?
For more than seventy years, the world has been dominated mainly by Western democracies. The world order established so far is reeling on a tightrope that threatens to be broken, in part, by the crisis caused by the coronavirus pandemic. This crisis has exposed the failures of a system that for a long time seemed perfect. It is in this context that the latest G20 meeting has taken place, a virtual meeting where the leaders of these countries have committed themselves this Thursday to do “whatever it takes” to deal with the social and economic impact caused by the coronavirus crisis. The G20 leaders, whose countries represent 80% of the world's GDP, announced that they will inject more than $5 trillion into the global economy to minimize the damage caused by job and income losses.
The G20 has decided to increase funding for research and development of vaccines and medicines, as indicated in a communiqué issued at the end of the meeting. “The G20 has committed to do whatever is necessary to overcome the pandemic,” along with the World Health Organization and other international institutions, the communiqué said. For its part, the United Kingdom has decided to offer an additional £210 million to accelerate the development of the vaccine. This extra funding would make the UK the single largest contributor to the international coalition in research to find a vaccine for COVID-19, the Guardian has announced.
In the same statement, the leaders of these powers have explained that they will implement and finance all the health measures necessary to stop the spread of the virus. The G20 has also committed to ensuring the flow of vital medical supplies and other goods across borders and to addressing supply chain disruptions, according to Reuters news agency. “Emergency measures to protect health will be targeted, proportionate, transparent and temporary,” they said.
During the meeting, G20 leaders expressed concern about the risks faced by vulnerable countries. This situation has forced this group to recognize the need to strengthen global financial safety nets and national health systems to minimize the impact on these situations. “We are strongly committed to presenting a united front against this common threat,” they warned in their statement. “We are seriously concerned about the serious risks posed to all countries, particularly developing countries, and especially Africa and small island states,” they have lamented.
Saudi King Salman bin Abdulaziz, the current president of the G20, urged the leaders of these countries during his opening speech to “resume the normal flow of goods and services”, including vital medical supplies, as soon as possible to help restore confidence in the global economy.
The group's response to this global pandemic has been to inject more than $5 trillion into the world economy as part of the fiscal policy, economic measures and insurance plans needed to mitigate the economic consequences of this crisis, according to Reuters news agency. This amount is the same that the countries in this group injected into the world economy in 2009 to deal with the impact of the economic crisis.
However, in this statement the G20 has not directly addressed the International Monetary Fund's (IMF) call to double its funding to $2 billion. Instead, the statement calls on central bank leaders to develop an action plan with their finance ministers. This meeting between the G20 leaders comes after the group has been criticized repeatedly for not acting immediately on the coronavirus pandemic.
This summit took place several hours after the President of the European Commission, Ursula von der Leyen, reprimanded the countries of this institution for taking care of themselves' during the first phases of the crisis and not thinking about the consequences on a large scale. “When Europe really needed a spirit of all for one, too many initially gave an answer just for me,” lamented von der Leyen, as reported in The Guardian newspaper. The communiqué issued after the meeting warns that the pandemic is “a powerful reminder of our interconnectedness and vulnerabilities” and that the virus “has no respect for borders”.
China's President Xi Jinping urged the countries present at the meeting to join forces to prevent the world from entering a recession due to a coronavirus outbreak, according to local media reports. “The epidemic has affected global production and demand in every possible way, and countries must take advantage of and coordinate their macroeconomic policies and prevent the global economy from falling into recession,” the Chinese leader admitted during the virtual conference.
Jinping focused his remarks on trade barriers imposed by the United States, which he accuses of being responsible for the COVID-19 outbreak, and has called for boosting the economy through tariff reductions. “Fiscal and monetary policies must be effectively implemented, coordination of financial regulations must be strengthened and countries must work together to safeguard the stability of the global industrial supply chain,” he added.
Meanwhile, Abu Dhabi's Crown Prince Mohammed Bin Zayed al-Nayhan used the social networking site Twitter on Thursday to announce that the United Arab Emirates would be participating in the G20 virtual summit. The Crown Prince added that “we face an unprecedented challenge at COVID-19, and the people of the world expect this meeting to result in effective international action”.
In response to the commitments made today by the G20 to combat the coronavirus, Chema Vera, interim executive director of Oxfam International, insisted in a statement that “on the day that Imperial College London warned that nearly 40 million lives could be lost if urgent action is not taken, the world's richest governments have only increased the scale of the task”.
“The wheels of global cooperation are turning and the commitment to do what is needed is welcome,” he said after lamenting that this commitment is not enough. “G20 leaders must set out a truly ambitious plan with concrete actions on how they will work together to save lives, including a massive injection of funds for public health around the world,” he added. “More than ever we need our governments to look beyond their borders and work together - in every country and for each individual - to defeat this virus,” he concluded.
S&P Global warned after the meeting that Saudi Arabia and Russia do not appear to be any closer to their oil price war. They regretted that the G20 did not address this issue at its meeting, despite the pressure that the United States put on Saudi Arabia this week to curtail its plans to invade the market with oil.
Kremlin spokesman Dmitry Peskov explained before the meeting that oil markets were not on the agenda, but that the leaders would discuss the world economy. Some U.S. shale oil producers have been pressuring the Trump administration to intervene in the price war, which broke out after Russia earlier this month refused to accept OPEC's proposal to cut production to shore up prices, S&P Global recalled.
Saudi Arabia, meanwhile, has announced plans to increase its production by about a third and supply a record volume of 12.3 million barrels of oil per day to the market from April. According to S&P Global, US Secretary of State Mike Pompeo spoke to Saudi Crown Prince Mohammed bin Salman on Wednesday. During this conversation, Pompeo stressed that “as the leader of the G20 and a major energy leader, Saudi Arabia has a real opportunity to rise to the occasion and reassure the world's energy and financial markets”.