G20 Leaders Craft World Economic Crisis Response

WORLD leaders were set to declare an end to unfettered capitalism at a G20 summit yesterday after France and Germany demanded they act fast on promises to prevent a repeat of the worst economic crisis since the 1930s.

A communiqué drafted for release at a G20 summit in London, obtained by Reuters, signalled that leaders would submit large hedge funds to supervision for the first time and enhance regulation through a new agency and a beefed-up International Monetary Fund.

It included a pledge to deliver “the scale of sustained effort necessary to restore growth” without making any commitments beyond the trillions being spent to stabilise banks, shore up demand and limit job losses.

Keen to secure a confidence-boosting message for voters and frazzled financial markets as the world succumbs to recession, US President Barack Obama said there were no substantive differences with Europe, despite the hardball stances taken by the French and German leaders.

Washington wanted tougher regulation too, he told a news conference on Wednesday with Britain’s Gordon Brown, summit host, saying he was at the summit not just to lecture but to listen and to help lead the way out of trouble.

It was not clear whether the flashpoint, which appeared to focus primarily on Sarkozy’s demands for blacklisting of tax havens, would be enough to derail a message of unity from the meeting.

The draft communique said tax havens would be identified and sanctions could be deployed.
“The era of banking secrecy is over,” it declared.

Several hundred demonstrators clashed with riot police and smashed bank windows in London’s financial centre ahead of the summit on Wednesday.Police said one person died during the protest. More protests were planned for yesterday, the main day of a summit involving the world’s biggest economies, developed and up-and-coming, in all accounting for more than 80% of world trade and economic output.

Global economic output is expected to contract more in 2009 than any year since World War Two, dropping between 0,5 and 1,0%, according to the International Monetary Fund, whose head, Dominique Strauss-Kahn, is calling it a “Great Recession”. — Reuters.