- The Washington Times - Wednesday, April 1, 2009

LONDON (AP) - President Barack Obama and British Prime Minister Gordon Brown exuded optimism about a global deal to help pull the world out of recession on Wednesday, downplaying a rift with French President Nicolas Sarkozy ahead of the imminent Group of 20 leaders summit.

The two met as thousands of protesters gathered in the British capital’s financial district, with some demonstrators smashing their way into major bank while others threw eggs and fruit at police.

Obama said there was “enormous consensus” between the world’s rich and emerging countries on plans to kickstart the global economy. But Sarkozy warned that neither his country nor Germany would align with any “false compromises,” suggesting that a clear deal was not secure.

Washington has eased off on a push for other governments to pump more money into economic stimulus programs after heavy opposition from Europe, but Germany and France are still unhappy that not enough is being done to tighten international regulation to rein in financial market excesses.

The debate has led to lower expectations of what can be achieved at the London summit, which begins with a formal dinner later Wednesday before business meetings on Thursday, even as the crisis reaches a critical point.

Global trade is plummeting, protectionism is beginning to make inroads and unemployment is rising. Public anger is also inflamed _ protests here Wednesday turned violent in some places on Wednesday with some demonstrators throwing things at riot police. Others smashed windows to scramble into a Royal Bank of Scotland building after police managed to hold back protesters trying to storm the Bank of England. Several people were arrested.

Earlier, in a joint press conference with Britain’s Brown after the pair held talks at No. 10 Downing St., Obama said that any differences were “vastly overstated.”

“I am absolutely confident that this meeting will reflect enormous consensus about the need to work in concert to deal with these problems,” said Obama, who is under pressure to make a good showing in his first major appearance on the international stage.

Brown, too, sought to play up consensus, foreshadowing agreement on issues including a possible $100 billion boost for global trade, financial regulation, and support for economic growth and job creation.

G-20 leaders are also in general agreement on a plan to double the funds available to the International Monetary Fund to some $500 billion to help out emerging countries.

“We are within a few hours, I think, of agreeing a global plan for economic recovery and reform and I think the significance of this is that we are looking at every aspect,” Brown said.

But their optimism was at odds with Sarkozy, who said he would rather risk a public dispute than accept a vague consensus on key issues such as financial-market regulation and a crackdown on tax havens. The summit is also expected to take up the role of ratings agencies, more scrutiny of lightly regulated hedge funds and how to clear bank balance sheets of shaky securities.

“I will not be a part of a summit that concludes with a statement of false compromises, which doesn’t deal with the problems we face,” Sarkozy said in an interview broadcast live on Europe-1 radio early Wednesday.

The point was underscored by French Foreign Minister Bernard Kouchner, who said he expects the summit to be “rather difficult” with a confrontation between “two worlds: one that wants more regulation, and the other that wants less and which is closer to so-called ‘liberal’ positions.”

German Chancellor Angela Merkel said leaders “should not dodge and make feeble compromises on the financial market constitution of the future.” The French and German leaders are due to hold further one-to-one talks in London later Wednesday.

Brown, the host, had initially trumpeted the gathering as “a new Bretton Woods _ a new financial architecture for the years ahead.” But the meeting is shaping up as bearing little similarity to the 1944 conference in New Hampshire where the eventual winners of World War II gathered to set postwar global monetary and financial order.

Osamu Sakashita, deputy cabinet secretary for public relations for Japanese Prime Minister Taro Aso, said that the debate over fiscal stimulus or reform had perhaps been overblown.

“It’s not one or the other,” he said. “Perhaps the difference has been oversimplified or taken out of context.”

There is also growing consensus on the need to address the plight of developing countries, amid growing fears that the heavy toll exacted by the global economic crisis on those nations could come with heavy human and political implications.

In their meeting in November, the G-20 members vowed to avoid protectionism that could stifle trade. But since then, 17 have acted to pass subsidies to protect their own industries or limit imports, according to the World Bank.

It remains to be seen if leaders will be able to avoid a repeat of the last time that London hosted a world economic summit _ the 1933 World Economic Conference that tried to agree plans to revive the global economy in the midst of the Great Depression.

Many commentators blame the collapse of that gathering _ torpedoed in part by the recalcitrance of new President Franklin D. Roosevelt to make agreements that would restrict his freedom to act on the U.S. economy _ for the subsequent erection of international trade barriers, continued competitive currency devaluation and rising unemployment.

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