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Business

'Unprecedented level of cooperation' at finance meeting in London

Text by NEWS WIRES

Latest update : 2009-09-06

G20 finance ministers meeting in London have vowed to pursue existing stimulus policies until the end of the economic crisis. There was an "unprecedented level of cooperation" according to IMF head Dominique Strauss-Kahn.

AFP - Despite compromises struck at London's G20 finance ministers' meeting Saturday, world leaders still have a lengthy to-do list for boosting the post-crisis world economy at this month's main summit.

The talks in London were designed to lay foundations for a crucial meeting of leaders in the US city of Pittsburgh on September 24-25, expected to seal firm agreements to keep the global economy on the right track.

While the outlines of some plans were drawn up in London, notably on whether to wind down emergency state support, there are still plenty of gaps which need to be filled in.

Meanwhile, some pressing issues were not substantially addressed at all, including climate change.

Leaders have, though, stressed that despite any shortfalls, there is still a strong sense of unity and common purpose in the international community forged at the height of the crisis which eases the deal-making process.

There was an "unprecedented level of cooperation" at the finance ministers' meeting, International Monetary Fund (IMF) managing director Dominique Strauss-Kahn told reporters.

In one of their headline declarations, finance ministers agreed to "continue to implement decisively our necessary financial support measures and expansionary monetary and fiscal policies... until recovery is secured".

But this message was tempered with caution from figures including Strauss-Kahn and Anders Borg, finance minister of Sweden, which holds the rotating EU presidency.

They highlighted the risk that unemployment would continue to rise for months to come, a reminder that the tail end of the crisis presents lasting problems for world leaders.

Some experts also question whether the recovery of European powerhouses France and Germany could mask a "double-dip" or a slow and drawn-out recovery.

Another key focus in London was bankers' bonuses and financial regulation. Here, world leaders will have to work to achieve specific, binding agreements after finance ministers hammered out a compromise.

Ahead of the meeting, a split had seemed likely, with France and other European countries calling for a mandatory cap while Britain and the US opposed such strong measures.

A halfway house emerged with no pledge on capping but a pledge to reward long-term, not short-term success and agreement that the matter should be considered by the leaders' summit in Pittsburgh.

Divisions between France and the United States on the issue appear unresolved, though.

Other issues requiring action also stand out.

The issue of global imbalances -- principally the US's large current account deficit and China's surplus -- may be abstract, but some experts say it could be the big economic issue of the next decade.

It was not tackled by the communique, although many senior figures mentioned it as a preoccupation.

US Treasury Secretary Tim Geithner came to the meeting pitching for agreement on making banks put aside a certain amount of money to ensure they are better prepared for tough times.

But he admitted afterwards: "We still need to reach agreement on the level of capital ratio." He also highlighted a need for IMF reform to give emerging economies like China and India a louder voice.

On climate change, the communique said the need to fight it was "urgent" but proposed nothing specific.

The UN climate change summit in Copenhagen is looming in December at which world leaders will try to seal a new accord after the Kyoto Protocol requirements expire in 2012.

And campaigners criticised the lack of concrete proposals to help the developing world fight the effects of global warming.

"This is another missed opportunity to agree a funding package to help poor people adapt to climate change and developing countries to cut CO2 emissions," Oxfam's senior policy adviser Robert Bailey said after the meeting.

"While rich countries avoid their responsibilities, negotiations remain blocked, (and) time to broker a deal is ticking away."

 

Date created : 2009-09-06

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