– Bernd Debusmann is a Reuters columnist. The opinions expressed are his own –

The U.S. case for isolating Cuba and keeping it out of international meetings such as this week’s Summit of the Americas sounds simple: the country doesn’t have democratically elected leaders, it holds political prisoners, it violates human rights and its citizens can’t travel freely. All perfectly true.

But if the logic used for isolating Cuba were applied consistently, neither China nor Saudi Arabia, for example, should have taken part in the London G20 summit. The U.S. State Department estimates China has “tens of thousands” of political prisoners and describes it as “an authoritarian state in which the Chinese Communist Party … is the paramount source of power.”

That has made little difference to the close relationship of mutual dependence between the U.S. and China, the largest creditor of the United States. During U.S. Secretary of State Hillary Clinton’s February visit to China, pragmatism triumphed over human rights concerns as she urged the Chinese to keep buying U.S. treasury bonds.

In comparison to China’s “tens of thousands,” the State Department’s latest human rights report quotes a Cuban human rights group as saying the government there held at least 205 political prisoners at the end of 2008, down from 240 at the end of 2007.

The Saudi monarchy, according to the State Department report, denies its citizens the right to change the government peacefully, holds political prisoners, curbs free speech, restricts religious freedom, tolerates violence against women, and sanctions corporal punishment. The list goes on and includes lack of due process in the judicial system.

If the logic applied to Cuba were consistent, U.S. citizens should be banned from traveling to North Korea, an “absolute dictatorship” where the State Department noted extrajudicial killings, disappearances, arbitrary detentions, and political prisoners. Instead, the only country to which the U.S. government restricts travel by its citizens is Cuba.

In advance of making his first appearance at a Hemispheric summit this week, U.S. President Barack Obama eased restrictions his predecessor, George W. Bush, had imposed to make it more difficult for Cuban-Americans with relatives on the island to travel and send money there. Obama also allowed U.S. telecommunications companies to bid for Cuban licenses.

These are small steps that fall far short of lifting the 47-year-old U.S. trade embargo on Cuba, a Cold War measure that demonstrably failed in its aim to bring down the communist government of Fidel Castro, who defied 10 successive U.S. presidents, both Democrats and Republicans, before he formally handed power to his brother Raul last February due to a long illness.

HAVANA-WASHINGTON THAW?

Raul Castro, who is 77 and was Cuba’s defense minister for almost five decades, has since made several key changes in the leadership. They included firing foreign minister Felipe Perez Roque, one of a group of young officials whose dedication to Fidel Castro was so fierce they earned the nickname “tropical Taliban.” He was replaced by Bruno Rodriguez, a less doctrinaire foreign service veteran.

Some Cuba watchers saw this change as a move to facilitate efforts to thaw relations between Havana and Washington. How far and how fast Obama will go is certain to be a topic at the summit in Trinidad and Tobago where Cuba is the only country in all the Americas not invited.

Advocates of lifting the embargo, a policy change that would finally bring the United States in line with the rest of the world, see light at the end of the long tunnel. “This is the beginning of the end of the worst, least successful foreign policy experiment in the history of the United States,” in the words of David Rothkopf, head of a consultancy who blogs at Foreign Policy magazine.

Wishful thinking? Lifting the embargo would require repealing legislation — including the controversial 1996 Helms-Burton law - that penalizes companies doing business with Cuba. In one of its more bizarre interpretations, U.S. pressure resulted in Mexico City’s Sheraton hotel expelling a 16-strong Cuban delegation attending an energy conference there a few years ago.

The beginning-of-the-end school of thought points to legislation now pending - The Freedom to Travel to Cuba Act - which would allow all Americans, not only Cuban-Americans with family on the island, to visit. If that act were passed, a study for the International Monetary Fund estimates that up to 3.5 million Americans could visit annually.

Cuba is not on the official agenda of the Trinidad summit (the fifth in a series that began in Miami in 1994) but Venezuela’s left-wing, anti-American president, Hugo Chavez, is certain to bring it up, along with a demand that the 34-member Organization of American States readmit Cuba. Its membership was suspended in 1962.

The guideline that only democratically-elected leaders can take part in summit meetings dates from the 1994 gathering - and even then, the logic was flawed. The Miami meeting’s participants included then Peruvian President Alberto Fujimori, a leader of dubious democratic credentials whose acts in office included dissolving Congress and closing the country’s courts.

He then won elections boycotted by the opposition. This month, a Peruvian court sentenced Fujimori to 25 years in jail for human rights abuses and involvement in two military massacres during a campaign against left-wing guerrillas.

Obama campaigned for president on a platform of “change we can believe in.” His moves on Cuba will provide a good indicator of how much of a change agent he really is.

