What Did Russia Gain From The G20 Summit?

Posted by Written by

Multilateral signals are pointing to emerging economies uniting behind Moscow

By Chris Devonshire-Ellis

Much of the media attention concerning the weekend’s G20 summit in New Delhi has concerned two men who weren’t actually there – Vladimir Putin and Volodymyr Zelensky. Rather than the real meet of the multilateral and various bilateral discussions that took place, attention focused on the Summit declaration and especially what it had to say concerning the Ukraine conflict.

In this instance, Russia gained some political traction, with the attending Russian Foreign Minister, Sergey Lavrov stating that the statement, which refrained from criticising Russia’s position, was a sign that the global south would no longer blindly follow the Western powers. “They don’t want to be told to follow the Zelensky formula,” Lavrov said, “This is disrespectful to developing countries. This is neo-colonialism from western countries, and they have failed at the G20.”

Lavrov said it was a diplomatic win for Russia, saying the declaration “fully reflects our position”.

Although back in 2021, a United Nations motion roundly condemned Russia’s role in the Ukraine conflict, this initial viewpoint has subsequently been significantly eroded. Since then, a Western-lead bloc including the United States, European Union, UK, Canada, Japan, South Korea Australia, and New Zealand have imposed sanctions, representing 34 countries from a global total of 195. This indicates that of the 195 countries in the world, 161 are not prepared to become involved, disagree with the West’s position or are pro-Russia.

The G20 statement was immediately criticized by Ukraine, who labeled the group as ‘having nothing to be proud of’. Zelensky himself appears to have been sidelined as a conversation point, possibly as the gruff, constant demands for money and weapons, while dressed in fatigues rather than proper attire is starting to wear thin. This is especially true when accusations of embezzlement and fraud over US$100 billion of aid are surfacing and questions are being asked. People expect some form of traditional respect and manners, especially when sums of money of the size that have been sent to Ukraine. The image is bordering on the disrespectful, and the requests to attend summits of global importance inappropriate when Zelensky only has a repetitive rhetoric to promote without offering realistic solutions to his problems.

The Ukrainian President Zelensky and his wife meet Swedish King Carl XVI Gustaf and Queen Silvia at Stenhammar Palace in Stockholm last month.

Looking towards 2024, Brazil’s President Lula, who will host next years G20 summit in Rio de Janeiro, said that the Russian President would be welcome and would not be arrested, stating that “What I can tell you is that, if I’m Brazil’s president, and if Putin comes to Brazil, there’s no reason he’ll be arrested,” adding that “It’s true that Russia invaded Ukraine without asking anyone. And that the US invaded Iraq without asking anyone.” Interestingly, the 2025 G20 will take place in South Africa, meaning that the past three G20 summits would have taken place in BRICS nations.

Lavrov also praised the role of India in the negotiations, saying it had pushed back against attempts to “politicise” the G20. India has deep historical ties with Russia, which is its largest supplier of arms, and has remained firmly neutral on the Ukraine war. The Indian side turned down requests by other members for Ukraine to take part in this year’s G20 summit.

The Turkish president, Recep Tayyip Erdoğan, who was in Russia last week to meet Vladimir Putin over the resumption of the Black Sea grain deal – said he had discussed it again at length with Lavrov

at the G20 summit. While warning western powers that “any initiative that isolates Russia is bound to fail”, Erdoğan said he was “hopeful about the grain deal, it could start again”. Doing so however will require a partial loosening of Western sanctions on Russia that prevent Russian grain and fertilizers being exported to poorer nations. The developing world is now questioning why sanctions imposed by a minority of countries interferes with their domestic food security issues, indicating that the West has rather tied itself in knots over sanctions and is experiencing considerable blow-back.

Another win for Russia was the acceptance into the G20 of a permanent seat for the African Union, which President Putin had promised African leaders Moscow would push for at the recent Russia-Africa summit in St.Petersburg. He delivered.

Russia is also being viewed in Africa and Asia as genuinely trying to assist with food security issues, whereas the West is being seen as obstructive and unappreciative of their concerns, and intransient concerning the secondary impact sanctions upon Russia have on their ability to import grains and fertilizers.

Concerning trade with fellow BRICS member India, Lavrov announced that India plans to propose various investment options for the “billions of rupees” that Russia has amassed from its exports, saying that “I have recently met with my counterpart, S Jaishankar, and discussed bilateral issues, including the issue of trade settlement. In the current situation, Russia has billions of rupees accumulated in the accounts of Indian banks, and we are discussing how they can be used. And our Indian friends have conveyed they will suggest the promising areas where these funds can be used as investments.”

Although India and Russia initially agreed to settle their trade transactions in rupees after establishing the framework, the system failed to gain traction as anticipated. Moscow quickly amassed a surplus of billions of rupees due to New Delhi’s substantial oil purchases.

Russia has become a leading oil supplier to India. The two countries have increasingly settled a larger portion of their trade deals in their respective national currencies, while also redirecting shipments towards the east. However, as imports from India remain stagnant, over US$40 billion in Indian rupees have accumulated in special vostro accounts which Indian banks hold for Russian banks in the domestic currency. Russian companies have been unable to repatriate these rupees due to local currency restrictions.

Perhaps the most significant announcement of the weekend was the launch of a new economic corridor that will link India with the Middle East and Europe through a new network of rail and shipping infrastructure – although it remains in the early stages of planning. The United States and European Union have said that this corridor, which runs from India to Saudi Arabia via existing maritime routes and will involve the financing and construction of rail corridors across Saudi Arabia and Jordan to ports in Israel, is a response to China’s Belt & Road Initiative and will ‘counter’ China’s regional influence. Frankly, it’s hard to see how, as Chinese logistics companies will choose the most competitive freight option, they won’t care about who financed transport corridors.

There’s also an intriguing development about the proposed corridor from Saudi Arabia. The INSTC runs north-south via Iran and connects with Saudi ports. In fact, Riyadh is quite likely to officially join the INSTC project and act as a hub further extending it to its Red Sea port at Jeddah – which would then assist fellow new BRICS nations such as Ethiopia develop as future African legs of the network. With the US and EU fixating on bringing Saudi Arabia into their proposed rail corridor, it appears the Russians have beaten them to it – the first direct freight train from Russia to Saudi Arabia arrived last month.

Lavrov, it appears, has had a very productive G20 with the balance of emerging economic opinion starting to shift behind Russia. That momentum can be expected to become louder at the G20 summits in Brazil and South Africa, additionally suggesting that the BRICS have become the real power behind the throne as concerns global affairs.

Chris Devonshire-Ellis is the Chairman of Dezan Shira & Associates. He can be contacted at asia@dezshira.com

Related Reading


About Us

During these uncertain times, we must stress that our firm does not approve of the Ukraine conflict. We do not entertain business with sanctioned Russian companies or individuals. However, we are well aware of the new emerging supply chains, can advise on strategic analysis and new logistics corridors, and may assist in non-sanctioned areas. We can help, for example, Russian companies develop operations throughout Asia, including banking advisory services, and trade compliance issues, and have done since 1992.

We also provide financial and sanctions compliance services to foreign companies wishing to access Russia. Additionally, we offer market research and advisory services to foreign exporters interested in accessing Russia as the economy looks to replace Western-sourced products. For assistance, please email russia@dezshira.com or visit www.dezshira.com

Next Article