G20 Summit gets a deal

[Sheilbh]

I looked through the Guardian's collection of front pages from the world and the summit seemed to lead everywhere but the US.  We've had wall-to-wall coverage because it's in London.  How's it played in wherever you are?

G20: Gordon Brown brokers massive financial aid deal for global economy

• G20 leaders agree $1.1 trillion injection to aid global recovery
• New rules for banking and clampdown on tax havens
• Markets rise sharply as Barack Obama hails 'historic' deal

    * Patrick Wintour and Larry Elliott
    * The Guardian, Friday 3 April 2009
    * Article history

The G20 today agreed an economic recovery package of more than $1tn and new regulations for financial institutions Link to this video

World leaders yesterday agreed on a $1.1 trillion injection of financial aid into the global economy, with Gordon Brown claiming that the grand bargain he had brokered represented "a coming together of the world" which would speed recovery from the worst recession since 1945.

The sprawling deal set out in a nine-page communique hammered out over two days of talks in London also contains tougher-than-expected measures to tighten financial regulation, including a clampdown on tax havens, the final part of the deal to be struck, after an impassioned call for compromise by Barack Obama.
Heather Stewart on the G20 rescue package Link to this audio

The US president said that "the patient had stabilised and was in good care", claiming that, by any measure, the London summit was historic.

"It was historic because of the size and the scope of the challenge that we face and because of the timeliness and the magnitude of our response," he said.

The transatlantic compromise between America and Europe led to a jump in shares in London and New York. The FTSE index closed up more than 4% at 4,124.97. The deal won praise from business leaders, as well as anti-poverty campaigners, but dismayed the green lobby with its lack of measures to combat climate change.

British government officials lost their battle to include a commitment to spend a substantial share of the economic stimulus on low-carbon recovery projects.

Vague low-carbon language and climate change negotiations in Copenhagen in December were relegated to two paragraphs at the communique's end.

Some critics also pointed out that the summit failed to produce a co-ordinated plan to purge the global banking system of billions of dollars of toxic assets, and suggested that regulation of the financial industry should have gone further.

The deal will also be scrutinised to see if its claims of new billions to jump start world economies prove to be inflated.

Brown said that the existing agreed fiscal stimulus will amount to $5tn by 2010, and the measures will raise world output by 4% by the end of next year.

The prime minister also won agreement from other G20 world leaders that the International Monetary Fund will monitor the existing stimulus, and that the leaders will re-examine the issue at a further summit, probably in New York or east Asia in September.

Overall, the resources of the IMF will be trebled from $250bn to $700bn, following the lifting by the US of years of opposition. In a sign of the shift in world power, China agreed to provide $40bn of the new loans given to the IMF, with more to come from Saudi Arabia.

Brown has tied his political future to the summit, and claimed: "This is the day that the world came together, to fight back against the global recession. Not with words, but a plan for global recovery and for reform and with a clear timetable."

He insisted the deal would save jobs in Britain. He admitted there were "no quick fixes", but believed that as a result of the deal "the recovery, which is much needed in every part of the world, will advance faster". He had managed to achieve more in 10 weeks than he had previously accomplished over 10 years, he asserted. At the centre of the deal was a six-point plan:

• Reform of the global banking system, with controls on hedge funds, better accounting standards, tighter rules for credit rating agencies, and immediate naming-and-shaming of tax havens that fail to share information.

• A global common approach to dealing with toxic assets that impair the ability of banks to lend.

• A $1.1tn package to supplement the $5tn stimulus to the global economy by individual countries. The $1.1tn will allow the IMF, the World Bank and others to increase lending to vulnerable countries. There will be a tenfold increase to $250bn in the IMF's facility allowing members to borrow from other countries' foreign currency reserves.

• More power for leading developing countries within the IMF and World Bank, to end the stranglehold of the US and Europe on their top jobs.

• $200bn of trade finance over two years to help reverse the steepest decline in world trade since 1945, with cash from a range of public and private sources.

• A pledge that the fiscal stimulus, including the sale of gold by the IMF due to raise $6bn, will give help to the poorest nations and create green jobs.

A British cabinet member said "The scale of this deal will help with Gordon's underlying credibility. It will remind people what he is there for. It will be a slow burn, but the markets have jumped, and the polls will probably follow."

Brown faces a budget in which he will have to slash his growth forecasts and admit to massive borrowing. And commenting on the summit, the Tory leader, David Cameron, insisted it was now time for the prime minister to switch back to the issue of the domestic recession and to consider Britain's "truly horrific" deficit.