– Paul Taylor is a Reuters columnist. The opinions expressed are his own –

Thursday’s G20 summit may not mark the end or even the beginning of the end of the global recession. It did mark the end of the ascendancy of the unfettered, Anglo-Saxon model of capitalism.

What comes next is far from sure, but it will be different from the headlong dash for individual enrichment, short-term profit and financial acrobatics that began with the dominance of U.S. President Ronald Reagan and British Prime Minister Margaret Thatcher in the 1980s. The widespread acceptance of increased regulation would have been anathema for U.S. President Barack Obama’s predecessors.

“The old Washington consensus is over,” British Prime Minister Gordon Brown declared after chairing the London summit. It was a clear acknowledgement that the deregulation that allowed casino capitalism to flourish on Wall Street and in the City of London, the world’s two biggest financial centers, had failed and will be fundamentally overhauled.

Brown’s role in brokering a bigger-than-expected G20 deal on refinancing and reforming the International Monetary Fund and World Bank, extending the scope of regulation and providing new finance for trade and the poorest countries was a personal success. But it may not help him much at home, where many recall his 1997-2007 decade as a “light-touch” finance minister who claimed to have ended the cycle of “boom and bust.”

The $1.1 trillion in funds for the IMF, the World Bank, trade finance and development which he announced, even if it is not all new money, may begin to restore market confidence that countries will not default, and to revive trade flows.

But Brown and Obama did not achieve their initial declared objective of persuading countries with balance of payments surpluses such as Germany and China to give a bigger fiscal stimulus to the world economy.

Nor did they come up with a solution for disposing of banks’ toxic assets, which continue to impede a recovery.

Indeed, they were upstaged by French President Nicolas Sarkozy and German Chancellor Angela Merkel, who appeared in lockstep on the summit’s eve to hammer home demands for tougher regulation of all markets and financial institutions, and for the naming of shaming of tax havens.

“We have taken an important step toward creating order in an area of the world where there was previously no order,” Merkel told a news conference. Sarkozy said the world had turned the page on “the Anglo-Saxon model.”

The Franco-German couple, so strained since the hyperactive Sarkozy’s election in 2007, achieved almost all its objectives. The French leader’s pre-summit theatrics of threatening to leave an empty chair may have been an empty threat, but it played well back home and may have put his host on the defensive.

Obama, who was more of a listener than a leader at his first global summit, made clear that while he believed in the free market, executive pay and rewards would have to be changed to encourage long-term performance instead of quick profits.

Other winners at the table included Chinese President Hu Jintao, who was courted by Obama and Sarkozy and magnanimously contributed $40 billion toward the IMF war chest to help countries in financial trouble. In return, Hu was promised a reform of IMF seats and votes in 2011 that will give his emerging economic colossus, which now has no more say than Belgium or Switzerland, far greater power.

That redistribution will also benefit India, Brazil, Mexico and Indonesia, and should reduce the traditional U.S. and European dominance over international financial institutions, symbolized by their carve-up of the top jobs.

Agreement to publish a list of tax havens that use banking secrecy to deny cooperation with other countries about suspected tax cheats and money launderers came only after countries such as China and Brazil had been assuaged about the fact that it was compiled by the Organization for Economic Cooperation and Development, a largely Western, rich countries’ body.

Russian President Dimitry Medvedev was also among the winners, enjoying a fresh start in relations with the United States despite his country’s continued military presence in breakaway regions of Georgia following last year’s war.

— Paul Taylor is a Reuters columnist. The opinions expressed are his own –

A year ago, mere mention of the notion of a multipolar world was a sure way to lose friends and dinner invitations in Washington.

The London G20 summit shows just how far power has ebbed from the United States, and from the West in general. Until late 2008, the Group of Eight mostly Western industrialized nations — the United States, Canada, Germany, France, Britain, Italy, Russia and Japan — was the key forum for economic governance.

The new, unwieldy top table has emerged faster than anyone dared predict because a humbled America and a chastened Europe need the money and cooperation of rising powers such as China, India, Russia, Brazil and Saudi Arabia to fix the world economy.

The United States remains the pre-eminent military and economic power, and how it manages to clean up its banking system will be the biggest factor in the length and severity of the crisis. But how the emerging countries manage their currency reserves, exchange rates, trade policies and energy exports will also determine whether we recover from recession in the next 18 months or slide into a depression.

U.S. President Barack Obama, on his maiden foray in global diplomacy, showed he understands the new dispensation by paying respects in prior bilateral meetings to Chinese President Hu Jintao and Russian President Dmitry Medvedev.

