The G20 cannot let Russia hijack the global economy - Catherine Colonna, The Jakarta Post - (Bali, 08 Jul. 2022)


Catherine Colonna - The Jakarta Post - Denpasar, Bali

The Group of 20 stands at a crossroads. One of its members, Russia, has flagrantly violated the core values that underpin the multilateral system built after World War II.

The spirit of cooperation amongst G20 members rests on a simple idea: it is always possible to deal with our differences through cooperation and dialogue, or even competition, rather than by the use of force.

The G20 was created in 2008, not in the 19th century. It does not belong to these bygone days when “might makes right”, and when powers could defend their interests by conquering new territories by force and by denying the very existence of their neighbors. It is deeply committed to international law and territorial integrity, and to defending peace, human rights, security and the rule of law.

For most G20 members, Russian leadership lost its legitimacy as a member of this group when President Vladimir Putin took the decision to violate the borders of Ukraine. This will not change, as long as Russia continues its deliberate attacks on a sovereign state, on its civilians and as the behavior of the Russian army takes us back to some of the darkest times of history: rapes, summary executions and other war crimes.

The G20 cannot look away from the war in Ukraine for another critical reason: it has global economic consequences that concern us all, and that could lead to a global recession and a big step back in our agenda to fight poverty if left unaddressed.

G20 leaders met in 2008 because the collapse of the financial markets required policy coordination. More than ten years later, the Covid19 pandemic made clear to the biggest economies around the globe not only that they were in real need of cooperation to fight the virus (“no one is safe until everyone is safe”), but also that they needed to update their macroeconomic strategy to ensure the resilience and security of their value chains.

The last two decades have made the case for governments to urgently reinforce their cooperation to tackle market failures. The world economy is increasingly subject to shocks, climate risks being the most important threat of all, which the G20 has to address for globalization to remain sustainable.

The war of aggression in Ukraine is a new shock on the global economy. All indicators are turning red. Since Feb, 24, commodity prices have been surging, placing millions of people under the threat of famine, inflation is on the rise everywhere and financing conditions are tightening, placing a disproportionate burden on developing economies. This is the sole responsibility of Russia.

The global impacts of the war in Ukraine have also led to a new paradigm shift which represents an unprecedented challenge for the G20, with President Putin deciding to weaponize access to food and energy as never before.

Russia is taking the world population hostage by blocking the exports of Ukrainian grains. Not only is Russia stealing grains from Ukrainian occupied territories and intentionally destroying agricultural infrastructure, but it is also engaged in a “wheat diplomacy” which risks destabilizing vulnerable countries through its coercive economic strategy, whatever the human cost.

The same goes with energy exports: Russia is opting for artificial supply shortages, to inflate prices so that President Putin can fill his war chest.

The G20 cannot stay silent. The G20 must react swiftly. It is in the interest of none of the G20 economies to condone Russia’s hijacking of global value chains.

First, the G20 cannot opt for “business as usual”. It is not about creating divisions. It is about safeguarding the multilateral system and the global economy from Russia’s unilateral strategy. G20 must call on Russia to end this conflict and withdraw its troops immediately. It is purely and simply about abiding by international law, as repeated by the International Court of Justice.

Second, the G20 needs to counter disinformation, and build its response on fact-checked, objective assessments of the situation, rather than on propaganda. For example, it is not European or other countries that put the world’s breadbasket on fire with their sanctions, which do not cover food products nor agricultural inputs. It is Russia, with its multiple and deliberate attacks on agricultural infrastructure, including grain silos, and its blockade of Ukrainian ports on the Black Sea.

Third, the world needs the G20 to counter market failures that result from the tensions and uncertainties created by Russia’s war. The G20 club must adopt responsible and transparent behaviors, in line with WTO commitments, such as refraining from any unnecessary trade barriers, and fighting against speculative behaviors: we cannot allow any war profits.

The OPEC+ has a key role to play in this regard, to help maintain the stability and transparency of the energy market.

Fourth, the G20 needs to make a real stand for solidarity. Amid tightening financing conditions, the club needs to further reinforce financial support for the most fragile countries, which cannot pay the price for an unfair war.

Let’s be clear: the credibility of the G20 is now at stake. And we trust the leadership of Indonesia, as one of the largest democracies in the world, in this historic moment. Indonesia can count on France, with its partners, to make the Bali summit a decisive moment for peace and stability and to restore trust in global cooperation.

*** The writer is French foreign minister.