PITTSBURGH - World leaders at the two-day Group of 20 (G-20) summit in the
United States city of Pittsburgh agreed to work cooperatively to recover from
the global economic crisis and create structural reforms with long-term growth
as the goal.
In their end-of-meeting statement, the heads of the world's biggest economies
also vowed to reform banking sectors and raise capital standards, replace the
Group of Eight - that is, the US, Japan, Germany, France, the United Kingdom,
Italy, Canada and Russia - with the G-20 as the primary forum for international
economic diplomacy, endorse a World Bank-led food security initiative for the
world's poorest countries, and commit to phasing out fossil-fuel subsidies.
Catching most observers by surprise was the announcement that
the G-8 would now be supplanted by the G-20, a body more representative of the
world's most powerful countries but a far cry from the inclusive global
governance called for by the world's poorest countries and development
non-governmental organizations (NGOs).
The G-20 adds to the G-8 members Argentina, Australia, Brazil, China, India,
Indonesia, Mexico, Saudi Arabia, South Africa, South Korea, Turkey and the
European Union.
"The G-20 is more representative than the G-8 but there is still no seat at the
table for the poorest countries," said Oxfam senior policy adviser Max Lawson.
"South Africa is the only African country included in this club. That means
when the G-20 talks about growth and stability, they are leaving the poorest
countries in the cold."
The G20 leaders' decision to endorse a World Bank food initiative also helped
keep the world's poorest countries in the spotlight - especially in the context
of the global financial crisis.
"We see the urgency of addressing global hunger," Michael Klosson, chief policy
officer of Save the Children, told Inter Press Service (IPS). "Food prices in
the last couple years have squeezed incomes. When you're a poor country, 60-80%
of family income is spent on food. It really is urgent that the world
addressees this hunger crisis."
Although details remain to be finalized, the proposed World Bank trust fund
would help distribute the food aid from the $20 billion food security
initiative that G-8 leaders committed to at their July summit.
NGOs have called attention to the aid commitment, demanding that donor
countries ensure transparency and accountability in how food aid is
distributed.
"We think this is a good idea and urge that it be implemented as soon as
possible. The [World] Bank has a track record and mechanisms in place to ensure
transparency and accountability," Klosson concluded.
A commitment to reform of the International Monetary Fund (IMF) was reported to
be a sticking point for US President Barack Obama, who spearheaded the
initiative along with a number of the emerging economies, but the final
communique contained an agreement to shift 5% of the IMF voting power in favor
of developing countries at the expense of over-represented wealthy countries.
It was alleged that this shift was opposed in the morning by the British and
French delegations, who objected to the reduction in voting power to which they
- along with a number of western European countries - would be subjected.
The reform is likely to benefit China and perhaps one or two other emerging
economies such as Brazil or India.
"It's important that China does get a fairer representation, but it's not just
about countries like China. It's about poorer countries in Latin America and
sub-Saharan Africa," Oxfam economic justice press officer Jon Slater told IPS.
The recovery from the financial crisis was a hot topic at the summit as world
leaders took stock of the efforts they had committed to undertake at the April
G-20 summit in London.
"We brought the global economy back from the brink, we laid the groundwork
today for longtime prosperity as well," Obama said at a press conference at the
conclusion of the summit. "Still we know there is much further to go."
Obama reiterated his call for bankers to be compensated on their long-term
performance instead of rewarding risky and aggressive practices for quick
gains.
The G-20 communique reflected this sentiment, saying that the leaders pledged
to "raise capital standards, to implement strong international compensation
standards aimed at ending practices that lead to excessive risk-taking, to
improve the over-the-counter derivatives market and to create more powerful
tools to hold large global firms to account for the risks they take."
In a commitment that was expected and enjoyed wide populist support, the
leaders committed to limit guaranteed bonuses for executives and putting a stop
to rewards for "risk-taking".
Environmental issues and global warming saw no major breakthroughs and most
major commitments on the issue seem to be put off until the Copenhagen Climate
Conference in December.
"We will spare no effort to reach agreement in Copenhagen through the United
Nations Framework Convention on Climate Change negotiations," read the
communique.
Leaders also committed to cutting fossil fuel subsidies and promoting energy
market transparency and stability.
Concerns before the summit had been raised about the possibility of a US-China
split in trade policy.
Earlier in the month, the US imposed tariffs on Chinese tires in a move that
many were concerned could spill over into G-20 negotiations and, in worst case
scenarios, spark a trade war.
US-Chinese relations seemed strong at the summit, where China walked away with
what will probably be a significant improvement in its voting share at the IMF
and further embedded itself into the international financial institutions and
institutions for international economic diplomacy.
The member countries committed to "fight protectionism" and "[bring] the Doha
round to a successful conclusion in 2010".
The G-20 will next meet in Canada in June 2010 and South Korea in November
2010.
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