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G-20 leaders gather in London amid financial meltdown

G-20 leaders gather in London amid financial meltdown
AFP
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First Published: Wed, Apr 01 2009. 09 04 AM IST
Updated: Wed, Apr 01 2009. 09 04 AM IST
London: World leaders including US President Barack Obama will gather in London on Wednesday for final talks on the eve of a G-20 summit dogged by divisions on how to tackle the economic crisis.
Obama arrived in London late on Tuesday on his first major foreign visit since taking office, and will hold talks with many of the leaders of the Group of 20 developed and developing nations ahead of Thursday’s official summit.
But the differences between the leaders on how to tackle the global crisis were laid bare in a newspaper interview on Wednesday with Japanese Prime Minister Taro Aso, who rejected German claims that fiscal stimulus was not the solution.
While the United States and others favour stimulus to boost economic growth, European countries led by France and Germany are sceptical about spending more than they have, and insist tighter global financial regulation is the priority.
“Because of the experience of the past 15 years, we know what is necessary, while countries like the US and European countries may be facing this sort of situation for the first time,” Aso told the Financial Times newspaper.
“I think there are countries that understand the importance of fiscal mobilisation and there are some other countries that do not - which is why, I believe, Germany has come up with their views.”
France had already raised the stakes by saying President Nicolas Sarkozy would walk out of the summit if leaders refuse to address his calls for stronger regulation to prevent such a crisis in the future.
German Finance Minister Peer Steinbrueck played down the likelihood, however, saying Berlin and Paris were expected to get their way.
“There is a high probability that we will succeed in implementing better regulation and better supervision and make further achievements in overwhelming this financial turmoil,” he told the BBC late on Tuesday.
The White House has rejected reports of any rift with European nations, and Obama has said any talk of regulation versus stimulus was a “phony debate”.
The president will hold talks Wednesday with British Prime Minister Gordon Brown, the summit host, followed by discussions with Sarkozy and German Chancellor Angela Merkel.
Obama will also hold his eagerly anticipated first encounters with Russian President Dmitry Medvedev and China’s President Hu Jintao.
The G-20 leaders’ presence in London has sparked a massive security operation across the capital, where a series of pro-environmental, anti-war and anti-globalisation protests are planned over the next two days.
On Wednesday, several demonstrations are planned to converge on the Bank of England, a march is planned on the US embassy calling for foreign troops out of Afghanistan and Iraq, and pro-Tibet activists are also staging a rally.
Brown has laid out five tests for success at the summit, including boosting the resources of the International Monetary Fund and World Bank to help them increase lending to countries struggling with the global economic downturn.
He also hopes to agree on proposals to clean up the banking system - including agreeing on global rules for bankers’ pay - to do “whatever is necessary” to stimulate growth, and to resist protectionism and boost trade.
But European Commission chief Jose Manuel Barroso has tried to play down expectations, saying the talks would not yield a “miracle solution” to the crisis and another summit may be needed later in the year.
The scale of the crisis facing the G-20 leaders is severe.
The World Bank on Tuesday forecast a contraction of 1.7% in the global economy this year, the first such outcome since World War II.
The 30-nation Organisation for Economic Cooperation and Development (OECD) meanwhile predicted its member state economies would shrink 4.3% this year, warning the world economy was “in the midst of its deepest and most synchronised recession in our lifetimes.”
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First Published: Wed, Apr 01 2009. 09 04 AM IST
More Topics: Financial Crisis | Economy | G-20 | US | Recession |