Russia’s invasion of Ukraine will force a drastic change to the Group of 20 forum of advanced and emerging economies, Hitotsubashi University professor Ichiro Iwasaki has said.
“It is almost impossible for the G20 to reach an agreement on sanctions against Russia,” Iwasaki said in a recent interview ahead of a meeting of the G20 finance ministers and central bank heads in Washington on Wednesday.
“Attempts to exclude Russia would probably be opposed by China. Some countries would follow as they attach importance to their economic relations with China,” he also said.
“I think it’s necessary to build a new group among countries that can cooperate in sanctions against Russia,” added Iwasaki, a former Foreign Ministry official well versed in Russian economic affairs.
The planned session will be the first minister-level meeting among the G20 economies since Russia began the invasion Feb. 24. The Group of Seven major powers, all of which are G20 members, are preparing to hold a separate meeting to highlight their solidarity.
The G20 meeting will take place amid increasing concerns that the trend of economic globalization “may go into reverse” due to the coronavirus pandemic and Russia’s aggression against Ukraine, said Takehiko Nakao, former vice finance minister for international affairs.
“It will be difficult to produce results this time because Russia is a G20 member and the positions of emerging economies vary,” Nakao said in a separate interview. “Nevertheless, it is meaningful to maintain the framework in which finance ministers and central bank governors exchange views.”
Iwasaki said Russia’s dependence on China will increase as a result of the war in Ukraine.
It is inevitable for U.S. and European companies to withdraw from Russia, while China may take advantage of the situation and raise its market share, Iwasaki said.
“Japan therefore should not withdraw from oil and natural gas development projects in Russia’s Far East,” he said. “It should not let its concessions transferred to Chinese companies.”
The G20 and G7 officials are also expected to discuss the recent developments in financial markets, where the yen has sunk to 20-year lows versus the dollar.
The G7 economies have noted that foreign exchange rates should be decided by market forces and that rapid fluctuations of currency rates are undesirable, Nakao said.
“I guess the importance of the latter is increasing,” he added.