The final communiqué repeated the same, tired ideas that we saw just a month ago when G20 finance ministers met. Then, as now, they complained about the lack of participation by the private sector, issued vague promises of more support from the IMF, and talked up how successful their meager debt suspension efforts have been to date.
The reality is, if the G20 could have done something it would have but it can’t because it’s largely powerless in this crisis. It just doesn’t have the leverage or the resources to do much more than issue empty promises. Just look at how excited they are about the fact that their debt suspension initiative (DSSI) has saved countries a measly $5.7 billion — a tiny, insignificant portion of the estimated $178 billion that developing countries are believed to owe.
Let’s face it, the fact that so much of the world’s debt is either owed to China or private creditors makes the G20 largely a secondary actor here. Further, we should stop pretending that at some point the U.S., Europe, and Japan are going to marshall the nerve to take on either powerful forces in Beijing or on Wall Street/The City to demand concessions on behalf of the world’s poorest countries.
That’s just not going to happen. After all, Donald Trump was so bored with the whole affair that he ditched the webinar to go play golf.
And a weak, ineffective G20 is a gift with a giant bow on it to President Xi Jinping and the Chinese government. They’re getting all of the political upside of claiming how they’re working so well within the DSSI framework, support the multilateral approach to debt relief, and are now the G20’s most generous country in debt mitigation at little to no expense.
After all, the Chinese still haven’t budged on their policy banks’ commercial loans that are excluded from DSSI, they haven’t improved transparency one bit and the debt suspensions they’ve agreed to in places like Zambia and Angola are just that — suspensions — which means they’re going to get paid back in full, just a few years later than they expected.
READ MORE African Debt: At some point, the hole becomes just too big to fill
So, what do we about it? To be honest, I’m not entirely sure. I’m not going to pretend there’s an easy solution here because there isn’t one. But continuing to believe that the old system still actually works is foolish.
This article was published in partnership with The China Africa Project
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