Can The G20 Survive With Or Without Russia?

When finance ministers and central bank governors from the G20 convene in Washington D.C. this week, American and European participants face the unwelcome prospect of Russian Finance Minister Anton Siluanov on the table, albeit virtually. With Russia feeling increasingly isolated and shunned in global forums, even from sports and cultural events, the G20 appears to be the last holdout. This is mainly because this year’s meeting host, Indonesia, has stayed resolutely neutral in the Russia-Ukraine crisis (along with other emerging market heavyweights China, India, Brazil and South Africa) and insists that it does not have the power to disinvite a member.

The question is whether the G20, whose membership comprises over 80% of global output, can survive in its current form as a grouping which brings together emerging and developed nations to resolve pressing economic issues. U.S. Treasury Secretary Janet Yellen has already warned that America will boycott G20 meetings if Russian officials show up and has called for the expulsion of the country. European nations are likely to follow America in any walkout.

A splintering of the G20 will seriously compromise global cooperation just at a time when the world is in midst of a war, the pandemic is still raging in many parts of the world, and supply chain disruptions (including from the Russian invasion) has sent prices for commodities, including food, soaring with no immediate relief in sight. As IMF Managing Director Kristalina Georgieva warned last week, the world’s ability to deal with the “double crisis,” of pandemic and war are further complicated by another growing risk: “fragmentation of the world economy into geopolitical blocs—with different trade and technology standards, payment systems and reserve currencies.”

Although she did not mention it, Georgieva’s comments imply a decoupling of the global economy and an effective dismantling of the post-1945 international order. In her own remarks at a D.C. forum, Janet Yellen did not hold back in warning countries “sitting on the fence,” in particular China. “The world’s attitude towards China and its willingness to embrace further economic integration may well be affected by China’s reaction to our call for resolute action on Russia.”

Yellen further articulated what the new international order which America is seeking to build from the ashes of Ukraine. Elements of this include “free but secure trade,” shorthand for deepening economic integration “with countries we can count on”: “friend shoring” of supply chains to a large number of “trusted countries.”

The tough talk from Washington implies that the G20 as we know it, an economic grouping which miraculously came together in 2008 despite vast variations in economic strength and political systems, is no longer the defining body for global economic cooperation. The tussle over Russia’s continued participation is likely to consume political capital and seriously impair the grouping’s ability to deliver for the next two years.

India is scheduled to host the G20 in 2023 and its neutral position on Russia has already ruffled feathers in Washington. A reversion to the pre-2008 world order, when the G7 was the only game in town, seems inevitable but would be deeply unrepresentative of the global economy today.