G-20 gives $1 trillion to fight global crisis
Published 12:00 am Tuesday, December 1, 2009
AP Business Writer
LONDON (AP) ó World leaders pledged $1.1 trillion in loans and guarantees to struggling countries and agreed Thursday to crack down on tax havens and hedge funds ó but failed to reach sweeping accord on more stimulus spending to attack the global economic decline.
At the end of a highly anticipated one-day gathering, leaders of the Group of 20 nations said they would upgrade an existing financial forum to serve as an early warning monitor to flag problems in the global financial system.
They did not, however, satisfy U.S. and British calls for new stimulus measures. Nor did European politicians get their goal of a global financial superregulator.
The leaders did bridge several gaps between the United States and some European nations over how far to regulate the market and how to curb the excesses that sparked the global economic crisis.
President Barack 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.
However, it had become clear long before the gathering began that there was little support for more such stimulus spending outside the U.S. and Britain.
“I think we did OK,” Obama told reporters afterward. “We have agreed on a series of unprecedented steps to restore growth and prevent a crisis like this happening again… We have created as fundamental a reworking of resources to these international financial institutions as anything we’ve done in the last several decades.”
Obama’s words echoed comments by British Prime Minister Gordon Brown and the French and German leaders.
Thursday’s gathering was called in hopes of restoring faith in the global financial system ó and in one possible gauge of success, European and U.S. markets surged ahead as the outcome of the summit came into view.
The biggest headline figure was the new money for the International Monetary Fund, which helps out governments that run into financial trouble from the crisis, and other development organizations to send credit to countries that have seen it dry up.
French President Nicolas Sarkozy, who earlier had threatened earlier to walk out if unsatisfied with the outcome, also praised Obama for helping to create consensus and persuade China to agree to publish lists of tax havens.
“There were moments of tension,” Sarkozy said. “Never would we have thought to get as big an agreement.”
German Chancellor Angela Merkel called the measures “a very, very good, almost historic compromise” that will give the world “a clear financial markets architecture.”
“For the first time we have a common approach to cleaning up banks around the world to restructuring of the world financial system. We have maintained our commitment to help the world’s poorest,” Brown said. “This is a collective action of people around the world working at their best.”
The G-20 leaders also said that developing nations ó hard-hit and long complaining of marginalization ó would get a greater say in world economic affairs. They said they would renounce protectionism and pledged $250 billion in trade finance over the next two years ó a key measure to help struggling developing countries.
The leaders also agreed to new rules on linking executive pay to performance, Brown said.
Despite the announcement of a global supervisory body to flag problems, Sarkozy lost his bid for a global regulatory czar that could actual enforce regulations inside U.S. and other countries.
Obama said that the comprehensive deal was just the beginning, and the world’s problems “are not going to be solved in one meeting, they’re not going to be solved in two meetings.”
G-20 leaders agreed to gather again to assess progress on their commitments at the sidelines of the annual U.N. summit in New York in September.
Police were out in force for the G-20 summit Thursday, swarming the east London riverside site after demonstrations in the city’s financial district on Wednesday turned spordically violent.
Police boats patrolled the Thames river as small groups of demonstrators protested world poverty and climate change. Over 110 people were arrested over two days, police said.