G20 ministers discuss credit crisis

ArticleData Array ( [Article] => Array ( [article_id] => 1011768 [headline] => G20 ministers discuss credit crisis [abstract] => Finance ministers from the world's biggest economies are trying to find common ground ahead of the vital G20 summit in April but already the talk is of splits.
[keywords] => G20, Europe, US, rift, ministers [content] =>

Finance ministers from the world's biggest economies are trying to find common ground ahead of the vital G20 summit in April but already the talk is of splits.

The world's richest countries -- the United States, Japan and China – plus wealthy European nations and emerging powers like South Korea will bid to lay the foundations for a plan to pull the global economy out of its tailspin.

But the build-up to the meeting at a luxury hotel near Horsham, south of London, has been marred by clashes between the United States and Europe on whether this is best done through new stimulus measures or tougher regulation.

Fears for G20 summit

Failure to come up with a clear commitment to action will dampen hopes that the much-heralded G20 summit, to be hosted by current G20 president Britain in London, can fulfil its promise and further hit already volatile stock markets.

On the eve of the finance ministers' meeting, Britain's finance minister Alistair Darling tried to play down talk of splits between the US – whose positive view of stimulus is shared by Japan and China -- and Europe.
 
Transatlantic rift downplayed

"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," Darling, the event's host, told BBC radio.

"I think on both sides of the Atlantic -- and also, for that matter, in other parts of the world -- there is a commitment to ensure that we support people, support businesses and our economies."

But recent exchanges suggest there are real differences.

Stimulus or regulation?

In recent days, senior US officials including Obama's top economic adviser Larry Summers have said leading nations must try to jumpstart a global recovery by pumping more money into their economies.

That has not been welcomed in Europe, where many leaders do not want more spending because of already big budget deficits.

French President Nicolas Sarkozy and German Chancellor Angela Merkel agreed Thursday to join forces at the summit to urge tighter regulation to avert future crises instead of more spending, in a rare show of unity.

And the chairman of eurozone finance ministers Jean-Claude Juncker of Luxembourg added this week that US calls for more cash to be injected into the world economy "do not suit us".

Obama said this week he was "optimistic" about the prospects for agreement, adding: "Everybody understands that we're in this together."

Current situation ‘dangerous’

Whether or not they reach agreement, finance ministers at the meeting will find it hard to forget that many of their countries are facing their worst recessions for decades amid shrinking consumer demand.

World Bank President Robert Zoellick, who has provided some of the most sobering analyses of the current situation, arrived Friday after warning that 2009 was turning into a "very dangerous year" for the economy.

Earlier this week, Zoellick said the current crisis was the worst since the 1930s. He added that any new stimulus plans would be "like a sugar high unless you fix the banking system."

Banking regulation begins

Those in favour of tighter regulation received a boost Friday when Switzerland, Luxembourg and Austria said they would relax their sensitive bank secrecy laws amid growing international pressure to stamp out tax havens.

Their announcements followed similar moves Thursday by Belgium, Liechtenstein and Andorra.

France and Germany have been leading the charge to clamp down on tax havens amid claims a lack of transparency helped fuel the crisis and the issue is likely to remain on the agenda at Saturday's meeting.

The meeting is also likely to touch on trade protectionism and increasing funding for the International Monetary Fund (IMF) to bail out struggling countries.

 

[start_date] => 14 March 2009 | 01:53:34 PM [comments_allowed] => 0 [source] => AFP [commentCount] => 0 [video] => [image] => Array ( [caption] => Britain's Treasury chief Alistair Darling with US Treasury Secretary Timothy Geithner at the minister's meeting (AAP) [useRegularImage] => 1 [media_library_id] => 66733 [site_id] => 1 [media_library_group_id] => 0 [media_usage_id] => 0 [filename] => site_1_rand_685369988_g20_finance_ministers_1403_b_aap.jpg [title] => g20_finance_ministers_1403_b_aap_685369988 [description] => file:site_1_rand_685369988_g20_finance_ministers_1403_b_aap.jpg [type] => [height] => 338 [width] => 450 [source] => [video_hi] => [video_lo] => [section] => [display_order] => 0 [create_date] => 2009-03-14 13:57:12 [active] => 1 [media_usage] => Article Large [usageWidth] => 300 [usageHeight] => 225 ) [imagePath] => http://media.sbs.com.au/news/upload_media/ [audio] => [reporter] => [relatedLinks] => Array ( [0] => Array ( [id] => 1011752 [label] => G20 ministers deny rift over fighting credit crisis [display_order] => 1 [type] => Article ) [1] => Array ( [id] => 1011747 [label] => Obama to work on G20 growth strategy [display_order] => 2 [type] => Article ) [2] => Array ( [id] => 1011736 [label] => Australia’s G20 ‘B-List’ status downplayed [display_order] => 3 [type] => Article ) [3] => Array ( [id] => 1011589 [label] => Aussie strengths to be underlined at G20 [display_order] => 4 [type] => Article ) ) [relatedArticles] => Array ( [0] => Array ( [article_id] => 1011752 [headline] => G20 ministers deny rift over fighting credit crisis [abstract] => Britain and France's finance ministers played down talk of a transatlantic rift on fighting the credit crisis, as they and colleagues to prepare for next month's vital G20 summit. [content] =>

Britain and France's finance ministers played down talk of a transatlantic rift on fighting the credit crisis, as they and colleagues to prepare for next month's vital G20 summit.

