September 5, 2023 - 7:00am
All is not well in the G20. The summit planned for the end of this week, hosted in New Delhi by the Indian government, has been overshadowed by China’s announcement that President Xi Jinping will not be attending. Further reports suggest that India is struggling to get member states to reach a consensus on the leaders’ declaration, mainly due to language that the Western powers want to include about the war in Ukraine.
The fact that the G20 is fracturing should be taken as bad news for the West. The group was initially conceived by former US Treasury secretary Larry Summers and former Canadian finance minister Paul Martin as an expansion of the US-led Bretton Woods institutions. After a series of financial crises in the mid-to-late 1990s which included the 1997 Asian financial crisis and the 1998 Russian financial crisis, economists decided that closer cooperation was needed to ensure fiscal stability.
The tensions surrounding the G20 summit are therefore usefully contrasted with the recent expansion of the Brics bloc to include six new members last month — Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the UAE. Brics is advertised as an alternative to Western-led economic and financial gatherings like the G20: the fact that one is expanding while the other is fraying around the edges speaks volumes.
Just as discussions are taking place about who will and who will not be attending the G20, news reports have revealed that Chinese lenders have extended billions of dollars’ worth of loans to Russian banks. When President Joe Biden announced the sanctions against Russia last year, he vowed that they would engineer the collapse of the Russian economy. Yet this still hasn’t happened, and the Chinese lending shows that non-Western economies are now sufficiently large and developed to be able to operate independently.
The Chinese loans to Russia have been taken as a signal that non-Western powers are trying to create alternative economic and financial arrangements that do not rely on the US dollar or the US-led Bretton Woods systems, of which the G20 itself is a late addition. In fact, these arrangements are already taking place and Western commentators are merely catching up with the changed reality on the ground.
Last month’s Brics meeting in South Africa was largely focused around plans to challenge the Western economic order, a discussion that has been ongoing for some time. If the six countries mentioned above were to join the group, Brics would account for a little under half of global GDP.
Organisations like the G20 were conceived when American power was at its zenith. They implicitly rely on the ability of the United States to unilaterally dictate terms. So the implication is that not attending the G20 — as is the case with Russia — is a sort of punishment while the forum can be used to make statements about Western dissatisfaction with the Russia-Ukraine war. But Xi Jinping’s decision to not attend the upcoming summit shows that non-Western powers are losing interest in what they see as hegemonic institutions in which they are forced to play second fiddle. Further divisions in the G20 can only make Brics seem more appealing.
Philip Pilkington is a macroeconomist and investment professional, and the author of The Reformation in Economics
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SubscribeNothing ties the Bricks countries together other than a dislike of being lectured to by the West. They’ll soon be squabbling like rats in a sack, starting with the India-China border dispute.
If it all focuses the minds of British foreign policymakers on the national interest, instead of promoting distinctly Western notions of morality around the world, so much the better.
Another great achievement of Biden’s and the Democrats to drive not only Russia and China into a Cold War 2.0 alliance but to help them create a proper bloc with all the other emerging economic powers.
Still, we’ve made sure we’ve got Poland, Sweden/Finland and the little Baltic nations on our side. Sweden, at least, have a reputation for being good at spying.
Ah yes, a nation that’s now having to beg for weapons from North Korea to defeat a much smaller neighbour, and another that is experiencing deflation, a colossal property bubble about to burst and youth unemployment so high they’ve stopped publishing the figures. Throw in South Africa where rampant corruption means they can no longer keep the lights on, and India whose GDP per population is around $2k, with most of their diaspora happily settled within the western nations and having regular border skirmishes with their fellow BRICS member.
For all the wests faults (and there are many) they pale in comparison to those faces by the BRICS nations
I think this is fair. Sometimes we act as if the western decline is inevitable. And we don’t recognize the real fault lines within BRICS, namely India and China.
Yet it’s also true that western hegemony is no longer guaranteed and that many nations are sick of the empty moralizing they get from the west.
Look at that current political leadership of G7 nations. It doesn’t exactly inspire confidence in the future, or that we have leaders capable of meeting future challenges.
An air of lethargy has descended on us. People have fought for what we have achieved, then whole generations have grown without having to strive for anything, and now … ennui. Everything is just boring. Who cares that our leaders are useless? What difference does it make? Why am I sitting here bothering to type this? Life is sooo predictable.
But if I was young I could paint my face or have a huge tattoo or even have surgery to have something removed (or added). That would be exciting. Everyone would be talking about me – I would be important!!!
Seriously. Why bother to work hard at a job? Why buy a house if I can live with my parents for ever? Why be concerned about G7? How many people care about what our leaders say when the rugby World Cup is just a couple of days away.
The problem is that today’s minorities, the ones who have to work and fight for something, will stay in family units, will multiply fast while we see children as a waste of time, and will slowly become majorities, taking over what we have. Is this really a problem, though? Maybe it is the only way forward.
