World leaders meet to thrash out recovery plans

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The leaders of the world's most powerful countries were to pursue talks Sunday on settling their differences over how to nurse the fragile world economy back to health.

The G20 nations convened in the eastern Canadian city of Toronto on the heels of a tough-talking G8 summit, in which the world's major industrialized powers laid down the law to Iran and North Korea.

US officials called on leading economies to focus on a return to growth, in a move set to pit the world's top economy against European nations some of whom have ordered spending cuts to slash back public deficits.

"This summit must be fundamentally about growth, and our challenge, as the G20, is that we all need to act to strengthen the prospects for growth," US Treasury Secretary Timothy Geithner told reporters.

He took a swipe at powers like Germany, Britain and Japan that he fears have moved too quickly towards budget cuts.

"It's fair to say that I don't think that you've seen from those countries yet a set of policies that would, again, give everybody confidence that you're going to see stronger domestic demand growth," he said.

The G20 talks opened late Saturday with battle lines being drawn as members disagreed over the balance to be struck between reducing budget deficits and encouraging growth and spending.

"If it sounds like everyone is rushing to the exit it might cause problems," a senior G20 official told AFP, summarizing the concerns of the United States and many emerging powers that Europe's new parsimony could stifle growth.

Brazil warned Europe's plans to radically cut government spending would hurt emerging economies, comments echoed by UN chief Ban Ki-moon.

"If the cuts take place in advanced countries it is worse, because instead of stimulating growth they pay more attention to fiscal adjustments, and if they are exporters they will be reforming at our cost," said Brazilian Finance Minister Guido Mantega.

Ban also warned the G20 working dinner that the challenge facing the group had changed from when it first came together in Pittsburgh in September.

"Let me emphasize this evening that, under any circumstances we must not balance budgets on the backs of the world's poorest people," he said.

He called for greater investment in agriculture and the green economy which could help fuel jobs.

France's President Nicolas Sarkozy stuck up for Europe, insisting there was no deep trans-Atlantic rift on the deficit issue.

"I've heard Obama say how important it is to support sustainable policies, including for the United States, he has indicated quite clearly the risk posed by deficits and debt," he told reporters.

Signs also emerged that the US position may not be as firm as it seems.

The New York Times on Sunday cited US administration officials as saying that despite the Obama administration's public pitches for more stimulus measures, the United States will go along with other leaders who are more concerned about rising debt and join in a commitment to cut their governments' deficits in half by 2013.

At the end of two days of talks in an exclusive resort north of Toronto, the leaders of the Group of Eight richest nations acknowledged in their final statement that economic recovery remained "fragile."

The leaders of Britain, Canada, France, Germany, Italy, Japan, Russia and the United States also took a tough stand on pressing international problems.

They demanded Iran reveal the extent of its nuclear program in transparent talks, condemned North Korea's alleged torpedo attack on a South Korean warship and urged Afghanistan to boost efforts to take charge of its security.

In bilateral talks US President Barack Obama concentrated on ties with Asia, meeting China's Hu Jintao and assuring his South Korean counterpart Lee Myung-Bak that Washington would stand "foursquare behind" Seoul in its standoff with the north.

Security remained tight, and the G20 leaders' arrival in Toronto was marred by clashes between so-called "black bloc" anarchist protesters and vandals, who broke away from a large, peaceful protest.

At least three police cars were set ablaze and riot officers arrested 75 people, resorting to tear gas to protect the steel and concrete barricade shielding the downtown conference venue.

Canada spent more than US$1 billion to secure this week's back-to-back G8 and G20 summits, hoping to avoid the serious street battles that have marred recent gatherings of such global forums.

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