Syria to eclipse trade, economy at Russia’s G20 summit

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A potential showdown over Syria between US President Barack Obama and Russia's Vladimir Putin could overshadow a two-day meeting of world leaders beginning today (5 September) in St Petersburg initially dedicated to reviving the global economy.

The group of 20 developed and developing economies will try to forge a united front on growth, trade, banking transparency and the fight against tax evasion at the summit, which will be hosted in a tsarist palace.

The club that accounts for two-thirds of the world's population and 90% of its output is divided over issues such as the emerging market turmoil and the Federal Reserve's decision to end its stimulus programme for the US economy.

But no rift is wider than the one between Obama and Putin over possible military intervention in Syria, with both presidents turning up the volume on Wednesday.

Obama used a visit to Sweden to build his case for a military response to the "barbarism" of a chemical weapons attack on 21 August which Washington blames on Syrian forces loyal to President Bashar al-Assad.

Obama, who is seeking approval for military strikes from the US Congress, said: "My credibility is not on the line. The international community's credibility is on the line."

"And America and Congress' credibility is on the line, because [otherwise] we give lip service to the notion that these international norms are important."

Putin said Congressional approval without a UN Security Council resolution would be an act of aggression, and accused Secretary of State John Kerry of lying by playing down the role of the militant group al Qaeda with rebel forces.

"Our opponents' arguments are very weak. To be honest, they are non-existent," Putin said in Moscow.

Putin's comments dimmed prospects of a compromise which had been raised when he said in an interview he did not rule out supporting military action – if it was approved by the UN Security Council and there was proof Assad's forces had resorted to chemical warfare.

Foreign ministers from key states in the G20 – which includes all five permanent Security Council members – will discuss Syria on the sidelines of the meeting although it is not formally on the summit agenda.

The G20 lacks the powers of the Security Council, but Putin would like to see a consensus to avert military action in what would be a significant – but unlikely – diplomatic triumph for Russia, Syria's key arms supplier and international ally.

Lack of harmony

The G20 achieved unprecedented cooperation between developed and emerging nations to stave off economic collapse during the 2009 financial crisis, but the harmony has now gone.

There are likely to be some agreements – including on measures to fight tax evasion by multinational companies.

An initiative will be presented to leaders on refining regulation of the $630 trillion (€478 trillion) global market for financial derivatives – such as futures, options and swaps – to prevent a possible markets blow-up.

Steps to give the so-called 'shadow banking' sector until 2015 to comply with new global rules will also be discussed.

But consensus is proving hard to achieve among developed economies as the United States takes aggressive action to spur demand and Europe moves more slowly to let go of austerity.

Meanwhile, emerging economies in the Brics countries – Brazil, Russia, China and South Africa – are divided over the role of the US dollar in the world economy.

And there has been no sign of them rallying behind the fifth Brics member, India, after it called last Friday for joint currency intervention.

The International Monetary Fund will call at the meeting for strengthening global action to revitalise growth and better manage risks, an IMF document obtained by Reuters showed.

Advanced economies led by the United States will increasingly drive global growth while emerging countries are at risk of slowing, due to tighter US monetary policy, it said.

"The greatest worry may well be a prolonged period of sluggish global growth," the IMF said.

But with the United States and other advanced economies picking up speed, the IMF said it still expected global growth to accelerate in 2014 from this year, helped by the highly accommodative monetary conditions in the rich world.

Former Russian Finance Minister Alexei Kudrin also urged caution, warning of the threat posed by debt and suggesting the main problems of the global financial crisis may not have been overcome yet.

"We aren't in a recovery – we have just won a breathing space," he said.

Further friction on the fringes of the summit could be caused by Obama's plans to meet human rights activists including members of a gay rights group which staged protests against a law Putin signed banning "gay propaganda" among minors.

The law has been widely criticised in the West and is one of the areas on which Russia and the United States have fallen out as relations deteriorated this year and Obama called off a meeting with Putin that was planned for Wednesday.

Trade protectionism is another important point on the agenda of the G20 summit. In a recent report, the European Commission identified about 150 new trade restrictions introduced over the last year, whereas only 18 existing measures have been dismantled. A total of almost 700 new measures have been identified since October 2008, when the European Commission started monitoring global protectionist trends.

Positions

One of the major tensions between Washington and Moscow is fuelled by the case of Edward Snowden, a former CIA employee who revealed that the US authorities had spied on its EU allies and tapped the servers of internet companies across Europe for personal data. Snowden received asylum in Russia and refused to extradite him to the United. There is no extradition agreement between Russia and the United States.

In a long-ranging interview the Channel One and the Associated Press agency, Russian President Vladimir Putin said that Russia has proposed such extradition agreement, but Washington has refused, and that the American authorities are not extraditing Russian criminals who in his words committed “much worse crimes” than leaking secrets.

Putin said Russia wanted Snowden to reach in some Latin American country, but in his words US services acted unprofessionally by leaking information about his destination. As a result, Snowden “got stranded in Russia”, the Russian President said.

“I do realise that the US secret service prefers to portray him as a traitor. But he has a different mentality. He believes he is a human rights campaigner […] Perhaps in a while the US might realize that he’s not a traitor or a spy but rather a man of certain convictions which could be viewed in different ways. And perhaps some compromise could then be found,” Putin said.

Background

The first G20 summit of heads of state and government was held in Washington in November 2008.

It was the result of a joint EU-US initiative to tackle the global financial crisis effectively. Since then, the G20 has become the premier forum for international economic cooperation. G20 leaders have since met once, or even twice, a year. The 2014 summit will be hosted by Australia.

The members of the G20 are the European Union together and the following 19 countries: Argentina, Australia, Brazil, Canada, China, France, Germany, Italy, India, Indonesia, Japan, Mexico, the Republic of Korea, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom and the United States.

The European Union is represented at the summit by the President of the European Commission, José Manuel Barroso, and the President of the European Council, Herman Van Rompuy.

In a joint letter, Barroso and Van Rompuy have set out their views on the key issues for the G20 summit.

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