Obama in demand as G20 seeks answer to crisis
LONDON (Reuters) – World leaders meet on Wednesday under intense pressure to produce a morale-boosting response to the worst economic downturn seen since the 1930s.
They will have their work cut out at a G20 summit where U.S. President Barack Obama makes his first major international sortie, under perhaps more pressure than anyone to show that the country where the crisis began can lead the way out.
Washington is pushing hard for other governments to pump more money into economic stimulus programmes while France and Germany say they do not want this to distract from the need to regulate and rein in financial market excess.
Obama, also seeking to thaw relations with Moscow and muster support for a new strategy in Afghanistan, meets Russia’s Dimitry Medvedev and China’s Hu Jintao among others before the G20 leaders all get together for dinner at Buckingham Palace.
British Prime Minister Gordon Brown, host to the G20 leaders — whose economies account for more than 80 percent of world trade and economc output — is determined to declare a success when it all ends on Thursday, despite some clear difficulties.
French President Nicolas Sarkozy says this time the leaders, who held a first crisis summit in November, must do more than renew pledges to restore growth and crack down on financial market excess.
In a commentary for publication by newspapers, Sarkozy said governments had made "gigantic efforts" in response to the economic crisis but that much work still needed to be done to prevent other such disasters.
"Failure is not an option, the world would not understand it and history would not forgive us for it," he said, adding it could take meetings beyond London to get all the way there.
Media reports on Tuesday suggested Sarkozy was willing to go as far as storming out of the summit if he did not get his way, and his finance minister said he would not sign off on something he did not approve, but officials back in Paris laughed off the idea of a dramatic exit.
Sarkozy and German Chancellor Angela Merkel are pushing hard for visible results on regulation, such as closer tabs on hedge funds and credit rating agencies and naming and shaming of tax havens if they fail to bow to pressure and end bank secrecy.
Those are not the only demands.
China and Russia want the West to give them more say over matters of global economic importance and have gone as far as to suggest the dollar should one day be dropped as the world’s main reserve currency, though the latter is not seen as an issue the summit will broach in any depth.
The rest of the developing world is hoping aid flows will not dry up as governments elsewhere pump trillions of dollars of public money into bank rescues and tax breaks or big building projects to support demand and jobs.
They got a reminder of the gravity of the situation from the Organisation for Economic Co-operation and Development.
The OECD said on Tuesday the economies of its 30 members, most of which are wealthy industrialised ones, would shrink by 4.3 percent in 2009, costing 25 million jobs.
That is about half of the worldwide job losses that the International Labour Organisation is forecasting in the next year or so as international trade slumps and companies fold.
To limit the fallout, the G20 leaders are expected to more than double the $250 billion available to the International Monetary Fund to help countries pushed to the brink.