Amid rising geo-political tension on the anniversary of the Ukraine-Russia conflict, the G20 finance ministers and central bank governors could not reconcile their differences on Friday over how to describe the development. While India, the current chair of the powerful grouping, which represents 85% of the world GDP, strongly pitched for the tag “crisis”, the US and its allies remained firm that it should be called “war”.
As a result of the drafting of the communique, which was to be issued after the meet, dragged on till late evening. “We will oppose any step back from the declaration of the leaders in Bali. We strongly condemn this brutal attack on Ukraine,” French finance minister Bruno Le Maire said, adding that ministers can’t deviate from the stand taken by leaders. “I fully trust India because it is in the driving seat.
India is in the best position to have this strong communique that we all are waiting for,” he said. France won’t sign the communique if Bali declaration on war is not followed, he added.
Besides, China is also believed to be taking a long time to come on board to give relief to debt-distressed countries. “Ultimately, the countries have to decide whether we find a middle path on the conflict or follow the Bali model,” a person aware of the matter said.
At the previous G20 leaders’ meeting at Bali in November 2022, western countries insisted on a strong condemnation of Russia’s invasion of Ukraine in the joint communique, which was opposed by some other countries. The Bali Declaration was finally issued after the summit, rejecting the “use or threat of use of nuclear weapons” and stated: “The peaceful resolution of conflicts, efforts to address crises, as well as diplomacy and dialogue, are vital. Today’s era must not be of war.” Prime Minister Narendra Modi coined the last sentence, which was seen as ambiguous and soft on Russia.
Russia has been a traditional ally of India, which has also been expanding trade with Moscow’s rivals – the US and European countries – with lucrative defence deals in recent years.
With high commodity prices dampening India’s growth story and stoking inflation, India can’t afford to abandon Russia, a cheaper source of fuel. Russia’s share in India’s crude oil import basket rose to a record 28% in January compared with a mere 0.2% before the Ukraine invasion on February 24, 2022.
On Thursday, US treasury secretary Janet Yellen called for stronger sanctions against Russia and better enforcement of restrictions meant to restrict Moscow’s capacity to wage war. Germany has also voiced its opposition to the circumvention of sanctions on Russia. With sanctions limiting its options, Russia sells a large part of its crude to China and India.
On February 22, Union minister Anurag Thakur reiterated Modi’s statement that the current era is not one of war, but peace.
The talks on finding lasting solutions to debt-trapped countries is also dragging on in the G20 Finance Ministers and Central Bank Governors meeting. “The country that has the largest stake takes longer to decide on the matter,” another person aware of the matter said, without naming China.
Amid food and energy shortages for their population due to dwindling forex reserves and debt repayment obligations, India’s neighbours Sri Lanka, Bangladesh and Pakistan have sought a bailout from the IMF over the past year to tide over their economic hardships. While India is one of the largest loan providers, China is the biggest lender to these countries.
“I will continue to push for all bilateral official creditors, including China, to participate in meaningful debt treatments for developing countries and emerging markets in distress,” Yellen said on Thursday.
India, the chair of G20 for 2023, is backing the implementation of the Common Framework intended to deal with insolvency and protracted liquidity problems, along with the implementation of an IMF-supported reform programme in debt-stressed countries.