For the G20, the war in Ukraine is an obstacle to cooperation in the world economy | business and economy

Medan, Indonesia – When G20 finance ministers and central bank governors met in Bali on July 15-16, the summit raised hopes of a coordinated approach to tackle some of the world economy’s most pressing issues.

Those hopes faded over the weekend, when disagreements over the war in Ukraine dashed any chance of a joint communique to address mounting challenges, including rising inflation, slowing economic growth and widespread shortages of food and goods.

“Failure to reach consensus on economic threats was inevitable from the start, due in no small part to the fact that some of the most pressing of these, such as Russia’s invasion of Ukraine,” said Ian Wilson, lecturer in politics – and Security Studies at Murdoch University in Perth, opposite Al Jazeera.

The summit’s rare failure to produce a communiqué and instead publish a 14-paragraph summary of the presidency does not bode well for the prospect of consensus at the main G20 leaders’ summit in November.

Indonesian Finance Minister Sri Mulyani Indrawati said the decision to scrap the proposed communiqué was “a challenging and difficult situation” and a source of regret.

“Most of the paragraphs are actually supported by our members [but] There is still a problem that they cannot solve yet,” Indrawati told the media when asked about the communiqué.

Indonesian Finance Minister Sri Mulyani Indrawati described the failure of G20 finance leaders to agree a joint communiqué as a “challenging and difficult situation”. [File: Sonny Tumbelaka/Pool via Reuters]

Although host Indonesia urged participants to find a consensus in the interest of the global economy, the summit fragmented between Western countries on the one hand and Russia and China on the other, as the United States and its partners blamed the Russian invasion for the current economic instability in Ukraine.

“Russia chose this war after being warned that a broad coalition of countries would respond with sanctions,” US Treasury Secretary Janet Yellen said on Friday. “By starting this war, Russia alone is responsible for negative effects on the global economy, particularly higher commodity prices.”

In April, at an earlier meeting of finance ministers and central bank governors, Yellen and representatives from Canada, Ukraine, France and the United Kingdom walked out of talks in protest at Russia’s participation.

Russian Foreign Minister Sergei Lavrov walked out of a G20 foreign ministers meeting earlier this month in what was seen as retaliation for the snub.

Russia’s invasion of Ukraine, which left shipments stuck in Ukrainian ports for months, has been accused of disrupting supply chains from cooking oils to grain exports.

The invasion has also affected exports of raw materials used in chemical fertilizers from Russia and neighboring Belarus, with knock-on effects on oil palm cultivation in countries like Indonesia.

consensus “naive”

“A meaningful consensus, even on a limited scale, is simply not possible when there are such deeply conflicting political and economic interests,” Wilson said.

“Facilitating Russia’s interests as part of a compromise deal, for example, would no doubt be seen by other G20 nations like the US and Britain as helping to facilitate and legitimize its war against Ukraine. A significant part of the G20 countries is actively opposed to the Russian invasion. It is extremely naïve to imagine that consensus would be possible and that it would not overshadow the entire event.”

On Friday, Bank Indonesia Governor Perry Warjiyo reiterated the theme of the Bali talks – “Recover Together, Recover Stronger” – as he implored G20 members to unite for the good of the global economy, seemingly to no avail.

“This is a global problem, so a global solution is needed,” Warjiyo said.

Radityo Dharmaputra, lecturer in international relations at Airlangga University in Surabaya, said Indonesia’s efforts to remain neutral on the war and Indonesian President Joko “Jokowi” Widodo’s recent visits to Russia and Ukraine meant that Indonesia lack of influence to promote effective dialogue at the forum.

“I think this was an expected situation and many warned Indonesia that the G20 summit would not be a normal summit and would be full of great power politics,” Dharmaputra told Al Jazeera.

“Appealing to the West that this war is devastating the world economy will be difficult as at the same time Ukrainians are being killed and bombed by Russia. The West’s moral stance is questioned by many of its own citizens when they agree to compromise with Russia. Indonesia is stuck in its own hole. From the start, the Indonesian government tried to remain neutral in a war. It has some downsides as Indonesia cannot really influence the proceedings as it stays in the middle.”

Dharmaputra added that if Indonesia had taken a clear stance and been more critical of Russia, the government could have used its G20 presidency to put pressure on the country, either by expelling Russia or threatening expulsion if it continued to attack Ukraine .

Indonesian President Joko “Jokowi” Widodo has tried to mediate peace between Russia and Ukraine [File: Willy Kurniawan/Reuters]

Indonesia, which currently holds the annual G20 presidency, draws heavily on its historical legacy of a “bebas-aktif” or non-aligned approach to diplomacy while seeking to play an active role in peace mediation.

Some analysts, meanwhile, are questioning the assumption that the talks had collapsed.

“Through this forum, Sri Mulyani Indrawati has managed to raise the issue that countries in the world need to pay attention to the food crisis, and many countries have agreed on this,” said Deni Friawan, an economics researcher at the Center for Strategic and International Studies, told Al Jazeera .

“The cancellation of this communiqué was very unfortunate, but also understandable given the tensions that exist between the West and Russia and China.”

Friawan said countries must recognize that there is no “win” in forums like the G20 and that blaming Russia for invading Ukraine will not produce consensus on broader economic issues.

“As with the 2008 global financial crisis, it is necessary to coordinate economic policies, including at the central bank, to emerge from the current crisis so that there are no beg-your-neighbor policies such as protectionism or restrictions on food and commodities. ” he said.

“That will actually make the crisis worse or become a race to the bottom.”