Indonesia chases G20 progress with Russia but Germany, France sceptical

JAKARTA — G20 finance leaders will meet in Bali this week for talks on issues like global food security and soaring inflation, but there was scepticism from Germany and France over Indonesia's hopes for common ground as tensions over Ukraine simmer.

Russia's invasion of Ukraine overshadowed a meeting of foreign ministers from the Group of 20 major economies last week, as Russia's top diplomat walked out of a meeting and accused the West of "frenzied criticism".

And at the most recent G20 finance leaders' meeting in Washington in April, officials from some Western nations left the room when it was the Russian representative's turn to speak.

Germany is expecting more open and direct discussions with Russia this time around, government sources said in Berlin on Wednesday (July 13).

"Most will want to adopt a different approach on the day, after April," one of the sources added.

But the source put a damper on hopes of agreement on a joint communique following the talks, sought by host Indonesia, saying Russia and China were expected to band together amid tensions with the West over the Ukraine war.

A French Finance Ministry source also said the G20 ministers were unlikely to agree on all issues for a communique, with the economic consequences of the war particularly disputed.

"The question is whether we have a separate declaration from the presidency which denounces the Russian invasion of Ukraine and details the economic risks of the consequences and then a part of the communique, a roadmap, that covers the G20's current work," the French source said.

"The G20's capacity to act and communicate is very strongly hindered by the war in Ukraine which one of the G20 members is fully responsible for," the source added.

Indonesia hopes to issue a communique — which the April meeting failed to do — when talks wrap up on Saturday, though its central bank governor said if that was not feasible the outcomes would be summarised in a chair's statement.

[[nid:587083]]

"We hope for the best, but of course prepare for the worst," said Indonesia's central bank governor Perry Warjiyo.

"I don't want to speculate, we are still trying very hard to reach a communique," he said in an interview last week.

Indonesian officials have noted disagreements between Western countries and Russia on how to word a draft communique to describe the state of the global economy and how it is being affected by the war in Ukraine, which Moscow calls a "special military operation".

US Treasury Secretary Janet Yellen and Japanese Finance Minister Shunichi Suzuki, after a bilateral meeting in Tokyo on Tuesday, blamed the war for volatility in currency markets and for increasing the risk of global recession.

Yellen and Suzuki are due to attend the Bali meeting in person.

Indonesia has said Russian Finance Minister Anton Siluanov will address the meeting virtually, with his deputy travelling to Bali. Ukraine's finance minister has also been invited and is due to attend one session virtually.

Putting aside issues related to the war, Warjiyo said the G20 had made substantial progress on topics like regulatory principles on crypto and central bank digital currencies.

Indonesia's G20 deputy for finance, Wempi Saputra, said the group will try to come up with actions to help poor countries tackle a looming food crisis, by ensuring supply and affordability of food and fertilisers.

Other topics on the agenda include the setting up of a fund under the World Bank to better prepare for future pandemics and a Resilience and Sustainability Trust at the International Monetary Fund that could be accessed by countries in need of funds, as well as debt relief for poor countries.

Yellen urged China and other non-Paris Club creditors to co-operate "constructively" in helping low-income countries facing debt distress, saying Beijing's lack of co-operation has been "quite frustrating".

Indonesia's Wempi said a multinational signing of a global tax agreement, initially scheduled on the sideline of meetings, has been pushed back. The Organisation for Economic Cooperation and Development has set a new target for the major tax overhaul to take effect in 2024, instead of 2023.