- The Washington Times - Saturday, September 26, 2009

PITTSBURGH | The leaders of the Group of 20 economic powers agreed Friday to keep the massive stimulus programs each country put in place to revive the global economy until lost jobs as well as growth start to reappear.

The group, which formally became the world’s main economic decision-making body at the meeting, also adopted President Obama’s proposal to work toward more balanced trade and growth, and ratified a long list of financial reforms aimed at preventing a recurrence of last fall’s global financial crisis.

Amid heavy security and a smattering of protests that Mr. Obama described as “very tranquil” compared with other recent global summits, the world leaders took credit for having “pulled the global economy back from the brink” in the six months since they last met while launching an ambitious agenda to further shape the course of the economy in the future.

But they resisted pressures from investment markets to quickly pull back the massive fiscal stimulus programs and lenient monetary policies that helped stoke the budding global recovery. Despite growing inflation concerns stemming from such policies, Mr. Obama and other leaders stressed that the recovery isn’t complete until millions of lost jobs are restored.

“We want to make sure when growth returns that jobs do, too,” said Mr. Obama. Nearly 7 million jobs have been lost in the U.S. alone, and the sharp rise in joblessness is a problem worldwide.

To stress their resolve to put jobs at the center of the recovery, the group endorsed a “jobs pact” drafted by the International Labor Organization with the goal of saving or creating 11 million jobs worldwide.

Because of the huge job losses, the leaders overwhelmingly felt that “not only are we not out of the woods, but we are still in the forest,” said Australian Prime Minister Kevin Rudd. “The stimulus measures must be continued. The key thing is not to exit too early or to exit too late.”

Mr. Rudd said he was gratified that Australia was among the countries that for the first time are gaining “a seat at the top economic table,” a result of a decision to funnel major economic issues through the G-20 rather than the Group of Seven industrialized nations.

Mr. Rudd credited China for insisting that the top decision-making body include far more than the seven countries that have dominated world affairs since World War II. The new arrangement recognizes that the world economy is now driven as much by major developing countries such as China, India, Russia and Brazil as it is by the United States, Europe and Japan, said delegates to the G-20 meeting.

In light of the growing importance of major developing countries, the G-20 also agreed to raise their voting share within the International Monetary Fund by at least 5 percent.

The “BRIC” group of major emerging countries - Brazil, Russia, India and China - is pushing for a 7 percent increase in their voting share, while the U.S. proposed a 5 percent increase. Analysts expect a compromise level of 6 percent ultimately to be adopted.

The increase in voting shares for developing countries would come at the expense of small European countries like Belgium and Luxembourg, which would lose some of their voting shares within the IMF.

European countries now hold 30 percent of the IMF’s voting shares, an amount that is disproportionate to the European Union’s share of world economic output. The U.S. holds a 17 percent share, and that would remain unchanged.

While a Brazilian delegate described the changes as “significant” for emerging countries, advocates for poor countries said they still are greatly under-represented in the world’s main economic forums.

Max Lawson, a senior policy adviser at international aid group Oxfam, called the deal “tinkering at the edges” because it leaves the IMF as “the world’s rich country club.”

And while the G-20 is more representative of the world’s population than the G-7, “there is still no seat at the table for the poorest countries,” he said. “South Africa is the only African country included in this club.”

The G-20 embraced most of Mr. Obama’s plan for rebalancing world trade, reducing excessive trade and budget deficits in countries like the United States while reining in huge trade surpluses in countries like China and Germany.

However, the wording of the agreement appeared to allow plenty of room for differing views over trade to continue. For example, while Mr. Obama and Mr. Rudd interpreted the communique as a mandate to reduce trade imbalances, Chinese President Hu Jintao stressed that he views the principle imbalance as the one which concentrates most of the world’s wealth in a few countries in North America, Europe and East Asia.

Moreover, Mr. Hu’s interpretation would seem to support China’s goal of raising its own economy to Western standards regardless of whether that means running lopsided trade surpluses.

“The root cause [of the wealth imbalance] is the yawning development gap between the North and the South,” he said. “Only with real development of the vast developing world can there be solid global economic recovery and sustainable world growth.”

On other issues, the G-20 agreed to try to complete the Doha round of trade negotiations by the end of next year, and it endorsed phasing out subsidies for oil, gas and coal “in the medium term” without setting a date. The International Energy Agency has suggested doing so by 2020.

Copyright © 2019 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide