Senior leaders of the United States, Canada and the United Kingdom walked out of a meeting of the Group of 20 major economies on Wednesday in protest of the G-20’s decision to allow Russian officials, including Finance Minister Anton Siluanov, to participate.

The U.S. and other members of the G-20 had called on Indonesia, which holds the rotating chair of the organization, to bar Russia from the meeting over its invasion of Ukraine. The fact that Russia was allowed to participate highlights the significant fractures within the organization in addressing the war in Ukraine. 

Although Ukraine is not a member of the G-20, Ukrainian Foreign Minister Dmytro Kuleba and Finance Minister Serhiy Marchenko were invited to attend the meeting. In remarks at the beginning of the session, Kuleba vowed that Ukraine would not cede territory to Russia as part of peace negotiations. Both Kuleba and Marchenko joined the walkout.

In his remarks, Siluanov warned against politicizing dialogue among member states, saying that it might harm the global economy.

Major split

While the U.S., U.K., France, Germany, Japan and Canada — some of the largest members of the G-20 — have forcefully condemned Russia’s actions in Ukraine and fully participated in a regime of tough economic sanctions, many others have not. The latter include China, Indonesia, India and South Africa.

On Wednesday morning, Treasury officials told the Reuters news organization that Treasury Secretary Janet Yellen had spoken with Indonesian Finance Minister Sri Mulyani Indrawati the day before the meeting. In a statement, the department said, “Secretary Yellen firmly condemned Russia’s brutal invasion of Ukraine, and emphasized there will be no business-as-usual for Russia in the global economy.”

The statement continued: “Secretary Yellen emphasized that the United States will continue to work in solidarity with Indonesia to advance the important business of the G-20, including addressing the negative impacts of Russia’s invasion on the global economy.”

Yellen had signaled her intention to avoid meetings in which Russia participated in comments on April 7, when she reiterated U.S. President Joe Biden’s call to expel Russia from the organization.

On Wednesday, Canadian Deputy Prime Minister and Minister of Finance Chrystia Freeland tweeted, “This week’s meetings in Washington are about supporting the world economy — and Russia’s illegal invasion of Ukraine is a grave threat to the global economy. Russia should not be participating or included in these meetings.”

A plea for cooperation

The G-20 was founded in 1999, but it became a force on the world stage during the global economic crisis of 2008-09, when it served as the coordinating body for a series of policy responses that many economists credit with preventing far greater economic damage.

More recently, the group was central in the development of a plan to impose mandatory minimum taxes on international businesses to prevent a “race to the bottom” as countries competed to attract companies with ever-lower tax rates.

On Wednesday, International Monetary Fund Managing Director Kristalina Georgieva called on G-20 members to continue cooperating to address major global problems, calling the organization “crucial to sustain the momentum on collective efforts to deliver on global ambitions for the common good.”

She added, “We also recognize how interdependent we are …  and it is so obvious that cooperation must and will continue.”

Future effectiveness questioned

Experts, however, are now concerned that the G-20 may struggle to lead on some of the key issues that its members have identified as important, including climate change and global food shortages, because of disagreements about Russia’s continued participation.

“We have a real need for a group like that, to sit down and try to come up with practical solutions,” Matthew Goodman, senior vice president for economics at the Center for Strategic and International Studies, told VOA. “But it’s very difficult to see how that’s going to happen under the current circumstances. There’s a substantial group that doesn’t want to work with Russia right now, and there’s another substantial group that isn’t willing to talk or agree to things without Russia at the table. So, it’s hard to see how you get out of that.”

Goodman, who helped organize G-20 summits during the Obama administration, said it was possible that there might be some “lowest common denominator” issues that the entire G-20 could agree on despite its internal divisions. But he wasn’t holding out much hope.

“It’s just hard to see how this group really delivers on anything,” he said.

Summit in doubt

Unlike the annual G-20 summit, which is normally attended by heads of state, Wednesday’s meeting in Washington involved member states’ finance ministers and central bank governors.

This year’s summit, scheduled for November, will be held in Bali, in recognition of Indonesia’s position as chair. Indonesian President Joko Widodo has indicated that Russian President Vladimir Putin will be welcome in Bali, prompting protests from other group members and suggestions that a boycott might take place.

