SAO PAULO – Finance leaders from the world’s largest economies failed to agree on a joint statement as they wrapped up talks on Feb 29, with divisions over the wars in Gaza and Ukraine overshadowing efforts to forge a consensus on global economic development.

Brazil, which hosted finance ministers and central bank chiefs from the Group of Twenty (G-20) major economies, issued its own summary in lieu of a shared communique.

India took a similar tack in its G-20 presidency in 2023, but still rallied most of the G-20 in condemnation of Russia for invading Ukraine.

Brazil’s summary, in line with a draft communique seen by Reuters on Feb 27, cited the economic risks of “wars and escalating conflicts” but urged debate on them in other venues.

It also noted higher odds of a “soft landing” for the global economy, which would cool inflation without a major recession.

Brazilian finance minister Fernando Haddad told journalists that differences among G-20 foreign ministers discussing regional conflicts the week before had “contaminated” talks on the financial track, spoiling efforts to reach a joint statement.

G-20 officials debated late into the night and down to the final hours of the meeting how to describe the wars in a joint communique, with Russia and major Western nations at loggerheads over the language, according to people familiar with the matter.

Those geopolitical tensions ran throughout the two-day meeting, at times overshadowing the formal agenda, such as discussion of a global minimum wealth tax on the ultra-rich proposed by Brazil.

German finance minister Christian Lindner had said earlier on Feb 29 there was still hope the G-20 finance ministers would agree on a communique with a reference to geopolitical risks to economic growth.

“There was a point when the lack of consensus was so small that it concerned one word,” said Mr Haddad, without giving detail.

The G-7 group of rich Western nations and Japan are backing the idea of referring to the war “on” Ukraine, while Russia wants to describe it as the war “in” Ukraine, said two people familiar with the matter.

The G-7 countries also backed language describing the war in Gaza as a “humanitarian crisis” with no mention of Israel, the sources said.

Brazilian officials hosting the event have tried to focus talks on economic cooperation to tackle issues such as climate change and poverty, but countries including Germany have pushed for a joint statement that mentions wars in Ukraine and Gaza.

Germany’s Mr Lindner insisted there could be no business as usual amid a war against Ukraine, Hamas “terror” and a humanitarian situation in Gaza.

“All of this cannot leave us cold, all of this must be discussed here,” he told reporters on Feb 29 morning. “A draft has been prepared that reflects the request that the geopolitical issues are discussed.”

Despite the tensions hanging over the meeting in Sao Paulo, Mr Achim Steiner, head of the United Nations Development Programme (UNDP), called the start of Brazil’s presidency in 2024 a success, as the only contention of the second day of finance track talks was “over a few words” in a joint statement.

“Brazil had set clear priorities, for example, with their tax proposal,” Mr Steiner told Reuters on Feb 29.

As part of efforts to address inequality, Brazil has proposed debates on a global minimum wealth tax that would ensure increased tax contributions by super-rich individuals.

“Even with slightly higher tax rates for the approximately 2,500 billionaires worldwide, very considerable additional revenue could be generated,” he said.

Brazil will aim to craft a statement on international taxation by the group’s July summit, Mr Haddad said on Feb 29.

He said he was expecting a report on the matter from the European Tax Observatory, which has advocated for a global wealth tax on the world’s richest people, in contrast with income taxes common in most major economies.

French finance minister Bruno Le Maire expressed support on Feb 28 for a global minimum tax on the world’s most wealthy.

Japan’s representative – vice-finance minister for international affairs Masato Kanda – who is participating in the G-20 talks on behalf of the country’s finance minister, said the group has broadly endorsed Brazil’s proposal to highlight steps to address inequality, as 2024’s mainstream agenda. REUTERS