G20 Summit Set To Expose Crisis Sticking Points

British Foreign Secretary David Miliband said on Sunday that Britain and the United States will not push G20 leaders to announce specific spending pledges to help fix the worst economic crisis (politicians hate the word depression) in decades when they meet in London next week.

Said Miliband, “This G20 summit was never about writing national budgets. It is about the international financial architecture.

“Let us not hear this (idea) that somehow the Anglo-Saxons are for fiscal policy and the other Europeans are somehow for regulation — you have got to do both,” he said. “You have got to mend the banking system, but you have also got to make sure that demand is put back into the economy.”

Leaders from the world’s 20 biggest economies, the G20 nations, meet in London next Thursday to discuss how better regulation, help for international trade, and extra spending could help pull the world out of the worst recession since the 1930s.

A meeting of G20 finance ministers earlier this month to pave the way for the London summit was dominated by reports of divisions between Washington and European countries over the balance between extra spending and tighter regulation. Of course, as the G20 meeting approaches these divisions are being downplayed.

Other than additional stimulus measures, which Europe is resisting, Miliband said the focus of the London summit would be on extra money for the International Monetary Fund and World Bank, financial sector reform, macro-economic coordination and free trade.

The world economy shrank for the first time since 1945 in the last quarter of 2008, throwing millions of people all over the world out of work, and the IMF says 2009 will bring the first annual global contraction for more than 60 years.

Under such conditions what is agreed to at the G20 meeting will be important. However, the meeting may expose difficult to deal with disagreements among world leaders as to what to do about the crisis rather than achieve meaningful results. It is highly doubtful if any near term improvement in financial conditions will occur as a result of the London G20 meeting.

2009 is shaping up to be a brutal year. Disagreements among the G20 nations as to how best to cope with crisis and how to restore the world economy are likely to be sharp even if the leaders manage to keep them below the surface and out of communiques.