Is G20 Solidarity and Sustainability Possible in an Age of Northern protectionism?

SOUTH Africa’s Finance Minister Enoch Godongwana (left) and President Cyril Ramaphosa in conversation at the G20 Media Launch held in the Imbizo Media Centre Cape Town on December 3, 2024. Picture: Katlholo Maifadi/DIRCO

Ashraf Patel

South Africa, and Africa’s, G20 in 2025 comes at a time of deepening geopolitical and geo-economic fractures, conflicts, and a cost-of-living crisis.

We are told that hosting large international events brings prestige on the global stage, but it is expensive and does not necessarily lead to concrete development outcomes.

There is an African proverb: “If you want to go fast, go alone. If you want to go far, go together”.

The lesson from this proverb is captured in the theme of South Africa’s G20 Presidency: “Solidarity, Equality and Sustainability”.

Through our Presidency, we will seek to strengthen and advance our common pursuit of the Sustainable Development Goals (SDGs) and the Pact for the Future. (Finance Minister Enoch Godongwana, 11 December 2024, BRICS Finance Ministers meeting)

Since democracy, South Africa hosted commendable global events like the World Conference on Racism, the UN Sustainable Development Summit, UN COP 14 and the FIFA World Cup where super-inflated costs and corruption left many cities in debt.   Significant investments of diplomatic resources and capital were invested.

Will South Africa incorporate African Solidarity?  Can it really ’go together’ with Ubuntu, and with African peoples and advocate for concrete actions to address the current African Debt crisis?

Many African governments especially its people and civil society including labour are sceptical.

Flowing from the ‘Southern tide’ of Global South nations, Indonesia, India Brazil, and now South Africa,  can SA  still ensure a substantive developmental agenda at G20 before handing the baton to the US under Trump, who is anti-globalist and likely to drastically reduce its commitment to ‘Global public goods’?

These and other realpolitik realities would no doubt be on the minds of foreign policy mandarins as they assess how exactly can the G20 in 2025 add value to our national interest framework and the AU Agenda 2063.

G20 Communiques are often ‘consensus-driven’ and the action items that take years to concretise and become formal agreements in the UN system.  An example is the global minimum tax and tax on ultra-net individuals being a case in point. G20 statements on geopolitical conflicts are very contested and diluted to the point of non-committal.

The rise of Trump 2.0 is set to deepen protectionism and a general retreat from global institutions. The recent EU elections have seen a shift rightward with nationalist parties' backlash against global institutions, especially global finance, green carbon, and unfettered globalisation. The counter-trend in the North is a move towards nationalism, especially issues of industrial policy, immigration, and a backlash against new green carbon taxes.

An example is the recent EU-Mercusor Free Trade agreement signed last week that has been criticised by farmers groups, labour and climate change activists.   Even Brazil has been part of the agreement, which again puts the spotlight on the contradictory commitment and non-commitments to the global development agenda in favour of the rising tide of ‘free trade agreements’ with protectionism favouring the powerful groups, and sacrificing labour and environmental rights and small-scale farmers. These contradictions are deepening.

Inclusive multilateralism and a workable WTO

The recent UN Summit of the Future held in September 2024  was timely and a solid proposal to ensure multilateralism and save the UN SDG agenda. Currently, the WTO is hobbled by a rise in protectionism from the US, green protectionism of the EU, the EU CABM program and trade wars between the US and China.

The non-functioning WTO appeal body needs to be functional to resolve trade disputes fairly and transparently and with significant SDT support for the LDCs. Unresolved items such as the Agriculture treaty, Fisheries treaty and E-Commerce treaty should be in line with UN SDGs and development content to ensure the LDCs nations have a fair inclusive globalisation while allowing nations to opt out of agreements that are exploitative and unfair without sanction.

Genuine financial reforms need to address  African debt and sustainable development.

The current African debt crisis with high cost of capital, super interest rates and together with high food inflation has amplified the daily cost of living crisis leading to food riots from Kenya to Nigeria.

The UN Secretary-General urged a recent BRICS Sherpa meeting that the G20 needs to address the unsustainable debt crisis Africa faces. The UN SDG Stimulus report provides a workable framework to address the current short-term. G20 nations must consider:

• The current G20 common framework is weak and does not address debt deepening and transparency.

• A debt sustainable model in line with the UN report Stimulus report

• Implementation of tax on ultra net worth individuals and a minimum 15% tax on multi-national should be fair and transparent.

• Address the risk of Climate Finance becoming a new spectre of  ‘Green Debts’.

• Firm commitments are needed for the UN Conference on Finance for Development to be held in Spain in 2025.

• Consider the International Tax on Financial Transactions:

Special Committee on US Trillion-dollar Budget Deficit and its risk to the Global financial system

It should be noted that the US and UK banking crises led to the Global financial meltdown in 2008, leading to the formation of the G20 in 2009 to address the systemic risk to the global economy.

Financial doyen Dr Micheal Power observes:

"That is how I feel about the recently completed US elections. Neither “house” – not the Democrats, not the Republicans – dared mention the elephant in America’s room: its gargantuan $36-trillion federal debt load and the ever-rising budget deficit that now adds $ 2 trillion to that debt total annually."

The G20 should create a special committee to monitor the elephant in the room – which is the US  $34 trillion deficit - and given the US dollar's role as a global reserve currency, is a current systemic clear and present danger to the global financial system.

This is set to deepen as the Trump 2.0 administration's leading policy doyens Elon Musk and David Sacks (both South African born ) are committed to neo-libertarian views on finance and crypto deregulation. The financial future is dystopian.

BRICS multipolarity and multilateralism

The BRICS nation's commitment to broadening and deepening global governance for sustainable development is commendable. By default and design, the BRICS nations have become the champions of multilateralism and global governance reform for the Global South. Innovations such as the New Development Bank (NDB) are broadening development finance for Africa and the Global South. Some trading in local currency and move towards a BRICS currency are early steps to address the US dollar primacy - and the risk it poses to the world of finance and trade. However, the big debate for the Global South is whether this momentum deepens in a fractured world of protectionism, wars and trade wars.

Towards a Social and Civil 20 – between reform and revolution

Brazil and President Lula should be commended for providing for a Social 20, although a modestly diluted form from the heydays of the World Social Movement (WSF) of 2005, where the PT party was strong.

In the form of Social 20, President Lula has managed to include labour, the Landless Peoples Movement, youth and gender participation.

SA should not lose the momentum of the progressive components.

Just as G7 nations are part of the G20, the BRICS core nations form a part of the G20, there has been robust debate by anti-globalisation activists, who are taking a dim view of a G20 and as well as  BRICS prospects for genuine people-centred development in a fractured, conflict-ridden world.

South Africa will host the G20 in 2025 with a dystopian future already present, as the COVID pandemic has shown us all.  Indeed, policy and financial elites are worlds apart from the sentiments and lived reality of the multitudes of masses of humanity that languish at the bottom of the pyramid.

Is another world possible at all?

Ashraf Patel is a Senior Research Associate at the Institute for Global Dialogue IGD, UNISA.