Youngsters aren’t staying at home for longer because they want to, they’re doing so because they have little choice. If they move out and start paying the eye watering rents then they’ll never be able to save a deposit for a house. How long would it take you to save £50k in cash while paying the equivalent of your mortgage at the same time after all?
But where are they working? What jobs are they doing? I have two grandchildren who have great jobs because they didn’t fall into the ‘uni’ trap. One is buying a house as we speak – aged 23.
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Where do you live, and what do they do for a job? If they’re earning considerably more than the national median while living in a cheaper area then they aren’t very representative of the nation are they
Unis are good if you choose STEM subjects.
Our leadership indeed leaves much to be desired, but unlike China and Russia, ours can be replaced fairly quickly and easily. Are our systems perfectly democratic and fair? Certainly not. Still, they are more democratic and more fair than China, Russia, Iran, Saudi Arabia, etc. The problem is our economic policy hasn’t been subjected to political scrutiny as it should have. Free trade puritanism and irrational ‘end of history’ optimism allowed bad actors like China and Russia to game the system and use it to further nationalistic political goals. Allowing China and Russia into the global system in the first place just gave these brutal regimes a path to power. Now we’re paying the price for our benevolence. Geopolitics is a brutal game and we’re paying the price for trying to play nice. The solution is to stop being nice and live in the world as it is, not as we imagined it would be in 89 or 91.
I would argue that allowing the oil rich Gulf nations into the global free trade has done more damage to the world over the years! It put colossal amount money into a few wrong hands.
The west had access to clean nuclear energy, but it chose to follow a foolish path. France bravely stands out in this regard.
Great post.
West should never had allowed China and Russia into WTO.
Because they newer did and still don’t meet the criteria of membership.
Expand NATO for 30 years, pull out of every nuclear and ballistic treaty (Bush jnr and Cheney) and fund a rather dubious strain of nationalism with dirty slush funds in the Ukraine.
There you have enough for Russian nationalist propaganda, yet I still can’t get my head around their own enormous propaganda push, the West’s media corporations backing this latest round of neoconservatism.
Are their investors also on the boards of the key arms, security and reconstruction corporations? Or are they simply ideologically blinded lackeys for this sinister incarnation of the US Democrats?
NATO expanded because nations subjugated by Russia for centuries knew what will happen when genocidal Russian imperialism revives.
We see that they were correct by just watching events in Ukraine.
Now Sweden and Norway are joining NATO.
According to Russian stooges on here and elsewhere, all these countries (over 20) are wrong but vodka fuelled shi*hole of Russia is right.
It took two world wars to make the west as it is!
…if and when the rich of the G7 start stashing their money and buying bolt-holes in the BRICS group there will be genuine cause for concern….whilstever the traffic is in the other direction…which it clearly is…there are plenty of other issues to lose sleep over…
This is already happening with rich Russians and Indians buying high-end properties in Dubai (UAE) and Phuket!
Can you read?
He said till citizens of rich G7 countries start buying boltholes in Bric countries.
All the traffic is the other way.
Because who with any brain wants to live in shi*hole like India?
BRICS is not a new Warsaw Pact. It is just more Chinese mood music intended to rally as many countries as possible to an anti-US/western coalition. BRICS membership does not guarantee a pro-Chinese stance.
We are already in a new Cold War. The current line up is roughly as follows.
Pro-US: US, Europe, U.K., Taiwan, South Korea, Japan, Australia.
Pro-China; China, Russia, Iran, South Africa.
Floating voters: India, Saudi Arabia, UAE,
Still everything to play for.
Current favourite. US. 3-2.
Best plausible outcome long term. New P5 acting often in collaboration. US, China, India, Europe, Russia.
Yes, you are right. But India too has close ties to Iran. To some extent also Russia. India cannot risk putting all its eggs in the G7 basket. Plus there is also France as a ” floater” thanks to a close connect through India to Tanzania.
I should not spell doom for BRICS or G20. Being somewhat in the know of things I can state that there are backchannels open. Even the India- China discord is exaggerated. There is of course more wolf- warrior diplomacy from CCP under Xi, but there are also trade ties between the two Asian giants.
The border flare- ups are less likely as Xi cannot risk a war now.
You may even hear of a possible BRICS secretariat in Delhi in the future.
The fact that James Cleverly is visiting Beijing, and that future likely BRICS entrants are Indonesia, Vietnam and Bangladesh are also pointers to a more multi- polar world.
This is Blinken’s opportunity to land a diplomatic coup – work with the Indians to craft a final declaration that avoids confrontation, shows a true understanding for the issues that preoccupy most of the world, and charts an inclusive, cooperative path to a solution.
Such a document would re-establish the G20 as a meaningful forum and show up Russia and China as childish party-wreckers!
… I must not be taking my meds…
Not likely to happen unfortunately. Vicki Nuland too influential still to let that happen.
I agree. You must not be taking your meds.