G20 highlights global fractures

The G20 brings together the leaders of the twenty most industrialised nations of the world and is considered a highly representative body: its members constitute 90% of the world’s gross domestic product, more than 80% of global trade and at least 65% of the world’s population. It is considered one of the most important global gatherings, where several major economic and political initiatives find their beginnings.

Argentina hosted the G20 this year and set about pushing several interesting priorities such as the future of work in the 21st century, along with infrastructural development and gender equality. However, the meeting of global leaders last week was remarkable in the amount of supplementary story lines that it had come to represent. It would be the first time that global leaders had met in such numbers since the murder of journalist Jamal Khashoggi, allegedly at the behest of Saudi Arabia’s Crown Prince, Mohammed bin Salman.

It was also the first major foreign trip for Russian President Vladimir Putin since Russian naval forces fired upon, and detained Ukrainian naval vessels in the Black Sea, bringing the two sides dangerously close to open conflict. An ongoing issue was trade tensions between the US and China have rattled global markets in recent weeks. With institutions like the IMF expecting global economic growth to slow down markedly towards the back-end of 2019 heading into 2020, the increasing number of political risks is on target to be match by an economic downturn in the near future, which may fuel political discontent within the middle and lower classes, as it often does.

The future of work is one of the most pertinent debates that few have heard of, or perhaps, not paid much attention to. The rise of automation and artificial intelligence are two issues which policy makers around the world will need to grapple with in the coming years, with the rise of such technologies being called the fourth Industrial Revolution. There are two sides to the debate: one side says that as in the past, governments and societies will readily adapt to these radical changes over time, and people will eventually find new jobs which will be created by automation and AI. The other side says that with so many people losing their jobs in a short time due to their jobs being taken over by machines, it will cause mass discontent and upheaval, threatening the very fabric of society itself.

It is far too early to be certain of either argument, but what is certain is that there are a high number of jobs which are under threat of being automated, and policy makers will need to come up with some very innovative solutions, and quickly. According to two separate studies, some 47% of US jobs and 54% of EU jobs were at high risk of automation, which would put a vast number of people out of a job in short order. Whilst the benefits of AI and automation may enhance efficiency and lower production costs, policy makers have not yet solved how to maintain the current social contract of ensuring people have decent paying work in a world where machines take over half of the jobs in the economy. It is one of humanity’s biggest challenges alongside climate change.

On the political front, it is evident that global rules and norms are increasingly under pressure from countries acting in a manner which threatens the fabric of global cooperation. The brazen murder of a Saudi dissident journalist in Saudi Arabia’s embassy in Turkey by agents of the state points to a country that had, and may still have, little fear of the repercussions and damage to its image. Russia’s actions in the Black Sea, where they fired upon Ukrainian naval vessels and detained dozens of sailors, also show that it feels it can withstand any condemnations of its actions from the US or EU.

Countries with an authoritarian hue have come to appreciate that the controversial actions which they undertake on the ground quickly become facts, with verbal condemnation being the only real opposition they have often faced. This is not to say that Russia, for example, has not faced sanctions for its role in the war in Ukraine. But the economic price it has paid has not prevented Moscow from seeking to expand its influence by any means it deems fit in its near abroad, often to considerable success. Whilst this is part and parcel of global power competition, it can also erode the foundations of the post war system which was set up to avoid another calamity like the Second World War.

Trade tensions between the US and China have been on the high side since last summer, with both sides trading the imposition of trade tariffs on each other’s goods. President Trump has made trade a centrepiece of his foreign policy, promising to tackle America’s trade deficit with other countries, and China in particular. Beijing, on the other hand, has little appetite to change the status quo given its importance as a manufacturing and export bastion for global trade. Mr. Trump has worked hard to get China to address the US trade deficit by buying more American goods, and to cease from intellectual property theft and forced tech transfers from American firms in exchange for access to China’s market.

Whilst these are complaints that have predated Trump’s Presidency, and are legitimate causes for concern, his unorthodox approach of applying maximum pressure and trade tariffs also risks harming cooperation with China on other issues, like dealing with North Korea or lowering tensions in the South China Sea. Both sides have agreed to a 90 day pause on the implementation of new sanctions, the chances of both sides finding a mutually satisfactory solution to structural issues in their trade relationship is slim.

Argentina’s G20 Presidency highlighted some of the more pressing issues the world faces, which is only fitting given the central importance of the G20 as a global forum which sets the tone for global policy and economic development for the following year.

But despite the cross-cutting issues like the future of work, it is apparent that the very foundations of global cooperation are under strain because of the rising risks emanating from issues like trade, the Ukraine conflict and issues in the Middle East. While it is reasonable to expect some progress to be made on a few issues, it is becoming increasingly apparent that cooperation is becoming more difficult to attain. Japan holds the G20 Presidency next year, and have their work cut out for them.