The Europeans acted as midwives to this new world (dis)order, but they have yet to accept that they too need to be cut down to size. To make way for the legitimate aspirations of emerging and developing nations in international financial institutions, the number of Europeans at the table will have to shrink. This should force them to pool their representation under the European Union, as they do in trade negotiations.

That may be unpalatable not just for Britain but even for core euro zone members such as Germany and France.

Yet French President Nicolas Sarkozy and German Chancellor Angela Merkel made the best case for a single EU seat by working like a tag team to pressure the United States and Britain into stricter regulation, notably of hedge funds, and tougher action against tax havens.

Managing the new power constellation won’t be easy and may not work. It will take trade-offs between Washington and New Delhi to clear the path for a global trade pact, among Western nations, China and India to fight climate change, and between industrialized and developing powers to reallocate power in the IMF, the World Bank and the United Nations.

At least now almost all the key players are at the table, except for Iran. But that’s another story.

– Eric Auchard is a Reuters columnist. The opinions expressed are his own –

Some of the world’s biggest mobile operators say they can stimulate the global economy by luring $550 billion in new investment, but only with the implied trade-off that they retain their monopoly market powers.

AT&T, Deutsche Telekom, NTT DoCoMo, Telefonica and Vodafone are among the carriers who have called on national regulators to provide a “minimally intrusive” regulatory environment to encourage new investment.

In a letter to world leaders gathered at the G20 Summit in London, the industry is looking to showcase its power to create jobs and stoke business activity by arguing for rule-making that would ensure their ability to make decent monopoly profits on new networks.

A group of executives representing 24 of the world’s biggest carriers and phone equipment makers such as Alcatel-Lucent, Ericsson and Nokia also say regulators should free up more radio airwaves for their services.

The mobile industry is suggesting a lighter regulatory touch that would effectively end efforts to promote greater competition among smaller players and new market entrants.

It’s a self-serving argument, but they make strong points, worth considering.

The executives cite a study by consulting firm AT Kearney that suggests that 25 million jobs could be created and global gross domestic product (GDP) would increase by 3-4 percent over five years if upward of $500 billion in private capital is invested in new networks and services. They point to evidence that in emerging economies, a 10 percent rise in mobile subscribers boosts annual GDP growth by 1.2 percent.

Governments around the world are running up against limits to how much fiscal stimulus can be applied to get economies moving again without the money going to waste or reviving inflation. Once financial markets are stabilized and consumer confidence can be restored, it will be up to industries to drive the economy forward.

The mobile phone industry is presenting governments with a devil of a choice: Go light on our entrenched powers and efforts to reform the industry’s monopoly structure or carry on making it hard for us to invest in new businesses and do without our help in the next wave of recovery and economic stimulus.

These are just the sort of regulatory trade-offs that are an important part of what got us into the current economic mess. On the downside, the vast consolidation of the banking and financial services sector, along with steel and raw materials, have made economic recovery harder in these key sectors.

Don’t these hard lessons apply to the mobile phone industry? Economic stimulus benefits today could lead to more monopoly problems tomorrow.

– Stephany Griffith-Jones is executive director of the Initiative for Policy Dialogue at Columbia University. The views expressed are her own. –

There are many important challenges facing G20 leaders when they meet in London in early April.

The first is to coordinate sufficiently large fiscal and other measures to ensure that world aggregate demand recovers, and a major recession is avoided.

It is also crucial that concrete measures are taken that will allow developing countries, especially those that may become foreign-exchange constrained, to sustain growth. This will not only be key for avoiding a large slowdown in growth and increase in poverty in those countries, but also to guarantee important demand for developed country exports. It is estimated that around 200 million people could be pushed into poverty, mainly in developing countries, if rapid action is not taken to soften the impact of the crisis on those countries.

QUICKLY REFORM THE IMF’s COMPENSATORY FINANCING

The calls for significantly expanding the resources of the International Monetary Fund (IMF) by several G20 leaders are welcome. One effective way of doing this would be through a counter-cyclical expansion of official liquidity, by a one-off, large issue of IMF Special Drawing Rights (SDRs). This would compensate for the large contraction of private liquidity, which has resulted in a sharp fall in private capital flows to developing countries. Once the situation normalizes, the SDRs could be reabsorbed by the IMF. The major objection to SDR issues in the past has been the threat of inflation. It has no validity at present. The dominant threat is of deflation and recession.

A complementary or alternative measure is for the IMF to modify its facilities so it can lend rapidly, at sufficient scale, and without overburdening borrowers with the heavy conditionalities of the past, especially when the sources of crises are exogenous.

