Bessent no-show, Brics tensions set to cast shadow over Durban G-20 meeting

Straits Times

16 hours ago

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The Durban gathering of finance chiefs on July 17 and 18 also unfolds against a backdrop of mounting economic pressures.
JOHANNESBURG - Another no-show by US Treasury Secretary Scott Bessent, Mr Donald Trump's tariff threats and rising tensions between Washington and Brics countries all look set to overshadow this week's meeting of G-20 finance chiefs in Durban, South Africa.
Several key officials including
Mr Bessent skipped February's Cape Town gathering of finance ministers and central banks in the grouping, already raising questions about its ability to tackle pressing global challenges.
'I think it's problematic not to have the world's largest economy represented at the table, at least at a senior political level,' said Mr Josh Lipsky, chair of international economics at the Atlantic Council.
'It raises questions about the G-20's long-term viability,' said Mr Lipsky, adding that Mr Bessent's absence foreshadowed US plans for a slimmed-down, 'back to basics' G-20 when it assumes the grouping's rotating presidency in 2026.
Mr Trump has implemented a baseline 10 per cent tariff on all US imports, with punitive rates targeting specific countries and products - including steel and aluminium at 50 per cent, autos at 25 per cent, and threatened levies of up to 200 per cent on pharmaceuticals.
Extra tariffs on 25 countries are set to take effect on Aug 1.
His threat to impose further tariffs on Brics countries adds complexity, given that eight G-20 members - including host South Africa - belong to the expanded Brics grouping.
The overlap hints at the emergence of competing forums as Western-led institutions face credibility challenges.
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'Policy uncertainty is the biggest theme at this point in time,' South African Reserve Bank Deputy Governor Fundi Tshazibana told Reuters.
The G-20 has its origins in past crisis firefighting and really took off as countries around the world saw a need to coordinate policies to emerge from the global financial crisis of the late 2000s.
'The G-20 was built around a presumption that all the world's major economies shared a common interest in a stable, relatively open global economy,' said Mr Brad Setser of the Council on Foreign Relations. 'But Trump doesn't really care about stability and wants a more closed global economy.'
'Difficult space'
The Durban gathering of finance chiefs on July 17 and 18 also unfolds against a backdrop of mounting economic pressures, particularly for African economies.
Sub-Saharan Africa's external debt has ballooned to US$800 billion (S$1 trillion), or 45 per cent of GDP, according to Goldman Sachs, while traditional funding sources are drying up.
Chinese lending has slowed to a trickle after years of expansion, leaving an US$80 billion financing gap.
'The views that they've expressed are if you negotiate them down before taking the loan, they will go with that,' said Mr Trevor Manuel, the former finance minister of South Africa who is leading the Africa Expert Panel of the G-20.
'But once the loan is made, then they expect a return, and that is embedded in their legislation. So that is one issue that needs a lot of attention,' he said.
China's Belt and Road Initiative has brought very significant resources to the African continent, 'but there are also the offsets,' said Mr Manuel.
'I think that part of the push going forward is greater transparency, which means that some of the barter arrangements and so on need to be dealt with quite differently.'
Meanwhile, US and European grants - accounting for 25 per cent of the region's external financing - face cuts as Washington suspends foreign aid and European capitals redirect funds towards defence.
'Africa is in a difficult space,' said Mr Lumkile Mondi, political commentator at the University of Witwatersrand.
'Investment in the continent is going to dwindle because of high levels of indebtedness and low GDP growth, making it less relevant in the current geoeconomics.'
When it assumed the G-20 presidency in December under the motto 'Solidarity, Equality, Sustainability', Pretoria had hoped to use the platform to pressure rich countries on climate finance and address the distrust between the global North and South.
Instead, it finds itself managing the fallout from aid cuts and tariff wars that directly undermine those goals.
As the continent's most developed economy, South Africa faces pressure to champion African interests while navigating great power rivalries. The National Treasury said it was 'premature to comment' on specific goals for the gathering, however.
Director General of Treasury Duncan Pieterse said in a statement on July 13 that they hoped to issue the first Communique under the South African G-20 presidency at the end of the meetings.
On Monday the G-20's financial stability watchdog delivered a new plan on how to tackle climate risks but paused policy work amid a US retreat that has tested efforts to advance a united financial policy on climate-related risks.
The US has withdrawn from multiple groups dedicated to exploring how flooding and wildfires and big climate-related policy shifts could impact financial stability. REUTERS