Lula faces many challenges as Brazil assumes G20 presidency | Economic and commercial news

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As Brazil takes over the G20 presidency from India on December 1, Luiz Inácio Lula da Silva will be challenged to keep his promise to defend the interests of the South amid two ongoing wars and a slowdown of the world economy.

Lula also takes over at a time of bitter internal divisions within the group, the legacy of outgoing President Narendra Modi, whose team, eager to impose a joint declaration, trampled diplomatic niceties under closed doors.

Despite these obstacles, Lula moved forward and announced Brazil’s three key priorities at the head of the G20: social inclusion and the fight against hunger, the gradual elimination of fossil fuels in favor of renewable energies and the reform of global economic governance.

The Group of Twenty – the G20 – is a forum for the world’s largest economies to coordinate on key global policy issues. Together, the G20 countries account for 85 percent of global production and two-thirds of the world’s population.

The G20 is made up of the European Union and 19 other countries, a mix of advanced and emerging economies. At the G20 summit in September, India invited the African Union – representing 55 countries from across the continent – ​​to become a member of the group.

This was seen as a move to highlight Modi’s self-ascribed role as “mother of democracy… in easing the global trust deficit” between rich and poor nations.

The G20 was founded in 1999, following the Asian financial crisis. Originally conceived as a council bringing together finance ministers to discuss macroeconomic policy, its scope has since expanded to cover issues ranging from global development to climate change and gender equality.

Critics, in turn, have called the G20 an ineffective discussion forum. During more than 200 meetings, the group came together around its annual report statement. Otherwise, New Delhi issued only one joint statement – ​​on the African Union.

In a context of growing geopolitical tensions, South Africa and Brazil have openly criticized The Israeli bombardment of Gaza. For its part, China welcomed a delegation Muslim countries in November calling for a ceasefire. Elsewhere, the ongoing conflict in Ukraine has also undermined efforts to reach consensus.

Despite maintaining a neutral position on this conflict, India has become more critical of Russia in recent months. Modi also reduced military purchases from Moscow and strengthened diplomatic ties with the West.

Vladimir Putin, who is under international control arrest warrant for war crimes, refused to attend the September rally in New Delhi. Chinese President Xi Jinping also skipped the event, amid growing geopolitical tensions with India and deepening ties with Russia.

That hasn’t stopped India from “turning the annual summit into an advertisement for Modi’s cult of personality,” said Jayati Ghosh, an economics professor at the University of Massachusetts at Amherst. “In practice, this presidency has been ineffective”, with the host country more concerned with improving its national image than meeting global challenges.

“While trying to project India as a global superpower, Modi is passing the baton with no shortage of issues…the global economy is slowing, climate change is imminent, and conflicts in Ukraine and Palestine have undermined North-North relations. south,” she added.

Lula also takes over at a time of bitter internal divisions within the group, a legacy of outgoing President Narendra Modi (File: Evelyn Hockstein/AFP)

Before the handover this week, Lula told a virtual summit of G20 leaders: “I hope that (Israeli-Palestinian relations) ceasefire) an agreement can pave the way for a lasting political solution to the conflict.”

Brazil has long supported a two-state solution. From The Hamas attacks of October 7 and the subsequent Israeli bombing of GazaLula has repeatedly called for a rapid and definitive end to the fighting.

In October, Brazil led a UN Security Council resolution which called for a pause in the conflict but was vetoed by the United States.

“Lula’s position on Israel is delicate, but he is arguably the world statesman best placed to try to stop the carnage,” Ghosh added.

Elsewhere, Brazil’s president angered Western leaders by suggesting Russia and Ukraine share joint responsibility for their conflict. He publicly supported the participation of Xi Jinping and Vladimir Putin at the G20 summit in Rio de Janeiro next year.

Equitable global growth

At the G20 summit in New Delhi in September, President Lula urged leaders to try to end world hunger by 2030.

“Part of this could be achieved through the creation of a global hunger task force,” a Brazilian government official, who asked to remain anonymous, told Al Jazeera.

“The task force would seek to rally support for areas such as low-carbon agricultural research and improved agricultural insurance, particularly in food-insecure countries… which would require more funding from rich countries,” the source said. It is unclear how likely these measures are to succeed.

Lula also supported the idea of ​​a minimum global corporate tax rate of 15 percent. The Organization for Economic Co-operation and Development (OECD) plan, designed in 2021 to combat tax evasion and stem decades of tax “competition” between governments, could generate at least $150 billion in additional global tax revenue annually.

Nearly 140 governments have signed the OECD agreement and are at various stages of turning the proposal into law.

“By expanding the OECD program, Brazil also wants to increase investments in the green transition. Lula wants the G20 to devote more funds to renewable energy and nature conservation projects,” the official noted.

India turned G20 summit into ‘an advertisement for Modi’s personality cult’ (File: Dar Yasin/AP Photo)

Reforming multilateral institutions

For years, Lula has pushed to strengthen the role of multilateral bodies such as the United Nations in trying to solve global challenges. His attachment to diplomacy, however, goes beyond a penchant for consensus.

At the United Nations General Assembly in New York in September, Lula defended the need to reshape the global governance system. “The unequal and distorted representation at the head of the IMF (International Monetary Fund) and the World Bank is unacceptable,” he said.

In 2022, the IMF provided $160 billion in DTSthe reserve currency of the Fund, to European countries and only 34 billion dollars to the whole of Africa.

“The unfair allocation of SDRs is only part of the problem,” says Rogerio Studart, Brazil’s former representative to the World Bank.

“Fund quota limits are also too low for emergency loans,” Studart said. He was referring to IMF programs such as the Resilience and Sustainability Trust, where grants to countries are capped at 150% of their capital commitments to the fund.

“These measures reduce the amount of money available for climate disasters, particularly in low-income countries. I think Lula will try to increase countries’ quotas for emergency loans and reduce the conditions attached to these programs,” he added, stressing that success was not clear because it had been going on for years. years.

Studart also rejected the World Bank’s “cautious” approach to risk tolerance.

“The Bank can raise a lot more money for developing countries by adjusting its loan-to-equity ratio,” he said. A higher ratio would increase the Bank’s lending capacity, but would result in a higher risk of non-repayment.

His remarks echo a G20 report released in July which said that by slightly increasing their lending ratios, groups like the World Bank could unlock billions of dollars more in new lending. “Brazil will echo the findings of the report,” Studart said.

For Ghosh, professor of economics, “Lula is simply pragmatic. While the previous G20 presidency focused more on domestic politics, Lula is the ideal candidate to try to restore some stability in today’s tense world order.”

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