G20 closes ranks but skims over toughest tasks
Seoul, November 12, 2010
G20 leaders closed ranks on Friday and agreed to a watered-down commitment to watch out for dangerous imbalances.
They offered investors little proof that the world was any safer from economic catastrophe.
After an acrimonious start, the developed and emerging nations agreed at a summit in Seoul to set vague "indicative guidelines" for measuring imbalances between their multi-speed economies but, calling a timeout to let tempers cool, left the details to be discussed in the first half of next year.
European leaders broke away for their own mini gathering in the middle of the summit to discuss a deepening credit crisis in Ireland, a stark reminder that the consequences of the worst financial crisis since the Great Depression still posed a serious threat to global stability.
In a communique signed off at the end of the gathering, the group's fifth since the financial crisis exploded in 2008, there was a little something for everyone.
Leaders vowed to move towards market-determined exchange rates, a reference to China's tightly managed yuan that the United States has long complained is undervalued.
They pledged to shun competitive devaluations, a line addressing other countries' concern that the US Federal Reserve's easy-money policy was aimed at weakening the dollar.
In a nod to emerging markets struggling to contain huge capital inflows, the G20 gave the okay to impose "carefully designed" control measures.
They also agreed that there was a critical, but narrow, window of opportunity to conclude the long-elusive Doha round of trade liberalisation talks launched in 2001.
But there was no mention of Ireland, and the bland promises to deal with imbalances did not appear substantive enough to bring about any real shift. The International Monetary Fund warned that gaps between cash-rich exporters and debt-laden importers was widening to pre-crisis levels. "The work that we do here is not always going to seem dramatic," US President Barack Obama told a news conference after the summit.
"It's not always going to be immediately world-changing. But step by step what we're doing is building stronger international mechanisms and institutions that will help stabilise the economy, ensure economic growth and reduce some tensions."
Global financial markets were not moved by the outcome of the G20 summit as it offered few concrete measures to change economic policy. Investors were instead focused on the fiscal crisis in Ireland.
After weeks of verbal jousting, the United States and China sought to bury the hatchet over rows about China's "undervalued" currency and the global risks created by the US
printing money to reflate its struggling economy.
"Exchange rates must reflect economic realities ...Emerging economies need to allow for currencies that are market driven," Obama said. "This is something that I raised with President Hu (Jintao) of China and we will closely watch the appreciation of China's currency."
The G20's accord sought to recapture the unity that was forged in crisis two years ago, but deep divides meant the leaders could not venture much beyond what was already agreed by their finance ministers last month. - Reuters