An instrument of power is bound to break down in a community of sovereign nations pursuing irreconcilably hostile geopolitical objectives.

The just finished G-20 summit in India showed – once again -- that “strategic and systemic rivalry,” sweeping sanctions, hybrid and proxy wars are incompatible with multilateralism, respect for different socio-political systems, peaceful coexistence, and free trade.

The G-20 was created in 1999 as an informal forum of U.S., Canadian and E.U. finance ministers to deal with prudential regulations and crisis management. When the informal consultations were upgraded to the summit in Washington D.C. on November 15, 2008, America’s deep financial crisis and the Great Recession were already under way.

Orchestrated by France and the U.K., the London G-20 summit on April 2, 2009, was held at the height of the financial crisis, and the forum was declared as the principal “venue for international economic and financial cooperation.”

France and the U.K. blamed the crisis on Washington’s mismanaged monetary policies, lapses of prudential oversight and an inadequately regulated financial system.

There is no economic policy coordination

The London summit sought to strengthen the peer pressure to coordinate the G-20 economic and financial policies to prevent similar crises in the future. Nothing came of that, despite months of U.S. Congressional hearings and modest regulatory changes.

Principles of economic policy coordination – i.e., the rules of orderly trade adjustment – were, and still are, ignored. Exactly as was the case with the original Article IV of the IMF’s Articles of Agreement. What followed then was a demise of the system of fixed (but adjustable) exchange rates, and the new world of the “free for all system” of floating exchange rates since 1972.

Similarly, with no economic policy cooperation, the G-20 agenda has now become a “kitchen sink” of geopolitical clashes, climate change, green economy, digital economy, technology transformations, poverty and excessive debt of developing nations, etc.

Sherpa indiscretions revealed, for example, that most of the work on the last G-20 communiqué in India involved a fight to castigate Russia for its “special military operation” in Ukraine.

But the fight did not stop there. The U.S. Treasury Secretary Janet Yellen forcefully denied that the G-20 was not tough enough in condemning Russia. She also emphasized that the U.S. would use international lending agencies to help the Global South and to counter China’s Belt and Road Initiative with an infrastructure project connecting India to the Middle East and Europe.

Iran, of course, was not included in that project, and it remains to be seen how that land corridor will reach India from the Strait of Hormuz.

Give the G-20 back to finance ministers

Yellen was equally upbeat regarding the outlook of the U.S. economy. She saw the economy’s “soft landing,” with declining inflation and a strong labor market.

That’s a feat never seen in any economy. But this is an election campaign, and, being America’s chief economic officer, she is not expected to say that the only credible choice is the length and amplitude of an inevitable economic recession.

Not a good contribution to G-20 economic growth and prosperity.

Yellen also noted that Europe was in trouble by saying that “most of Europe is doing less well than the United States.” That’s another equivocation. The E.U. economy has been stagnant since the summer of 2022, with Germany in recession and France eking out a 0.2% GDP growth.

Taken together, a recession bound U.S. and a zero growth E.U. represent 42% of the global GDP.

In view of that, Americans and Europeans were not eager to talk much about the international economic policy coordination during the G-20 summit last week. Geopolitics were a more attractive topic, along with using funds of official international lending agencies to promise help for the developing nations’ debt management.  

The economic cooperation was confined to declaratory, non-binding statements about “well calibrated monetary, fiscal and structural policies …” in response to the global economic growth “below the long-term average.”

Summitry is perverting the role of G-20 as the world’s top economic forum. To have any relevance, the G-20 should be a technical gathering of finance ministers and central bank governors, working along the IMF and the World Bank.

The IMF should play a crucial role, with the OECD, in preparing G-20 meetings dealing with economic policy coordination. The IMF and the World Bank also have the technical expertise to provide analytic inputs concerning economic and financial problems of the developing world.

All the rest should go to the huge United Nations network of specialized agencies.

And the skyscraper on New York’s East River is the only place where geopolitics – and questions of war and peace -- should be dealt with.