G-20 leaders move to tighten regulation
As much as $500 billion will also be channeled into the International Monetary Fund (IMF).
By Ben Quinn | Correspondent 04.02.09
LONDON – Leaders at the G-20 summit have reached agreement on a package which is being greeted widely as a landmark move to banish the era of “light-touch” financial regulation.
An additional $500 billion will be channeled into the International Monetary Fund (IMF) in a bid to alleviate the impact of the global recession on struggling economies. Also pumped into the world economy will be $250 billion in IMF Special Drawing Rights and $250 billion to boost trade.
However, there was early concern that the lack of new money for a major international stimulus package could spell trouble down the line.
British Prime Minister Gordon Brown said in a publicly broadcast session that the leaders had agreed to a draft communiqué in early morning discussions that would strengthen international institutions, such as the IMF, and send out a clear message against protectionism and the erection of trade barriers.
Analysts in London said that the initial details coming out of the summit would ensure that it would not be regarded as a failure.
But Robin Niblett, the director of Chatham House, Britain’s leading international affairs institute, warned that there could be problems in the future if the leaders of Germany and France, Chancellor Angela Merkel and President Nicolas Sarkozy, went home and portrayed the absence of a new international stimulus package as a victory.
“There will be difficulties if the Germans and French start crowing over this because the US has been deeply concerned that other countries are relying too much on it to pull them out of the crisis,” said Dr. Niblett, who cautioned that such a scenario could lead to protectionism. “The problem is that the Americans might then say, ‘well ok, we are going to look after out own interests.’”
“Overall though, this summit is going to be regarded as a success. One of its biggest achievements will be putting an end to the type of light touch regulation that was advocated in the past by people like Gordon Brown. That is a key global agreement, but the most important thing that this summit has done is show that the G-20 can still speak with one voice.”
The BBC reported that the summit was on the verge of agreeing to a deal to “name and shame” countries that breach free-trade rules. Britain’s Treasury minister, Stephen Timms, told the channel that the G-20 had agreed to impose sanctions on tax havens that refuse to sign up to Organization for Economic Cooperation and Development (OECD) rules against money laundering and tax evasion.
Moves are also afoot to cut the pay of bank executives down to size, as well as to impose regulations on hedge funds, which currently are largely unregulated.
Mr. Sarkozy on Wednesday threatened to walk out of the summit if it did not tighten regulations on banks, hedge funds, and tax havens. The measures on regulation appeared to seal a victory for an alliance between Ms. Merkel and Sarkozy.
But there was disappointment from charities advocating at the summit for the interests of some of the world’s poorest countries.
John Slater, a spokesman for the British charity Oxfam, which works extensively in the developing world, said: “We are concerned that the text from world leaders here about tax havens does not go far enough. We had been hoping for a proper deal that would assist developing countries to access information about companies and individuals who are evading taxes which could be used to alleviate poverty.”
“Instead, what we seem to be getting is a package about simply naming and shaming tax havens and requires states to keep up with international standards. That would just keep the country-to-country deals on sharing information about tax evasion, rather than creating a shared global framework.”
Nevertheless, he said that many charities and NGOs at the summit were hopeful about additional funding for the IMF, although they wanted to see the money earmarked for some of the world’s poorest countries.
Other third world campaigners had even more critical reactions to the summit. Ruth Tanner of War on Want, a British charity which campaigns against world poverty, said: “It seems that the same old mistakes are being made.”
“The sense we have got is that this gathering has simply been all about simply reviving the failed polices of the free market system. On the basis of what we heard from Gordon Brown in the morning, they are using this to simply accelerate free trade, when what poor countries need is a fundamental transformation of their relationships with richer ones.”
“From where we are standing, the United Nations is a far more relevant forum for tackling the underlining problems of world poverty,” she added.
Embarrassingly, there was a reminder of the difficulties in brokering a deal involving 20 world leaders following an attempt to take the customary G-20 “family” picture.
Leaders had to line up for a second time shortly before lunchtime after it emerged that the Canadian prime minister, Stephen Harper, was in the restroom while his peers were having their photograph taken. No one, it seems, had noticed.
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2. Sher Orpen | 04.02.09
International diplomacy must of course take into account the different situations of each country — both political and social. What’s good for the goose isn’t always good for the gander, and this is what getting together and discussing is for. In general, I’ve heard relative agreement that stimulus is called for in the current economic climate, but each country defines that differently. Those countries with a more extensive social safety-net than what exists in the US feel that safety net is part of their stimulus. Good for them — they’re looking at their circumstances. We must do what we feel our circumstances dictate.
There is no absolute right or wrong in politics — or economics, apparently — but I give the Obama team tremendous credit for what they’ve managed to pull together so far. My take is that economists generally agree with the proposals and programs they’ve announced. Now, how these things look once congress gets done with them will be interesting.
But evaluating the Obama policies must always happen in the context of what the Bush policies were for the previous eight years. In many ways, we’re returning to the more fair situation that existed before tax cuts that benefited mostly the wealthy were enacted. And we’re admitting the wealthy and large companies won’t regulate themselves for the common good. And we’re being more honest about the money required to run the government and fight the wars. Bravo on all fronts, I say.
3. Irene Kiff | 04.02.09
President Obama and Michelle are representing the US in a manner which hasn’t happened in over eight years. I am grateful for a president who can utilize his intellect, as well as his innate grace, in dealing with the difficult problems which he (and we) face.
I wish the Republicans would get behind him half as much as the Group of 20 have. The R’s in the congress with their “politics as usual” is sickening and could succeed in bringing down our country.
4. Shirley Freeman | 04.03.09
Based on many commentaries, the Republicans in Congress have given Obama exactly what the Group of 20 have–acquiesence in a small portion of what Obama proposes. Commentaries on conservative media indicate that Obama had proposed much greater funding to help undeveloped countries’ economies though this crisis.
To give you some exposure to opposition opinion, Obama’s lack of firm leadership at the G20 conference has been a topic of interest. PM Brown’s comment that the “Washington consensus” is now dead and no more is of interest. Obama’s failure to state firmly to China that we do not want a new international currency to replace the dollar is viewed as a mistake. Most conservative commentators, I believe, are saying that U.S. leadership has been “given away.”
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1. Larry Clifton | 04.02.09
Obama’s wild spending policies are being rejected at home and abroad. The media are desparately trying to prop Obama up, but we don’t buy their liberal fishwrappers anymore either . . .