The United States, Canada and their allies in the Group of Seven nations will find it more difficult to isolate Russia as finance ministers gathered Friday around the bigger table of the Group of 20.
It’s not that they won’t try. As meetings began Thursday evening, Russia was placed between the Australian chairman and the representative from the New Partnership for Africa’s Development, a group of African leaders created in 2001 to better organization initiatives aimed at poverty reduction and economic growth.
In diplomatic terms, that seating arrangement is as close as one gets to being kicked out of the room. Yet Russia still was there at the main table, a testament to the limits of the G7’s influence. In the depths of the financial crisis, the G7 finally recognized that it no longer could guide the global economy on its own. G20 leaders met for the first time under the auspices of a club that until then had been reserved from finance ministers and central bank governors. President Barack Obama declared in Pittsburgh in 2009 that the G20 from that point on would be the central place for co-ordinating global economic policy.
As an economic firefighter, the G20 performed well. As a place for sorting out broader geopolitical concerns, it has been less successful. It struggled to form a consensus on the civil war in Syria. Russia’s incursions in Ukraine pose an even greater challenge, as it marks the first time the G20 has had to confront a member country that has so blatantly violated international norms. The G7 countries suspended Russia from the Group of 8, an arrangement formed at the end of the Cold War to bring Russia into the fold of the world’s leading democracies.
“I was always one for seeing the G20 mandate expand,” Gordon Smith, a distinguished fellow at the Centre for International Governance Innovation and a former Canadian deputy minister of foreign affairs, said in an interview earlier this week. He’s rethinking that now. “The G20 will go back to international economic questions,” Mr. Smith said from Victoria.
This week’s gathering of economic leaders is the first G20 meeting since Russia put troops in Crimea and annexed the region from Ukraine. Finance ministers and central bankers met over dinner Thursday. Their talks concluded Friday afternoon with a new statement on the global economy and the policies they intend to implement to reinvigorate growth.
The G20 welcomed signs that the global economy is gaining strength, but said it would remain “vigilant in the face of important global risks and vulnerabilities.” The statement singled out Ukraine, saying the group will be watching the “economic situation” closely, “mindful of any risks to economic and financial stability.” The group avoided any mention of Russia’s role in Ukraine’s difficulties.
The death of former Canadian finance minister Jim Flaherty Thursday cast a pall over the opening session. Until he decided to retire from cabinet last month, Mr. Flaherty was among the longest serving members of the G20. “He was a masterful leader, who commanded the respect of his peers,” former U.S. treasury secretary Hank Paulson said in an e-mailed statement to The Globe and Mail. “During some of the darkest days of the global economy, Canada was fortunate to have him as finance minister and we in America, and the rest of the world, benefited from his strong, calm leadership.”
Australian Treasurer Joe Hockey delayed the start of the G20 meetings to pay tribute to Mr. Flaherty. Mr. Hockey recalled that at Mr. Flaherty’s final G20 meeting earlier this year in Sydney, Mr. Flaherty spoke of leaving the world a better place for his children.
Joe Oliver, Mr. Flaherty’s replacement as finance minister, called Mr. Flaherty “one of Canada’s great statesmen.” Mark Carney, the former Bank of Canada governor who now leads Britain’s central bank, called Mr. Flaherty a “man of principle” who helped turn “the bad times to good.”
The situation with Russia adds another layer of discomfort, although of a different sort. In recent years, Russia has formed a loose alliance with Brazil, China, India and South Africa, all of which are G20 members. The “BRICS” group sees itself as something of a counterweight to the G7. Whereas the G7 countries have imposed sanctions on Russia, the BRICS countries issued a statement last month insisting that Russia be allowed to attend the G20 summit scheduled for November in Brisbane, Australia.
Ukraine will figure prominently in talks this weekend, as the G20 gathering bleeds into the annual meetings of the International Monetary Fund and World Bank. The IMF is working on the details of a multibillion-dollar rescue fund for the country, which many observers say is the most effective way for the U.S. and its allies to counter Russia’s military influence on the region.
G7 finance ministers and central bank governors met in Washington Thursday to discuss Ukraine’s financing needs. Jacob Lew, the U.S. treasury secretary, also met with his Russian counterpart, Anton Siluanov. Mr. Lew warned Mr. Siluanov that the U.S. was “prepared to impose additional significant sanctions on Russia if it continues to escalate the situation in Ukraine,” the Treasury said in a statement.