Russia and China tone down G20 text on geopolitical tensions

JAKARTA/WASHINGTON (Reuters) – Russia and China watered down a statement by Group of 20 financial leaders on geopolitical risks to the global economy as a controversial meeting ended on Friday and removed reference to “current” tensions as financial markets worried about a possible war in Ukraine.

The meeting of finance ministers and central bank governors from the Group of 20 major economies was one of the most divided since the start of the COVID-19 pandemic in 2020, according to people familiar with the discussions.

Canadian Finance Minister Chrystia Freeland veered from the G-20 economic scenario to issue an impassioned plea to her Russian counterparts not to invade Ukraine, warning that such a measure would hurt the global economy and impose “crushing” sanctions on Russia, according to two sources familiar with the matter. Notes. Read more

Other sources familiar with the meeting said China and Russia objected to the reference to “current tensions” in an earlier draft statement, as well as disagreements over poor countries’ debt restructuring and carbon pricing.

“We will also continue to monitor key global risks, including emerging geopolitical tensions, and macroeconomic and financial vulnerabilities,” the group’s closing statement said simply.

As the meeting wrapped up, US and European stocks fell amid fears that a Russian invasion of Ukraine was imminent after Russia-backed separatists announced a sudden evacuation of their breakaway regions in eastern Ukraine. Read more

stop paying debts

The G20 talks, which took place virtually and in the Indonesian capital of Jakarta, were also marked by disagreements over the group’s troubled debt restructuring framework.

The final statement failed to endorse proposals by the International Monetary Fund and the World Bank to immediately suspend debt service for poor countries seeking restructuring and expansion to include some middle-income countries.

Instead, the finance officials reiterated their “commitment to intensify our efforts” to implement the framework “in a timely, orderly and coordinated manner” without any details.

Earlier, a source in the talks said that China, by far the world’s largest bilateral creditor, had held off on the idea of ​​accepting full debt reductions.

World Bank President David Malpass said at the Munich Security Conference after the financial meeting that he was concerned that the G20 was “not setting the steps forward” to deal with the huge and growing debt burden in developing countries.

“The G-20 discussions on debt have been really disappointing,” said Eric LeCompte, executive director of Jubilee USA Network, a faith-based organization that campaigns for debt relief for poor countries. He said China was resisting steps to bolster the bankruptcy-like G-20 debt framework “so they can do deals alongside” debtor nations.

credibility questions

Indonesia’s Finance Minister Sri Mulyani Indrawati said other sticking points include the reluctance of some countries to support carbon pricing as a tool to tackle climate change and how to help low-income countries such as Chad, Zambia and Ethiopia that are struggling with debt burdens. So far unsustainable during the coronavirus pandemic.

“This is also about the reputation and credibility of the G20 as a group of countries with larger economies to help countries in an unstable situation,” she said.

On other topics, the final draft of the G-20 text pledged to use “all available policy tools to address the effects of the pandemic,” with the caveat that future policy space is likely to be “narrower and uneven.” Read more

“Central banks will act as necessary to ensure price stability in line with their respective mandates, while remaining committed to clear communication of their policy positions.”

The uneven pace of recovery from the pandemic is complicating the policy path of central banks. The expected steady increases in interest rates by the US Federal Reserve have drawn attention to the potential implications for emerging markets.

While cases of the Omicron variant of COVID-19 are declining in many rich countries, they are still increasing in many developing nations including host country Indonesia.

The G20 text also pledged to ensure that a landmark agreement last year that sets a global minimum corporate tax in 2023 is implemented. [nL1N2UT0JV]

Additional reporting by Francesca Nanjoy and Stefano Suleiman in Jakarta, Lika Kihara in Tokyo, Christian Kraemer in Berlin, Jan Strubchowski in Brussels, Lee Thomas in Paris, David Lauder and Andrea Schallal in Washington. Writing by David Lauder and Mark John; Editing by John Stonestreet, Toby Chopra and Leslie Adler

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