G20 EXPECTATIONS- GLOBAL CALL IN ACTION- APRIL 2ND 2009
The G20 Meeting in London will be on April 2nd 2009 topics are foccused on protectionism is without a doubt on the rise.
Alistair Darling today said it was important to be "realistic" about what could be achieved at next month's G20 summit after Washington played down hopes of the meeting agreeing a "global new deal" to fight the recession.
In an interview, the chancellor said that the London meeting of leaders from the world's 20 largest economies would not produce the final word on the world's response to recession, describing it instead as "part of a process".
"I think we have to be realistic about what we can do together," Darling told BBC Radio 4's World at One, suggesting that the government is keen not to let expectations about what can be achieved at the summit get out of hand.
"When you have 20 people sitting around the table, inevitably there will be differences of emphasis at times. But I think we are pretty much pointing in the same direction," he said.
"This is part of a process. I don't think things begin or end either this weekend or on April 2. It will continue beyond that, quite simply because the world's economy is continuing to develop.
"What is clear though is that we do need a commitment both to support the economy, to sort out the banking system and to use international institutions far more effectively."
"What is clear though is that we do need a commitment both to support the economy, to sort out the banking system and to use international institutions far more effectively."
Darling also played down talk of a rift between the US and Europe. "I don't actually think that the divisions between the European countries and the US are anything like what has been described over the last few days," he said.
However, France and Germany yesterday set themslves firmly against further injections of cash into their economies.
Obama's spokesman appeared to accept that a deal was unlikely at the 2 April summit, telling reporters the US president was not seeking to negotiate "specific commitments".
Finance ministers from the G20 countries will arrive in the UK today ahead of a meeting, taking place in Sussex tomorrow, at which they will set out the policy gaps remaining to be bridged if any sort of agreement is to be reached at the summit.
The German chancellor, Angela Merkel, will fly to London tonight for potentially awkward talks with Brown tomorrow morning.
Merkel and the French president, Nicolas Sarkozy, yesterday made clear that they had no desire to add to their own fiscal stimulus packages and believed the G20 should instead focus on the tighter regulation of financial markets to prevent a repeat of the current slump.
At a joint press conference following talks in Berlin, Merkel said the two countries would send "a common signal" at the summit.
"The issue is not spending even more, but to put in place a regulatory system to prevent the economic catastrophe that the world is experiencing from being repeated," she said.
Asked how Obama would respond to the Franco-German stance, the US president's spokesman, Robert Gibbs, told reporters: "We're not going to negotiate some specific economic percentage or commitment, but continue to talk about the notion that ... it is important that the world act together in growing our economy, as well as that we together take steps to ensure that the crisis doesn't happen again.
"Different international bodies have said that the global economy is likely to contract at about 2% of GDP over the course of the next two years, and that their recommendation is that countries stimulate their economy to that degree.
Obama's spokesman appeared to accept that a deal was unlikely at the 2 April summit, telling reporters the US president was not seeking to negotiate "specific commitments".
Finance ministers from the G20 countries will arrive in the UK today ahead of a meeting, taking place in Sussex tomorrow, at which they will set out the policy gaps remaining to be bridged if any sort of agreement is to be reached at the summit.
The German chancellor, Angela Merkel, will fly to London tonight for potentially awkward talks with Brown tomorrow morning.
Merkel and the French president, Nicolas Sarkozy, yesterday made clear that they had no desire to add to their own fiscal stimulus packages and believed the G20 should instead focus on the tighter regulation of financial markets to prevent a repeat of the current slump.
At a joint press conference following talks in Berlin, Merkel said the two countries would send "a common signal" at the summit.
"The issue is not spending even more, but to put in place a regulatory system to prevent the economic catastrophe that the world is experiencing from being repeated," she said.
