G-20 approves greater role for Asia, Latin America
The Group of 20 approved a greater voice for Asian and Latin American countries in a historic shift that recognizes the rising influence of both regions, then sat down on Friday to discuss the problems still confronting the economy.business Updated: Sep 25, 2009 23:00 IST
The Group of 20 approved a greater voice for Asian and Latin American countries in a historic shift that recognizes the rising influence of both regions, then sat down on Friday to discuss the problems still confronting the economy. The leaders of the world's 20 largest economies were attending a two-day meeting dedicated to fostering a healthy global recovery and vowed to overhaul lax financial regulations and work harder to control dangerous imbalances that contributed to a financial meltdown.
The economic developments were overshadowed on Friday by the disclosure of a secret Iranian nuclear facility. US President Barack Obama, French President Nicolas Sarkozy and British Prime Minister Gordon Brown appeared together to demand that Iran fully disclose its nuclear ambitions and threatened new sanctions. The decision to raise the profile of the G-20 represents a major change and underscores how the world's balance of power has shifted in the past 40 years.
The leaders decided the G-20 will serve as the board of directors on global economic cooperation, a function that for more than three decades had been performed by a smaller club: the United States, Japan, Britain, Germany, France, Italy, Canada and later Russia. The G-20 includes such developing economies as China, Brazil and India. Leaders of the G-8 will, however, continue to meet on matters of common importance such as national security, the White House said late Thursday.
"The old system of international economic cooperation is over. The new system, as of today, has begun," Brown said. He said that the G-20 would become the "premier economic organization for dealing with economic management around the world." The leaders also searched for ways to make sure that the financial excesses that led to the worst global downturn since the Great Depression were not repeated.
The concluding communique, according to drafts that were circulating, addressed issues such as restraining excessive bonuses paid to bankers to stop financial institutions from engaging in the risky practices that contributed to the crisis.
EU leaders had recommended links between bankers' pay and the companies' long-term performance and have sought to end bonuses where a banker is paid a set amount regardless of the risk being taken.
According to participants, the final document glossed over differences on the executive-bonus issue by avoiding language for specific caps, which France had pushed for but that America had opposed. A US push for stronger requirements for bank capital, the cushion that banks hold against loan losses, was included, but with many of the specifics over how the capital would be determined left to be set at later meetings.
The leaders also agreed to a US proposal for a "framework for sustainable and balanced growth" to deal with such issues as China's huge trade surpluses and the soaring US budget deficit. Brown said the plan would set economic objectives for individual countries which would be reviewed annually with the International Monetary Fund assisting in those reviews.
However, there would be no penalties for failing to meet the objectives, because no country wanted to lose its sovereignty over its trade policies.
Still, the leaders sought to portray their summit as a major success.
"I have the impression that we are on a successful path," said German Chancellor Angela Merkel, who was leaving Pittsburgh to fly back to Berlin where on Saturday she was holding her final campaign rally before facing German voters on Sunday.
After scattered acts of vandalism on Thursday, the streets of Pittsburgh generally were quiet Friday with heavy security around the David L Lawrence Convention Center where the talks were being held.
The summit ends Friday with a joint communique likely to paper over many remaining disagreements.