Finance

Russia, China water down G20 text on geopolitical tensions

  • Ukraine crisis overshadows G20 meeting ending Friday
  • Sources say Russia, China watered down text
  • Differences emerge on poor country debt

JAKARTA/TOKYO, Feb 18 (Reuters) – Russia and China watered down a communique being drafted by heads of the Group of 20 major economies on Friday to remove a reference to “current” geopolitical tensions clouding the global economic outlook, sources at the talks said.

The meeting of G20 finance chiefs took place with world financial markets rattled by a stand-off between the West and Russia over Ukraine. Stocks in Europe fell after a separatist leader in eastern Ukraine announced an evacuation of his breakaway region’s residents to Russia.

The G20 talks, held virtually and in the Indonesian capital Jakarta, were also marked by disagreements about what debt relief should be offered to low-income countries. No final communique had been released hours after some delegations had left for home.

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An earlier draft of the communique seen by Reuters already contained no direct reference to the crisis on the Ukraine-Russia border, saying only that the G20 would monitor risks, “including those arising from (current) geopolitical tensions.”

Communique drafters use brackets for language that has not been agreed by all at the table. Sources told Reuters that both Russia and China asked for the word “current” to be removed.

Sri Mulyani Indrawati, finance minister of host Indonesia, told local reporters that it had taken time to arrive at the final wording “because of course at the same time in the room were countries involved in the geopolitical tension mentioned.”

The most recent English-language draft seen by Reuters simply read: “We will also continue to monitor major global risks, including from geopolitical tensions that are arising, and macroeconomic and financial vulnerabilities.”

That vaguer language contrasts sharply with a warning by finance ministers of the G7 group of large western economies on Monday that Russia would face “massive” economic consequences if it chose to invade Ukraine. Neither Russia nor China are members of the G7.

CREDIBILITY

Sri Mulyani said other sticking points involved the reticence of some countries to endorse carbon-pricing as a tool to tackle climate change, and how to help low-income countries such as Chad, Zambia and Ethiopia struggling with debt burdens made yet more unsustainable during the coronavirus pandemic.

“This also concerns the reputation and credibility of the G20 as a group of countries with the biggest economies to help countries that are in an uneasy situation,” she said.

Earlier a source at the talks said China, by far the world’s largest bilateral creditor, had baulked at the idea of ​​accepting outright haircuts on debt.

On other subjects, the latest draft of the G20 text pledged to use “all available policy tools to address the impacts of the pandemic,” while warning that future policy space was likely to be “narrower and uneven.” read more

Inflation is currently elevated in many countries due to supply disruptions, a mismatch in supply and demand, as well as rising commodity and energy costs, the draft communique said.

“Central banks will act where necessary to ensure price stability in line with their respective mandates, while remaining committed to clear communication of their policy stances,” the draft read.

The diverging pace of recovery from the pandemic is complicating the policy path for central banks. Expected steady interest rate hikes by the US Federal Reserve have drawn attention to the potential fallout for emerging markets.

While cases of the Omicron variant of COVID-19 are receding in many wealthy countries, they are still rising in many developing nations including host country Indonesia.

The draft text also noted agreement to make sure that a landmark deal last year setting a global minimum level of corporate tax could be implemented in 2023.

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Additional reporting by Fransiska Nagoy and Stefanno Sulaiman in Jakarta; Christian Kraemer in Berlin, Jan Strupczewski in Brussels, Leigh Thomas in Paris; writing by Mark John; ; Editing by John Stonestreet and Toby Chopra

Our Standards: The Thomson Reuters Trust Principles.

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