Asked how Obama would respond to the Franco-German stance, the US president's spokesman, Robert Gibbs, told reporters: "We're not going to negotiate some specific economic percentage or commitment, but continue to talk about the notion that ... it is important that the world act together in growing our economy, as well as that we together take steps to ensure that the crisis doesn't happen again.
"Different international bodies have said that the global economy is likely to contract at about 2% of GDP over the course of the next two years, and that their recommendation is that countries stimulate their economy to that degree.
"That's in large measure what the United States has done, and the president will talk to other nations of the G20 about acting together in hopes of doing the same without, again, negotiating some specific commitment."
His comments will heighten speculation that the summit might result in vague statements of shared principles or aspirations, rather than a hard and fast plan for action to revive the global economy.
Luxembourg's prime minister, Jean-Claude Juncker, yesterday warned that Europe was wary of getting deeper into debt by embarking on further expensive stimulus programmes.
"The European recovery programme represents a spending level of 3.4% to 4% of GDP," he said.
"Our public finances are beginning to suffer, and we must take account of the effects these programmes will have in 2009 and 2010 before we undertake additional spending."
"Our public finances are beginning to suffer, and we must take account of the effects these programmes will have in 2009 and 2010 before we undertake additional spending."
The size of the challenge facing the British Government in bringing together world powers was emphasised in a candid admission by Britain’s most senior civil servant that it was proving “unbelievably difficult” to liaise with the Obama Administration to prepare for the meeting.
The whole point of the G20 meeting on April 2 burst into the open when Larry Summers, chief economic adviser to President Obama, called on other countries to follow America’s lead in pumping even more money into stimulus plans to revive the world economic system.
Brazilian President Luiz Inácio Lula da Silva, saying a rising wave of protectionism by rich nations threatens the world's emerging economies, vowed to lobby the U.S. to adopt a free-trade deal with Colombia even though it could hurt some of his own country's exports to the U.S.
Mr. da Silva was sharply critical of recent protectionist measures by nations that normally promote free trade. One example: the "Buy American" clause included in the latest U.S. stimulus package approved in Congress, even though it was modified to make sure the U.S. complies with international trade rules.
He warned that the global financial crisis threatens to pinch off growth that was reducing poverty in poor nations, and called for financial aid and other measures to prevent the further spread of crisis effects. "We can't accept the idea that for the irresponsibility of bankers, and the irresponsibility of a few leaders, who didn't regulate, that the rest of the world ends up stuck with the bill, and above all its poorest," he said.
He warned that the global financial crisis threatens to pinch off growth that was reducing poverty in poor nations, and called for financial aid and other measures to prevent the further spread of crisis effects. "We can't accept the idea that for the irresponsibility of bankers, and the irresponsibility of a few leaders, who didn't regulate, that the rest of the world ends up stuck with the bill, and above all its poorest," he said.
Brazil is an unlikely advocate for more open trade. Expensive import tariffs make many goods, from computers to automobiles, too expensive for the average Brazilian. Brazil resisted U.S. efforts to bind the Western hemisphere in a giant free trade agreement, arguing that the U.S. terms were too tough on Latin American trading partners. The country, however, is now pushing to revive stalled World Trade Organization talks for a global trade deal.
Mr. da Silva's arguments underscore how radically the financial crisis is changing the outlook of even nations that appear to be surviving the downturn better than others. He said he believes Brazil will avoid recession this year, even as the U.S., Europe and Japan contract. But new data released on Tuesday showed the Brazilian economy slowing fast -- growing a meager 1.3% during the last three months of 2008 compared to the same quarter of the previous year.
Protectionism can seem beneficial at first," he said. "But in the long term, it wounds countries, above all the poor countries, which need to sell their goods to the rich countries in the global economy."
EUOBSERVER / BRUSSELS - Europe's biggest banks are happy to do business with corrupt regimes in Africa and Central Asia, according to a new report by UK-based NGO, Global Witness.
