The US yesterday gave in to pressure from Europeans over environmental concerns, allowing the word “climate” into a joint communique at a G20 conference overshadowed by a viral outbreak that has shaken the global economy.
Delegates at the meeting of G20 finance minister and central bankers in Riyadh, Saudi Arabia, spent much of their time talking about a global slowdown exacerbated by the coronavirus outbreak, but struggled to come up with a united response, according to people familiar with the deliberations.
Countries such as Japan, and international institutions, including the Organisation for Economic Co-operation and Development, have been pushing for those with surpluses to spend more.
Photo: EPA-EFE
One of the main addressees of the calls for more spending is Germany. So far, the export-driven country has shown little interest in significantly boosting expenditures, arguing fiscal stimulus cannot bolster foreign demand.
On climate change, differences of opinion in the Saudi capital were starker.
The US, represented by US Secretary of the Treasury Steven Mnuchin, objected to including a reference to the subject, according to four people familiar with the communique-drafting process.
The Saudi delegation, which is hosting the event, did not show much enthusiasm for it either, according to two of them.
After several days of heated debate, including French Minister of the Economy and Finance Bruno Le Maire cornering Mnuchin late on Saturday as the G20 delegates dined, the US reluctantly agreed to a mention of climate change, according to two people familiar with the matter.
As of yesterday morning in Riyadh, it was also looking unlikely that representatives would leave Saudi Arabia with any breakthroughs on a global taxation system that would apply to multi-national companies, according to the people.
Europeans have balked at a US proposal that new global rules should be a “safe harbor” regime. Mnuchin sought to reassure his counterparts by insisting such a system would not mean the rules would be optional, but Europeans said they still needed to fully assess the proposal.
Delegates on Saturday heard a warning from the IMF that the COVID-19 outbreak would dent global growth.
The outbreak will shave about 0.1 percentage points from global growth and constrain China’s growth to 5.6 percent this year, IMF managing director Kristalina Georgieva said.
“Be we are also looking at more dire scenarios where the spread of the virus continues for longer and more globally, and the growth consequences are more protracted,” she said.
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