The war in Ukraine deepens the divide between the major economies at the G20 meeting

A year after the Russian invasion of Ukraine, the war has deepened the divide between the world’s major economies, threatening the fragile recovery by disrupting food and energy supply chains and distracting from anti-poverty plans and debt restructuring in poor countries.

Those divisions were evident last week when top economic policymakers from the Group of 20 economies gathered for two days at a resort in Bengaluru, a city in southern India, where tensions over Russia overshadowed efforts to demonstrate unity. During the summit, Western nations slapped a barrage of new sanctions on Moscow and revealed more economic support for Ukraine, while developing countries like India, which were reaping the benefits of cheap Russian oil, resisted voicing criticism.

Differing views left officials struggling to put together the traditional joint statement, or joint statement, on Saturday, forcing top representatives from the Group of Seven nations, the world’s most advanced economies, to try to convince their reluctant counterparts that defending Ukraine was worth the cost.

a Meeting summary It was released in the afternoon and noted that “most of the members strongly condemned the war in Ukraine” but “there were other opinions and different assessments of the situation and the sanctions”. The statement noted that Russia and China had refused to sign parts of the summary that referred to the war in Ukraine.

In an apparent reference to the tensions surrounding the debate, the statement said the G20 “is not the forum for resolving security issues,” but that members “recognize that security issues can have significant consequences for the global economy.”

Treasury Secretary Janet L. Yellen said Saturday in an interview that she tried to make the case for a common response to the most reluctant states. “Ukraine is fighting not only for its country, but for the preservation of democracy and peaceful conditions in Europe,” she said, adding, “It is an assault on democracy and territorial integrity that should concern us all.”

The summit took place at a pivotal moment for the global economy. The International Monetary Fund last month raised its forecast for global production, but warned that the Russian war in Ukraine still casts a shadow over the uncertainty. The fund also noted that increasing “fragmentation” in the world could be a drag on future growth.

Ms. Yellen was among Russia’s harshest critics during the two-day meeting. At one point, she directly confronted top Russian officials in private and called them “complicit” in the Kremlin’s atrocities.

Conflict over how to characterize Russia’s actions led France’s finance minister, Bruno Le Maire, to publicly vent his frustration with some countries that would not attack Russia in writing. He noted that when G20 leaders met in November in Bali, Indonesia, their statement confirmed that most members strongly condemned the war, and he said on Friday he was opposed to tempering that sentiment.

“I want to make it clear that we will oppose any step back from the statement of the leaders in Pale on the question of the war in Ukraine,” Mr. Le Maire, who declined to name the strongholds, told a news conference. . We strongly condemn this illegal and brutal attack on Ukraine.

India’s close economic ties with Russia have made its role as host of the G20 this year particularly challenging. Moscow is a major supplier of energy and military equipment to India, while the United States is India’s largest trading partner.

To stay neutral, India has tried to avoid calling the conflict a “war” and instead focused on other issues. In the summit’s opening address, Prime Minister Narendra Modi outlined the threats to the global economy, but made no mention of Russia, pointing instead to “Geopolitical tensions are rising in many parts of the world.”

Some of the resistance to condemning Russia stems from concern about the United States using its economic might to isolate a G-20 member.

“The fact that the US has so much power to take action against a geopolitical competitor is a huge concern,” said Eswar Prasad, a professor of trade policy at Cornell University who speaks to US and Indian officials. “It is clear that there has been a defection from the G20.”

Mr. Prasad added that the aggressive use of sanctions by the United States has raised concern among other countries – even if they disagree with Russia’s actions – that they may one day incur Washington’s wrath.

This use of economic warfare came to light on Friday, when the United States slapped sanctions on more than 200 individuals and entities in Russia and other countries helping financially with Moscow’s invasion of Ukraine. Sanctions have also been imposed on Russia’s metallurgical and mining sector and energy companies.

The war in Ukraine wasn’t the only issue that consumed India’s finance ministers last week.

The United States and Europe have continued to iron out differences over American support for electric cars that European countries believe will hurt their economies. The global tax agreement struck in 2021 continues to falter, increasing the likelihood that it will fall apart. Talks about restructuring the debt burdens facing poor countries to avoid a series of defaults have failed, largely due to resistance from China.

“There hasn’t been much change that I see,” said Ms. Yellen, who expressed frustration with China’s role as a roadblock last week.

But it is the war in Ukraine that has left the world’s economic leaders even more divided. In many cases, resistance to support Ukraine and confrontation with Russia is the result of many countries’ complex domestic politics, and the United States is no exception.

A growing number of Republicans, including former President Donald J. Trump, have argued in recent weeks that the United States cannot afford to support Kiev indefinitely. They contend that at a time when the United States is saddled with record levels of debt and a weak economy, that money is better spent on domestic problems.

Last year, the United States brought more than $100 billion Humanitarian, financial and military aid to Ukraine. The Congressional Budget Office projected last week that the United States is on track to add nearly $19 trillion to its national debt over the next decade, $3 trillion more than previously projected.

For the Biden administration, reducing aid to Ukraine does not appear to be an option.

In the interview, Ms. Yellen said the United States could afford it and that supporting Ukraine was a priority for national security and economic reasons.

Ms. Yellen said: “The war is having a negative impact on the entire global economy, and providing the necessary support for Ukraine to win and end this is certainly something we can’t really afford to do.”