As late as November 2007, Barclays in Paris held a private account for Teodorin Obiang, the study says. A scion of the ruling family in Equitorial Guinea, Mr Obiang in the past 10 years spent €4.5 million on sports cars even as 20 percent of children die before their fifth birthday due to poverty in the oil-rich country.
A €1.2 million Bugatti Veyron: Teodorin Obiang bought three. The cost of less than one of the cars could buy a mosquito net for every child in the malaria-prone country
Until March 2007, BNP Paribas was involved in billions of euros of syndicated loans to the Angola ruling elite-linked oil firm Sonangol, Global Witness writes.
As late as November 2007, Barclays in Paris held a private account for Teodorin Obiang, the study says. A scion of the ruling family in Equitorial Guinea, Mr Obiang in the past 10 years spent €4.5 million on sports cars even as 20 percent of children die before their fifth birthday due to poverty in the oil-rich country.
A €1.2 million Bugatti Veyron: Teodorin Obiang bought three. The cost of less than one of the cars could buy a mosquito net for every child in the malaria-prone country
Until March 2007, BNP Paribas was involved in billions of euros of syndicated loans to the Angola ruling elite-linked oil firm Sonangol, Global Witness writes.
Deutsche Bank has still not made clear to the NGO what happened to the €2 billion or so of Turkmenistan's natural gas income, which it was holding for the country's notoriously cruel dictator, Saparmurat Niyazov, when he died in January 2007.
"The international banking system is complicit in helping to perpetuate poverty, corruption, conflict, human suffering and misery," the Global Witness paper says.
Coming ahead of the G20 finance summit in London on 2 April and in a climate of hostility to big bank secrecy caused by the financial crisis, the report calls for regulation of bank dealings with "PEPs" (politically-exposed persons) and a name-and-shame campaign by FATF (the Financial Action Task Force).
The Paris-based FATF is a little-known international anti-money laundering body with 34 members, including 15 of the richest EU states and the European Commission.
Of 10 EU states surveyed which are also FATF members, none complied with the body's full set of recommendations on issues such as making money laundering illegal or forcing banks to carry out enhanced due diligence on PEP-type clients.
Global Witness' paper, Undue Diligence, reads like a roll call of the most respectable financial institutions in Europe.
Of 10 EU states surveyed which are also FATF members, none complied with the body's full set of recommendations on issues such as making money laundering illegal or forcing banks to carry out enhanced due diligence on PEP-type clients.
Global Witness' paper, Undue Diligence, reads like a roll call of the most respectable financial institutions in Europe.
HSBC and Banco Santander are named in connection to the Obiang family. Credit Lyonnais allegedly helped Gabonese President Omar Bongo place funds abroad. Societe Generale is said to have done similar work for the ruling family of Congo-Brazzaville.
Fortis bank is accused of helping the former ruler of Liberia, Charles Taylor, fund conflict in east Africa by processing payments for government-linked timber firms.
The list of banks implicated in the Angola loans includes Commerzbank, KBC, the Royal Bank of Scotland, ING and Standard Chartered.
"If banks cannot identify the ultimate beneficial owner of the funds ...and if they cannot identify a natural person (not a legal entity) who does not pose a corruption risk, they must not accept the customer as a client," the NGO said.
An article which appeared on 8 March on a Turkmenistan opposition website, the Chronicles of Turkmenistan, broadens the debate.
The story points the finger at French construction company Bouygues for allegedly giving current President Gurbanguly Berdymukahemmedov an €80,000 Mitsubishi Evolution X while bidding for contracts for a new airport building and palace complex.
Gordon Brown's focus on "red herring" issues such as bank bonuses and tax havens risks turning next month's summit of the Group of 20 nations into a catastrophe that fails to deal with the recession, the CBI employers' group has warned.
Martin Broughton, CBI president and British Airways chairman, said the London summit should focus on a global stimulus and undertakings to resist protectionism.
