G20 – Group of Twenty

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G20: Historic Summit Ends with Pledges Worth $5 Trillion

What was perhaps the most important economic summit in the past 60 or more years has just concluded, with pledges of $5 trillion. Despite protests, the summit was regarded as a success. Michelle Obama made an indelible impression on Britain and indeed the world, and ties were forged between leaders of these 20 nations, the EU, and more.[br]


G20: Historic Summit Ends with Pledges Worth $5 Trillion

What was perhaps the most important economic summit in the past 60 or more years has just concluded, with pledges of $5 trillion. Despite protests, the summit was regarded as a success. Michelle Obama made an indelible impression on Britain and indeed the world, and ties were forged between leaders of these 20 nations, the EU, and more.[br]

‘Stability, Growth, Jobs’ was the tagline of the summit. The 29-point communiqué addressed each of these issues, and added a commitment to adhere to the promises made, and to meet again before the end of 2009.

The Dollars and Cents
Here is a look at what has been pledged:

  • Tripling funds available to the IMF from $250 to $750 billion
  • A new Special Drawing Rights (SDR) allocation of $250 billion
  • Additional lending from the Multilateral Development Banks (MDBs) of at least $100 billion
  • $250 billion of funding for trade finance
  • Use of additional resources from IMF sales of gold for finance to the poorest nations
  • A $1.1 trillion program to restore credit, growth and jobs worldwide
  • Global financial institutions have pledged $850 billion to finance banks in developing countires. The funds will be used to aid in bank recapitalization, infrastructure, trade finance, debt rollover, balance of payments support, counter-cyclical spending, and social support.
  • Fiscal expansion (use of government taxation and spending) to save and create jobs
  • And of course monetary policy has been used extensively in most of the 20 nations by cutting interest rates and other actions to improve lending and price stability[br]

Read the full communiqué here: http://www.londonsummit.gov.uk/resources/en/news/15766232/communique-020409

Will they keep their Promises?
The last G20 summit, which was in November of 2008, was criticized for its empty promises. The nations agreed then to resist protectionist measures, but then 17 of the 20 turned around and implemented such policies.

‘There has been some skepticism as to whether or not the leaders will see that their promises are going to be kept,’ commented EconomyWatch correspondent Vladimir Gonzales. ‘But this time the conditions are much more critical than they were last November and the public will not forget the promises made in London. The pressure to stick to their commitments is much greater now.’

Point 29, the last paragraph of the communiqué, ends with, ‘We have committed ourselves to work together with urgency and determination to translate these words into action. We agreed to meet again before the end of this year to review progress on our commitments.’

Unanimous Support
All of the leaders, from Obama to Medvedev had encouraging and positive comments about the outcome.

Obama described it as, ‘a turning point in our pursuit of global economic recovery. By any measure the London Summit is historic. It is historic because of the size and scope of the challenge that we face and because of the timeliness of our response. We owe it to our citizens to act now. Today the world leaders have responded with unprecedented effort.’

Gordon Brown said, ‘This is the day that the world came together to fight recession not with words but with a plan for economic recovery and reform. In this new global age of interdependence global problems require global solutions.’

Nicolas Sarkozy, who threatened to walk out of the summit if the US pushed their agenda too hard, even said, ‘(The results of the summit) are beyond what we could have imagined … We are all happy with the results.’

Hong Kong in the OECD?
Sarkozy had been pushing for all countries and territories to be in the OECD, or Organisation for Economic Cooperation and Development, in order to eliminate tax havens and ensure transparency in financial markets.

The Chinese president, Hu Jintao, however, has managed to keep Hong Kong and Macau off the OECD list. Hu and Sarkozy met privately after their Jamie Oliver dinner in 10 Downing Street. But Hu would only meet after Paris moderated its position on recognizing the independence of Tibet.

Hu expressed his skepticism of having a tax haven blacklist based in Paris, and said he would not be comfortable having the OECD monitor China, Hong Kong, or Macau. China will join the OECD sometime this year.

Obama Stole the Show
Obama & Michelle Obama forged ties with many in London, not least of which was the Queen. She presented Queen Elizabeth a fully loaded iPod, but the gesture that has been most talked about is a near-hug. Many felt it was a violation of protocol or an etiquette faux pas in front of royalty. Michelle put her hand on the Queen’s back when she did the same first.

But Anna Post, great-great-granddaughter of Emily Post, said it was no violation of manners, ‘Was it a crime it happened? No, not at all. [Obama] didn’t make a mistake.’

