G20 parts ways in search of lasting recovery

Sun Jun 27, 2010 7:27pm EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Lesley Wroughton and Simon Rabinovitch

TORONTO (Reuters) - World leaders agreed on Sunday to take different paths for cutting budget deficits and making their banking systems safer, a reflection of the uneven and fragile economic recovery in many countries.

In a reversal from the unity of the past three crisis-era Group of 20 summits, the leaders left room to move at their own pace and adopt "differentiated and tailored" policies.

The G20 rich and developing economies tried to balance their contrasting priorities by pledging to halve budget deficits by 2013 without stunting growth, and to clamp down on risky bank behavior without choking off lending.

"Our challenges are as diverse as our nations," President Barack Obama said. "But together we represent some 85 percent of the global economy, and we have forged a coordinated response to the worst global economic crisis of our time."

In a sign of how much work was involved to forge this G20 consensus, negotiators spent at least 45 hours drafting the summit's final communique, said Dominique Strauss-Kahn, head of the International Monetary Fund.

The G20 allowed each country space to decide how to proceed with controversial provisions such as taxing banks to recoup bailout costs and implementing tougher bank capital rules.

It also steered clear of confrontation with China by dropping, at the last minute, a specific mention of the yuan currency, even though Beijing has just allowed it to resume its rise against the dollar.

The G20, which includes emerging economic powers as well as the developed economies where the economic trouble started, united last year to throw trillions of dollars into the battle against recession.   Continued...

<p>U.S. President Barack Obama gestures as world leaders gather for a group photo at the G20 Summit in Toronto June 27, 2010. Pictured are: South Korean President Lee Myung-bak, Canadian Prime Minister Stephen Harper, Obama, Saudi King Abdullah, French President Nicolas Sarkozy (front row, L-R), Spanish Prime Minister Jose Luis Rodriguez Zapatero, Prime Minister Jan Peter Balkenende of the Netherlands, South African President Jacob Zuma, Russia President Dmitry Medvedev, Ethiopian Prime Minister Meles Zenawi and Turkish Prime Minister Tayyip Erdogan (back row, L-R). REUTERS/Jim Young</p>