Category: G20
Geithner tells Europe to focus on growth
BBC News | Friday, 25 June 2010 | 12:36 GMT
Europe must focus on growth as well as cutting spending to reduce national deficits, US Treasury Secretary Timothy Geithner has told the BBC. Speaking in Washington ahead of G8 and G20 meetings this weekend in Canada, Mr Geithner said that world leaders must concentrate on the "paramount" challenges of growth and confidence. He added the world could not rely as much on the US as it has in the past. The European Union says securing growth "remains a priority". The Group of Eight and Group of 20 rich and developing nations are assembling on Friday for three days of talks. The leaders of the G8 countries – Canada, France, Germany, Italy, Japan, Russia, the UK and the US – are meeting in Muskoka, Ontario on Friday and Saturday to discuss help for poor countries. Later on Saturday, in Toronto, the G20 will open talks on how best to emerge from the worst financial crisis since the Great Depression, and will conclude the summit on Sunday.
Many European governments, including the UK, have implemented severe austerity measures in recent weeks in order to cut debt levels. UK Prime Minister David Cameron, who has arrived in Canada along with other leaders, said in an article for the Globe and Mail newspaper: "No-one can doubt the biggest promise we have to deliver: fixing the global economy." "I believe we must each start by setting out plans for getting our national finances under control," he added. Herman van Rompuy, the president of the European Council, said that the EU’s key words this weekend would be "growth, confidence and medium term". "The restoring of confidence in budgetary policies goes hand in hand with effective growth strategies," he said ahead of the meetings.
Growth challenge
When asked if Europe faced the possibility of Japanese-style stagnation if it carries on with debt reduction policies, Mr Geithner said "Europe has the capacity to prevent that". But he added: "Europe can make a choice to put in place the reforms and policies that will provide the possibility of stronger growth rates in the future. This
At G20, India to oppose bank tax, push IMF reform
Reuters | Tue Jun 22, 2010 | 9:22pm IST
India said on Tuesday it would oppose a single global bank levy designed to insure against failing institutions, an IMF proposal backed by Germany and France, when Prime Minister Manmohan Singh attends the G20 summit in Canada. Asia’s third-largest economy, where financial institutions are tightly regulated, argues its banks are sound and what is required to prevent failures globally is stricter capital rules which New Delhi will push at the summit this week. "On the issue of bank tax, as far as India is concerned, the health of our banking system speaks for itself," Foreign Secretary Nirupama Rao said, when asked about India’s stand on the contentious levy. She said India hoped the summit would see the leaders arrive at "common principles for reforming financial markets", while Finance Secretary Ashok Chawla said India would "support all efforts at raising the benchmark on financial regulation".
The levy proposal was widely expected to be set to rest at the Toronto summit, but with Germany and France renewing their push for it, the bank tax could emerge as a sticking point among the world’s top economies. A German official on Tuesday said it was a key test if the grouping could find a common position on important matters. In a joint statement on Tuesday, Britain and the two nations said they would coordinate planned levies and were committed to the full implementation of the financial sector reforms agenda. Opposing the proposal are Japan, Brazil and Canada, which have argued their banks did not need tax-funded bailouts at the height of the financial crisis.
Yuan escapes criticism from G20; not from U.S., IMF
Reuters | Sat Jun 5, 2010 | 5:54pm IST
China’s currency policies were spared a specific mention in the ‘Group of 20’ communique on Saturday, but U.S. Treasury Secretary Timothy Geithner and the IMF kept up pressure for a stronger yuan. Both in a letter to G20 colleagues and comments after the conclusion of their meetings here, Geithner characterized a more flexible yuan exchange rate as a central and necessary component of rebalancing the global economy. He said China had ambitious reform plans aimed at strengthening domestic consumption so it could rely less on exports for its growth. "A necessary part of that process of reform, and the Chinese leaders have acknowledged this and recommitted to this, is to resume what they call the reform of their exchange rate mechanism," Geithner told a news conference in South Korea’s main port city.
