The US and EU have imposed sanctions on Russia for its actions in Ukraine. How are these international issues going to affect the global economy?
Russia’s war in Ukraine is straining global economic cooperation. The conflict has caused a fall in the value of the ruble, which has been devalued by more than 50 percent since 2014. The Russian economy is expected to shrink by 4-5% this year alone.
WASHINGTON— A schism between Western democracies and Russia and China is driving policymakers to find out how to keep dialogue going between countries with opposing viewpoints as they grapple with the economic consequences of the Ukraine conflict.
The United States and its Western allies have a difficult assignment, as Indonesia said Friday that it has invited the presidents of Russia and Ukraine to a Group of 20 economic powers conference in November. They must not just challenge Russia, but also collaborate with countries caught in the middle, fearful of being left out of policy discussions.
Indonesian President Joko Widodo said he has invited Russian President Vladimir Putin and Ukrainian President Volodymyr Zelensky to the group’s meeting this year in Bali, which would be hosted by the Indonesians. Mr. Putin has accepted the offer, according to Mr. Widodo. The G-20, which includes Russia, China, and other important emerging-market countries as well as Western powers, has acted as a forum for debating global economic concerns.
The United States opposes Russian President Vladimir Putin’s presence at the G-20 conference in November.
Mikhail Klimentyev/Press Pool photo
President Biden opposes Mr. Putin’s presence at the G-20 meetings in November, according to the White House. “There’s a lot that may happen between now and then,” White House press secretary Jen Psaki said. “But we definitely haven’t seen an indication to date of Russia’s intention to engage in diplomatic negotiations constructively.”
A request for comment from the Russian Embassy in Washington was not returned.
Finance ministers and central bankers from across the globe convened in Washington in April for meetings of the International Monetary Fund and the World Bank. They saw firsthand the problems of a world ripped apart by the Ukraine conflict and strained by the Covid-19 epidemic.
While tensions between the countries remained high throughout the week-long summit, the chasm between them was highlighted when Treasury Secretary Janet Yellen and other Western officials walked out of a G-20 session as Russian Finance Minister Anton Siluanov, who was present virtually, began speaking.
According to the host nation, Indonesia, Ukrainian President Volodymyr Zelensky has been invited to the G-20 conference in November.
Getty Images/Sergei Supinsky/Agence France-Presse
The IMF delegations departed the talks without delivering a standard communiqué stating policy goals. The G-20 made little progress on a key task: creating a shared framework to deal with developing-country debt issues.
“We can’t truly handle some global concerns, like climate change or pandemic preparedness…without a bigger gathering,” said Mark Sobel, a former Treasury Department and IMF official who now chairs the Official Monetary and Financial Institutions Forum in the United States. “We’ve reached a point of no return.”
In an interview, Indonesian Finance Minister Sri Mulyani Indrawati, who chaired the G-20 meeting in April, said the walkout was a well choreographed mechanism that enabled Russia to participate while allowing the US and others to express their discontent.
Sri Mulyani Indrawati, Indonesia’s finance minister, said the G-20 is an essential organization for a nation like hers, after attending a 2018 gathering.
Photo credit: Reuters/Nguyen Huy Kham
She went on to say that representatives from the United States, the United Kingdom, Canada, and a few other nations left the room for a few minutes but returned for the remainder of the meeting. The delegations of several US allies, such as Italy and Japan, did not leave the conference.
“The fact that we were able to hold a meeting with all of the ministers in attendance and yet concentrate on the subject and make progress…was quite surprising,” Ms. Mulyani said. “I believe it can still be handled.”
The minister said she had intensive meetings with Ms. Yellen and other G-20 colleagues for weeks before the conference to iron out a plan. Ms. Mulyani was first requested by certain members of the Group of Seven leading countries to disinvite Russia. When she resisted, they demanded that Moscow be prevented from speaking.
At a recent news conference, Treasury Secretary Janet Yellen said that the G-20 lacked agreement on removing Russia, a measure that the US supports.
Ting Shen/Bloomberg News photo
Despite this, Ms. Mulyani noted that about half of the G-20 members informed her that Russia should be included. She eventually convinced the United States and others to agree to the walkout, which was scheduled to have the least influence on the meeting’s agenda.
“The goal was to preserve the G-20 as the premier platform for collaboration while also providing a place for people to vent their concerns over the invasion of Ukraine,” she said. “That was the precise format of the compromise.”
For nations like hers, the survival of the G-20, which rose to prominence during the 2008-09 financial crisis to provide a varied range of countries a voice in global economic policy debates, is critical, according to Ms. Mulyani. Argentina, Brazil, India, South Korea, Mexico, Saudi Arabia, South Africa, and Turkey are also members of the organization.
While the US has advocated for Russia’s expulsion from the G-20, Ms. Yellen said at a recent press conference that such a move would be impossible to achieve.
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“I believe we were looking for a way to express our displeasure while also acknowledging that we have a lot of work to do,” Ms. Yellen said.
Sergii Marchenko, the Ukrainian Finance Minister, who had been persuaded by Western nations to attend the conference, stated in an interview that he had hoped for more countries to join the walkout, but that he still appreciated the statements made by numerous countries criticizing the invasion.
The G-20 tensions arise as the globe grapples with food shortages caused by the conflict, a lingering virus, and longer-term issues such as climate change.
The difficulties, according to DJ Nordquist, a former US World Bank executive director who served as a White House economic adviser during the Trump administration, “may destroy multilateralism at a moment when we need open channels and collaboration the most.”
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According to authorities, the G-20 and other meetings in Washington provide a lesson for other international organizations on how to keep dialogues continuing in the middle of conflict.
“As soon as the Russian minister finished speaking, they came right back and the business continued,” Ngozi Okonjo-Iweala, the World Trade Organization’s director general, told reporters Tuesday. Okonjo-Iweala attended the April meeting and is now preparing for a ministerial meeting of her organization in June. “We anticipate the same. We’ll have to devise methods to get around this now.”
—This article was co-written by Tarini Parti.
Yuka Hayashi and Andrew Duehren may be reached at [email protected] and [email protected], respectively.
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