WASHINGTON: Will it all work? World leaders achieved the minimum at their London summit, cobbling together more resources for the International Monetary Fund and pledging to do better regulating unruly financial markets.
But no country would budge from its bottom line, so the big goals didn't get done.
But global markets cheered anyway, happy that the Group of 20 leaders were able to demonstrate unity in the midst of the worst financial crisis in decades.
In the end, the ability of President Barack Obama and the other leaders to paper over their differences may turn out to be the biggest achievement of all.
Despite some tough talk going into the meetings, including a threatened walkout by French President Nicolas Sarkozy if things didn't go his way, the leaders emerged with a show of common purpose.
Their final communique even contained a pleasant surprise in the form of a tidy $1.1 trillion pledged to help make sure emerging economies like those in Eastern Europe and Latin America can tap into sufficient resources at the International Monetary Fund to withstand the current turbulence.
That pile of money was easier to obtain because it won't force the United States or other countries to increase their deficits to supply the additional resources to the IMF. Instead, much of the increased support will come in the form of loans the major countries will agree to provide to the IMF if the agency needs more firepower.
The leaders also pledged to fill in the current gaps in financial regulation that have been laid bare by the troubles in subprime mortgage lending that began in the United States but have now spread to other types of loans and bank assets not only in the U.S. but around the world.
Obama stood firm against a determined push from Sarkozy and German President Angela Merkel for creation of a global regulator to attack what the Europeans see as a U.S.-brand of unfettered capitalism that brought the global economy to its knees. - AP
LONDON: Asian nations, who dominate the roster of industrializing economies, have won a greater say in salvaging and reshaping the global system that brought them unprecedented prosperity but now threatens to reverse that progress.
The sweeping consensus on reviving growth and stepping up surveillance of international financial institutions reached Thursday at the Group of 20 summit of major economies reflects that growing sway.
"I believe people will be encouraged by the fact that China and India and Japan and many countries ... we've all been able to come together in a way we could never have done even a year or two ago and designed quite detailed proposals that will reshape the global financial system," a jubilant British Prime Minister Gordon Brown said as the one-day meeting wrapped up with a pledge of $1.1 trillion in loans and guarantees to developing countries.
The statement issued by summit leaders included a pledge, responding to a chief demand from Asian and other developing countries, for reforms of the International Monetary Fund and other institutions to better match global economic and political realities.
"We will reform their mandates, scope and governance to reflect changes in the world economy and the new challenges of globalization," the statement said.
Such moves are needed, it said, to enhance the credibility and accountability of those organizations.
"China and other countries are right to say that the representation and the quotas of the IMF have to be changed to meet new times. We have set a timetable for doing that," Brown said.
Developing economies account for nearly half of all exports, and Asia for about half of that total.
With trillions of dollars in foreign reserves, China and other countries in the region have unprecedented financial heft.
"We have long called for increasing representation of emerging economies. This is finally taking place, but only very slowly," said Osamu Sakashita, deputy cabinet secretary for public relations for Japanese Prime Minister Taro Aso.
"There is a welcome shift but there is more to be done in that direction," he said.
Such changes are imperative given the shift of power and productivity to Asia in recent decades.
The last time London hosted a world economic summit, in 1933 in the midst of the Great Depression, geopolitical and economic power lay squarely in the West - in the United States and European colonial powers.
Today, China is fast overtaking Japan as the world's third-largest economy in terms of economic output, if not per capita wealth.
"International institutions need to reflect the realities of power in the world," said Ed Gresser, trade director at the Progressive Policy Institute in Washington.
"To be effective, they have to involve and include the emerging economies. They need to feel they have a voice."
Beijing has led demands from developing economies for a bigger say in managing the world's finances and had suggested its contribution to a global bailout fund might be contingent on receiving it.
Ultimately, at the London summit China pledged a contribution of $40 billion in extra funding, Brown said.
In the weeks before the summit, Chinese leaders stressed their desire for fundamental changes to the world financial order, calling for the creation of a new global currency to reduce reliance on the U.S. dollar and claiming advantages in their communist-ruled country's ability to bypass messy democratic processes.
Thursday's agreement stopped short of promoting a shift away from the U.S. dollar. But it did include, as expected, reassurances that rich countries will keep their markets open to exports, the lifeblood of modern affluence for much of the newly industrialized world.
The condemnation of protectionism also carried a pledge to make right, by the end of 2010, any market-restricting moves taken since G-20 countries last issued such a declaration, in November at the last summit.
"Actions that are protectionist will be named and shamed," Brown said. - AP
LONDON: Anxiously assembled at the most perilous moment for the global economy since the Great Depression, the world's financial powers pledged more than $1 trillion Thursday for emergency loans to contain the contagion.