International Monetary Fund Managing Director Dominique Strauss-Kahn joined Geithner in pointing out that China’s currency, also known as the renminbi, was too weak. "The IMF still believes that the renminbi is still substantially undervalued…even a revaluation of 20-25 percent doesn’t solve all the imbalances and you have more to do, so it’s only part of the problem and you still have other imbalances, Strauss-Kahn told reporters. After allowing the Yuan to strengthen gradually over three years from about 8.28 to the dollar in July 2005 to 6.83 in July 2008, the Chinese authorities virtually pegged it to the dollar in 2008 to help exporters weather the global financial storm. Beijing has resisted pressure from manufacturers and lawmakers in Western countries to unshackle the yuan and let it appreciate in line with China’s growing economic strength.
G20 scraps plans for universal bank tax
Reuters | Sat Jun 5, 2010 | 5:41pm IST
The world’s top economies scrapped plans for a universal global bank tax on Saturday, giving countries plenty of wiggle room over how to make banks pay for their bailouts in future. Finance ministers from the Group of 20 countries ended a two-day meeting to review progress on a string of initiatives agreed last year to make the financial system safer and protect taxpayers from having to pay for bank rescues again. Attempts to introduce a global bank levy were finally ditched in the face of opposition from Japan, Canada and Brazil whose banks needed no public aid during the worst financial crisis since the 1930s. "There is no agreement to proceed with an ex ante bank tax," said Canadian Finance Minister, Jim Flaherty.
The G20 said it recognised there was a range of policy approaches and that it will approve a set of principles later this month in Toronto on how to protect taxpayers. British Finance Minister George Osborne reiterated his pledge to introduce a UK bank tax regardless of what other countries do and will spell out his plans in a budget report on June 22. "Different countries will do different things but to have it under the umbrella of the G20 is going to be helpful," Osborne told reporters. Britain was forced to shore up the banking sector and rescue several individual firms.
BASEL BACKING
The meeting did not agree any new regulation or alter deadlines for implementing steps agreed last year. But ministers sought to keep plans for tough new Basel III bank capital and liquidity rules on course for
Developing nations can help global recovery – World Bank
Reuters | Fri Jun 4, 2010 | 9:51am IST
Giving developing countries a bigger say in global economic governance could help the world economy recover more quickly from the crisis, the World Bank said on Friday. The Group of 20, bringing together the world’s top developed and emerging economies has emerged as the leading global forum, representing over 80 percent of the world’s economic activity, but over 170 poorer countries feel left out. Strong growth, forecast by the World Bank at 6 percent this year in emerging countries, twice the rate of mature economies, should be recognised, Ngozi Okonjo-Iweala, World Bank managing director, told Reuters. "What this immediately tells you is that they can help a lot in making up for some of the demand that is missing from the developed countries and that’s the point, that the G20 cannot afford to ignore them," she said on the sidelines of a forum.
High growth in non-G20 countries could be crucial just as Greece’s debt problems threaten to spill over to other euro zone countries. "Just when we thought we had turned the corner there are clouds on the horizon," Okonjo-Iweala said, referring to problems in Greece and elsewhere in Europe. Developing countries need access to overseas markets to grow faster and the G20 must give development the central place it deserves on its agenda, she added. "We can envision not just Asian tigers but African lionesses," Okonjo-Iweala said. "There is money to be made. Companies investing in low income countries are reaping disproportionately higher returns."
G20 aims to reduce red ink, keep recovery on track
Reuters | Thu Jun 3, 2010 | 3:17pm IST
Disagreements over how quickly, to reduce billowing budget deficits and restore balance to the global economy, risk straining high-level Group of 20 talks that started on Thursday. A plunge in the euro and in global stock markets, triggered by fears that Greece’s debt woes could spread to other euro zone countries, has added urgency to the meetings of G20 finance ministers and central bankers in this southern port city. With officials ruling out agreement in Busan on key financial and regulatory reforms, including a mooted global bank levy, the need to strike the right balance between trimming deficits and sustaining economic growth will take centre stage.
"Countries with high budget deficits need to make sure they can deal with those deficits," Britain’s finance minister, George Osborne, said in Beijing before flying to Busan. "Surplus countries also need to play their part contributing to global growth and that will be one of the big topics for discussion in South Korea," he said. U.S. Treasury Secretary Timothy Geithner said the need to get the balance right was a "shared imperative" recognised by all G20 members. "As the IMF says, we want those fiscal reforms to happen in a way that’s growth-friendly," Geithner told reporters in Washington on Wednesday. "Some countries are in a very strong position. Some countries need to move much more quickly." Another G20 official put the need for coordinated fiscal tightening more graphically: the euro zone crisis had shown that some countries would have to withdraw stimulus earlier than expected, but not everyone should run to the other side of the boat at the same time, the official said.
