Sao Paulo: A broad group of world finance chiefs aimed to forge a consensus on boosting the role of emerging economic powers and crafting a new system to help a struggling global economy.
The Group of 20 gathering of finance ministers and central bank governors began discussions on the second day of a two-day meeting in Sao Paulo seeking to lay the groundwork for next week’s Washington summit on the deepening economic crisis.
World Bank President Robert Zoellick, who is part of the discussions, said that a new financial architecture will take time but that all countries see the need for a coordinated response to the economic troubles.
“All of us know it’s a meeting at a time of historic challenge,” Zoellick said adding: “The food and fuel crises of the recent years have now been supplemented by the blow of a financial crisis.”
Zoellick, who last month said that the Group of Seven was not working in fixing the economy but that a G20 system was too unwieldy indicated yesterday that a new system will take time to evolve but was inevitable.
“These global challenges require global solutions,” he said.
Zoellick further added: “We need to modernise the multilateral system to bring in the important developing country voices such as Brazil. I think over the next two years we are going to see some real changes to the global system.”
Asked about how the Sao Paulo meeting was moving toward establishing such a new system, Zoellick said: “I think it’s too early to say.”
The calls for a broader multilateral response came despite caution by Washington, where lame-duck administration of President George W Bush has been noncommittal ahead of the transition to president-elect Barack Obama, who assumes office in January.
US Treasury Secretary Henry Paulson was not at the Sao Paulo meeting of finance ministers and central bankers, sending instead Treasury undersecretary David McCormick, who said only that initial talks were ‘very productive’.
McCormick did not elaborate. He noted: “Brazilian President Luiz Inacio Lula da Silva, who opened the meeting presented a constructive overview of the challenges we face and the need for developed and developing nations to work together in addressing those challenges.”
In fact, Lula told finance ministers and central bankers that a new world financial architecture was needed to coordinate the response to a deepening crisis.
“This is a global crisis and it demands global solutions,” Lula said.
Lula said that nations struggling with the crisis must avoid temptations to take unilateral measures and stressed that the new universal mechanisms are needed that have to be worked out in concert.
“The crisis gives an opportunity for real changes,” he said, adding: “We cannot, we must not and don’t have the right to fail.”
The G20 includes the seven major industrialised nations — Britain, Canada, France, Italy, Japan, Germany and the United States — plus Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa, South Korea and Turkey.
It also includes the 27 member European Union.