Thus, there should be a major and quick reform of IMF compensatory financing .This has become urgent, given recent very sharp falls in commodity prices, with highly negative effects, especially on low income countries. Existing facilities for those countries are clearly insufficient, especially as regards the scale of their lending. It is therefore urgent to scale up these facilities.

The recent creation of a new IMF Short-Term Lending Facility (SLF) for countries with good policies facing short-term liquidity constraints is welcome. As yet, no country has used it. It may need modifying to extend its very short maturity and to make it accessible to a larger group of countries.

It is also important that aid to low-income countries is increased. Furthermore, multilateral and regional development banks need to rapidly and greatly expand their lending.

CORRECT THE REGULATORY DEFICIT OF GLOBAL FINANCE

The magnitude of the current crisis is clearly associated with inadequate regulation of banks and financial markets.

The new regulatory governance should be based on a well-functioning network of national authorities and include truly international regulation of global financial institutions . A global financial regulator needs to be created, building on institutions like the Bank for International Settlements.

This new institutional structure should have real power to influence decisions of national regulators, especially in the largest countries, including industrial countries. Secondly, it should take macro-prudential concerns clearly into account. Finally, it should consider the potential costs of financial instability on the real economy.

The current deep crisis and numerous previous ones that hit developing countries seem to demonstrate that crises are inevitable in deregulated financial systems. There is, therefore, ever-growing consensus that more complete and more effective financial regulation is required.

There are two broad principles on which future financial regulation needs to be built. The first is counter-cyclicality, in order to correct the main market failure of banking and financial markets — their boom-bust nature. The key idea is that provisions and/or capital required should increase as risks are incurred, that is, when loans are disbursed. In this way, provisions and capital requirements should increase during periods of rapid credit growth and decrease when lending expands at slower rates. This would strengthen banks in boom times and discourage them then from excessive lending. It would also make it easier for them to continue lending in difficult times. It is encouraging that the Basle banking Committee has recognized this principle in broad terms.

The second key principle for modern, effective regulation should be comprehensiveness. Economic theory tells us that for regulation to be effective, the domain of the regulator has to be the same as the domain of the market to be regulated. There is need for comprehensive and equivalent transparency, as well as regulation of all financial activities, instruments, and actors. Both minimum liquidity and solvency requirements need to be regulated.

Ensuring enough demand globally and in developing countries is crucial to avoid a large recession in the near future. Appropriate regulation of the financial sector is key to avoid future costly crises. Both tasks are difficult, but essential.

– Paul Taylor is a Reuters columnist. The opinions expressed are his own –

The foreplay to next month’s G20 summit is degenerating into a buck-passing exercise rather than crafting a Grand Bargain to save the world economy and regulate capitalism.

The industrialized powers do not agree on how to arrest the steep slide in output, how to handle collapsing banks, how much market regulation is needed, how to reach a world trade deal and prevent protectionism, or how to redistribute power to emerging nations in exchange for their money.

At this rate, the April 2 London summit — U.S. President Barack Obama’s global economic debut — is highly unlikely to restore confidence.

The United States says other countries must follow its lead and spend more on a fiscal stimulus to boost demand. It is turning a deaf ear to calls for radical financial regulation. Euro zone finance ministers, anxious to preserve the budget discipline that underpins their common currency, are refusing to pile up more debt before their current stimulus efforts have taken effect.

The EU seeks a doubling to $500 billion of the International Monetary Fund’s war chest to bail out countries in trouble, including in eastern Europe, and it wants China, Saudi Arabia, Russia and others to pay most of the tab. Yet there is little sign the Europeans are willing to accept a diminution of their IMF seats and votes to make room for the emerging economies.

Washington and London are resisting pressure from France and Germany for mandatory regulation of all financial markets and institutions, including hedge funds and private equity.

STICKING POINTS

The key trade-offs required involve Germany and China pumping more public money into their economies to boost demand in return for the United States and Britain accepting global rules for regulation of all markets; and the industrialized nations agreeing to yield more power to emerging countries in the IMF, and welcome them into the Financial Stability Forum, in exchange for contributions to bolster the bail-out fund and acceptance of an ambitious world trade liberalization deal.

One of the few items on which there is at least rhetorical agreement is a crackdown on tax havens. This is politically useful to show concern for social justice (and improve revenue collection) at a time when unprecedented amounts of taxpayers’ money are being poured into salvaging banks. But it is hardly the central priority in overcoming the worst financial crisis since the Great Depression.

G20 finance ministers must make substantial progress this week toward a Grand Bargain encompassing a coordinated fiscal stimulus, financial regulation, progress on trade, more money for the IMF and more say for the emerging nations.

Otherwise the London summit may go down in history as a milestone on the descent into depression.