November 18, 2022: Global News Roundup
Global economy, Ukraine war, US-China rivalry dominate G20 talks in Indonesia
The Global News Roundup collects news stories from entirely international (non-US) media sources on variety of pressing global issues and events.
The G20 is “a strategic multilateral platform connecting the world’s major developed and emerging economies…Together, the G20 members represent more than 80 percent of world GDP, 75 percent of international trade and 60 percent of the world population.” Created in 1999 in the wake of the East Asian financial crisis as a forum for finance ministers and central bank governors, the G20 has become a critical mechanism for coordinating financial and economic policy and for “carrying out negotiations and building consensus” among government leaders on pressing international issues. The G20’s members are: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom, the United States, and the European Union. While not a full member, Spain is invited as a “permanent guest”. The image below depicts Indonesian President Joko Widodo welcoming Spanish Prime Minster Pedro Sanchez to a mangrove nursery on the 2nd day of the summit.
(Image: Indonesian President Joko Widodo (left) welcomes the arrival of Spanish Prime Minister Pedro Sanchez (right) at the mangroves nursery site on the second day of G20 Summit events at the Ngurah Rai Forest Park, Denpasar, Bali, Wednesday, Nov. 16, 2022. Indonesia G20 Media Center/Aditya Pradana Putra/wsj/AA/22. The official G20 photo gallery can be found here.)
While US-China-Russia relations certainly headlined the annual summit (more below), the fragile state of the global economy was also a central focus. Meetings and consultations throughout the year in the lead up to the summit focused on the global food crisis, economic consequences of the pandemic and war in Ukraine, turbulence in crypto markets, and sustainable infrastructure development, among other central issues. The differential impacts of global economic instability and decline on developed versus emerging economies was a frequent theme, including repeated reference to economic “scars” and “scarring” used to describe the impact of the pandemic and Ukraine war on economies around the world. Documentation from various G20 bodies and working groups on these issues over the course of 2022 can be found here.
All heads of state of G20 members states were in attendance this week in Bali with the exception of Russian President Vladimir Putin, who sent other officials in his stead amidst speculation that he wanted to avoid public confrontations with Western leaders. President Widodo opened the summit “with a call for the world to “end the war” and bridge “wide differences” amid rifts over Russia’s invasion of Ukraine.” He continued, “I understand we need huge efforts to be able to sit together in this room.” Other G20 leaders, including Argentine President Alberto Fernandez and French President Emmanuel Macron, expressed similar hopes that the summit could be a forum for diplomatic resolution of the conflict between Russia and Ukraine.
During the summit, the US spearheaded a “Western-led push to condemn Russia's invasion of Ukraine”, seeking firm commitments and a joint statement against Russia from other G20 members. Ukrainian President Volodymyr Zelensky addressed the forum by video to present his new 10-point peace plan, and mocked Putin’s absence by referring to it as the “G19”. Russian Foreign Minister Sergei Lavrov, pictured below, said that Ukraine’s terms were “unrealistic and inadequate”. A series of explosions in Poland during the summit, initially blamed by NATO on a Russian missile strike but later determined to be of likely Ukrainian origin, further contributed to the tension.
(Image: Russian Foreign Minister Sergey Lavrov during the G20 Summit, courtesy of The Moscow Times, here.)
The Western coalition garnered strong criticism from China. Before the summit had even started, Chinese state media ran an op-ed critical of the expected US stance on Ukraine and Taiwan:
The current posture of Western countries led by the US seems as if they are going to G20 to "quarrel," and public opinion has already made rough predictions about who will be targeted and what they will say. The global rift triggered by the Russia-Ukraine conflict and US' promotion of its strategy to contain China is a new situation for this year's G20 summit… Bringing political confrontation to the G20 venue is a severe pollution to the precious platform of the G20, which is bound to be unanimously condemned by the international community.