Last month, Australian Prime Minister Scott Morrison said, “The idea of sitting around a table with Vladimir Putin, who the United States are already in the position of calling out [for] war crimes in Ukraine, for me is a step too far.”

The Biden administration has not made an official statement about the president’s plans for the Bali summit. In a press conference on April 7, press secretary Jen Psaki noted that the meeting was seven months away, “a lifetime.”

A history of expulsions

If Russia were excluded from the G-20 — a prospect that most experts view as unlikely — it would not be the first time the country had been ousted from a prestigious international organization.

Russia’s membership in the G-7 group of some of the world’s largest economies (at the time, the G-8) was suspended in 2014 after it invaded and took over Ukraine’s Crimean Peninsula.

Russia formally left that organization in 2017 and expressed no interest in rejoining it, even after then-U.S. President Donald Trump and then-Italian Prime Minister Giuseppe Conte called for its reinstatement in 2018. The G-7’s other members rejected the proposal unanimously.
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Some of the worst flooding in South Africa’s history has left more than 400 people dead and some 40,000 displaced, dealing a devastating blow to the eastern city of Durban, which has a seaport that has also been badly affected.

With the port not fully functioning, there are supply chain concerns and China — South Africa’s biggest trading partner — and other nations, are likely to see their imports and exports disrupted.

Earlier this week, South African President Cyril Ramaphosa declared a national state of disaster because of the flooding — which he blames on climate change but which some critics blame on poor infrastructure and the fact that most of the people affected were living in makeshift shacks in informal settlements.

Ramaphosa stressed the importance of quickly fixing the situation at the port, saying, “The Port of Durban — which is one of the largest and busiest shipping terminals on the continent and which is vital to our country’s economy — has been severely affected.”

The road to the port, which handles some 13,000 heavy vehicles a day, has been severely damaged, he added.

On Tuesday, Public Enterprises Minister Pravin Gordhan Pravin Gordhan visited the port, which has reopened, and concluded it would take more a week to clear some backlogs. The rail network to the site had been affected by landslides and still needs to be repaired, he said, adding that 9,000 containers have accumulated at the port and would be cleared in the next nine days.

Logs and debris also ended up in the harbor due to the floods, which he said had disrupted shipping.

One of the countries likely to be affected by problems at the port is China, said Cobus van Staden, senior China-Africa researcher at the South African Institute of International Affairs.

“In relation to the situation in Durban, it’s very serious for the whole of China-Africa trade, rather than just for South Africa; this is because of the centrality of Durban port to Chinese exports,” he told VOA.

“About 20 percent of total China-Africa trade goes out through Durban and this includes resources like cobalt, copper and lithium coming from the Democratic Republic of Congo and Zimbabwe particularly,” he added.

Maersk, the world’s biggest container line, halted operations at the port last week and told VOA by email its warehouse had been affected and was still not operational. While vessel operations had resumed, the company said problems with road access were affecting all cargo entering or leaving the terminal.

“We continue to assess the damages and monitor the situation as it evolves, customers are being updated daily on the progress and the contingency plans so that we may get the supply chains moving again as quickly as possible,” it said.

Wandile Sihlobo, chief economist for the Agricultural Business Chamber of South Africa, told VOA he thought it would take some time before activities at the port were back to normal.

“There’s been great devastation by these excessive rains and it’s a major risk to commerce and all goods: automobile, agriculture and other sectors of the economy that are dependent on trade,” he said.
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Closing the economic divide in the hard-hit industrial Midwestern United States could dampen the fervor of anti-democratic populism, a new working paper suggests.

Populism is ascribed to political movements that embrace an us-versus-them mentality. Battles are often fought along socioeconomic, ethnic or communal lines.

“When communities are in decline, when residents are anxious about their own futures and the futures of their children, when the younger generation has left, there is a great feeling of frustration, of anxiety, of ill ease about losing status and a changing world,” says John Austin, principal author of the report. “And the populists, of both left and right, prey on these attitudes and anxieties.”

The American Midwest was once an economic powerhouse with thriving steel, oil, aviation and auto industries. But globalization and technological change shuttered many of those factories, leaving struggling communities with far fewer high-wage unionized jobs. Some studies suggest economic grievances, often stemming from an erosion of earning potential and living standards, are behind the rise of populism in the United States.