Nicolas Sarkozy said the summit meant that the era of secrecy by banks was over; "great progress" had been made, he said, and the page had been turned on the economic model which had dominated since Bretton Woods in 1944 created the world's institutional framework.

"Since Bretton Woods, the world has been living on a financial model, the Anglo-Saxon model. It's not my place to criticise it, it has its advantages [but] clearly today a page has been turned," he said.

The German chancellor, Angela Merkel, said the deal was "a very, very good, almost historic compromise".

The summit's biggest loser may have been the fight against climate change. Diplomatic sources said China led the opposition to green language in the final communique. David Norman, the WWF campaigns director, claimed that the summit had been "a huge missed opportunity".

A lawyer said he thought that old-school tax havens would die out within a decade, while a UBS senior economist said he thought it was a bit light as deals go (he wanted more stimulus).  On the other hand even the cynical BBC hacks, like Paxo, said that this was a real summit with real policy debates going on unlike most of these events.

So far as I can tell Obama helped save the communique by making the French and Chinese compromise on Hong Kong and Macau.  It seems Sarko also played a bit of blinder hinting at an empty chair and then actually really helping build a deal.

George Soros was a bit disappointed with some stuff about the IMF but said he thought it was the first time that governments were reacting ahead of the crisis.

All in all it appears to have been a bit of a success and the first time I can remember that journalists come out of an international political meeting and say 'it's not just hot air'.  From what I've read, especially on the IMF, it seems like a good deal.

Incidentally I saw an amazing statistic last night in a feature on Brazil (leading into an interview with Lula) apparently they've not been as big as other countries on overseas borrowing.  In 2007 Brazil's banks were worth a third of what Britain's were, now they're 10% bigger

Edit: And the interview was terrific.  Lula is very, very good.  I like him a lot and this, with other things I've read, gives me a lot of hope for Brazil.  Unlike, alas, Argentina.

[Valmy]

Edit: And the interview was terrific.  Lula is very, very good.  I like him a lot and this, with other things I've read, gives me a lot of hope for Brazil.  Unlike, alas, Argentina.

Lula is a Godsend.  Having sane and responsible leaders in Latin America makes things so much easier.

[saskganesh]

our lead yesterday was Harper missing the photoshoot.

oh and Laureen Harper getting good ink because she rides a harley (?) and likes kittens.

[Sheilbh]

oh and Laureen Harper getting good ink because she rides a harley (?) and likes kittens.

Michelle Obama's been a big hit with the papers here.  Though they're all gearing up for the style wars in Strasbourg tomorrow when she meets Carla Bruni

And I think we've all loved this photo:

No matter how bad Brown is, he's not Berlusconi.  And I didn't realise Medvedev was a bit chubby.  I thought Russians only 'elected' supermen nowadays

[Grallon]

Now they should move to synchronize the G20 membership with that of the UN Security Council - and we'd finally have a proto gobal government.



G.

[saskganesh]

besides the "big 5", most of the G20 rotates terms through the security council anyway. essentially, it's already there.

[Martinus]

Well, the Polish stock exchange is up by 7% in a day.

[Grey Fox]

G20 is a Canadian Idea.

[BuddhaRhubarb]

depending on where you get yr news... I've seen reports on style, ipods, bashing protesters, protesters breaking windows etc... people saying that protesters have nothing to complain about because the economy sucks.

[Admiral Yi]

Lots of protestor footage.  CNN noted several times that the protestors are not bashing the US.

Lots of Obama press conference footage (he said nice things about the queen! he called it football, not soccer!).

Breakthrough on nuke reductions with Russia.

Sarkozy and Merkele opposed to stimulus spending.

IPod.

[Iormlund]

Shamelessly stolen from a guy in EUOT:

[KRonn]

oh and Laureen Harper getting good ink because she rides a harley (?) and likes kittens.

Michelle Obama's been a big hit with the papers here.  Though they're all gearing up for the style wars in Strasbourg tomorrow when she meets Carla Bruni

Barrack Obama needs to remind people that he's the fellow who accompanied Michelle Obama to Europe.        

ALA JFK.

[Sheilbh]

Lots of protestor footage.  CNN noted several times that the protestors are not bashing the US.

The odd thing is that here the stories moved from the most half-hearted riot in English history to the idea that it's all a bit of tail wagging dog and that the media largely created it and were left, comparatively, disappointed.

[Ed Anger]

G20 is a Canadian Idea.

Fuck Canada.

[Sheilbh]

G20 is a Canadian Idea.

It may well be but I think the current G20, which isn't actually the 20 largest economies, is a French invention.  At least that's what Sarko claims