The summit of the heads of the world’s 20 most developed countries, known as the G20, was held in early December in Buenos-Aires, the capital of Argentina. These types of gatherings are always the center of attention, since they only happen once a year and give the leaders of these countries a chance to directly exchange their views on the current state of the world economy and global politics. Without a doubt, the G20 is the ideal venue for meaningful decisions and agreements to be made. Unlike the United Nations where almost every country can be represented, this bloc only encompasses those with real economic power. That said, even in the case of the G20, there are only a few countries truly fit to take the center stage.
These lead actors, however, are not in the best of shape:
The host, Argentina, suffers from a 45.5% inflation rate, forcing it to maintain a base interest rate of 60.75%. A worrying situation by all measures.
South-Africa is in the midst of a land seizure campaign against its minority of white farmers to the dismay of both the US and the EU, while also causing the South African rand to weaken to a potentially dangerous degree.
India actively opposed the USA’s sanctions by purchasing oil from Iran and missile weapons from Russia.
Turkey’s controversies include the imprisonment a US pastor, openly declaring the USA part of the Gülen movement, purchasing Russian arms when when the US denied them the sale of military equipment and bombing Kurds alongside allied US instructors in Syria. All the while the Turkish lira all but collapsed due to it’s 20% inflation rate becoming unmanageable.
Saudi-Arabia is in hot water over supposedly ordering the assassination of an opposition journalist as well as it’s two year war on insurgents in Yemen causing thousands to die of hunger without any kind of military or political breakthrough.
Russia has a history of being considered a villain on the world stage, but seizing Ukrainian ships near the Kerch Strait is a strong entrance even for them. Although they’ve been hit with sanctions since the annexation of Crimea and accused of election meddling by the FBI, they were still given free reign by the West to run successful military operations in Syria, giving them an advantage in the region over the militants supported by NATO. This presence has also significantly contributed to keeping ISIS in check and reducing their influence in the region to near insignificance.
France also had its fair share of issues, with the yellow vest movement’s protest. President Emmanuel Macron has clear ambitions of taking a lead role within Europe, however, his support of a centralized EU army, a European replacement for the SWIFT system and the development of Quant as a government sponsored alternative to Google are all contrary to US interests. It should come as no surprise then, that the Paris riots only intensified during his stay at the G20, eroding his position.
Germany was once again represented by Angela Merkel, whose party decided on a strategic withdrawal after suffering losses during recent elections, making it difficult for her to step up and take charge of the EU so to speak. She also has much to discuss with other participants, especially President Trump, since his tariffs on the auto industry has struck the Achilles-heel of Germany’s economy.
Italy, represented by Giuseppe Conte, is currently struggling with various EU institution for its un-willingness to meet Brussels’ 2% budget deficit requirement while the Italian President himself criticized the EU’s immigration policy using nationalist rhetoric.
Theresa May of the United Kingdom didn’t sit out the summit either. She is now also faced with a Brexit impact study by the Bank of England and has only a mere two weeks to convince the Parliament to support her exit proposal. As many as 10 ministers have left her cabinet over the past month alone and her party members have initiated a motion of censure against her. Scotland has also contemplated secession, were the current deal to be accepted.
Looking at the full list of baggage and various issues the many heads of state brought with them to the G20 summit, it almost gives the impression that they’re using the summit as an opportunity to take a break from the pressure they’re facing elsewhere. At the very least they don’t have to face their respective domestic situations while also being able to see that the others aren’t faring all that much better either. All that said, none of these countries were the true stars at the center stage of the Argentina summit.
The event itself was highly anticipated due to the mere possibility of a dialog between the Chinese and US Presidents. The overall economic outlook of 2018 was for the most part defined by the trade tensions between these two countries, culminating in them both levying notable tariffs on one another. It could conceivably escalate even further, as President Trump has already proposed the possibility of further tariff increases in January of 2019. In spite of that, the markets seemed generally hopeful of this meeting between the two, keeping an eye out for positive announcements and potential solution proposals. The Chinese and US delegations both had an equally optimistic tone leading up to the meeting itself, indicating that there was a real possibility for a mutually beneficial outcome on the table. Although the meeting continued within the same spirit of cooperation, no specifics agreements have been reached as of yet.
The result, if one can call it that, would be the parties agreeing to a ceasefire of sorts for the next 90 days to cool off and leave open the opportunity for a future agreement. Even so a lasting peace still seems far off and the market was somewhat disillusioned with the lack of any concrete resolution. The initial promising tone of President Trump’s twitter feed turned out to be a false alarm, as it was not on the same page as the information coming out of the White House afterwards, calling the Chinese news media’s coverage ’Fake News.’ Investors seem to be catching on and are becoming increasingly skeptical of the seeming harmony between Trump & Xi, some even suspecting that there may be some misunderstanding between the two at work.
For now at least we can be sure that they’ll negotiate and there won’t be any further tariff raises in the next 90 days. This potential agreement three months down the line could very well include china lowering it’s 40% tariff on foreign auto imports as well as rekindling its demand for US agricultural products, which fell to zero in 2018. On the other hand there’s very little information on what the US would have to give in return. There’s also a notable absence of any mention of intellectual property rights, cutting existing tariffs or toning down the heavy government influence of the yuan-dollar pair’s price.
Now that the initial enthusiasm has worn off, the markets are back to their downwards trend so the only thing left to do is wait and see what analysts will have to say over the course of the next three months on what a potential deal could include.