The prime minister and Lord Mandelson, business secretary, host a meeting of business organisations from the G20 countries at Downing Street next week. Mr Brown has called for regulations "to outlaw shadow banking systems and offshore tax havens".
Martin Broughton, CBI president and British Airways chairman, said the London summit should focus on a global stimulus and undertakings to resist protectionism.
The prime minister and Lord Mandelson, business secretary, host a meeting of business organisations from the G20 countries at Downing Street next week. Mr Brown has called for regulations "to outlaw shadow banking systems and offshore tax havens".
But Mr Broughton told the Financial Times it would be "nothing short of a catastrophe, when you've got an opportunity to make a difference, that you get bogged down" in issues that were "totally irrelevant" to resolving the current crisis.
It also emerged Mr Brown was struggling to organise the summit. The UK's top civil servant said on Monday that it was hard to find anyone to speak to at the US Treasury. Sir Gus O'Donnell blamed the "absolute madness" of the US system where a new administration had to hire officials from scratch.
The CBI president said tackling the recession must be the priority. He backed a call by Law-rence Summers, Barack Obama's chief economic adviser, for the world to pump more money into the economy and said Germany, Japan and China "need to show the leadership because they are not showing it at the moment".
Mr Broughton urged Alistair Darling, chancellor, to safeguard jobs in the Budget, noting the UK's fiscal stimuluslooked "pretty small" beside the US's.
Transatlantic tensions suggest that there will be no grand bargain at April's G20 summit
At least there is no danger of interminable drift when leaders of the Group of 20 gather in London next month to address the worst economic crisis since the 1930s. They have set themselves just one day, April 2nd, to do what their predecessors failed to accomplish in weeks: tackle the crisis and consider ways to remake the rules of finance
The tensions were exposed at an assembly of European finance ministers on March 9th and 10th. The ministers responded sharply to a call by Lawrence Summers, the White House economic adviser, for everyone in the G20 to focus on boosting global demand. Such calls were “not to our liking,” sniped Jean-Claude Juncker, Luxembourg’s prime minister and the chairman of the meeting. The cause of harmony may not have been helped when Britain’s most senior civil servant was quoted as saying the shortage of staff in Barack Obama’s two-month-old Treasury was making preparations for the summit “unbelievably difficult”. (Tim Geithner, the treasury secretary, disputes that.)
In reality, the tensions appeared more symptomatic of the opening of bargaining than of a disastrous rift. The G20’s agenda focuses on three broad areas: sorting out the crisis through fiscal and monetary means and by encouraging banks to lend; medium-term regulatory reforms; and strengthening multilateral bodies such as the IMF so that they can give more help to crisis-hit developing countries. Everyone has different priorities.
America feels its counterparts are not doing enough to boost demand. It would like them to pledge a fiscal stimulus equal to 2% of global GDP this year and next, and for the IMF to monitor compliance. Some countries would also like the European Central Bank to make better use of its monetary arsenal, as the Federal Reserve and the Bank of England have.
America has indeed done a lot to stimulate growth. The IMF, however, notes that taking into account automatic stabilisers, such as welfare payments to the unemployed, Germany’s fiscal response is not as far behind America’s as it appears. Not only does Germany feel its spending package is big enough, it is pressing for a quick return to balanced budgets when the crisis is over.
America has indeed done a lot to stimulate growth. The IMF, however, notes that taking into account automatic stabilisers, such as welfare payments to the unemployed, Germany’s fiscal response is not as far behind America’s as it appears. Not only does Germany feel its spending package is big enough, it is pressing for a quick return to balanced budgets when the crisis is over.
Although transatlantic differences have emerged over fiscal policy, they are narrowing over regulation. Germany and France have long battled to persuade America and Britain to regulate hedge funds, which are clustered in the financial centres of New York and London. America is now prepared to countenance regulation of systemically important ones.
sources:The Economist ,Simon Johnson,Andrew Sparrow ,guardian.co.uk,Martin Wolf ,Malloch Brown
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