World financial crisis

Finance summit to discuss boosting world economy

Article published on the 2008-11-15 Latest update 2008-11-15 15:24 TU

Sarkozy (L) Bush (C) and Barroso at the White House
(Photo: Reuters)

Leaders of the G20 group of the world's dominant economies meet in Washington on Saturday to discuss how to tackle the world economic crisis. They are expected to commit themselves to stimulate their economies and tighten up financial regulation but discussions are expected to continue for several months.

Sources close to French President Nicolas Sarkozy told the AFP news agency that the summit is expected to draw up an action plan with deadlines which will culminate on 31 March.

The G20 countries, which represent 85 per cent of the world economy, are expected to agree to co-ordinate stimulus plans, reform financial regulation and change global governance. But not many specific details are expected to be agreed Saturday.

The Washington Post reports that the meeting will discuss proposals to create a "college of supervisors" to oversee the world's 30 largest international institutions and an alert mechanism to be run by the International Monetary Fund (IMF).

Emerging economies, Brazil, Russia, India and China are expected to demand more weight in the IMF.

At a sumptuous welcoming dinner at the White House on Friday, outgoing US President George Bush declared that reform is necessary.

But he defended free market capitalism as "an engine of prosperity, progress, and social mobility in economies all over the globe" and insisted that "all our nations must reject calls for protectionism, collectivism, and defeatism in the face of our current challenge".

"We should establish more clear rules for the way global finance works and I think there is a great consensus for this," European Commission chief José Manuel Barroso said Friday.

Before leaving for Washington, French President Nicolas Sarkozy said that he would "explain that the dollar, which at the end of World War II was the only world currency, can no longer claim to be the sole world currency" and declared that "laissez-faire capitalism is over".

US President-elect Barack Obama will not attend the meeting but former Secretary of State Madeleine Albright and ex-Republican lawmaker Jim Leach will meet foreign leaders on his behalf.

In a radio broadcast Obama called for swift action inside the US, saying that Congress should pass "at least a down-payment on a rescue plan" to create jobs and help the unemployed.

Anti-poverty campaigners demonstrated in the Philippines ahead of  the summit. They expect job losses in companies set up to outsource for firms in richer countries, as well as shrinking exports to hit agriculture.

And they expect less money to come in from millions of Filipinos working overseas.

"We expect that with the coming recession in developed countries, which employ most of our migrant workers, we expect them to come back and we will lose much of our input into our  domestic economy," James Miraflores of the Freedom from Debt coalition told RFI.

 Venezuelan President Hugo Chavez on Friday announced that he will host a meeting of "small countries", including Bolivia, Nicaragua and Cuba, to "take decisions about the crisis" at the end of November.

Chavez was sceptical about the Washington meeting.

"I doubt they will reach any decisions in Washington to solve this crisis," he said. "The hurricane that triggered this crisis came from Washington."