G20 meeting ends with pledge, but no clear indication of how far the G20 nations would go in the event of another financial crisis.
Nicholas KammAFP/Getty Images/Newscom
Global finance ministers and central bankers concluded three days of talks late Saturday with pledges of greater cooperation to avert another financial crisis, leaving uncertain how far they would go in changing their domestic policies in response to international pressures.
Singapore Finance Minister Tharman Shanmugaratnam, head of the International Monetary Fund's steering panel, said at a concluding news conference that all countries realized the importance of policy reform and better coordination as the global economy recovers from the worst economic downturn since World War II.
"Although we are in a better position than a year ago, there are significant vulnerabilities," he told reporters. "We are still in a fragile situation. We have to be extremely watchful."
IMF Managing Director Dominique Strauss-Kahn said it would be critical for all nations to guard against complacency, especially in the face of new threats from higher oil and food prices, which were exacting a heavy toll on the world's poorest nations.
World Bank President Robert Zoellick called the surge in food prices the biggest threat to the world's poor, with 44 million more people being pushed into poverty over the past year because of higher prices.
"We are one shock away from a full blown crisis," Zoellick said at a news conference wrapping up a meeting of the bank's steering committee. Zoellick said the World Bank was pursing a variety of programs to provide support to poor countries struggling with high food costs.
But Max Lawson, a spokesman for Oxfam, the international aid advocacy group, criticized the finance officials for putting off any action on increased support until a meeting of G-20 agricultural ministers in June.
"Leaders today said the food crisis is desperately urgent, so urgent they will act on it ... in June. That's 66 days away. Nearly half a million children will have died of hunger by then," Lawson said.
The talks Saturday followed meetings on Friday of the Group of 20 nations, which includes traditional economic powers such as the United States and European nations, and emerging economies such as China, India and Brazil.
The G-20 reached agreement on a plan to provide increased monitoring of countries in the G-20, starting with seven of the largest nations, to make sure that their government debt, trade balances and investment flows were not rising to levels that posed a risk to the global recovery.
A report on the surveillance of those seven nations — the United States, China, Japan, Germany, France, Britain and India — was to be presented in November at a summit of the G-20 leaders in Cannes, France.
"We have the framework and we have the process by which policies can be scrutinized," said French Finance Minister Christine Lagarde, whose country currently heads the G-20. She said expected more refinements to the program when G-20 leaders meet later this year.
There were scattered protests around Washington over the weekend but none on the scale of a decade ago when demonstrators shut down streets around the headquarters of the IMF and World Bank, three blocks from the White House.
Despite the deal, it was not clear how effective the new system will be, especially in light of significant opposition from China to foreign lectures on its currency and trade policies.
Treasury Secretary Timothy Geithner on Saturday said the Obama administration was committed to doing its part to reduce America's soaring federal deficit, which is projected to hit $1.5 trillion this year despite approval this week in Congress of a 2011 budget that will trim $38 billion in spending.
Mexican Finance Minister Ernesto Cordero said the G-20 agreement for increased surveillance was a significant milestone.
"The fact that these recommendations are not mandatory does not mean they do not make pressure" on nations to reform their economic policies, he said.
But Brazilian Finance Minister Guido Mantega said that despite the recovery so far in the global economy, many dangers persist.
"The root causes of the crisis — oversized financial sectors, excessive financial risk-taking, destabilizing cross-border capital flows ... have not been fully addressed," he said in his remarks to the IMF meeting. "Not surprisingly, the recovery remains fragile."