The G20 Summit, to be hosted in Bali between the 15th and 16th of November this year, is fast approaching. The G20 provides ample opportunity for Indonesia as a host country to gain international prestige and domestic political wins. Equally, however, there are a number of obstacles the country will face that may inhibit its ability to make the most of such opportunities. This article looks at both the opportunities and obstacles to appraise whether Indonesia will meet its goals when the Summit rolls around this coming November.
What is the G20?
The Group of 20 (G20) is an informal forum for international cooperation on global economic and financial issues. The G20 brings together leaders from the European Union and the following 19 countries: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, the Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom, and the United States of America. Together, these countries represent approximately 90% of global GDP, 80% of international trade and two thirds of the world’s population.
Originating from a meeting between 20 finance ministers and central bank governors at Washington DC in 1999, the G20 evolved into a leader-level forum in 2008 to respond to the Global Financial Crisis. Since then, G20 Leaders Summits have occurred on an annual basis with a rotating presidency amongst its members. The President of the G20 each year is responsible for hosting the Summit, and has the power to decide the agenda and invite guests. This year, the President of the G20 is Indonesia.
Indonesia’s Presidency of the G20
As President of the G20 in 2022 and Chair of the Group of 33 developing countries in the World Trade Organisation (WTO), Indonesia has committed to representing the voices of developing countries at the negotiating table. It has chosen to focus on ‘Recover Together, Recover Stronger’ as the theme of the Summit held in Bali, to highlight the issue of an equitable and sustainable post-pandemic recovery. As part of this theme, Indonesia has also chosen to focus on three priority issues: global health architecture, digital transformation and sustainable energy transition.
At an international level, Indonesia’s Presidency of the G20 is significant for the country as it represents a chance for the nation to gain international prestige. Whereas commentators note that President Joko Widodo (Jokowi) has taken ‘a more passive approach to multilateralism’ compared to his predecessor Susilo Bambang Yudhoyono, Jokowi is looking to step up Indonesia’s global leadership as his presidential term winds to a close in 2024. While advocacy on behalf of the interests of developing countries is one way Jokowi has sought to make a global mark, the intensifying great power rivalry in the lead up to the Summit has meant that Jokowi has attempted to play the role of a ‘bridge builder, particularly between Russia and Ukraine’. Jokowi is also seeking to highlight Indonesia’s position as a prominent leader within the ASEAN bloc by vocalising regional security issues, particularly the political situation in Myanmar and Chinese incursions into the South China Sea.
As a pragmatist, Presidency of the G20 is also important for Jokowi as the Summit represents an opportunity to gain domestic political wins. The Ministry of Foreign Affairs has openly stated that it wishes to showcase Indonesia’s investment potential by hosting the G20 and that it is a chance for the country to demonstrate to the world that it is ‘open for business’. Minister of Investment Bahlil Lahadalia has said that he aims to attract Rp 200 to 250 trillion (USD 13.4 to 16.8 billion) in foreign direct investment over the course of the G20 Presidency. Apart from that, the government seems keen to use the momentum of the G20 to drive home difficult domestic political reforms, such as plans to implement a carbon tax and pass the Personal Data Protection Bill that has been stuck in a legislative nether.
With all these ambitions comes the crucial question – how likely is Indonesia and Jokowi to achieve its goals at the G20 Summit? Certainly there are obstacles lying ahead.
Geopolitical tensions exacerbated by the war in Ukraine leaves Indonesia’s leadership in a precarious position. Firstly, there is the question of whether all the major political players will even attend. Russia’s invitation and attendance at past G20 meetings this year has led to walkouts by US, Canadian, and British officials. Both US President Joe Biden and Canadian Deputy Prime Minister Chrystia Freeland have called for Russia’s removal from the forum, referencing the harsh economic impacts of Russia’s illegal invasion, claiming ‘business as usual’ at the G20 an impossibility. Indonesia has responded by inviting Ukraine President Volodymyr Zelensky as a guest to the summit. Jokowi has travelled to both Ukraine and Russia to attempt mediation in his capacity as a G20 president, publicly indicated his ‘readiness to be a communication bridge between the two leaders’, and announced that he had secured Russian guarantees to permit vital exports of food and fertilizer from Ukraine.
Intense political divisions within the forum have already culminated in significant setbacks, with an unprecedented failure at the meeting of the G20 Finance Ministers and Central Bank Governors to produce a joint communique resulting in having to instead publish a 14-paragraph ‘Chair’s Summary’. Indonesian Finance Minister Mulyani Indrawati commented that the failure to produce the traditional communique was a ‘challenging and difficult situation…most of the paragraphs are actually supported by our members but there is still an issue that they cannot reconcile yet…because they want to express their views related to the war’.
The Ukraine war has impaired an already fragile global economy, with supply chain disruptions and commodity price shocks worsening a cost-of-living crisis affecting millions of people. An additional 71 million were pushed into extreme poverty in the world’s biggest countries according to the UNDP. This is against the backdrop of a still in-progress global recovery from continual Covid-19 related disruptions.
Global inflation is on the rise and higher than last year’s 2021 World Economic Outlook Update projections due to food and energy prices and lingering supply-demand imbalances. This has led to an increased risk of recession and further monetary tightening by major central banks that will weigh on post-Covid economic recovery. There are no signs of improvement in the foreseeable future, with recent indicators by the IMF projecting a further decrease in global growth for both 2022 and 2023. Economic hardship and threats to food security remain a global issue, and are lamented as a ‘long-standing headache for Jakarta’, one of the largest countries facing severe ‘double burdens’ of malnutrition – undernutrition and obesity. Indonesia’s low levels of economic engagement with other G20 countries could also undermine its ability to act as a strong negotiator in the area of global trade. While Jokowi aims to increase trade between Indonesia and other G20 partners (perhaps through the forum itself), Indonesia is not quite there yet.
