London: World leaders begin formal talks here Thursday in an attempt to forge a new global deal for economic recovery, hoping to downplay divisions among key G-20 members on tightening market regulation to curb financial market excesses.
President Barack Obama and British Prime Minister Gordon Brown, the host of the summit in London’s Docklands district, have expressed optimism that differences among the Group of 20 can be overcome.
But France and Germany have warned that they will not agree to “false compromises” that soft-pedal the need for tougher financial regulation to curb the excesses of financial markets that caused the current crisis.
A series of pre-summit bilateral meetings and an evening reception for heads of state at Buckingham Palace on Wednesday were marred by sporadically violent protests in the British capital’s financial district.
Obama, who is under pressure to make a good showing in his first major appearance on the international stage, has urged other G-20 leaders to support an agreement, saying “We can only meet this challenge together.”
He added that differences in the grouping had been “vastly overstated” and said the meeting would “reflect enormous consensus.”
Brown foreshadowed agreement on issues including a possible $100 billion boost for global trade, and support for economic growth and job creation.
G-20 leaders are also in general agreement on a plan to double the funds available to the International Monetary Fund to some $500 billion to help out emerging countries.
But consensus on measures beyond those immediate financial shots-in-the-arm for the ailing economy was by no means clear.
French leader Nicolas Sarkozy, who had earlier implied he might walk out of the meeting if key demands on tightening regulation were not met, presented a more conciliatory stance at a joint press conference with German Chancellor Angela Merkel after arriving in London, saying he had “confidence in Obama.”
However, he also warned that neither France nor Germany would align with any “false compromises” and that the two European countries considered concrete steps on tax havens, hedge funds and ratings agencies as “red lines” — necessary steps — in the negotiations.
The standoff had led to lower expectations of what could be achieved at the London summit, which began with a formal dinner Wednesday evening before business meetings on Thursday, even as the crisis reaches a critical point.
Global trade is plummeting, protectionism is beginning to make inroads and unemployment is rising. Public anger is also inflamed _ protests here Wednesday turned sporadically violent with some demonstrators throwing eggs, paint and projectiles at riot police. Others smashed windows to scramble into a part-nationalized Royal Bank of Scotland building after police managed to hold back protesters trying to storm the Bank of England. Several people were arrested throughout the day.
Another concern for leaders is the plight of developing countries, amid growing fears that the heavy toll exacted by the global economic crisis on those nations could come with heavy human and political implications.
UN Secretary-General Ban Ki-moon has written to leaders to urge them to approve a $1 trillion stimulus plan for developing countries and urge the G-20 countries to back away from damaging anti-trade policies.
In their meeting in November, the G-20 members vowed to avoid protectionism that could stifle trade. But since then, 17 have acted to pass subsidies to protect their own industries or limit imports, according to the World Bank.