Saudi-led G20 summit marks global turning point in tackling pandemic fallout

Serious questions and a lot of work remain ahead for the G20 in its stewardship of the global economy.
Sunday 29/03/2020
Saudi King Salman bin Abdulaziz Al Saud attends G20 videoconference discussing the coronavirus pandemic, March 26. (AFP)
Global challenge. Saudi King Salman bin Abdulaziz Al Saud attends G20 videoconference discussing the coronavirus pandemic, March 26. (AFP)

DUBAI - The first virtual Group of 20 summit, presided over by Saudi King Salman bin Abdulaziz Al Saud, set the track for a global approach to tackle the worldwide fallout from the spreading coronavirus pandemic but many short- and long-term questions remain.

Saudi Arabia, which assumed rotating presidency of the G20 this year, called an extraordinary meeting of the group and organised it in less than a week.

International summits typically take months of preparation -- the G20’s annual summit is scheduled for November in Riyadh -- but the coronavirus outbreak created the necessity for an emergency meeting.

US President Donald Trump, Chinese President Xi Jinping, Russian President Vladimir Putin, French President Emmanuel Macron and British Prime Minister Boris Johnson, who has since been diagnosed with coronavirus, were among world leaders participating in the emergency 2-hour meeting March 26 via videoconference.

German Chancellor Angela Merkel and Canadian Prime Minister Justin Trudeau took part in the proceedings from their homes, where they were under self-isolation.

The lead-up to the virtual summit raised questions around how far leaders would be able to strike consensus because they usually meet in person following months of preparatory meetings among their staff members.

In his summit-opening remarks, King Salman reminded world leaders “the world counts on us to come together and cooperate in order to face this challenge.” Prospects for a coordinated worldwide health response and economic support had been marred by divisions between the United States and China over responsibility for the pandemic.

At the end of the meeting, G20 leaders released a communique telling the world they are prepared to do whatever it takes to overcome coronavirus pandemic.

The G20 announced plans to inject $5 trillion into the global economy to preserve financial stability and revive growth by restoring confidence. The World Bank is finalising a relief package of up to $160 billion of its own while the United Kingdom committed $253 million towards the international effort for finding a vaccine for coronavirus.

With few specifics available on commitments made, the G20 virtual summit appears to mark a turning point, a virtual meeting of the G7 the previous week failed to result in any breakthroughs.

The virtual summit also signals US-China cooperation on the pandemic, with Xi pledging Beijing’s full support to Washington over a private call later with Trump.

Serious questions and a lot of work remain for the G20 in its stewardship of the global economy.

Global markets remain volatile and under pressure, supply chains face unprecedented disruption and forecasts of a global economic recession are multiplying. Following a virtual meeting of G20 finance ministers and central bankers, International Monetary Fund (IMF) Managing Director Kristalina Georgieva was downbeat in suggesting the world faces “a recession at least as bad as during the global financial crisis or worse.”

“Investors have already removed $83 billion from emerging markets since the beginning of the crisis, the largest capital outflow ever recorded,” Georgieva said. Financial ratings agency Moody's is forecasting the G20’s combined GDP to fall 0.5% this year, with the United States contracting 2% and the eurozone 2.2%.

Washington passed its largest economic rescue bill in history, which involves more than $2 trillion in federal spending but the United States has now become the global epicentre of the pandemic. Confirmed cases of coronavirus surged in America and have overtaken China’s numbers, where the outbreak began, as well as Europe, which continues to struggle.

The broader international effect of the coronavirus-triggered crisis is growing, even with international travel halted and more than 3 billion people around the world forced into social lockdowns.

The resource-rich Middle East could be among the hardest hit economically with plummeting demand for commodities such as oil, gas and by-products but also with activity in aviation, tourism and real estate frozen.

More than 80 countries have applied to the IMF for emergency financial relief. The IMF, together with the World Bank, had called on G20 members to suspend repayments for low-income countries that could suffer the most from the pandemic, given their limited access to capital markets and inadequate health facilities.

G20 members are yet to decide on debt relief or easing measures that could provide much-needed economic relief for important parts of the Middle East, particularly Lebanon, Jordan and Egypt where high debt levels prevail.

In the shorter term, the Middle East must solicit support from the G20 to ensure it can remain protected from the health crisis but also the economic fallouts of the pandemic.

Timely debt relief and economic support could ease the effects of crippling social lockdowns across large, urbanised populations. Medical aid such as protective gear for health-care workers, testing kits, face masks and sanitisers will prove critical in early detection and containment where inadequate health facilities exist and especially with large numbers of displaced people and refugees such as Syria, Turkey, Lebanon, Iraq, Libya and Yemen.

Riyadh led the push for G20 counterparts to make important commitments and begin work towards a comprehensive plan. Its presidency will remain in the limelight to keep G20 actions coordinated and commitments forthcoming.

Carrying on from this first virtual summit, Saudi Arabia will build even greater momentum towards the G20 summit in November, which is increasingly likely to mark a defining moment for a global recovery that is expected to last for years.