- The Washington Times - Sunday, November 16, 2008

World leaders at Saturday’s global economic summit in Washington agreed on a statement of principles and actions aimed at halting the worldwide economic downturn and improving investment and banking oversight, with the Bush administration saying it had laid down a marker for the defense of free markets as the plans move forward.

The general list of commitments included a call for coordinated stimulus spending within each country, better regulation of banks and complex investment products that avoids “overregulation,” more inclusion of emerging economies in global governance, and a need to avoid protectionism.

“I don’t think we could have predicted how productive this meeting was going to be,” President Bush said.

The group is expected to meet again in April, possibly in London, during President-elect Barack Obama’s first few months in office.

The summit agreement did not address differences between the U.S. and Europe over what form future regulation should take, leaving each country to make those decisions for itself while encouraging better communication among regulators.

And the idea promoted by British Prime Minister Gordon Brown, for a so-called “college of supervisors” that would oversee large financial institutions whose dealings cross international borders, was not given any regulatory powers.

“In advance of the summit, there had been much discussion: Was this going to result in an assault on capitalism or the death of capitalism, or the revamping of the free-market system?” said a senior Bush administration official, briefing reporters at the White House. “Uh, quite to the contrary.”

The Bush administration, having secured language in the agreement that spoke of the need to reform the International Monetary Fund and World Bank, appeared to soften in its opposition to increasing the IMF’s bankroll.

“Whether the current resources are adequate or not is to be determined,” said a senior finance official who had previously said the IMF had enough money to help struggling economies.

Japan said Friday it was willing to contribute $100 billion.

Mr. Brown, who has pushed Asian and Persian Gulf nations to contribute more to the IMF, echoed Mr. Bush’s calls for reform to the IMF and World Bank, which were formed near the end of World War II.

“The institutions built in 1945 are not necessarily best equipped to deal with the problems of 2008,” Mr. Brown said during a press conference at the British Embassy after the summit. “We need to change the way our international institutions work so we have proper crisis prevention.”

The leaders’ statement also committed to seeking a resolution to an impasse in the Doha round of global trade talks, which fell apart over the summer, and included an agreement not to erect any new trade barriers over the next 12 months.

Mr. Bush spoke for 10 minutes at the conclusion of the summit, while many of the other leaders left the National Building Museum bound for various parts of the city to hold their own news conferences or speeches.

Among the world leaders in attendance at the summit were Luiz Inacio da Silva of Brazil, Hu Jintao of China, Lee Myung-bak of South Korea, Dmitry Medvedev of Russia and Nicolas Sarkozy of France.

Mr. Bush on Friday evening had challenged his fellow leaders not to abandon free-market principles at a White House dinner to kick off the summit meetings, saying they should “reject calls for protectionism, collectivism and defeatism in the face of our current challenge.”

The joint communique said that countries should “avoid overregulation.”

“These reforms will only be successful if grounded in a commitment to free-market principles, including the rule of law, respect for private property, open trade and investment, competitive markets, and efficient, effectively regulated financial systems. These principles are essential to economic growth and prosperity and have lifted millions out of poverty and have significantly raised the global standard of living.”

The senior administration official pointed to this paragraph in particular as a triumph for the White House.

Mr. Bush talked about his administration’s support for better oversight of complex derivative products such as credit-default swaps - which have played a major role in the market instability.

The White House on Friday announced support for selling and buying these derivatives through a clearinghouse that would enable institutions to better track their level of risk.

“That’s a significant reform,” Mr. Bush said.

Mr. Obama declined to attend the summit, but sent Clinton-era Secretary of State Madeleine K. Albright and former Rep. Jim Leach, Iowa Republican, in his stead. The two met with more than a dozen delegations, which included a few heads of state and “conveyed President-elect Obama’s determination to continuing to work together on these challenges after he takes office.”

While Mr. Bush will be responsible for leading and managing the country for the next 65 days, this first summit offered him, at most, an opportunity to frame the debate going forward over global economic structures and practices.

“I am retiring,” Mr. Bush said. “But I told the leaders this: that President-Elect Obama’s transition team has been fully briefed on what we intended to do here at this meeting.”

Sean Lengell contributed to this report.

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