The Syrian crisis is expected to dominate discussions when leaders of the world’s top 20 economies meet in St. Petersburg on Thursday to begin a two-day summit, but the global economy will remain a key concern, and talks are expected to focus on a proposed crackdown on tax evasion, debt and deficit targets, volatility in emerging markets and trans-Pacific trade.
President Vladimir Putin, in a departure from Russia’s longstanding opposition to intervention in Syria, said that he may support a Council resolution authorizing the use of force, if it is proved beyond doubt that the Syrian government used chemical weapons, but warned the U.S. and its allies against pursuing unilateral action in Syria.
Deficit and Debt Reduction
Canada will continue to push G-20 members to reduce government deficit and debt, despite dwindling support for the policy as employment fails to gain momentum in Europe and elsewhere, even after a slow yet sustained economic recovery in the past quarters.
“We want to see that fiscal consolidation continued,” Andrew MacDougall, a spokesman for Canadian Prime Minister Stephen Harper, was quoted as saying by Reuters. “If you don’t have your books in order, it limits your ability to maneuver, so the longer you put that decision off, the harder your choices become.”
G-20 member nations will present separate fiscal strategies rather than adopt a universal measure to achieve fiscal targets, Reuters reported, citing another Canadian official.
Tax Evasion, Global Trade
Ways to combat tax evasion, which was high on the agenda of the G-8 summit in June, will remain in the spotlight during the G-20 meet, and it is seen as one of the topics on which the group, including the U.S. and Russia, may reach an agreement.
The G-20 attempts to modify the international tax structure to prevent wealthy industrialists and multinational companies from exploiting differences in taxation across world nations. Finance ministers from G-20 nations formally extended support, in July, to adopt the plan, and Thursday’s summit is expected to become a milestone in updating a decades-old global tax system.
Talks on improving international trade, including the Trans-Pacific Partnership, or TPP, agreement, are also expected to take place on the sidelines of the summit.
TPP is one of the most ambitious free-trade agreements ever proposed and is currently being negotiated between the U.S., Australia, Canada, Singapore, Brunei, Chile, Malaysia, Mexico, New Zealand, Peru and Vietnam.
Turbulence In Emerging Markets And Capital Flows
India is one of the worst-hit emerging markets among G-20 economies, alongside Turkey and Indonesia, and India’s Prime Minister Manmohan Singh, in his address to the nation on Wednesday, before leaving for Russia, said the G-20 summit comes at a time when India has introduced several measures to strengthen economic stability, stabilize the currency and create a more investor-friendly environment.
But he added that the external environment needs to be “stable and supportive” and the “G-20 Summit, therefore, is an important forum to seek an international climate that is beneficial for all countries.”
However, a Canadian official who spoke to Reuters, said India and other countries, which seek investment in infrastructure, should be more committed to lure investors, rather than attempting to use international platforms to call on foreign governments and international development banks to fill the gap.
Another Canadian government official told Reuters that the U.S. Federal Reserve’s proposed move to cut back on its massive bond-buying program, spurred by improving private-sector demand in the U.S., is not the only reason for turmoil in emerging markets.
“Some of these challenges also reflect the state of their own economies,” the official said.