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G-20 leaders near agreement, if not progress

G-20 leaders near agreement, if not progress
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First Published: Fri, Nov 12 2010. 09 40 AM IST
Updated: Fri, Nov 12 2010. 09 40 AM IST
Seoul: The G-20 will agree to setting vague “indicative guidelines” for measuring global imbalances and hammer out the details next year, G-20 sources said on Friday, effectively calling a timeout to let tempers cool after heated debate over currencies.
Negotiators laboured until the wee hours of the morning to try to thrash out an agreement that their leaders can all endorse, despite deep divisions that were on public display in the run-up to the Group of 20 summit concluding on Friday.
“It was very hard work,” said one G-20 source after a negotiating session that ended around 3 a.m. (1800 GMT)
G-20 sources said deputy ministers had agreed on the wording for a final statement, but it is not expected to venture much beyond what was already agreed at a finance ministers’ meeting last month.
Leaders are expected to call on the International Monetary Fund to develop a range of indicators to identify when imbalances pose a threat to economic stability. G-20 finance ministers will consider the findings at a meeting in early 2011, according to a draft statement.
An earlier version of the document showed negotiators debating over whether those indicators ought to be “measurable” or “quantitative and qualitative”. In the end, neither phrase was included, suggesting the G-20 failed to agree on the wording.
The G-20 has fragmented as a synchronised global recession gives way to a multispeed recovery. Slow-growing advanced economies have kept interest rates at record lows to try to kickstart growth, while big emerging markets have come roaring back so fast that many are worried about overheating.
G-20 leaders had high hopes for the Seoul summit, billing it as a chance to move toward “Shared Growth Beyond Crisis”. But tempers have flared over the US Federal Reserve’s latest bond-buying programme aimed at strengthening a shaky recovery, and Ireland’s worsening debt troubles served as a reminder that the financial system is far from fully healed.
A German government spokesman said finance ministers from Germany, Britain and France discussed the Irish debt situation, and will probably make a statement about it later on Friday.
Empty Words
US President Barack Obama and treasury secretary Timothy Geithner found themselves repeatedly defending the Fed’s easy-money policy, pointing out that a healthy US economy was essential to global growth.
They sought to refocus G-20 attention on building a more stable world economy, less vulnerable to the boom-and-bust cycles that have marred the past two decades.
Central to that effort is smoothing out imbalances between cash-rich exporters such as China, which has amassed more than $2 trillion in reserves, and debt-burdened importers.
Although the United States drew the loudest criticism, China’s yuan policy remained a hot-button issue. Beijing allowed the yuan to rise this week, following a pattern of modest appreciation around big international events.
Donald Straszheim, senior managing director at China Research ISI Group in Los Angeles, said he saw “no chance” that this summit could come up with any real substantive decisions on currencies or imbalances because no sovereign nation would take domestic policy instructions from abroad.
“China I think would be willing to sign on to the empty words of a standard communique -- no to protectionism, yes to exchange rate reform, no to competitive devaluations,” he said. “This is easy but does not get one very far.”
Geithner was scheduled to meet Chinese vice premier Wang Qishan and People’s Bank of China governor Zhou Xiaochuan on Friday, likely the last opportunity for face-to-face meetings before the United States releases a delayed report on whether it views China as a currency manipulator.
Despite the acrimony, G-20 leaders were eager to show they remained united and capable of cooperating to build a more stable global economy.
Dimitri Soudas, chief spokesman for Canadian Prime Minister Stephen Harper, said when leaders sit down together they invariably make progress and Seoul should be no different.
“It was concerted action by the G-20 that averted economic catastrophe and this obviously needs to continue, especially in this context of weakened and uncertain growth prospects,” he said.
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First Published: Fri, Nov 12 2010. 09 40 AM IST