Many are in awe that a black woman from one of the roughest neighborhoods in the US (the Southside of Chicago) is the First Lady and is on such genial terms with the Queen of England. The

The iPod gift is a great representation of change the Obamas have been promising. It’s hard to imagine any of the Bush First ladies presenting an iPod to the Queen.

‘That was a perfect example of this new administration and a fresh approach to the world, especially with our strongest ally,’ said Richard Verrone, a history, pop culture and 20th-century America professor from Texas Tech University. ‘It shows the world, and it’s a statement to the British public, that there’s absolutely a different person in charge now, a different vibe in the White House.’

The Protesters
Crowds assembled, some peacefully, some violently, to make their causes known. Some were anti-nuke, some there for a free Tibet, some anti-capitalism, and some were simply troublemakers, ready for a fight. Many of the demonstrators were there for anti-war and climate-change causes. Some even arrived in a real riot vehicle they had purchased, and they were wearing police uniforms.

The protests resulted in one death and 63 injuries. One police officer was admitted to the hospital. Protesters stormed a Royal Bank of Scotland office and broke windows at an HSBC branch. Public anger over the former RBS chief executive’s pension of £703,000 is still alive.

G-20, Group of Twenty

The G-20, or Group of 20, is a group of Central Bank Governors and Finance Ministers that discusses, analyzes, and acts on the most important issues of the global economy. These 20 leaders represent the most developed and industrialized economies in the world.

While the G-20 is made up of 20 government officials, it represents many more than 20 nations as one representative is from the European Central Bank or the Council Presidency (on a rotating basis).

The G-20 first met in 1999 in Berlin. This inaugural meeting was led by the finance ministers of Germany and Canada. This meeting set regular points of discussions for future meetings which have continued every year since then.

The G-20 mandate is to encourage free and practical discourse within its members, which are both highly-industrialized and developed and emerging-market nations, on the most salient economic issues of the time. The overall goal is to promote and sustain economic stability worldwide.

The issues that are debated and constructively discussed include topics such as trade, protectionism, national policies, the various international financial bodies and institutions, and international cooperation in general.

In addition to the national representatives present at the G-20 meetings, the president of the World Bank, the managing director of the International Monetary Fund (IMF), the chairs of the IMF, and the financial committee and development committee of the World Bank and IMF are also present. This is to guarantee the various central banks and economic institutions work together properly.

Collectively, the G-20 represents approximately 90% of the world’s GNP, 80% of global trade, and two-thirds of the planet’s population. There has been some critisim, however, from some African nations that suggest that the G-20 overlooks their needs. The only African nation in the G-20 is South Africa.


The G-20 membership list is as follows:

The London Summit 2009 – G-20

The G20 leaders converged in London for the Summit on 2 April, 2009. The global economy was on top of the agenda for all of them. They gathered to pool ideas and align interests to make commitments for our collective future. One of the main goals was to restore confidence in the world markets..

Coordination among these 20 powers had to be re-established. Some of the issues they addressed are:

    • Stabilization of financial markets
    • Working to enable businesses and families to survive this recession
    • Economic reform and strengthening of the world’s economic and financial system to bring back trust and confidence, and prevent a similar crisis from happening again
    • Bring the global economy back to sustainable growth

    Before the summit there were reports that it would not be without its tensions. According to a report from “The Economist”, White House economic adviser Lawrence Summers called for the leaders to focus on increasing global demand. This was at a meeting for European finance ministers on 9 and 10 March, 2009.

    Luxembourg’s prime minister and the meeting’s chairman, commented that the request was “not to our liking.”

    But apparently this US call for increased demand is due to the sentiment in the US that the rest of the world is not doing its part to stimulate this demand. The US is pushing for a fiscal package equivalent to 2% of global GDP in 2009 and 2010. It also wants the IMF to oversee compliance.

    Tensions were further heightened when the most senior civil proclaimed that saying the limited staff in Barack Obama’s Treasury, which was only 60 days old at the time, was causing summit planning to be “unbelievably difficult”.

    Other nations are encouraging the European Central Bank to use its monetary tools better – as the US has done. So far the US has pledged 4.8% of GDP from 2008-2010. Italy has only pledged 0.3%, France 1.3%, and Britain 1.5%.

    Problems aside, this was the first summit for the host, Gordon Brown, and the first for Barack Obama (it was be Obama’s first overseas trip as the president).

    Previous G-20 meetings have been held in the following nations:

 

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