EXIT STRATEGIES
G20 nations to date have merely discussed the timing of unwinding the super-loose monetary and fiscal policies they launched to cushion the crisis, but the Bank of Canada on Tuesday became the first G7 nation to raise its key interest rate. "I would think we are coming to a time where we could move forward with the
Amnesty’s report condemns ‘politicisation of justice’
BBC News | Thursday, 27 May 2010 | 11:08 GMT
Amnesty International has criticised the "politicisation of international justice" in its annual report, which documents torture in 111 countries. The human rights group accuses powerful governments of subordinating justice to political self-interest and of shielding allies from scrutiny. It expresses particular concern over possible war crimes committed during fighting in Sri Lanka last year. The report also criticises the UN for its failure to intervene. Thousands of people were killed during the war, and a UN spokesman described the situation in northern Sri Lanka at the time as a "bloodbath". But Amnesty says that "power plays" at the UN Human Rights Council led to member states approving a resolution drafted by the Sri Lankan government, complimenting itself on its success against the Tamil Tigers. "By the end of the year, despite further evidence of war crimes and other abuses, no-one had been brought to justice," Amnesty’s Secretary General Claudio Cordone says. "One would be hard pressed to imagine a more complete failure to hold to account those who abuse human rights."
‘Landmark event’
In its report, Amnesty also cites the United States and European Union for using their position with the UN Security Council "to continue to shield Israel from strong measures of accountability for its actions in Gaza". But it says that there have been positive developments over the past year as well. In Latin America, it notes the conviction of former President Alberto Fujimori of Peru for crimes against humanity, and Argentina’s last military President Reynaldo Bignone for kidnapping and torture. And it hails the arrest warrant issued by the International Criminal Court (ICC) for the Sudanese President, Omar al-Bashir, on war crimes charges as a "landmark event". However, it is disappointed by the African Union’s failure to co-operate with the ICC, despite a "nightmare of violence" in Darfur affecting hundreds of thousands of people. This, it says, is a "stark example of government failure to put justice before politics". And it calls on all G20 countries – including the US, China and Russia – to sign up fully to the ICC.
Rich world may face next downturn with dull weapons
Reuters | Thu Apr 22, 2010 | 3:35pm EDT
Rich countries may not be able to resharpen their crisis-fighting tools fast enough to get them ready for the next downturn, leaving them increasingly reliant on cash-rich emerging powerhouses to ensure stability. Before the latest upheaval struck, advanced economies had enjoyed a relatively peaceful stretch dating back to the early 1990s. Aside from the 2001 recession, which proved to be mild, the financial trauma was largely centered in emerging markets. That has changed. As the International Monetary Fund has stressed in the run-up to this week’s meetings of world finance officials in Washington, the biggest threats to the global recovery are concentrated in advanced economies now. Households and governments are shouldering unsustainable debt burdens, and Greece’s woes illustrate how quickly such fiscal strains can explode.
Emerging markets, scarred by debt crises of the late 1990s, have built up an estimated $5.5 trillion in reserves as a form of self-insurance against future problems, but the rich world has no such cushion. Indeed, emergency rescue efforts have driven government debt loads in the United States and Europe near World War Two highs and benchmark interest rates to record lows, leaving little leeway to respond should another crisis strike. "Emerging countries are becoming a very important force, not only because they’re driving the recovery but also because their fiscal policies are much more sound than in developed countries," said Domenico Lombardi, president of the Oxford Institute for Economic Policy and a senior fellow at Washington’s Brookings Institution. "In the case of the next crisis, their role could be even more important in stabilizing the global economy."
Global recovery moving faster than expected, says G20
BBC News | Saturday, 24 April 2010 | 00:02 GMT
The global economy is emerging faster than expected from the deep recession, finance ministers from the world’s leading economies, the G20, have said. After talks in Washington, they said the pace of the recovery was largely due to the huge amounts of government money pumped into national economies. US Treasury Secretary Timothy Geithner said he welcomed the greater sense of urgency being shown over Greece. The country has asked for an EU-IMF bailout of its debt-ridden economy. Greece’s finance minister is due to take part in IMF talks on Saturday. Earlier this month, a deal was agreed under which eurozone nations would make available to Greece emergency loans of up to 30bn euros ($40bn; £26bn) in the first year, with a further 10bn euros coming from the IMF (International Monetary Fund).