“Left-wing populists definitely prey on the same resentment and anxieties about a changing world as right-wing populists, but the left-wing populists offer a policy solution: ‘Let’s soak the rich, get you free health care, free college, a decent wage.’ That’s their solution,” says Austin, director of the Michigan Economic Center and a senior fellow at the Brookings Institution.

“Right-wing populists offer a culture war: ‘Don’t trust the government, immigrants or someone else who’s getting theirs (opportunities and benefits) at your expense. They’re the cause of your community distress.’ And the right-wing populists also encourage anti-democratic behaviors: ‘Don’t trust the press. You can’t trust the government. We can’t trust our own institutions,'” he says.

Samuel Abrams, a professor of politics and social sciences at Sarah Lawrence College in Bronxville, New York, sees the right-left divide differently.

“My sense is that populism on the right often seeks to retain our institutions and hearken back to some sense of what that institution may have been,” says Abrams, a senior fellow at the American Enterprise Institute. “The flip side is, if you look at the rhetoric on the left, my sense is that it’s not about preserving institutions, it’s about destroying institutions. It’s not about saving them at all, and I tend to see a lack of proposals on the left of what would replace these institutions.”

The report finds that some Midwestern communities are on the rebound because they’ve been able to exploit their local assets.

“Their economic development approach is, ‘We have to grow our own new future based on who we are,” Austin says. “It’s not about chasing factories to come in, and it’s not about giving tax breaks to get folks to move to town. It’s about looking around and investing in and leveraging whatever assets you have and building from within.”

That can mean growing local universities and research institutions, revitalizing downtowns to make them more walkable and livable, and investing in schools, the arts and recreation.

“Those investments in quality of life and play have much stronger impacts on a community’s employment growth and population growth than do traditional business-friendly measures like ‘Let’s cut taxes and lower regulation and hope that that will attract some industry or some investment,'” Austin says.

The problem, according to Abrams, is that voters aren’t necessarily rational about what they need, often embracing wholesale a set of ideas on the left or the right rooted more in ideology than practical concerns.

“So, yes, you could absolutely transform these heartland communities. I think it would be very powerful to do that, and I think that would go a long way,” Abrams says. “But we then still have to deal, again, with this ideological polarization. … If you look at a lot of the rhetoric of the populist movement right now with immigration, defense, a lot of xenophobic (attitudes) … you can make people wealthy or more comfortable, but it’s not going to change that.”

Data from the 2020 presidential election between incumbent Donald Trump and former Vice President Joe Biden show that some Midwestern cities and counties that experienced economic growth shifted toward the Democrats, away from Trump’s brand of populism and toward Biden’s center-left views.

But, in Abrams’ view, economic resurgence can only do so much.

“I do think there’ll be some change if we can enhance economic stability and help people feel less exposed to economic change,” Abrams says. “But there are also numerous examples of where you can find Trump supporters and populists, on the left and the right, where it has nothing to do with money and it has everything to do with ideology.”
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The International Monetary Fund has slashed its forecast for global economic growth to 3.6% this year, saying Russia’s war in Ukraine threatens a fragile recovery from disruptions caused by the pandemic. White House Bureau Chief Patsy Widakuswara has this report.
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The world economy will grow at a slower pace because of Russia’s invasion of Ukraine, the International Monetary Fund said in a report Tuesday.

The organization forecasts growth of 3.6% this year, compared to 6.1% last year. Originally, it had predicted 4.4% growth this year.

“The economic effects of the war are spreading far and wide,” the IMF said in its report.

The war has exacerbated negative economic trends such as disrupted commerce and price hikes for fuel and food.

“In the matter of a few weeks, the world has yet again experienced a major, transformative shock,” IMF chief economist Pierre-Olivier Gourinchas wrote in the foreword to the fund’s World Economic Outlook report. “Just as a durable recovery from the pandemic-induced global economic collapse appeared in sight, the war has created the very real prospect that a large part of the recent gains will be erased.”

The IMF predicts the Russian economy will shrink by 8.5% this year, and Ukraine’s will fall by a whopping 35%.

The United States, China and Europe were also expected to see slower growth as a result of the war.

Some information in this report comes from The Associated Press.
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The Biden administration is taking a key step toward ensuring that federal dollars will support U.S. manufacturing — issuing requirements for how projects funded by the $1 trillion bipartisan infrastructure package source their construction material. 

