The COVID-19 pandemic has touched every nation and is a truly global event of utmost importance to world leaders. The acute health, economic and social consequences of the crisis have underscored the need for a coordinated international response. The G7 and G20 platforms are practical institutions capable of advancing the dialogue on this critical issue.
The G7 was created in 1975 as an informal forum bringing together the leaders of the world’s most industrialized nations. It is an important component of the international governance structure, but it does not include representatives from developing and emerging economies. The limited representation of the G7 has been acknowledged by United States (U.S.) President Donald Trump, who recently called for an expansion of the group’s membership.
In 1999, the G7 finance ministers and central bank governors called for the creation of a group of twenty, a new international forum that would help strengthen the international financial architecture. The G20 was born from the conviction that global crises require globalized and inclusive solutions and the belief that there was a need for a permanent forum for informal dialogue between advanced and emerging economies (G20, 2007). The key role the G20 played during the 2008-2009 global financial crisis, with its first Leaders’ Summit held in 2008, was an important milestone in its evolution to its current form. Nowadays, the G20 is often regarded as the premier forum for global economic coordination. Beyond the economic and demographic weight of the G20, the commitments made by the leaders it represents potentially impact many other international organizations and institutions.
The G7 and G20’s agendas overlap but retain distinct presidency focuses. The U.S. G7 Presidency announced four priorities in October 2019: strengthening growth and prosperity, reducing regulations, eliminating trade barriers and opening energy markets (Kirton, forthcoming). Saudi Arabia’s G20 Presidency focuses on the theme of “realizing opportunities of the 21st century for all,” with the aims of empowering people, safeguarding the planet, and shaping new frontiers. The COVID-19 crisis has since added new challenges for both the G7 and G20’s agendas.
Past major crises (the Asian financial crisis and the Great Recession, among others) started – and often remained confined – in the economic and financial spheres, requiring remedies that policymakers were familiar with. The current COVID-19 crisis is different, since it started as a health crisis before turning into a global crisis with multiple ripple effects on economies and societies. It has caused the largest shock to the global economy since World War II, amidst an unprecedented level of uncertainty fueled by the poorly understood dynamics of the pandemic. This uncertainty further constrains policymaking by discouraging decisions that cannot be reversed.
Regarding the potential synergies between the G7 and the G20, what has been observed so far is promising. On March 16, the G7 leaders held a conference on the COVID-19 crisis. Their statement ended with a “call upon the G20 to support and amplify these efforts.” On March 17, Saudi Arabia announced that it was organizing the first video conference among G20 leaders to respond to the health, economic and financial crisis still escalating around the world (Kirton, 2020).
The G20 met in an extraordinary virtual summit on March 26 to address the challenges posed by the outbreak of the COVID-19 pandemic. The G20 leaders pledged to do “whatever it takes and to use all available policy tools to minimize the economic and social damage from the pandemic.” They committed to resolving the disruptions to global supply chains and to “seek to ensure adequate financing to contain the pandemic and protect people, especially the most vulnerable.”
The G20 leaders agreed to mobilize resources to bridge the immediate financing gap, which the Global Pandemic Monitoring Board estimated to be at least $8 billion. The Kingdom of Saudi Arabia has pledged $500 million. The G20 leaders asked their finance ministers and central bank governors to coordinate on a regular basis to develop a G20 Action Plan in response to the COVID-19 crisis. The Action Plan outlined several financial responses, including a G20 debt service suspension initiative to support low-income countries; a comprehensive IMF support package, and support offered by the World Bank and other multilateral development banks, amounting to more than $200 billion. To counter the social and economic impact of the COVID-19 crisis, G20 leaders committed to injecting over five trillion dollars into the global economy.
Kirton (forthcoming) indicates that the G7 Summit, scheduled for September, is likely to commit to further actions against the pandemic, offer additional macroeconomic stimulus, endorse the energy market stabilization measures, and highlight technological developments such as carbon capture, sequestration and use, among other potential declarations. The likelihood is that these topics, aligned with the G20 agenda, will also be discussed at the G20 Leaders’ Summit in Riyadh in November.
The Saudi G20 Presidency fully recognizes the multiple dimensions of the current crisis and has taken action accordingly. To date it has hosted nine extraordinary ministers’ meetings, covering various areas and challenges. The current crisis is truly global in that the fight against the pandemic has to be won everywhere, otherwise it will not be won anywhere. This opens a unique opportunity for unity and collaboration between the G7, the G20, and much beyond.
G20. 2007. “The group of twenty: a history,” report.
Kirton, John. Forthcoming. “Finding strength in unity.”
Kirton, John. 2020. “Crisis Compliance with G7 Leaders' Videoconference Commitments,” March 18. G7 Research Group.