WASHINGTON // World leaders battling a deepening economic crisis vowed to co-operate more closely, keep a sharper eye out for red-flag problems and give bigger roles to fast-rising nations - but kicked many hard details down the road for their next summit. That summit is expected after the US president-elect Barack Obama takes office in January. Perhaps as important as the modest concrete steps they took, the leaders of the planet's richest nations - and some of the fastest-developing - made clear in their meeting yesterday that they recognise the world's increasingly interconnected financial architecture and the responsibilities that go along with it.
"There shall be no blind spots," the German chancellor Angela Merkel declared. "There is here [Washington] a great common will to ensure that such a crisis is not repeated." Underscoring how bad things have become, the US President George W Bush, the summit host, said he had agreed to the recent US$700 billion (Dh25.7 trillion) rescue plan for US financial institutions only after being told America was at risk of falling into "a depression greater than the Great Depression."
Also significant at the summit: the inclusion of a far broader range of countries than the elite, old-guard group that usually holds such summit meetings. "Emerging market countries were not the cause of this crisis, but they are amongst its worst affected victims," declared the Indian prime minister Manmohan Singh. Leaders from 21 nations and four international organisations attended the emergency summit, which took on a workaday feel appropriate to the grim crisis that drew them together.
At the conclusion of talks, they released a joint communique that was modest in scope but high in hopes. Covering eight pages and 47 action items, the document's overarching focus is to establish a series of new safeguards for the fragile and opaque global financial system. Nearly all the efforts are aimed in some way at better flagging risky investment patterns and regulatory weak spots before they bring down companies and then ripple dangerously through entire economies, as has happened in recent months.
To that end, the leaders called for such mundane things as "supervisory colleges" where financial regulators can compare market notes across countries, better co-operation between nations on regulations, the eventual standardisation of accounting rules governing how companies can value potentially tricky assets, and new attention to credit-rating agencies. The leaders also supported expanding the membership of the Financial Stability Forum, a group that has been examining the causes of the financial crisis and crafting ways to prevent future problems.
And the group called for broadening the financial police work of the 63-year-old International Monetary Fund as well as modernising the institution to better keep pace with the changing economic environment. None of the items was splashy, but officials argued they have far-reaching potential. "It's not glamour," said the French president Nicolas Sarkozy. More than two dozen items were slated for some level of action by the end of March, around the time the leaders expect to gather again, with the rest left for later.
Concrete proposals were few, however, with most details slated to be worked out by finance ministers in the coming months and beyond. The leaders also discussed the shorter-term problem of how to bring their nations' economies back from the brink. Some had pushed ahead of time for a pledge of co-ordinated new government stimulus spending by each nation. But with Mr Bush cool to such action in the US, the communique only endorsed taking such action "as appropriate." Hundreds of protesters flocked to the US capital city, and some made the point that families worldwide were worried about pocketbook issues. "Money for people's needs, not bankers' greed," said the bright yellow signs of some of the demonstrators.
The talks were undoubtedly remarkable, however, for drawing together such a vast number and array of nations and bringing them to agreement on a set of actions, however limited, in less than a month's time. Leaders from major powers including Britain, Germany, France and Japan were there, alongside rulers from developing countries such as China, India, Brazil and South Korea as well as from the oil-rich Gulf state of Saudi Arabia, who headed the GCC delegate at the talks.
The summit was announced on Oct 22, and the urgency of the downwards-spiralling global economic situation led to much faster action than is typical in the usually glacial diplomatic arena. With fears high that signs of discord among the world's most powerful politicians could send markets plunging again come Monday, the presidents and prime ministers appeared uncharacteristically determined to hold their tongues about any disagreement over either the cause of the current crisis or their compromise agreement.
This despite the fact that the action plan seemed to leaning in most areas far more toward the US preference for boosting oversight and free-market incentives than the European desire for increased regulation and requirements. Mr Sarkozy, the British prime minister Gordon Brown and the European Commission president José Manuel Barroso emerged with praise for the meeting as a sign of historic co-operation.
The Canadian prime minister Stephen Harper said after the summit that "despite the great diversity of countries in the room for those two days of the summit, there was a practically unanimous agreement on all major topics." "It is the road to the new Bretton Woods," Mr Brown said, referring to the 1944 meeting in New Hampshire which established the international monetary protocols governing trade, banking and other financial relations among nations.
Mr Bush, though, is on his way out of office and the leaders were clearly looking beyond him to his successor. Many met on the sidelines of the summit with Mr Obama's delegates, the former Secretary of State Madeleine Albright and the former Republican representative Jim Leach of Iowa, while speculating about whether the Democratic president-elect might veer from Mr Bush's approach by the time of the next summit.
Mr Obama will be sworn in on Jan 20.