A similar commentary the following day noted that “many are also concerned that some Western countries, particularly the US, are seeking to use the Bali summit to advance their own geopolitical agenda against Russia, therefore preventing the crucial meeting from tackling serious economic issues.” Needless to say, China did not join in the condemnation of Russia’s actions (other countries, such as India and Saudi Arabia, have also been reluctant to do so), and the final version of the joint statement clearly reflected the competing perspectives among members states: “Most members strongly condemned the war in Ukraine and stressed it is causing immense human suffering and exacerbating existing fragilities in the global economy – constraining growth, increasing inflation, disrupting supply chains, heightening energy and food insecurity, and elevating financial stability risks. There were other views and different assessments of the situation and sanctions…” (italics added). The full text of the joint statement is available here.
While there was broad international consensus that the three and a half hour Xi-Biden meeting the day before the summit—the first face to face meeting of the two heads of state—was a giant step in the right direction, there was no consensus about whether or not the discussions would ultimately help thaw the increasingly cold and tense relations between the two rival superpowers. The Taipei Times reported that Biden “objected” to China’s “coercive and increasingly aggressive actions toward Taiwan”, but that the two did agree on several issues, including the necessity of avoiding nuclear conflict and the possibility of future cooperation on climate change and “global financial, health, and food stability”. The Hindu agreed that the meeting’s tone was “conciliatory”, and that Biden and Xi “discussed ways “to responsibly manage” the intensifying competition”. The South China Morning Post noted, however, that “tensions remain” and “potential flashpoints” lie ahead, including on the so-called “Taiwan red line”.
There was also a lot of press from East Asia relating the hopes for and outcomes of meetings between Chinese President Xi and other heads of state in the region. For example, see here for coverage of the meeting between Xi and Japanese Prime Minister Kishida and here for coverage of the meeting between Xi and South Korean President Yoon. Last but not least, the Canadian press is discussing Prime Minister Trudeau’s odd and seemingly hostile run-in with Xi, who scolded Trudeau for publicly revealing the content of their private conversations.
In other news, the UN estimated that the world’s population hit 8 billion people this week, on November 15, and predicted a global population peak at almost 10.5 billion in the 2080s.
Things I’m keeping an eye on:
1. The FTX crypto saga: Sam Bankman-Fried is in real trouble following last week’s collapse of FTX (e.g., frozen assets, bankruptcy filing, investigations). Also, customer funds mysteriously disappeared from their FTX accounts following the collapse, with FTX blaming hackers for the problem. Changpeng Zhao, founder and CEO of Binance announced the creation of a fund to serve as lender of last resort moving forward, which improved investor sentiment a bit early in the week. By Thursday, though, there was some indication that the FTX pain was spreading, including to crypto-based lenders and hedge funds. It turns out that FTX is also intertwined with Ukrainian firms and the Ukrainian military : “The philanthropic FTX Future Fund had recently been providing discreet support to entrepreneurs developing innovative military tools for Ukraine.” And FTX was also a major recent contributor to certain US Congressional campaigns (he was the 6th largest individual donor in the last federal election cycle). This is a big story and getting bigger by the day.
2. Metals markets: Nickel prices went sky high this week, with thin trading volumes aggravating volatility (trading has thinned by roughly 70% since March, when nickel trading was temporarily halted on the LME). Also, there’s talk over the past couple of weeks of “mystery whales” buying up gold, referring to some massive physical gold purchases by as-yet-unidentified central banks. And, the Reserve Bank of Zimbabwe just released another gold coin for purchase, a continuation of its efforts to create an “alternative store of value to the US dollar”. I’m keeping a very close eye on substitutions of gold for USD around the world, as well as proposals for gold-backed alternatives to the USD. The Edge Singapore recently commented on how demand for gold has stayed unusually strong despite the expensive USD, arguing that deteriorating local currency values are driving demand for gold: “Strong demand from those regions where the local currency continues to reach decade lows versus the US dollar reaffirms gold’s potential function as a wealth-preservation vehicle and a “currency of last resort” globally.”
3. Winter has arrived for the Northern hemisphere and Europe’s energy crisis is intensifying. In Germany, officials are making emergency preparations to manage expected blackouts, including emergency plans to distribute cash so that ATM outages do not cause unrest. In France, output reductions by a major supplier of nuclear power are poised to squeeze energy supplies further. And, in the UK, high energy prices are contributing to the highest inflation rates in 40 years.