(Bloomberg) — Finance chiefs of the world’s biggest economies clashed in Washington over a variety of issues, including Russia’s invasion of Ukraine, complicating efforts to coordinate policies to cope with rising risks to global growth.
At a gathering of finance ministers and central bankers on Thursday from the Group of 20, which represents 80% of the global economy and includes the US, China, Russia and Saudi Arabia, among others, how to address the war became a topic of disagreement, according to people familiar with the situation.
During the G-20 session, countries including Germany pushed for stronger language condemning the war, but the meeting broke up without an agreement, the people said.
Tensions also emerged over Saudi Arabia’s recent decision to cut oil production along with its OPEC+ partners, Federal Reserve interest rate hikes and the resulting strength of the US dollar, and China’s role in efforts to address debt burdens in emerging markets, according to the people, who asked not to be identified discussing private deliberations.
The splits come at a fragile moment for the global economy. The International Monetary Fund, which played host to the G-20 this week amid its larger annual meetings schedule, downgraded its outlook for growth next year, citing the war, inflation and rising interest rates as risks.
No Consensus
While the dividing lines on the issues among governments have been clear in public, they also threaten the role set for the G-20 forum since it started in 1999 in the wake of the Asian financial crisis: to coordinate economic and financial policies among nations to avoid and respond to crisis.
In the world of global economic policy, such disagreements are hashed out in so-called communiques, which reflect the consensus of the attendees. Even in the best of times, that can be tricky for a gathering as big as the G-20, which has a mix of rich and emerging countries, as well as a combination of democracies and autocracies.
The schism also emerged in broader IMF discussions. Nadia Calvino, who leads the IMF’s International Monetary and Financial Committee, the fund’s main advisory panel, said Friday that Russia also blocked consensus on the committee’s own communique.
The closest the G-20 has come to a consensus communique since Russia’s invasion in February is a “chair’s summary.” These have been issued by Indonesia, which holds the group’s presidency this year.
A document resulting from Thursday’s meeting, which might include a section that reflects topics the group could reach consensus on, is still being worked out and expected to be released as late as Saturday, according to people familiar with the matter.
Indonesia Finance Minister Sri Mulyani Indrawati, speaking to reporters Thursday after the meeting, acknowledged that the group faced “many challenges, differences in view” and “quite a lot of huge gaps” that need to be bridged. She made similar remarks after they met in April, which was also fractious, with the US and others walking out when Russian officials spoke.
US Treasury Secretary Janet Yellen, in a statement Thursday to the IMFC, labeled Russia’s war in Ukraine “illegal” and “needless,” and demanded its immediate end. Yellen earlier in the week called out China as the biggest obstacle to dealing with emerging market debt issues.
The US and Saudi Arabia are also embroiled in one of their worst public disputes after Saudi Arabia this month helped lead an oil output cut among members of the OPEC+ group, which includes Russia, while President Joe Biden’s administration grapples with the worst inflation in decades.
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