Ahead of the November Summit, the IMF has outlined three major priorities for the G20 in addressing such a challenging, complex, and ever-changing global economic climate. Firstly, countries must do everything in their power to bring down high inflation. Secondly, fiscal policy must help-and not hinder- central bank efforts to bring down inflation. Thirdly, there is a need for a fresh impetus for global cooperation – led by the G20 – and the G20’s new $1.1 billion fund for pandemic preservation and preparedness show that this is possible. There is opportunity here for Indonesia in its position as G20 leader to reduce barriers to cooperative and open trade, however it is clear that it faces a challenging economic environment, and it remains to be seen how much progress can be made at the forum under its leadership.
Sustainable energy transition is one of three key priority areas for Indonesia’s G20 theme of ‘Recover together, Recover stronger’. With the third largest tropical rainforest in the world, the largest topical peatlands and mangrove forests, and numerous coastal zones, the impacts of climate change are of great import to Indonesia’s long-term development and living conditions for many Indonesians.
How a sustainable energy transition should be managed, however, currently divides members of the G20, with a significant emissions gap between advanced economies and developing economies within the forum itself. Noto Suoneto and Hugh Harsono for The Diplomat compellingly argue that ‘Indonesia must address the challenge lying in the fact that not all G20 economies possess the same economies, knowledge, and societal demands regarding the issue of energy transition.’
Domestically, Indonesia’s energy transition policy remains slightly confused. On the one hand, Indonesia has initiated various projects aimed specifically at establishing renewable energy sources such as solar, wind and hydropower. On the other, it has an economic dependence on coal for its economic growth, and is the world’s 8th largest carbon emitter. Indonesia generates a very low amount of renewable energy compared to other G20 nations, which could ‘potentially affect its credibility to lead the G20 on this issue.’
Domestic Lobby Groups
Adding further to existing strains on the G20’s various precedential meetings to the G20’s main November Summit are the protests and concerns of domestic Indigenous and Women’s Rights groups. The G20’s official dialogue for women’s empowerment, known as Women 20 or the W20 (held between 19-21 July) has been the subject of protests due to alleged exclusion of local voices and failures to address key women’s issues. Activists at Lake Toba, North Sumatra claimed that issues of deforestation, land grabbing and agrarian conflict in the area, which disproportionately affects Indigenous women, have been overlooked.
Sekar Bankaran Aji, a campaigner for Greenpeace Indonesia, spoke to Al Jazeera on the issue:
‘I think the W20 narrative is ironic when their theme is ‘recover together’ equally, but they didn’t even include any agenda regarding land grabbing and customary forests. Toba women are not involved in the talks in an inclusive manner, so how can they recover together equally? The forum focused on small and medium enterprises (SMEs), while women are dying trying to defend their customary land, something which is apparently not considered a problem for the W20.’
This follows Joko Widodo’s signing of four Presidential Decrees intended to protect land for farmers around Lake Toba, however local groups say they do not go far enough to protect land rights. They call for the revocation of permits of companies that negatively affect women, farmers and Indigenous peoples. Certainly domestic issues remain at the forefront of Indonesia’s leadership of the G20.
It’s not all doom and gloom. In fact, Indonesia has already managed some significant achievements that bode well for the November Summit. Despite the failure to publish a joint communique, Indonesia still managed to secure attendance from all G20 members at both the Foreign Ministers Meeting and Finance Ministers Meeting. Indrawati maintained that there were multiple areas in which consensus was reached, including the importance of stabilizing food security, preparing a pandemic response and prevention, creating a global tax agreement, price stability, and assisting in financing cleaner energy globally. Progress in these areas aligns well with Indonesia’s G20 theme and priority issues.
In a turn-around from Scott Morrison’s stance and a win for Indonesia-Australia bilateral relations, Prime Minister Anthony Albanese has confirmed Australia’s attendance at the November Summit, and has offered assistance to Indonesia as host. On August 18th, Jokowi publicly announced that Xi Jinping and President Putin have both confirmed their attendance, and that Ukraine and Russia have accepted Indonesia as a ‘bridge of peace.’
Indonesia’s priority areas and agenda to raise both economic growth and its international profile can still become reality, despite the geo-political, economic, energy, and domestic challenges it faces. As G20 President in a unique crisis it has played its peace-maker role well. Many opportunities remain to collaborate with other non-aligned leaders in the forum such as South Africa, Brazil, and Australia and next year’s G20 Chair India on creating achievable targets that take into account the need for pragmatism and facilitation. The IMF has offered ongoing advice for Indonesia’s leadership and key priorities for the November Summit, and addressing these priorities concurrently acts to mollify domestic issues such as economic hardship and threats to food security.
With vast renewable energy sources and many more projects currently underway, including an expected move of Indonesia’s capital to East Kalimantan and a potential subsequent development of the Balikpapan shipping port into a ‘green bunkering hub for domestic shipping’, Indonesia is on the right path to become a strong authority on climate issues at the G20. However, it should learn from the W20 and take care to include the perspectives of Indigenous communities and women in its planning. Lessons from the G20’s various forums can also be utilized as learnings for Indonesia’s 2023 chairmanship of ASEAN.
Finally, an apt summation by Endy Bayuni of The Jakarta Post:‘Indonesia has done all the right things in keeping the G20 relevant during the first eight months of its presidency, still keeping the economic agenda and its theme Recover Together, Recover Strong intact as far as possible but shifting the priority and allocating more resources toward the larger and more important agenda: Peace.’
Written by Hirzi Putra Laksana and Kate Langley.