G20 Divided on Russia, Ukraine

· Normally such a document is released within hours of the session, but last week the finance chiefs clashed over a variety of issues

· Agreement has become tougher since Russia’s invasion, with members like the US opposing the war, while China and India have been less clear of their views

Finance ministers and central bankers from the world’s biggest economies were divided on a variety of issues including Russia’s war in Ukraine, according to a Group of 20 statement released three days later than usual amid tensions over the invasion and its impact on global growth.

“Many members strongly condemned Russia’s war against Ukraine and expressed the view that Russia’s illegal, unjustified and unprovoked war of aggression against Ukraine is impairing the global economic recovery,” according to the G20 “Chair’s Summary” issued on Sunday by Indonesia, which leads the body this year.

The statement was based on G20 meetings in Washington that concluded on Thursday. Normally such a document is released within hours of the session, but last week the finance chiefs clashed over a variety of issues, including Russia’s invasion of Ukraine, making it more challenging to produce the summary – and particularly with other risks darkening the outlook for the world economy.

In addition, the document is usually released as a communique reflecting the consensus of members; however, agreement has become much tougher since Russia’s invasion, with G20 members ranging from those who steadfastly oppose President Vladimir Putin’s war, like the US and Germany, alongside those who have been less clear of their views, such as China and India.

“A few of these members noted that the sanctions against Russia do not target food. One G20 member expressed the view that the war in the Ukraine and sanctions have impacted the global economy,” the summary said. “One G20 member expressed the view that the sanctions are the main cause of the negative impacts on the global economy.”

Another source of tension was around fossil fuels and climate change, following Saudi Arabia’s recent decision to cut oil production along with its Opec+ partners. Those differences were highlighted in the summary.

“Many members noted the importance of continued action on long-term structural challenges such as climate change, while one member cautioned against the premature halt of investment in fossil fuels and called for balanced and just transitions policies in response to climate change,” according to the statement.

Exchange Rates

Meanwhile, without explicitly citing the strong dollar or calling on the Federal Reserve to reconsider the interest-rate hikes that have sent the US dollar surging this year, the statement referred to the struggles many countries are facing as a result of their own weaker currencies, along with higher inflation.

The summary allowed for “temporary and targeted measures to help sustain the purchasing power of the most vulnerable and cushion the impact of commodity price increases,” as long as those policies are “well designed.”

G20 central banks “will continue to appropriately calibrate the pace of monetary policy tightening in a data-dependent and clearly communicated manner, ensuring that inflation expectations remain well anchored, while being mindful to safeguard the recovery and limit cross-country spillovers,” according to the statement.

“Recognising that many currencies have moved significantly this year with increased volatility, we reaffirm our April 2021 exchange rate commitments,” the summary said.

That refers to a prior pledge to “refrain from competitive devaluations” and not “target our exchange rates for competitive purposes.”