- Associated Press - Friday, June 25, 2010

HUNTSVILLE, Ontario (AP) — Fresh from a congressional win on a financial overhaul, President Barack Obama pressed world leaders on Friday to join him in backing stronger rules against banking abuses. He made little headway in his call for more stimulus to keep the world economy growing.

Instead, he ran into strong opposition from countries wanting to put deficit reduction first.

“Those countries with budget deficits need to do that and, as a world, we need to address the imbalances,” Britain’s conservative new prime minister, David Cameron, said Friday after meeting summit host Stephen Harper, Canada’s prime minister. His government brought forward an emergency budget this week that proposed increased taxes and the toughest cuts in public spending in decades.

As Obama and other leaders sparred over how to keep their economies from slipping back into recession, there was little expectation of economic breakthroughs from sessions here and in Toronto.

Divided on economic remedies, the leaders searched for common ground on other issues, such as confronting nuclear standoffs with Iran and North Korea, dealing with the AIDS epidemic, and maternal and infant health care in desperately poor countries such as Afghanistan, Mali and Tanzania— a key project of Harper‘s.

Harper announced late Friday that leaders of the so-called Group of Eight major industrial democracies — the U.S., Canada, Britain, Germany, France Japan, Italy and Russia — had pledged to contribute $5 billion over the next five years to the initiative.

He said Canada’s contribution was $1.1 billion. The White House said that the U.S. commitment would total $1.35 billion over two years, with that support subject to congressional approval. Japan pledged $500 million over a five-year period.

He was asked at a news conference why he thought the G-8 would honor this commitment when it hadn’t honored many past ones. “Because of the tight budgetary situation we are seeing in many countries, leaders are being very cautious as to the pledges they have made,” he said. “I’m confident that money will be delivered.”

The eight-nation group met at a resort in Canada’s sprawling Muskoka region of lakes and vacation cottages several hours drive north of Toronto. On Saturday and Sunday, the focus shifts to Toronto, where their number will grow to 20 as they are joined by leaders representing fast-growing developing economies including China, India and Brazil.

At a time when leaders were discussing fiscal austerity, Canada’s Harper has come under criticism over the projected costs of the summits, including at least $900 million for security and $2 million for a theme park inside the media center that includes an artificial lake with canoes, deck chairs and a fake dock.

The Group of 20 has been gradually overshadowing the Group of Eight as the world’s premier forum for discussing and coordinating economic policy.

Obama was able to claim a big victory in Washington early Friday as congressional negotiators reached a hard-fought compromise on new Wall Street banking rules. He urged other countries to follow suit. “We need to act in concert for a simple reason,” Obama said as he left the White House. “This crisis proved and events continue to affirm that our national economies are inextricably linked.”

Some leaders congratulated Obama at the opening G-8 lunch session for tightening financial regulations, U.S. aides said.

A Cameron spokesman said Britain welcomes the U.S. steps and is at work on its own measures “to ensure the future resilience of the financial sector.”

Obama’s call for more temporary stimulus spending was being rebuffed by leaders in Europe and Japan who instead emphasized cutting government spending and even raising taxes, much as he’s been stymied at home on his pleas to Congress for more jobs and stimulus money.

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