‘Different speeds’
In Washington, G20 finance ministers said government efforts to jump-start recovery were paying off. "The global recovery has progressed better than previously anticipated largely due to the G20’s unprecedented and concerted policy effort," the statement said. But it stressed that the process was happening "at different speeds within and across regions". "We recognise that in such circumstance different policy responses are needed." Timothy Geithner spoke of "decisive and coordinated measures at home and across the G20", which means, he said, that "the world economy is growing and the financial system is healing". The G20 statement added that members should develop credible strategies for reducing stimulus spending and to allow ultra-low interest rates to rise to more normal levels. The finance ministers also asked the IMF to analyse
US delays China yuan ruling ahead of Hu visit
Reuters | Sun Apr 4, 2010 | 7:58am IST
US Treasury Secretary Timothy Geithner said on Saturday he was delaying an April 15 report on whether China manipulates its currency but pledged to press for a more flexible Chinese currency policy. The decision follows Thursday’s announcement in Beijing that Chinese President Hu Jintao will attend a nuclear security summit meeting in Washington April 12-13 and seems to be a move to keep tensions over currency in check. The Obama administration seeks broad global support for measures to curb Iran’s nuclear ambitions, making it an inconvenient time to risk inflaming the dispute over China’s currency policy. Analysts said it would have been a slap in the face to Beijing if Washington had labelled China a currency manipulator days after Hu’s visit.
Geithner said he will use upcoming meetings of the Group of 20 and a US-China economic summit in Beijing in May to try to get China to budge. "I believe these meetings are the best avenue for advancing US interests at this time," Geithner said in a statement issued at midday on the Easter holiday weekend. Treasury gave no indication when it will actually release the report. The US Business and Industry Council, a trade group, said the administration apparently would delay the release of the report until after the G20 summit meeting in June. As a result, "for three more months, more American factories will close or cut back production and more of their employees will lose their jobs" because unilateral US tariffs are needed to combat "predatory trade practices."
Doha trade talks not at their expected stage – Anand Sharma
Reuters | Sat Mar 20, 2010 | 8:27am IST
Minister of commerce and industry Anand Sharma said on Friday that progress in concluding global trade talks was behind schedule but that it was up to political leaders to decide if they can meet their own year-end deadline for a deal. Sharma said the Doha round of global trade talks was ongoing but "painstakingly slow." "It is also clear that the kind of progress which should have been made by March, which everyone was expecting, has not taken place," Sharma told reporters in response to a question from Reuters. "When it comes to the 2010 deadline, now this deadline was given to us," he said, referring to the demand by leaders of the Group of 20 industrial and developing nations at a London meeting in April 2009.
Sharma was in New York meeting with Indian business executives following a visit to Washington where he signed a framework agreement to strengthen trade and investment ties with the United States. India and the United States have clashed in the eight-year-old Doha round of world trade talks, with New Delhi demanding Washington make deeper cuts in agricultural subsidies and resisting US demands to open its own agriculture, manufacturing and services markets.
Bankers attack isolated US and UK moves on lenders
Reuters | Davos | January 27, 2010 | 3:10 pm
Top bankers took a swipe on Wednesday at U.S. and British moves to tighten regulation of their activities and pay, saying one set of rules was needed to govern the global banking industry. The ‘Group of 20’s’ leading nations have attempted to address the financial crisis through a common global approach, but policymakers came under fire from the industry’s leaders for potentially storing up problems for the future. “We collectively underestimate the cost of complexity,” Peter Sands, Chief Executive of Asia-focused bank Standard Chartered, told the World Economic Forum. “If we all do slightly different variants of everything … in every country in the world, it will create enormous amounts of complexity and the visibility of bank management and regulators … will be impeded.”
