Econ summit vows action — takes few concrete steps
WASHINGTON – World leaders battling a dire and deepening economic crisis vowed Saturday to cooperate 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 after President-elect Barack Obama takes office.
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 their recognition of the world's increasingly interconnected financial architecture and the responsibilities that go along with it.
"There shall be no blind spots," German Chancellor Angela Merkel declared. "There is here a great common will to ensure that such a crisis is not repeated."
Underscoring how bad things have gotten this time, President George W. Bush, the summit host, said he had agreed to the recent $700 billion rescue plan for U.S. financial institutions only after being told the nation 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 Indian Prime Minister Manmohan Singh.
Leaders from 21 nations and four international organizations attended the emergency summit that was held as Washington was blanketed in a gray mist and which took on a workaday feel appropriate to the grim crisis that drew them together. At the conclusion of talks that took place over two days, 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 cooperation between nations on regulations, the eventual standardization 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 modernizing the institution to better keep pace with the changing economic environment.
None of the items was splashy, and most would be understandable to few outside of financial experts, but officials argued they have far-reaching potential.
"It's not glamour," said 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 coordinated new government stimulus spending by each nation.
But with Bush cool to such action in the U.S., the communique only endorsed taking such action "as appropriate."
A handful of the hundreds of protesters that flocked to the U.S. capital city succinctly summed up skepticism about their benefit to the families around the world who are increasingly worried about mortgages, retirement savings and jobs. "Money for people's needs, not bankers' greed," said their bright yellow signs.
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. The summit was just announced on Oct. 22, and the urgency of the downward-spiraling 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 U.S. preference for boosting oversight and free-market incentives than the European desire for increased regulation and requirements.
Sarkozy, British Prime Minister Gordon Brown and European Commission President Jose Manuel Barroso emerged with praise for the meeting as a sign of historic cooperation.
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."
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 Obama's surrogates, former Secretary of State Madeleine Albright and former Republican Rep. Jim Leach of Iowa, while speculating about whether the Democratic president-elect might veer from Bush's approach by the time of the next summit.
Still, Bush made sure he kept an iron grip on the proceedings. His was the only voice heard in any official setting — during the toast at Friday's dinner and before and after the closed summit meetings. All the other leaders had to scramble to set up briefings or news conferences at alternative sites in order to express their thoughts.
The inclusion of the developing nations was demanded by Bush, in part in hopes they would act as a brake on European desires for tough new regulations of financial firms or products. But the decision also was hailed as necessary to the effectiveness of such a meeting, because the financial crisis that began in the U.S. had spread to the poorer nations.
Indeed, one goal of the meeting was to boost the effort to help such struggling nations weather the financial crisis largely caused by their bigger, more developed counterparts. Japan's prime minister, Taro Aso, urged China and others to contribute to the International Monetary Fund's $250 billion bailout pool, aimed mostly at poorer countries. Japan on Friday said it was ready to put in as much as $100 billion.
Talk of blame was kept to a minimum, though many still hold the belief that the primary fault for the cascade of ruinous events lies with a U.S., where it has become the norm to offer easy credit, outsize rewards for high-risk investing, and lax oversight to the whole process.
Associated Press writers Jeannine Aversa, Martin Crutsinger, Emma Vandore, Michael Fischer, David Stringer and Deb Riechmann contributed to this report.
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