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Amid a mountain of challenges surrounding the global economy, the forum for policy coordination among major economies has become dysfunctional. It is obvious that Russia is entirely to blame for this.
A meeting of finance ministers and central bank governors from the Group of 20 major economies was held in Washington. It was the first ministerial-level G20 meeting since Russia’s invasion of Ukraine.
Due to a confrontation involving Japan, the United States and Europe on one side, and Russia and other nations on the other, G20 members failed to issue a joint statement. In an unusual move, when Russian Finance Minister Anton Siluanov and his delegation spoke while participating in the meeting online, attendees from the United States, Britain and Canada left the meeting in protest.
There are a number of issues that need to be addressed in cooperation with participating nations, including how to deal with inflation caused by soaring prices of resources and food, how to handle developing country debts that have ballooned due to the COVID-19 pandemic and how to promote measures against global warming. Nevertheless, G20 members were not able to present concrete measures to tackle these issues. This is a serious situation.
The Group of Seven advanced nations, including Japan, the United States and European countries, which strongly criticized Russia before the opening of the G20 meeting, insisted on excluding Russia as a G20 member. However, as China and Brazil opposed the move, a rift among G20 members has come to light.
Russia’s outrageous acts have delivered a serious blow to the global economy, which had been on a recovery track from the slump caused by the pandemic.
The International Monetary Fund has said that the global economy is projected to grow 3.6% in 2022 from a year earlier, down 0.8 percentage point from its forecast in January this year. This is because the Ukraine crisis is fueling global inflation.
Inflation has hit low-income households hard, causing widespread political instability in Sri Lanka and other developing countries.
At a press conference after the G20 meeting, Sri Mulyani Indrawati, the finance minister of Indonesia, this year’s G20 chair, said participating members shared the view that the crisis in Ukraine was impeding the recovery of the global economy.
According to the Indonesian finance minister, there also were opinions in the meeting expressing deep concerns over humanitarian crises in Ukraine and calling for an early end to the war. Russia must heed such voices seriously.
The G20 was formed in the wake of the Asian currency crisis in 1997. Following the collapse of U.S. investment bank Lehman Brothers in 2008, the G20, which includes China and other emerging economies that have come to prominence, has been positioned as the most important platform to discuss the international economy.
A series of G20 ministerial-level meetings are scheduled ahead of the G20 summit this autumn.
The G7 should unite and continue to apply pressure on Russia through the G20 meetings. The G7 needs to not only strongly urge China and India not to act as loopholes for Russia amid sanctions, but also to call on other G20 members from South America, the Middle East and elsewhere to cooperate in the sanctions.