But they rebuffed President Barack Obama's bid for new stimulus spending and made no guarantees of success.
"This was the day the world came together to fight back against global recession," declared British Prime Minister Gordon Brown, the summit host, as he led a choreographed show of unity designed to boost confidence in homes and boardrooms everywhere.
"This is just the beginning," added Obama.
No one promised an immediate impact, and all agreed much remained to be done.
Besides promising $1.1 trillion for lending to less-well-off countries - an effort to erect an economic firewall and prop up remaining markets for bigger nations' exports - the Group of 20 industrial and developing countries vowed major efforts to clean up banks' tattered balance sheets and get credit flowing again, to shut down global tax havens and to tighten regulation over hedge funds and other financial high-flyers in the U.S. and elsewhere.
But French President Nicolas Sarkozy and German Chancellor Angela Merkel failed to get the powerful "global regulator" they sought with authority across borders, an idea opposed by the United States.
The leaders did agree to some expanded international oversight, including cracking down on hedge funds and tax havens.
Collectively, the measures were an attempt to free the clogged pipes of capitalism, so spending, lending, borrowing and manufacturing can expand instead of continuing to retreat.
European and U.S. markets surged ahead of the concluding summit communique, and Wall Street held most of its gains after the results were announced late Thursday.
Unlike previous Western-dominated summits, this gathering included China, India and other economic giants as well as rising powers.
Said Brown: "I think the new world order is emerging, and with it the foundations of a new and progressive era of international cooperation."
Obama, in his first major venture into international diplomacy, failed to get U.S. trading partners to spend more money on job-creating stimulus programs, as the U.S. and Britain have done. The proposal was opposed strongly by France and Germany.
"I think we did OK," Obama told reporters afterward.
"When I came here, it was with the intention of listening and learning, but also providing American leadership. And I think the document that has been produced as well as concrete actions reflect a range of our priorities."
"In life there are no guarantees; in economics there are no guarantees," he said. Both Brown and Obama were asked directly, "What happened today to help the world economy," and they both sidestepped the question.
Sarkozy, who at one point had threatened to walk out if he didn't get his way on international regulation, said he was happy with the outcome.
Obama "helped me on tax havens," Sarkozy told reporters.
"He's a very open man. It was completely in line with what we wanted."
Police were out in force, swarming the east London riverside meeting site Thursday as demonstrators protested world poverty and climate change.
A French daredevil scaled a London insurance building to unfurl a banner, entertaining people on the ground.
He was led away by police.
It was a high wire act inside the ExCel center, too, where summit partners gathered.
In an effort to offset their inability to agree on the more divisive proposals, the G-20 leaders outlined a raft of policies to rebuild trust in the financial system, including guidelines for new openness.
"The era of banking secrecy is over," said a statement issued by the G-20.
The meeting was a follow-up to one last Nov. 15 in Washington, when the group vowed to resist national protectionism that hampers world trade and to take steps to overhaul the global financial system.
The economy is considerably worse now than it was then - and expectations for breakthroughs had been limited.
Participants sought to trumpet the achievements and not dwell on what they couldn't accomplish. Obama called the summit "a turning point in our pursuit of global economic recovery."
The summit partners renewed vows not to turn inward or pass protectionist policies, even though since the November meeting 17 of the 20 core members, including the United States, have acted to protect domestic industries.
In the U.S. those actions have included bailouts for Detroit automakers and a "buy American" provision in the $787 billion stimulus package passed by Congress.
The U.S., which has committed nearly $2 trillion to bailing out failed financial companies and trying to prod consumer spending and job creation, had urged other wealthy countries to do likewise.
But European countries, fearful that such deficit spending would rekindle the kind of runaway inflation that marked the 1920s, resisted, suggesting that the stimulus steps they had already taken were sufficient.
Brown, the host, said the communique put out by the group "reflects a very high degree of consensus and agreement."
In the boldest moves of the summit, G-20 participants announced a tripling of loans available to the International Monetary Fund, to $750 billion, a $250 billion expansion in a special IMF fund to help members' foreign exchange reserves, and $250 billion to the IMF to support trade.
They also agreed to sell IMF-held gold to poor countries.
The G-20 leaders also said that developing nations - hard-hit and long complaining of marginalization - should have a greater say in world economic affairs. Steven Schrage, a former U.S. trade official who is now an international business analyst with the Washington-based Center for Strategic and International Studies, gave the G-20 credit for bolstering the IMF, but said much more needs to be done.
"Given the circumstances, they handled it well. But when you look at this global fire that continued to spread over the last five months, there's still not a clear way forward on a lot of the critical challenges," he said.
"There's still no real agreement on stimulus going forward."
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