World leaders are on the verge of adopting broad outlines to address problems in the global financial system.
G20 maps out road to financial recovery
World leaders meeting at the Group of 20 summit in Washington yesterday were on the verge of adopting broad outlines to address problems in the global financial system, making it more accountable to investors and more transparent to regulators, in the hope of ending the current meltdown and preventing future ones. European officials at the summit, which was convened at the National Building Museum, said a draft agreement would probably call for additional government efforts to bolster economies and co-operation on international regulation and reform of the financial system. Group of 20 leaders also called for a list of financial institutions that pose a risk to the global economy by March 31, a source close to the talks said. Warning against adopting protectionist policies, George W Bush, the US president, used his weekly radio address yesterday to stress the benefits of the free market despite many questioning its failures during the current crisis. The tentative plan of G20 members is to meet again early in 2009 in London, Tokyo or Paris after Barack Obama takes over as US president. He did not participate in the summit but sent as representatives Madeleine Albright, the former secretary of state, and Jim Leach, a former congressman. Mr Obama, in the Democratic Party's weekly radio address yesterday, stressed economic concerns. "Tens of millions of families are struggling to figure out how to pay the bills and stay in their homes. Their stories are an urgent reminder that we are facing the greatest economic challenges of our lifetime, and we must act swiftly to resolve them," he said. "[The] key priorities on which to focus in the days and weeks ahead [are] to ease the credit crisis, help hardworking families, and restore growth and prosperity." Created in 1999, the Group of 20 account for 85 per cent of the world economy and about two-thirds of its population. Its members are the United States, Germany, Japan, France, Italy, Britain and Canada, the European Union, Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa, South Korea and Turkey. In addition to the G20 leaders and President-elect Obama's representatives, participants at the summit included the heads of the World Bank and the International Monetary Fund, as well as the UN secretary general and the chairman of the Financial Stability Forum, the Switzerland-based organisation that brings together regulators, central bankers and financial officials. Saudi Arabia represented the GCC states at the meeting. Its inclusion as a major player on the world financial scene as well as that of India, Brazil, China, Argentina and other developing countries signifies a historic power shift in an economic world order that has been largely dominated by the United States, Europe and Japan. "We must use the crisis as an opportunity to correct things that were wrong before the crisis and strengthen multilateral bodies, because in a globalised world we need serious and representative forums to take global decisions," Luiz Inácio Lula da Silva, the Brazilian president, had told reporters before the summit. "We need to have other countries and other continents for more democratic, more plural decisions." In the first rescue in Asia by the IMF since the financial crisis hit, Pakistan announced yesterday it will receive a loan of at least US$7.6 billion (Dh28bn) from the fund. A group called the "Friends of Pakistan", which includes China, the US, Britain and the UAE, is also to meet in Abu Dhabi tomorrow to decide on economic aid to help stabilise Pakistan. Mr Bush warned against using the current economic situation to adopt anti-capitalistic measures. "In the wake of the financial crisis voices from the left and right are equating the free enterprise system with greed, exploitation, and failure. It is true that this crisis included failures by lenders and borrowers, by financial firms, by governments and independent regulators," he said. "But the crisis was not a failure of the free market system. And the answer is not to try to reinvent that system. It is to fix the problems we face, make the reforms we need, and move forward with the free market principles that have delivered prosperity and hope to people around the world? "Around the world free market capitalism has allowed once impoverished nations to develop large and prosperous economies. And here at home, free market capitalism is what transformed America from a rugged frontier to the greatest economic power in history." Gordon Brown, the British prime minister, echoed Mr Bush's sentiments. "Protectionism is the road to ruin," he told an audience at the Council on Foreign Relations in New York on Friday. * The National