G20 Summit: War, food and energy security key sticking points ahead of leaders' meet

At the Bali summit, leaders managed to produce a declaration at the eleventh hour after wrangling over the conflict for days.

There has been "forward movement" on most issues on the Indian Presidency's G20 agenda, although the language to describe the Russia-Ukraine conflict and food and energy security remained sticking points ahead of the Leaders' Summit, according to sources aware of developments.

While the final decisions will be made at the G20 Leaders' Summit - which will take place on September 9-10 in New Delhi - discussions have continued in recent days on a variety of subjects ranging from crypto regulation and Multilateral Development Bank (MDB) reform to the impact of climate change and transition pathways, sources said.

However, difficulties stemming from the war between Russia and Ukraine are key hold-ups.

India's lagacies

The September 9-10 Leaders' Summit will be the culmination of India's G20 Presidency and it is hoped many items on the agenda will get the rubber stamp of national leaders this weekend. One of these is a set of minimum common regulations for crypto, which India has been pushing hard over the course of its Presidency.

The latest addition to the G20's crypto discussions is a joint 'synthesis paper' by the International Monetary Fund (IMF) and the Financial Stability Board (FSB) which has been submitted and was discussed at the meeting of finance deputies in New Delhi on September 5-6. The IMF-FSB synthesis paper includes a "comprehensive roadmap and building blocks" for minimum common norms to regulate crypto.

"The roadmap and building blocks have almost been arrived at. Of course, this is subject to the leaders agreeing to it," a source said.

Also Read: How India's crypto fight could bear fruit at G20 Leaders' Summit

Apart from any minimum common regulations on crypto, the work done by India to underscore the importance of a digital public infrastructure is likely to be a lasting legacy of its Presidency.

"The G20 has recognised the role of digital public infrastructure in advancing financial inclusion and sustainable development," a source said, adding that policy recommendations to advance financial inclusion "have been endorsed unanimously".

Bones of contention

If India has been successful in helping the world's major economies recognise the macro-economic and financial risks emanating from crypto, it is seemingly fighting an up-hill battle when it comes to bringing about a consensus on two of the most disruptive global issues: the war between Russia and Ukraine and the resultant food and energy security problems.

In previous meetings held under the finance track of the G20, Russia and China have dissented on these matters, forcing India to release a Chair's Summary instead of a joint statement, or communique.

"Our position since February has been that we have derived the statement from Bali (Bali Leaders' Summit) and the February Bengaluru statement was the feeder into this one. And that's because also that the language given in Bali Leaders' Summit, we don't have the mandate to change that. So it must be left to the leaders during the Summit in September to take a call on that," Finance Minister Nirmala Sitharaman had said in July in Gandhinagar at the conclusion of the third meeting of Finance Ministers and Central Bank Governors.

According to sources, volatile food and energy prices has been a big issue over the course of not just India's but Indonesia's G20 Presidency too, following Russia's invasion of Ukraine in February 2022. At the Gandhinagar meeting, a report on the 'Macroeconomic Impacts of Food and Energy Insecurity and their Implications for the Global Economy' was submitted. Russia's opposition to the report was noted in a footnote to the Chair's Summary.

"Given the fact that Russia is not comfortable even with the mention of the issue in a footnote, the Indian Presidency would consider including the aforementioned language in the main text of any proposed joint statement at the Summit and let the leaders take the final call," sources said.

China, meanwhile, is also against a key component of any debt-related agreement, with sources saying the G20 is pushing for a package that has "climate-resilient features". The opposition from China - which is a key creditor for poor and vulnerable middle-income countries seeking debt relief - is "almost becoming inhuman", a source said.

Other key deliverables

While crypto, the Russia-Ukraine conflict, digital public infrastructure, and food and energy insecurity may garner the most attention, the Indian Presidency has made progress in other spheres too. These include the reform of MDBs - with the independent expert group led by Larry Summers and NK Singh having submitted the first volume of its report in July. The second volume, which will spell out a roadmap for the implementation of the group's recommendations, will be submitted in October during the annual meetings of the World Bank Group and IMF in Marrakech, Morocco.

Further, a "strong framework" to finance cities of tomorrow has been developed.

"The next step will involve MDBs and development finance institutions identifying pilot cases to apply the G20 principles for financing cities of tomorrow," a source said.

Also Read: World Bank must amend vision to look beyond poverty, says President Ajay Banga

The G20, under India's Presidency, has also developed a compendium of financial models to develop future cities with the help of private sector.

Climate financing is another focus area, with recommendations made on a mechanism to support adequate and timely mobilisation of resources. Crucially, a "country-driven assessment of macro-economic impact of climate change and transition pathways" has been approved, sources said.

As per the report on macro risks from climate change and transition pathways - which has been endorsed by G20 finance ministers and central bank governors - countries will be able to choose from a variety of policy routes depending on their circumstances.

"The report has offered carbon pricing and non-pricing solutions. Everyone agrees the transition has to be inclusive, swift, and co-operative, while the approach has to be customised. So all these solutions are provided in the report along with cost implications," sources said.