Winners and losers at the G20 summit
The Group of 20 ended a summit on Sunday saying its top priority was strengthening the shaky economic recovery and pledging to clean up debt-burdened public finances without stunting growth.Updated: Jun 28, 2010 08:19 IST
The Group of 20 ended a summit on Sunday saying its top priority was strengthening the shaky economic recovery and pledging to clean up debt-burdened public finances without stunting growth.
The group of major and emerging economies had different priorities going into the Toronto summit, and some were able to achieve more than others during the two-day meeting.
Following is a list of some of the winners and losers:
CANADA - DRAW
Host country Canada, arguing that its banks survived the world financial crisis without government bailouts, was a vocal lobbyist against a global tax on banks to fund future rescue packages, and a big winner when the G20 simply mentioned the idea of a tax as one option countries could adopt. Canada also saw the G20 endorse its push for specific deficit and debt reduction targets.
But the summit played poorly at home, where images of protesters torching police cars often overshadowed the political and financial discussions in the meeting itself.
Prime Minister Stephen Harper also came under fire for a $1 billion security bill and for the costly "fake lake" inside the media center. Billed as a way for visiting reporters to experience the lakeside landscape where the G8 summit took place, it turned out to be a small, square pool of water.
UNITED STATES - LOSE
US President Barack Obama arrived at the summit on what White House officials hoped would be a triumphant note after House and Senate negotiators reached a final compromise on a bill that would bring about the most sweeping overhaul of financial rules since the 1930s.
But he left having achieved little on the fiscal issues that dominated the summit.
The United States was forced to give ground on European demands for a new emphasis on budget austerity, which it had warned threatened to torpedo the fragile economic recovery.
Obama also told G20 leaders that existing proposals in the Doha world trade talks did not meet US needs and would have to change significantly.
CHINA - WIN
Beijing prevailed in its demand that draft language in the G20 communique praising China for enhancing exchange rate flexibility be removed from the final version.
Although it may seem odd to reject a compliment, China did not want the precedent of having its currency singled out, even in a positive light, in a formal statement by the G20.
China's victory on the issue was not total. If cautious officials in Beijing had not had the G20 to worry about, the Chinese currency might still be locked to the dollar. The threat of intense, coordinated criticism was crucial in pushing the government to depeg the yuan last week.
GERMANY - WIN
Germany insisted it faced no criticism for its budget-cutting plans, although it remains a G20 target as a trade-surplus country that needs to do more to boost domestic demand. In an interview with Reuters, Finance Minister Wolfgang Schaueble singled out public sector debt as a barrier to boosting domestic demand, and said the deficit cuts would help steer Germany to a path of sustained growth.
More broadly, German and other European officials looked like winners because they managed to tilt the balance in the final communique slightly toward the fiscal tightening side, and squeezed in that the Canadian consolidation targets accepted by the G20 were a minimum for advanced economies.
While Europe did not get global support for a bank levy, it did get G20 backing for some form of contribution from the financial sector to pay the cost of government interventions in that sector according to a set of common principles.
RUSSIA - DRAW
Russia pushed for reform of international financial institutions but no major advances were expected on that at the meetings. On most issues it successfully defended its position, but officials said privately that the nature of the big issues -- government deficits and slow growth rates in developed economies -- meant that Russia's position was peripheral.
BRITAIN - WIN
Prime Minister David Cameron can claim a win at his first G20 summit. He got some of what he wanted including implicit recognition in the G20 communique for his government's tough budget measures announced earlier this week.
Cameron also appeared to forge an easy relationship with Obama -- and even hitched a ride on the presidential helicopter -- and avoided a public rift over British oil giant BP and the costs of its Gulf of Mexico oil spill.
Cameron, 43, is cutting his teeth as a world leader and his Toronto outing appeared to mark a good start, even if he had to endure watching England's elimination from the soccer World Cup by Germany, in the company of Chancellor Angela Merkel.
BRAZIL - LOSE
Brazilian President Luiz Inacio Lula da Silva skipped the Toronto meeting, opting to stay home to deal with the aftermath of severe flooding.
The decision reduced Brazil's visibility at the meeting, a setback for a rising power that hopes to win a greater role in global affairs.
It also spurred the leaders of Russia, India and China to called off a meeting of so-called BRIC countries on the sidelines of the G20 summit, blunting at least temporarily their effort to present a united front in demands for more say in world financial institutions.
JAPAN - DRAW
Japan, which was against a global tax on banks heading into the meeting, took heart in the G20 saying the idea of a tax was optional. Japan has argued that its national deposit insurance scheme is an alternative to a bank tax.
But Japan will not be able to meet a target for developed countries to halve deficits by 2013 and stabilise or reduce government debt-to-GDP ratios by 2016. The communique welcomed Japan's recent fiscal reform and growth plans, but the special mention of the country's "circumstances" highlighted the dire state of its finances compared to its advanced peers.
Delegates played up efforts by Prime Minister Naoto Kan, Japan's fifth leader in three years, to build personal relations with fellow heads of state during his summit debut but this too put focus on the toll Japan's revolving-door leaders have had on diplomacy.
First Published: Jun 28, 2010 08:17 IST