Ministers from the Group of 20 industrialised and emerging market countries hold talks officially starting Saturday ahead of a summit of world leaders including new US President Barack Obama in London on April 2.

Focus on support

"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," the meeting's host, British finance minister Alistair Darling, told BBC radio.

"I think on both sides of the Atlantic -- and also, for that matter, in other parts of the world -- there is a commitment to ensure that we support people, support businesses and our economies."

All the politicians come together face to face for the first time for dinner at the luxury hotel outside London where the event is being held.

While the United States, the world's biggest economy, wants a coordinated international stimulus, most of Europe is suspicious of such a move and favours tightening regulation of financial markets and institutions.

In a boost for the United States, Japan and China -- the world's second and third largest economic powerhouses -- also embraced stimulus Friday.

Recovery plans at odds

Senior US officials including Obama's top economic adviser Larry Summers have recently said leading nations must try to jumpstart a global recovery by pumping more money into their economies.

But that has not been welcomed in Europe, where many leaders do not want more spending amid big budget deficits.

France and Germany have agreed to join forces to urge tighter regulation instead of more spending. Chancellor Angela Merkel said Friday: "We do not think much of the idea of a new package of measures" to underpin the economy.

Bank secrecy targeted

There was some good news for France and Germany on regulation Friday as Switzerland, Luxembourg and Austria said they would relax their sensitive bank secrecy laws, the day after similar moves by Belgium, Liechtenstein and Andorra. Monaco also intimated it would follow suit.

Berlin and Paris have been leading the charge to clamp down on tax havens.

East in favour of stimulus

China and Japan, meanwhile, embraced further spending to fight the economic fire Friday.

Japan's premier Taro Aso ordered a new stimulus package worth a reported200 billion dollars, while China's Wen Jiabao said Beijing had "adequate ammunition which means that at any time we can introduce new stimulus policies."

Japan's Finance Minister Kaoru Yosano told the Financial Times newspaper in an interview published Friday that reviving the world economy, not regulation, must be the G20's priority.

"We all agree (on the need for better regulation), but I personally feel: are these actions necessary at a time of crisis?" he said.

"What we ask at this moment is to save the life of the world economy – not to comment about its beard."

World Bank head Robert Zoellick, who is also attending the meeting, warned that "2009 is shaping up to be a very dangerous year" for the global economy.

French Finance Minister Christine Lagarde, arriving for the talks, said she was "very optimistic" about the meeting, stressing it was a question of finding "the best compromise between our different positions."

[content_type_id] => 3 [site_name] => World News Australia [articledate] => 14 March 2009 [articletime] => 14 March 2009 [display_order] => 1 ) [1] => Array ( [article_id] => 1011736 [headline] => Australia’s G20 ‘B-List’ status downplayed [abstract] => The British government brushed off claims that it has relegated Australia to a ‘low priority’ group of countries for April's G20 summit on the global economic crisis. [content] =>

The British government brushed off claims that it has relegated Australia to a ‘low priority’ group of countries for April's G20 summit on the global economic crisis.

A report in the Financial Times on Friday said secret government documents had put Australia and six other countries on a "B-list" because they were not deemed important lobbying targets ahead of the summit in London on April 2.

Eleven countries, including the United States, France, Germany, South Korea, Brazil and South Africa were named as "high priority states" for lobbyists to target.

Hierarchy downplayed

But a Foreign Office spokeswoman played down the significant of the so-called A and B list countries.

"We continue to have strong and deep relations with Australia and this list in no way represents a hierarchy of our political relations with those (11) states," she told AAP.

"This is a very indicative list and based on the prevalence and scale of well-developed non-governmental organisations, media, civil society, academia, trade unions and non-traditional actors like sovereign wealth funds, not on how objectively important or not each country and its government were, either to the UK more widely or in a G20 context."

A ‘PR issue’

The newspaper said the confidential documents were part of a tender issued last December by the British government's Central Office of Information on behalf of the Foreign Office "for the supply of PR services for the London summit".

The government wanted PR companies and lobbyists to help the Foreign Office lobby G20 countries and launch media campaigns before the leaders from the world's 20 biggest economies met in
London.

The tender documents said the "11 high priority states" would be the main focus for lobbying, while those in Tier 2 would receive less attention, the newspaper said.

Early talks underway

News of the secret papers came as G20 finance ministers, including Australian Treasurer Wayne Swan, arrived in southern England on Friday for two days of talks on saving the global economy.

Australian officials are understood not to be concerned about Australia being relegated to the "B list" of countries.

But Britain's shadow foreign affairs spokesman William Hague said the apparent downgrading of some G20 summit participants "sends completely the wrong message".

"In particular it is wrong for Commonwealth countries such as Australia and Canada to be put into the so-called second tier," he told the FT.

 

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