Brussels, 31/03/2009 (Agence Europe) - The stakes at play at the G20 summit are not in short supply but what counts for the leaders and institutions in London is how to show unity. This message was endlessly repeated before the summit and is expected to feature in the final text, the elaboration of which has made good headway. What is important, above all, is translating these words into deeds. Final arbitration will undoubtedly take place on Thursday for several points, such as the amount allocated to budgetary recovery (and its impact on growth and jobs) or the sum for consolidating the resources of the International Monetary Fund (IMF) and multilateral development banks (some quarters are hoping for more than the $500bn expected from the Bretton-Woods institution).
The key for economic recovery is support for global demand and this will be at the heart of the discussions. There is no question, however, of drawing up a hierarchy of budgetary efforts and regulatory reform of the financial system. These factors are both priorities. On this point, like the others, a convergence of views between the Europeans and Americans is developing on the statements made by the president of the European Commission. On Tuesday 31 March, José Manuel Barroso told the press about his aims for the meeting - “for the first time in an economic crisis, the world is working together”. He also stated that the summit is a “unique occasion” for affirming “our” determination in promoting: global coordination at a budgetary level; ambitious reform of the financial markets (“a confidence stimulus”; support for world trade and a firm commitment to developing countries and climate protection (“fairness” should be highlighted towards developing countries and “coherence” in the fight against climate change): five objectives, and as much action of equal importance, that require mutual definition in order to restore confidence.
Such confidence, according to Mr Barroso, does not necessarily require a new budgetary effort. He refuted criticism from those calling on the EU to spend more GDP on the recovery and explained that not announcing new measures at this stage also meant deciding to reinforce credibility and confidence in what has already been done. Mr Barroso affirmed that what they needed to do now was to “focus on the execution” of what has already been decided and that making comparisons on the different packages did not mean finding a solution to the crisis. He insisted that “citizens will judge the stimulus on the scale of the results and not on the scale of the efforts provided”. The Commission president also pointed out that “each economy is different and we need to adapt our instruments to national situations”. He hammered home the fact that “what counts is the results”.
In view of the meeting, there does appear to be some progress on the timetable for IMF reform deadlines (the counterpart needed for the increased contributions of certain emerging countries) and stricter financial regulation (together with action on tax havens and non-cooperative jurisdictions). The list is expected to change by Thursday.
Providing the EU with a single representative body in the international financial institutions (and others) would help to find a place for the other big economies. It came as no surprise that Mr Barroso confirmed that the Commission would not be opposed to this. He did assert, however, that such a development was currently, “not very realistic”. Better representation of developing countries, should, nonetheless, appear by 2011 (through greater voting rights) and is being prepared for a decision by the G20.
According to President Barroso, a shift in the positions of the US and EU is required if there is to be reform and a move towards convergence of the financial architecture. He stressed that pitting budgetary measures against regulation was a false debate because “it is not a question of one or the other but of doing both”. Mr Barroso was pleased that the new US administration is much more open about financial regulation, as it is about climate change and perhaps trade (the G20 will also urge resistance to protectionism and call for a conclusion of the Doha Round, which could help boost the global economy by a further $150bn a year).
But just as is the case for the different recovery packages that have already been decided, it is only putting the commitments made on Thursday into practice at a later date that will reveal whether London has been a success or just smoke and mirrors. As a precaution, President Barroso has now confirmed the need to organise other summits and declared that we should not expect a miracle on 2 April. He said that this was part of process and it would be useful to have another summit this year. He indicated that “it is obvious that the process is producing results” and explained that they had achieved more results over tax evasion over the last three months than over the last 30 years. (A.B./transl.rh)