G-20 sets ambitious goals, but short on details
PITTSBURGH — World leaders lined up Friday behind sweeping promises to fix a malfunctioning global economic system in hopes of heading off future financial meltdowns. For now, they said, they would keep stimulus programs going “until recovery is assured.”
“We will need to work together as we manage the transition to a more balanced pattern of global growth,” the leaders of 20 wealthy and developing nations said in a draft statement as they wrapped up two days of talks.
In the first international summit hosted by President Barack Obama, the G-20 moved to give China and other fast-growing economies a bigger say in decision-making and to crack down on greedy bankers.
They agreed to make themselves the lead group for tackling international economic issues in the future, eclipsing the older, Western-dominated Group of Eight.
They moved to require members to subject their economic policies to the scrutiny of a peer review process that would determine whether they were “collectively consistent” with sustainable global growth. They promised tighter and more coordinated financial regulation.
And, repeating pledges from G-20 summits in November and April, when financial panic was rampant, they vowed anew to “reject protectionism in all its forms.” They also went along with Obama’s push for a pledge to withdraw government subsidies for fossil fuels such as oil, coal and natural gas believed to contribute to global warming.
While issuing the lofty vows, the leaders failed to define how to accomplish many of them and were quickly back to bickering over details.
They did not suggest, for instance, how the peer review process would be enforced. And they failed to mention that previous pledges to avoid protectionism had been ignored by nearly all 20 members.
Disagreements over whether China should gain voting strength in the International Monetary Fund at the expense of European nations and over global warming language marred the summit.
The final statement said voting powers in the IMF “should reflect the relative weights of its members in the world economy, which have changed substantially in view of the strong growth in dynamic emerging market and developing countries.”
Now, developed industrialized nations wield about 57 percent of the voting rights in the IMF to about 43 percent for developing nations. The G-20 leaders called for shifting shares from developed powers to emerging ones by at least 5 percentage points. They called for a similar shift at the World Bank. European countries, particularly France and Britain, have been resisting such changes.
Despite these disputes, participants were quick to proclaim success.
“The old system of international economic cooperation is over. The new system, as of today, has begun,” declared British Prime Minister Gordon Brown, referring to the enhanced status for the Group of 20.
“I have the impression that we are on a successful path,” said German Chancellor Angela Merkel, before leaving Pittsburgh to fly back to Berlin, where she faces German voters on Sunday.
The summit partners did heed a warning, sounded frequently by Obama, to resist unwinding stimulus programs too quickly to avoid relapses.
“In the short-run, we must continue to implement our stimulus programs to support economic activity until recovery clearly has taken hold,” the draft said.
Summit partners held a series of discussions Friday on difficult problems still confronting the economy.
Obama circulated among the leaders before the talks began, speaking to Chinese President Hu Jintao and Russian President Dmitry Medvedev.
Said Hu: “The foundation of an economic rebound is not yet solid, with many uncertainties remaining. A full economic recovery will take a slow and tortuous process.”
In an apparent reference to a recent trade spat in which the United States imposed punitive tariffs on Chinese tire imports, Hu called on the leaders to “resolutely oppose and reject protectionism in all forms.”
Leaders papered over differences on the executive bonus issue by avoiding language for specific caps, something that France had pushed for but that the United States had opposed. A U.S. push for stronger requirements for bank capital — the cushion that banks hold against loan losses — was included, but with many of the specifics over how the capital would be determined left to set at later meetings.
The leaders also agreed to a U.S. proposal for a “framework for strong, sustainable and balanced growth” to deal with such issues as China’s huge trade surpluses and the soaring U.S. budget deficit.
The streets of Pittsburgh were generally calm. A few thousand demonstrators pledging nonviolence banged drums, danced and held signs advocating assorted causes. The march had a city permit and organizers pledged to keep it nonviolent. On Thursday, a march without a permit and other demonstrations ended with clashes with police and nearly 70 arrests.
Associated Press writers Pan Pylas, Michael Fischer, Foster Klug, Ben Feller and Daniel Lovering contributed to this report.
(This version CORRECTS that developing nations now have 43 percent of the voting rights in the IMF, not 48 percent.)