New guidance issued Monday requires that the material purchased — whether it’s for a bridge, a highway, a water pipe or broadband internet — be produced in the U.S. However, the rules also set up a process to waive those requirements in case there are not enough domestic producers or the material costs too much, with the goal of issuing fewer waivers over time as U.S. manufacturing capacity increases. 

“There are going to be additional opportunities for good jobs in the manufacturing sector,” said Celeste Drake, director of Made in America at the White House Office of Management and Budget. 

President Joe Biden hopes to create more jobs, ease supply chain strains and reduce the reliance on China and other nations with interests that diverge from America’s. With inflation at a 40-year high ahead of the 2022 midterm elections, he’s betting that more domestic production will ultimately reduce price pressures to blunt Republican attacks that his $1.9 trillion coronavirus relief package initially triggered higher prices. 

“From Day One, every action I’ve taken to rebuild our economy has been guided by one principle: Made in America,” Biden said Thursday in Greensboro, North Carolina. “It takes a federal government that doesn’t just give lip service to buying American but actually takes action.” 

Biden said that the roughly $700 billion the government devotes annually to procuring goods is supposed to prioritize U.S. suppliers but regulations going back to the 1930s have either been watered down or applied in ways that masked the use of foreign imports. 

The administration could not say what percentage of construction material for existing infrastructure projects is U.S.-made, even though the federal government is already spending $350 billion on construction this year. The new guidelines would enable government officials to know how many dollars go to U.S. workers and factories. 

Tucked into the bipartisan infrastructure package that became law last November was a requirement that starting on May 14 “none of the funds” allocated to federal agencies for projects may be spent “unless all of the iron, steel, manufactured products, and construction materials used in the project are produced in the United States.” That’s according to Monday’s 17-page guidance. 

The guidance includes three standards for these requirements to be waived: if the purchase “would be inconsistent with the public interest”; if the needed materials aren’t produced “in sufficient and reasonably available quantities or of a satisfactory quality”; or if U.S. materials increase a project’s cost by more than 25%. 

American manufacturers are about 170,000 jobs short of the 12.8 million factory jobs held in 2019, as manufacturing jobs began to decline before the pandemic began. But the U.S. has 6.9 million fewer manufacturing jobs compared with the 1979 peak, a loss caused by outsourcing and automation. 

Getting more industrial jobs will likely mean adding more factories and assembly lines — as manufacturers are operating at a 78.7% capacity, which the Federal Reserve notes is above the historical average. 
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Many businesses rely on fast shipments by sea and land to get the components they need to make and distribute their products.  But backups at U.S. ports and slowdowns in other modes of shipping have upended the system. VOA’s Mike O’Sullivan tells how one California toy company is coping.
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The Biden administration appears set to discuss the international economic impact of the Russian invasion of Ukraine and, potentially, Ukraine’s reconstruction as part of the November G-20 summit agenda. White House Bureau Chief Patsy Widakuswara has this story.
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Commercial truck traffic from the Mexican state of Chihuahua to Texas will return to normal immediately after both sides reached an agreement on border security, Texas Governor Greg Abbott said on Thursday.

The state of Chihuahua provided a plan to secure the border that will allow Texas authorities to cease enhanced inspections that have led to backups of trucks from Chihuahua over the past week, Abbott said during a joint press conference with Maria Eugenia Campos Galvan, the governor of that state.

“Texas and Chihuahua now have agreed to both secure the border as well to get commercial vehicles moving through the ports,” Abbott said.

Abbott, a Republican running for reelection in November, ordered the state’s Department of Public Safety last week to conduct “enhanced safety inspections” of vehicles as they cross from Mexico into Texas in order to uncover smuggling of people and contraband.

The inspections were part of a broader effort to deter illegal immigration that included the busing of migrants to Washington and aimed to counter what Abbott called the “open borders” policies of Democratic President Joe Biden.

Mexican truck drivers blockaded bridges at the U.S. border earlier in the week to protest the delays, which some drivers said caused waits that spanned more than half a day.

Abbott on Wednesday said that his state would cease enhanced inspections from the Mexican state of Nuevo Leon after a separate border security agreement with that state’s governor.

The stepped-up inspections will continue at other parts of the border with Mexico until agreements with those states have been reached, Abbott said.

 
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