Time for change – G20

(Business New Europe – bne.eu – bne/IntelliNews – November 17, 2014) Russian President Vladimir Putin met with the leaders of the western world at the weekend at the G20 summit, the first face-to-face meeting of all the world’s leaders since the Russian annexation of Crimea in March.

“At the closing of the evening program of the G20 summit [in Brisbane] Vladimir Putin held bilateral meetings with German Chancellor Angela Merkel and European Commission President Jean-Claude Juncker. The discussions were very long and thorough, bilateral relations have been discussedÉ The sides also focused on exchanging opinions on the situation in southeastern Ukraine. President Putin explained in details the Russian approach to the conflict,” Presidential press spokesman Dmitry Peskov said.

The Russian delegation, headed by Putin, arrived in Brisbane on Friday to attend the ninth G20 summit. Putin also had a brief conversation with US president Barak Obama, although is seems they didn’t do more than exchange a few words. Currently Europe is a lot close to finding a compromise with Russia over Ukraine than the US.

The meeting is of key importance to Putin and other leaders of the emerging markets, as they want to push the world to a more multipolar management system that gives them more say, and move away from the G7 format, which is dominated by the leading western powers.

“The GDPs of the BRICS countries calculated at purchasing power parity are greater than those of the G7. As far as I know, the GDP of BRICS is $37.4 trillion, while that of the G7, $34.5 trillion. What if they (G7) are told: ÔNo, thank you, we shall be doing this and that here on our own and we don’t care how you will carry on?’ There will follow nothing but worse imbalance. If we really wish to decide something, we should decide it together,” said Putin in an interview before meeting.

Sanctions Putin went to the G20 summit with no intention to defend Russia’s actions in Ukraine or complain about sanctions imposed on Russia since the annexation of Crimea. “There’s no sense [to discussing the sanctions,” Putin asked, implying the two sides are now at loggerheads.

“Of course, [sanctions] run counter to the very principle of G20 activities, and not only the activities of the G20 and its principles, they run counter to international law, because sanctions may be introduced only through the United Nations and its Security Council. Moreover, they are against the principles of the WTO and the General Agreement on Tariffs and Trade, the GATT,” said Putin.

However, we went on to threaten that the east and Russia may simply abandon any attempt to work with the west in the future if sanctions remain in place.

“Take our case: imagine our partners have restricted the access of our financial institutions to international money markets. In the meantime, by drawing capital from international financial markets, our financial institutions finance our companies that import finished products from the very same industrialized economies, thereby supporting jobs, the social sphere and economic growth. If we stop doing that, disruptions will follow there. These are in-depth matters. They are not lying on the surface, they are not obvious at first sight,” says Putin. “Our joint work with the Federal Republic of Germany maintains some 300,000 jobs there. If there are no contracts, these jobs may be lost.” While Putin admits the sanctions are painful, he pointed out that Russia’s reserves and huge mineral resources mean it can cope.

“A country like ours finds the situation easier to cope with. Why? Because we’re producers of oil and gas and we handle our foreign exchange/gold reserves and government reserves sparingly. Our reserves are big enough and they enable us to feel assuredness over our ability to stay committed to social obligations and to keep all the budgetary processes and the entire economy within a certain framework.

The meeting is significant as it is not just Russia that is worried about the US dominance of geopolitics; Russia has found a willing ally in China, which is also keen to reduce Washington’s clout on the global stage. The two are manifesting this change by ended the use of the dollar to price and settle for international trade deals.

“We’re moving away from the diktat of the market that denominates all the commercial oil flows in US dollars. We’re boosting as much as possible the use of national currencies – both the ruble and the yuan. Thirdly BRIC by BRIC The G20 is the to-be global workshop, but the practical day-to-day politics will be run under the auspices of the BRICS, which have started to build institutions to function as a multinational body (and is ironically a mirror image of the G7, an emerging market version of the biggest economic powers in the east).

“The decisions to create BRICS financial institutions are being implemented successfully. The efforts to form the Development Bank and a pool of currency reserves instituted at the Fortaleza summit are nearing completion,” said Putin. He recalled that the bank’s aggregate capital constituted an impressive $200bn.

“In this way we shall obtain common mechanisms capable of stabilizing the national markets of capital in case of critical situations in the global economy,” said Putin.

Russia will take over the rotating presidency of the BRICS group in April and has promised to focused on the further expansion of cooperation within the association.

“Russia is drafting an economic partnership strategy and an investment cooperation road map,” Putin said at a meeting of the BRICS leaders.

Looking for a way out And Putin is looking for a way to bring the conflict and resulting stand off with the west to an end. Putin explained in details Moscow’s stance on the situation in eastern Ukraine to German Chancellor Angela Merkel and new European Commission President Jean-Claude Juncker on Saturday, Russia’s presidential spokesperson said.

Merkel wants to continue dialogue with Putin, despite disagreements on Ukraine, deputy government spokeswoman Christiane Wirtz said on Friday. Wirtz said explicitly that there will be no new sanctions imposed on Russia, but left the possibility of adding more names to personal lists, especially of military personnel in Eastern Ukraine.

Wirtz said Merkel “has been talking with the Russian president for weeks and months, since the beginning of the crisis” in Ukraine and “listens to what the Russian president has to say,” RFE/RL reported.