G20 summit: World leaders thrash out global action plan to condemn Capitalism
LONDON (Reuters) – World leaders are set to declare an end to unfettered capitalism at a G20 summit on Thursday after France and Germany demanded they act fast on promises to prevent a repeat of the worst economic crisis since the 1930s.\r\n
A communique drafted for release at a G20 summit in London, obtained by Reuters, signaled that leaders would submit large hedge funds to supervision for the first time and enhance regulation through a new agency and a beefed-up International Monetary Fund.
It included a pledge to deliver "the scale of sustained effort necessary to restore growth" without making any commitments beyond the trillions being spent to stabilize banks, shore up demand and limit job losses.
Keen to secure a confidence-boosting message for voters and frazzled financial markets as the world succumbs to recession, U.S. President Barack Obama said there were no substantive differences with Europe, despite the hardball stances taken by the French and German leaders.
Washington wanted tougher regulation too, he told a news conference on Wednesday with Britain’s Gordon Brown, summit host, saying he was at the summit not just to lecture but to listen and to help lead the way out of trouble.
It was not clear whether the flashpoint, which appeared to focus primarily on Sarkozy’s demands for blacklisting of tax havens, would be enough to derail a message of unity from the meeting.
The draft communique said tax havens would be identified and sanctions could be deployed.
"The era of banking secrecy is over," it declared.
ONE DEAD AT PROTESTS
Several hundred demonstrators clashed with riot police and smashed bank windows in London’s financial center ahead of the summit on Wednesday.
Police said one person died during the protest. The man was found in a street near the central bank where he had fallen down and stopped breathing at around 7:30 p.m. (1830 GMT), they said.
It was not immediately clear what caused the man’s death and a police source said he likely died from a medical condition, although that would not be confirmed until after a post-mortem.
More protests were planned for Thursday, the main day of a summit involving the world’s biggest economies, developed and up-and-coming, in all accounting for more than 80 percent of world trade and economic output.
Global economic output is expected to contract more in 2009 than any year since World War Two, dropping between 0.5 and 1.0 percent, according to the International Monetary Fund, whose head, Dominique Strauss-Kahn, is calling it a "Great Recession".
The International Labor Organization says the crisis could cost 50 million jobs by the end of the year.
G20 leaders were preparing a major expansion in resources available through the IMF, possibly including a tripling of its war chest to $750 billion, officials familiar with negotiation of the issue said.
The draft communique contained a pledge by the G20 nations to allow "candid, even-handed and independent" surveillance of their economies and financial sectors by the IMF.
It also unveiled a Financial Stability Board to work with the IMF to identify economic and financial risks and measures needed to address them, revamping an existing body called the Financial Stability Forum.
The G20 leaders hope around two trillion dollars governments are pumping into the economy in tax cuts, building projects and green investments, according to summit host Gordon Brown, will limit the depth and duration of recession and maybe create 20 million or so new jobs.
Paris and Berlin, fearing the summit would fall short of the mark on regulation of tax havens, hedge funds and markets in general, went in gunning for concrete announcements.
"Any regulations we don’t agree here, won’t be agreed for the next five years," Merkel told a joint news conference with her French counterpart on Wednesday. "The summit is not about horse-trading between regulation and economic growth programs."
"In the results, we want the principle of new regulation to be a major objective … This is not negotiable," French President Nicolas Sarkozy added.
Obama, making his first official visit to Europe, said G20 nations were not going to agree on every point but brushed aside suggestions the summit would falter because countries were split over the importance of regulation versus new stimulus packages.
"The core notion that government has to take some steps to deal with a contracting global market place and that we should be promoting growth — that’s not in dispute," Obama said.
"On the regulatory side, this notion that somehow there are those who are pushing for regulation and those who are resisting regulation is belied by the facts."
Sarkozy earlier threatened to disassociate himself from any "false compromises" at the summit, the second such meeting of world leaders to try to tackle the problems created by the downturn and credit crunch, which in turn began when the U.S. housing market collapsed over two years ago.