Regulators welcomed plans by U.S. President Barack Obama to curb banks’ proprietary trading risks, with Bundesbank President Axel Weber lending cautious support. “We need to limit activity. We need to have more capital held against riskier activities,” he said, while indicating the U.S. approach would not get wholesale backing in Europe. But Barclays President Bob Diamond said moves by British and U.S. authorities — including a UK tax on bank bonuses and a U.S. clampdown on big banks’ activities — could threaten supranational solutions. He also noted domestic political imperatives coming to the fore. Both the UK and U.S. governments face the ballot box this year. Continue reading
US, India Expand Counterterrorism Cooperation
WSJ Online | NOVEMBER 25, 2009
U.S. President Barack Obama and Prime Minister of India Manmohan Singh arrive for a welcoming ceremony at the White House.
President Barack Obama and Indian Prime Minister Manmohan Singh pledged during the first state visit hosted by the Obama administration to expand their countries’ strategic partnership on issues ranging from counterterrorism to global warming. At the same time, Mr. Singh’s visit to the White House on Tuesday underscored some of the contentious issues that still exist between the world’s two largest democracies. Indian diplomats and pundits have bristled during the past week over what they fear has been the administration’s tilt toward China, New Delhi’s historic rival, on key Asian security and economic issues. Mr. Singh and other Indian officials also pressed Washington this week to push Pakistan to crack down more aggressively on militant Islamic groups that operate from within its borders.
Mr. Singh is visiting Washington a year after Pakistan-based militants launched a wide-scale attack on the city of Mumbai in which at least 170 were killed. Pakistan “should be pressurized by the world community to do much more to bring to book all those people who are responsible Continue reading
India to tell US no role for China in South Asia
ANI | Sun, Nov 22 | 10:45 AM
The Prime Minister, Dr. Manmohan Singh, is likely to use his four-day visit to Washington commencing from today, to firmly and emphatically reiterate and re-emphasise to the American leadership, that New Delhi does not see a role for China in South Asia, nor will it tolerate attempted third party guardianship initiatives in the region by Beijing. Placing its strong objection to the reference made to South Asia in the joint statement issued by Presidents Barack Obama and Hu Jintao in Beijing this week, the Indian Government has ensured that both the United States and China retreat from their proposed mediating efforts on ties between India and Pakistan. According to sources, China has indicated its appreciation and respect for the Indian position for only having bilateral and direct talks with Pakistan and brooking no interference from outside. “On China, we have a bilateral relationship with countries and we are not interested in a guardianship role with any, and nor will we accept a guardianship role by any country,” said a source. Foreign Secretary Nirupama Rao has said: “The Chinese have said that they respect our position and support direct talks between India and Pakistan.” The Chinese establishment seems to have been told that India will not accept any “guardianship role” by any country. Continue reading
World economies rebound but China set for best growth
BBC NEWS | 2009/11/19 | 11:55:56 GMT
The Organisation for Economic Co-operation and Development (OECD) says growth and recovery are expected in 2010 in just about all world regions. For its 30 member countries, rich nations including the US and UK, it has more than doubled its growth forecast to 1.9% for next year, from 0.7%. But the OECD warns developed nations not to expect a smooth ride. It said growth was being “held back by still substantial headwinds” and would be “modest” for some time. The very measures that are helping richer nations to recover pose risks to that recovery, the OECD says. The UK, for example, needed to come up with a concrete plan to ease concerns about the stability of the public finances, it added. The OECD said the effectiveness of the UK’s asset purchase programme – the so-called quantitative easing programme – was uncertain.
Jobless recovery?
The main danger for rich countries is unemployment, according to the OECD’s economic outlook. In the US, people are expected to continue 
to lose their jobs at a faster rate than new ones are created until sometime in the first part of next year. For the European Union, the picture is even worse. Unemployment may continue to rise in that region until 2011. A very different economic outlook is forecast for key emerging nations. China can expect to grow by 10%, India by more than 7%. The other two stand-out nations are Brazil and Russia. The OECD expects Brazil’s economy to rebound and expand by almost 5% after stagnating this year. Russia is also predicted to see that kind of economic improvement next year. But its turnaround will be even more dramatic. This year, it has experienced one of the worst economic slumps in the world – contracting by almost 9%. But those four so-called Bric countries are not part of the 30-strong OECD club. The one member nation whose economy should perform vigorously in 2010 is also an eastern one: South Korea should rebound to grow by 4.5% in both 2010 and 2011, after ending this year with almost no growth.
nvs Blog of Politico-Economics 