US sees broad G20 support for its economic vision
By Giuseppe Fonte and Caren Bohan
PITTSBURGH, Sept 24 (Reuters) – The United States said on Thursday there was broad support for its vision to build a more stable global economy and crack down on banks’ risky behavior, although G20 countries were still hashing out the details.
U.S. President Barack Obama, hosting his first Group of 20 summit on the same day he chaired the United Nations Security Council, laid out a broad agenda that included reshaping the world’s economy, reforming financial regulation and tackling climate change.
The White House said regulatory overhaul was the top priority for the G20 and Treasury Secretary Timothy Geithner said he expected to leave the two-day meeting with a firm schedule for implementing reform. [ID:nWEN4027]
Geithner said the challenges facing the global economy “don’t respect national borders, and nor can the solutions come from individual countries acting on their own.”
“Financial risk and leverage is going to flow where the rules are most lax, but the consequences of failure will be felt globally,” he added.
The summit also looked likely to generate an agreement on phasing out fossil fuel subsidies as part of combating global warming, although the timetable was vague. [ID:nN24469250]
The G20 groups the major rich and emerging nations and has become the primary forum for fighting the global economic crisis because it brings in fast-growing countries such as China that are increasingly vital to international commerce.
But it also fuses together a mix of countries with different priorities and different approaches to
solving some of the toughest economic problems.
Some of those divisions were apparent earlier on
Thursday when German Chancellor Angela Merkel warned that the U.S. drive to rebalance the global economy risked distracting the G20 from a more urgent need for market regulation.
With unemployment high in many G20 countries, leaders face intense political pressure to speed up the economic repairs. Merkel faces an election on Sunday and others are facing votes next year.
Aides were still grappling over the precise wording for a statement to be issued at the summit’s conclusion on Friday detailing the G20′s commitments.
France and Germany want curbs on bonuses in the financial sector that they say fostered huge risk-taking and helped cause the turmoil that shoved the world economy into recession.
Japanese Prime Minister Yukio Hatoyama said his
country wants to play a part in crafting global rules to rein in “excessive money-making games.”
A Canadian official told Reuters the G20 would outline pay principles at this meeting but it was up to each country to enforce its own rules.
Emerging markets like Brazil want the G20 to put more emphasis on reforming the International Monetary Fund to give them greater say over lending decisions.
The United States, the world’s largest economy and the epicenter of the global crisis, wants G20 countries to commit to reducing reliance on U.S. consumers by boosting consumption in exporting countries, such as China, while encouraging debt-laden nations such as the United States to save
China has given only qualified support for the idea of policing global imbalances.
Rich countries were pressing big developing nations on Thursday to increase domestic demand but it was still an open issue, an Italian diplomat said.
RULES OF THE ROAD
Protesters ran through an area about a mile (1.6 km) from the cordoned-off convention center where the G20 was meeting, throwing rocks at police and smashing shop windows as officers in riot gear used pepper gas, pellet-filled “beanbags” and batons to disperse them.
Police recruited from around the United States backed up Pittsburgh’s force and camouflage-clad soldiers were stationed in and around the security perimeter.
The sheer volume of problems the two-day summit is set to address prompted low expectations for any near-term action.
There was broad consensus that tougher, coordinated regulation was needed to avoid a repeat of the two-year crisis that cost millions of people their jobs and forced governments to put up trillions of dollars in taxpayer money to prop up a faltering financial system.
“We do know that unless we all have greater rules for the road, money can fly and transfer anywhere,” White House spokesman Robert Gibbs said. “So if there are weaker rules in one place but everyone else is taking concerted efforts, you don’t have a defense against what happened happening again.”
G20 leaders were keen to show their resolve to repair the financial system had not faded now that the global economy appeared to be pulling out of its downturn with greater force than many economists had predicted.
In another sign of increasing stability, major central banks announced they planned to scale back massive injections of U.S. dollars into their banking systems that were part of efforts to shore up crisis-hit economies.
“We are out of recession but not out of the crisis,” Christine Lagarde, France’s finance minister, said on CNBC.