(Bloomberg) -- The world’s top economic policymakers figure they’ll have to steer clear of two conflicts convulsing global politics — the wars in Ukraine and Gaza — to make progress on anything else at this week’s G-20 summit in Brazil.

There’s plenty more to talk about. The host nation is pushing ambitious plans on inequality and climate change. Finance ministers are keen to address trade and corporate taxation. Central bankers want to discuss cross-border money flows and the tricky last phase of the global inflation fight.

In a blog post Monday, International Monetary Fund chief Kristalina Georgieva called the Sao Paulo gathering “an important opportunity to shift focus from firefighting against successive shocks to a medium-term agenda.”

The trouble is that an increasingly polarized world is finding it hard to look beyond some of those shocks – especially since responses to the wars in Ukraine and the Middle East are exacerbating the split between wealthier countries and emerging ones.

The Gaza conflict hung over last week’s G-20 foreign ministers meeting in Rio, amid a row between the host nation and Israel – after Brazil’s President Luiz Inacio Lula da Silva likened the Jewish state’s behavior to Nazi Germany. Illustrating how the war is roiling domestic politics all over the world, Lula’s predecessor Jair Bolsonaro was pictured at a protest rally on Sunday kissing the Israeli flag. 

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The global economic fallout from Middle East turmoil has been largely contained so far, though that could change if an escalation sends oil prices up, or if Red Sea shipping suffers more attacks that force a costly rerouting of world trade. For finance chiefs this week, Russia’s war in Ukraine — which just entered its third year — may be the bigger obstacle. 

Keep Ukraine Separate

A plan that’s emerging to paper over gaps is for the US-led bloc of developed economies — which has been strongest in condemning the Russian invasion, and applying punitive sanctions – to address that war’s impact in a separate statement, according to officials from several delegations. 

That could take the form of a declaration by the G-7 advanced-nation group, which meets on Wednesday, the officials said. It would clear the way for the final G-20 communique — an end-of-summit document in which members typically sum up whatever consensus they’ve reached – to focus on other topics.

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The Russian war on Ukraine hit a global economy that was still recovering from pandemic shock. It set off a price-spike in energy and food that caused havoc worldwide — especially for poorer nations that have to import those staples, and which also now face higher borrowing costs.

One result has been to land several fragile economies, from Zambia to Pakistan, in deep debt trouble. How to help them out of it will likely be a key G-20 topic this week.

The US and China — the world’s two biggest economies, and the leaders of what are coming to look like rival blocs — are discussing new measures to prevent a wave of emerging-market defaults. Any breakthrough they make would likely need backing from the full G-20, which has so far struggled to come up with fixes for pandemic debt distress.

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The reports of progress on debt resolution come as the US and China take opposite sides on both the Ukraine and Mideast conflicts. Beijing has tacitly backed Russia’s invasion — while joining the near-global consensus for an immediate cease-fire in Gaza, which Washington has defied.

Agree to Disagree?

That points to the key challenge for economic leaders in Sao Paulo this week: how to spotlight areas they might agree on — and find a civil way of agreeing to disagree on the rest.

One Brazilian official said that from the host nation’s perspective “there has to be consensus,” and the toughest part will come tomorrow when discussions on how to refer to global conflicts are due. 

Another official was downbeat on the prospects, saying there probably won’t be much progress on issues like inequality or climate change.

The likely upshot is a relatively short and bland closing statement from the G-20. Brazil’s initial draft was about three pages. In preliminary talks on Monday, negotiators did explore some further issues on trade and debt — but they did so amid some hesitance, because widening the agenda increases the risk that consensus will break down, according to one person with knowledge of discussions.

In her blog post, Georgieva said the spread of military conflict has laid bare the economic risk of fragmentation, with almost three times as many trade-restricting measures imposed in 2023 as in 2019 – and outlined the challenge facing G-20 finance chiefs this week.

“No country stands to gain from the splintering of the world economy into blocs,” she said. “Restoring faith in international cooperation is critical.”

--With assistance from Manuela Tobias, Beril Akman and Martha Beck.

©2024 Bloomberg L.P.