2 April was a big day for the international community; the leaders of the Group of 20 countries (the G20) had a dramatic one-day gathering at the ExCel Centre in London. The goals of the meeting were three-fold:
1. Reach an agreement on global stimulus measures to halt the economic slide;
2. Develop new parameters for global regulation of the financial sector;
3. Reach an agreement to create stricter regulations for tax havens.
World leaders achieved #2 and #3 to some extent, but there was little accord on stimulus spending directed to halt the global economic decline. This process is commendable considering the tension that has built between world leaders over the days preceding the Summit.
There was a notable lack of direct discussion of environmental issues throughout the course of the Summit. As Cliamatico’s G20 Reporting team relates: “in the substantive elements of the Summit outcomes there is little mention of climate change. In the summary communiqué climate change is mentioned in the second-to-last and penultimate paragraphs only.” Yet, there are strong implications to the final decisions that may affect climate issues, especially in developing nations.
A lot of press was dedicated to the French President, Nicolas Sarkozy’s, threat to walk out of the negotiations if the outcome did not meet his expectations. At a joint news conference with the German Chancellor, Angela Merkel, Sarkozy said now was the time to “moralize the system…we are just trying to take responsibility.” When challenged if he would truly refuse to sign an agreement that does not meet his expectations, he added: “This is a historic opportunity afforded us to give capitalism a conscience, because capitalism has lost its conscience and we have to seize this opportunity.” France and Germany were well aligned in their expectations going into the Summit.
Sarkozy discussed “red lines” on tax havens, hedge fund regulation, banking transparency, and a worldwide cap on bankers’ pay. In the end, he got most of what he asked for.
In the end world leaders pledged $1.1 trillion(USD) in loans and guarantees to poorer nations. This money includes $300 million(USD) over the course of three years for multi-country development banks to lend to poor countries that have seen reductions in credit after crisis-hit banks closed their doors.
There has been little direct discussion of the specifics of how this money will be directed. In theory, a certain percentage could go towards certified sustainable development projects but this is speculation and is not certain in the least. Since 2007, France’s environment ministry has subsumed once-larger rival ministries, such as transportation, energy and raw materials. It is notable that in many decisions the French state has included direct considerations for environment. Perhaps in the next Summit, Sarkozy can stamp his feet to demand more action on that point.
After some tense moments between Sarkozy and Chinese President, Hu Jinato, agreement was reached to crack down on tax havens and hedge funds. Additionally, a new supervisory board to highlight problems arising in the global financial system was created.
Yet, the U.S. and British calls for new stimulus measures were not satisfied during the course of the Summit. But by all accounts (following from public statements by key G20 nation leaders) they did bridge the gap between the stance of the USA and Britain against that of some European nations. Sarkozy openly praised USA President Obama for “helping to create consensus and persuade China…” He went on to say, “there were moments of tension, but never would we have thought to get as big an agreement.”
In some ways the
Summit was a vital event not only to help the world dig its way out of financial troubles, reduce the probability of future issues, but to see how the leaders of the G20 interact with a new face around the table, that os US President Obama.