President Barack Obama and 19 other world leaders agreed Thursday on a vigorous agenda to loosen credit, expand international financial regulations and direct more resources to the poorest victims of global economic meltdown.
On his last day in London before heading to a NATO meeting in France today, Obama expressed confidence that nations working in concert is the best way out of crisis.
“At home I’ve often spoken about a new era of responsibility, and I believe that this era must not end at our borders,” Obama told reporters at the Group of 20 economic summit. “In a world that’s more and more interconnected, we all have responsibilities to work together.”
The president called the pact reached by the leaders a “turning point” for the world economy. The agreement calls for coordinated regulation of financial markets and a declaration against protectionist trade policies.
The leaders also agreed to triple to $750 billion their commitment to the International Monetary Fund, an institution created after the Bretton Woods economic talks in 1944 to confront economic crisis points around the world.
“I have no doubt,” Obama said, “that the steps that have been taken are critical to prevent us sliding into a depression.”
He added, “They are bolder and more rapid than any international response that we’ve seen to a financial crisis in memory.” In the days building up to the one-day summit and during their talks at the event, Obama and the other leaders worked hard to paper over internal disagreements. The president repeatedly blamed the press for overstating conflict within the group.
In truth, most came to London wanting different things. One objective they shared, however, was an interest in appearing cooperative — rather than risk a further loss of confidence and spooked financial markets.
In any case, French President Nicolas Sarkozy’s threat to walk out of the summit if his regulatory demands were not met did not materialize, and it appeared the other leaders largely acceded to his demands.
The group’s communique, which addressed his concerns and those of Germany, includes a call for stepped-up regulation of hedge funds and credit rating firms, and establishing guidelines to cap pay for financial executives. It also would end offshore tax havens.
“Controlling hedge funds doesn’t create a job in the French textile industry,” Sarkozy told reporters at the close of the summit. “But this turns the page of the madness of all those years of deregulation.”
For his part, Obama had to give up a push for a massive economic stimulus by member nations, after several objected strongly to deeper debt and greater spending.
Even so, the leaders at the summit and particularly Obama ultimately will be judged by results, and not a long list of principles.
When the G20 met in Washington last November, the members also came out strongly against protectionism — and then many of them went home and initiated new, protectionist trade policies.
Obama in recent days has offered mixed messages about the U.S. economy, one day citing reasons for hope, and shortly afterward warning of more job losses and an extended recession.
But he expressed strong faith, grounded in a deep political need, that the other leaders will hold to their bargain.
“There are going to be times where short-term interests are going to differ, there is no doubt about it, and protectionism is a classic example,” he said. “Then it becomes important … for me to try to give people a sense of why, over the long term, that’s counterproductive.”
