G20 summit: All eyes on trade war, oil prices and MBS visit

  • 27 Nov 2018

Leaders of the powerful Group of 20 will meet during their annual summit from November 30 to December 1 in the Argentinian capital of Buenos Aires.

The Group of 20, a club formed a decade ago amid the economic crisis, accounts for 85 percent of global economic output. ( Reuters )

Leaders of the G20, the world’s biggest economies, will meet between November 30 to December 1 in Argentina, with climate change, and the trade war between Washington and Beijing at the top of the agenda.

The United States and China, the world's two largest economies, have been waging an escalating trade war as US President Donald Trump vows to protect domestic industry as part of his "America First" philosophy.

Trump has cast his G20 meeting with Chinese President Xi Jinping as a deadline for Beijing to lessen trade barriers or face even more intense pressure.

The Group of 20, a club formed a decade ago amid the economic crisis, accounts for 85 percent of global economic output.

But the host of the summit, Argentina, says it is hoping to find agreement on improving global stability, even if deep disagreements remain.

Argentina says it is hoping to find agreement on improving global stability, even if deep disagreements remain.(TRTWorld)

'Rational and positive outlook'

Buenos Aires says the meeting should stress the importance of trade itself, at a time that the former consensus against protectionism breaks down.

"We are putting a focus on the situation of trade, just to make sure that it grows, that it is stable and that this vision is shared by the principal actors," Argentinian Foreign Minister Jorge Faurie said last week.

Faurie played down the importance of any final statement, quipping, "Sometimes we do such lengthy documents that people are a little bit lost in their reading."

But he said a draft proposal by Argentina, which was still being hammered out, was "reasonable" and would emphasise stability as part of a "rational and positive outlook" on trade.

Two other major summits this year, of the Group of Seven industrialised democracies and the Asia-Pacific Economic Cooperation forum, both ended without customary joint statements.

Faurie said Argentina, an emerging economy and the first South American host of the G20, was in a position to offer a "fresh approach" to world leaders.

On Tuesday, White House economic adviser Larry Kudlow said Trump will have a dinner meeting with Chinese President Xi Jinping at the upcoming G20 gathering and also held open the possibility that the two countries would reach a trade deal.

"There is a good possibility that we can make a deal and he is open to it," Kudlow, the National Economic Council director, told a press briefing, referring to Trump.

Symbolic reconciliation between Argentina and Britain

The G20 will also be historic in marking symbolic reconciliation between Argentina and Britain, which went to war in 1982 over British-ruled islands in the South Atlantic known as the Falklands to Britain and the Malvinas to Argentina.

In attending the summit, Theresa May will be the first sitting British prime minister to visit Buenos Aires since the war. Tony Blair briefly visited Argentina in 2001 when he crossed the Brazilian border at magnificent Iguacu Falls.

Faurie said Argentina was committed to working more closely with Britain from trade to environmental preservation to better connecting Argentina to the islands, whose nearly 3,000 people are culturally linked to Britain.

Argentina is leading the summit just as the other two Latin American members of the G20, Brazil and Mexico, go through presidential transitions in which the countries are shifting sharply to the right and left respectively.

Oil policy

And with the top three crude producers – Russia, the United States and Saudi Arabia – all present, oil policy is also expected to be discussed.

Oil prices have lost almost a third of their value since early October, weighed down by an emerging supply overhang and widespread financial market weakness.

Saudi Arabia raised oil production to an all-time high in November, an industry source said on Monday, pumping 11.1 million to 11.3 million barrels per day (bpd).

But the kingdom has been pushing for a collective production cut by members of the Organization of the Petroleum Exporting Countries (OPEC), indicating it may reduce supply by 500,000 bpd.

Traders are now awaiting the outcome of meetings of the G-20 leaders and of OPEC, both in the next 10 days.

Saudi crown prince

Also the focus of attention will be on Saudi Crown Prince Mohammed bin Salman, widely known by his initials MBS, who is participating in the summit as well.

His global image remains battered after the killing of Jamal Khashoggi, a Washington Post columnist and a critic of the crown prince, at Riyadh's consulate in Istanbul six weeks ago, straining Saudi Arabia's ties with the West.

On Tuesday, Human Rights Watch asked Argentina to use a war crimes clause in its constitution to investigate the role of the Saudi crown prince in possible crimes against humanity in Yemen and the killing of Khashoggi.

Meeting with Erdogan?

The summit will possibly see the Saudi crown prince meeting Turkey's President Recep Tayyip Erdogan as well.

The Saudi crown prince has asked for a meeting with Erdogan and that there was currently no reason not to meet him, Turkey's foreign minister said on Tuesday.

"Yes, he has asked Erdogan on the phone, whether they could meet in Buenos Aires. Erdogan's answer was, 'Let's see'," Foreign Minister Mevlut Cavusoglu told Germany's Sueddeutsche Zeitung newspaper.

World Trade Organization

G20 leaders are also expected to discuss reform of the World Trade Organization, but officials said it was unlikely any agreement would be reached.

The United States is increasingly sceptical of the WTO’s ability to resolve international trade disputes. The European Union is also pushing to reform the body to make it better able to address modern trade problems.

European countries are anxious that the final communique refer to the fight against climate change, a senior European Union official said. Trump has announced his intention to withdraw the United States from the Paris climate accord, casting doubt on the science underpinning the agreement.