Role of G20 for World Stability

Originally formed in response to the 2008 financial crisis, the G20 has now developed into a multilateral forum with a role that extends beyond the reason for its formation.

KOMPAS/HENDRA A SETYAWAN

Hundreds of participants taking part in the opening of the Indonesia Net Zero Summit 2022 in Nusa Dua, Bali, on Friday (11/11/2022). This activity was part of the Business 20 (B20) Summit, which is the official G20 dialogue forum with the global community and consists of 2,000 participants representing more than 6.5 million businesses.

Cooperation between the world’s countries continues to be necessary for global economic stability and to prevent the recession from having deeper effects. From the mapping of global geopolitical cooperation networks, the G20 needs to establish deeper relations with oil-rich countries that are members of the Gulf Cooperation Council (GCC) or Organization of Petroleum Exporting Countries (OPEC).

Establishing cooperation with the aim of strengthening geopolitics and economic trade transactions is very important for all nations across the world. Differences in natural resource potential and carrying capacity for factors of production between nations have led a number of them to form cooperative organizations in order to build the vision they want to create in the future.

However, from a macroeconomic context, none of these cooperative organizations are truly independent and capable of meeting the various consumption-based needs of their members. Every one of these organizations always needs supplies from the state or other organizations to meet the demand for goods and services at any given time.

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Even organizations that represent developed countries, such as the G7, still need cooperation with other countries of economic classes that are below them. One of the indicators of a developed country can be seen from the high average national GDP per capita of the G7 countries, which reached more than 48,000 US dollars per year. This high average GDP per capita indicates the high capital production factors owned by developed countries.

However, these high financial factors will not grow any further without support from other factors.

There are a number of crucial factors that will be needed to drive a country's economic progress. Among these are cheap and reliable labor or human resources, affordable raw materials, sufficient energy supplies, adequate technology, secured production locations, and regulations or incentives that support the economy.

In addition, foodstuffs or nutrition intakes are also needed to drive the production factors for labor. The higher the nutritional quality, the better the quality of human resources produced. In the end, it will produce goods and services that are high in both quality and value.

Towards this end, countries will always actively work to establish relations with other countries or organizations so that the various paradigms of economic progress they desire can be realized. It should not be surprising that developed countries have also joined forces with various other organizations, such as the G20, the OECD and the EU.

Group of twenty

The G20 is an interesting organization to join due to a number of advantages, including for reasons related to manpower, as well as access to a large market that consists of both developed countries and emerging market countries.

By joining this organization, "colonial" countries get to enjoy numerous benefits. For example, they can get the opportunity to sell products to countries with large populations. They also gain access to a large market with a relatively cheaper labor stock. In addition, they also gain access to a supply of foodstuffs for providing input to their populations and workforce.

Apart from organizations oriented towards global macroeconomic progress, there are also a number of organizations that are more specific, such as the GCC and OPEC and its building of an economy based on the chain of trading in fossil energy, oil and gas.

KOMPAS/HENDRA A SETYAWAN

Police Mobile Brigade officers sterilize the accommodation for state guests and delegates of the G20 Summit in Nusa Dua, Bali, on Saturday (12/11/2022).

There is also ASEAN, which establishes cooperation in various field throughout the Southeast Asian region. The same is true with BRICS, which seeks to collaborate in establishing cooperation between its member countries to accelerate the process of these countries becoming developed countries in the next few years.

Rich in oil

Based on a number of economic calculations as well as international trade balances, it turns out that almost all interstate organizations tend to experience deficits in the trade of all their commodities.

Only oil-rich countries, such as those in OPEC and the GCC, get to experience trade surpluses. Foreign exchange profits for these countries generally come from their trade in fossil fuel energies like oil and natural gas.

Cumulatively, organizations such as OPEC and the GCC, generate net returns of more than US$400 billion a year to their balance sheets.

Countries always need supplies or support from other countries. Conflicts, despite being inescapable elements of relationships, need to be ended.

It is for this reason that oil-rich countries will play a very large and re-stabilizing role in preventing a global recession in the coming year that could occur as a result of disruptions in fossil fuel supplies stemming from the Russia-Ukraine conflict. Additional energy supplies from OPEC and GCC countries will be very crucial to mitigate the effects of the global recession.

It is also necessary to immediately reconcile the situation so that the conflict immediately subsides. The end of the conflict will restore food and energy supplies to the way they were before.

International organizations are playing an increasingly large and important role in creating efforts towards peace.

Indonesia's G20 presidency and the G20 Summit, set to be held from November 15-16, serve as large venues for pursuing this peace.

KOMPAS/HENDRA A SETYAWAN

Coordinating Minister for Maritime Affairs and Investments as well as Head of Support for the Organizing of the G20 Summit, Luhut Binsar Pandjaitan, inspects the media center after giving a press statement in Nusa Dua, Bali, on Saturday (12/11/2022).

The issue of peace is especially important due to the fact that no country is able to meet its own needs. The desire of every country — regardless of their own individual interests — to join various multilateral organizations indicates a genuine intention to work together and not act separately. It also demonstrates that a nation is a reflection of man’s nature as a social being.

Countries always need supplies or support from other countries. Conflicts, despite being inescapable elements of relationships, need to be ended.

Although this conflict only directly involves a few countries, its impact is global. As such, the G20, as a forum for multi-country relations, can serve as an actual and constructive platform to strive for peace. Moreover, a number of conflicting parties are currently part of the G20 organization.

This article was translated by Prasiddha Gustanto