Brussels, 30/08/2013 (Agence Europe) - The ratcheting up of diplomatic tension in response to the Syrian crisis is overshadowing the economic woes of the world's 20 leading economies ahead of the G20 Summit in St Petersburg, Russia, on Thursday 5 and Friday 6 September.
At a press briefing organised in Brussels by the European Commission on Friday 30 August, no questions about Syria were taken on the grounds that that foreign policy issues were never discussed at the G20, but it was not ruled out that some leaders may discuss the matter on the sidelines of the meeting.
The world's leaders will also be looking at the global economy. A high-ranking European official said that the European Union (represented at the summit by the president of the European Commission, José Manuel Durão Barroso, and the president of the European Council, Herman Van Rompuy, will call for the message to be one of boosting confidence among economic players and the general public by going along with Russia's desire and putting growth first. The EU is expected to emerge from recession in the second half of 2013, although unemployment remains at a peak, and the EU is also expected to continue with its drive of budget, economic and financial reforms.
The European source said that Europe is meeting its commitments and achieving results. At the time of the last G20 (in Los Cabos, Mexico), the EU was mired in the sovereign debt crisis, but it now hopes to reap the rewards of its reforms that have led to stability on the financial markets through the launch of the banking union process. The source said that Europe expected the G20 to acknowledge this.
Focus on the emerging economies. This G20 will focus on the emerging economies. Countries like India, Brazil and Turkey are currently experiencing massive outflows of capital and their central banks are having to intervene to support their currencies. The Commission wonders whether they are simply victims of the announcement by the Fed in the United States that it would be adjusting its policy of quantitative easing or whether the problem extends beyond interest rates in the United States. During the long period of growth and influx of foreign capital, emerging economies let down their guard and were slow to adjust their trade model by making the difficult structural reforms that Europe has already undertaken.
In the budget domain, the G20 is expected to adopt an action plan that may include country-specific recommendations (see EUROPE 10893 and 10894). The negotiations will focus on how detailed the recommendations should be and whether there should be an implementation timeline. Although it is planned to monitor compliance, there are not any budget processes at the G20 that are anywhere near as binding as in Europe.
The EU has made huge strides in reforming the financial set-up, such as laying down bank capital requirements (see EUROPE 10910) for the “too-big-to-fails”, regulating derivatives and monitoring the work of credit rating agencies. Negotiations at the summit will focus on shadow banking, based on recommendations from the Financial Stability Council. The G20 will welcome the recommendations, which cover risk reduction on the repo market.
World leaders will take on board the work around the globe to spread the automatic exchange of bank information to tax offices to clamp down on tax fraud and the transfer of profits by multinationals for tax avoidance purposes.
The EU will call for the pledge made in Toronto (but not applied) that there should be no protectionist trade measures to be extended until 2016. (MB/transl.fl)