Summit on world financial crisis offers some countries larger roles
Posted: Monday, November 17, 2008 11:41 am
By: The Associated Press
The Messenger 11.17.08
By GREG KELLER
Associated Press Writer
PARIS (AP) — This weekend’s Washington summit on tackling the world financial crisis did little to dent a looming economic slowdown but offered developing countries such as China and India an important larger role, European and Asian observers said today.
Markets in Asia and Europe seemed skeptical about the results of the closely watched Group of 20 meeting in Washington, with major stock indexes mixed today on both continents — one sign that investors may have low expectations about its impact.
Leaders from 21 developed and emerging countries and four international organizations put off setting most concrete goals until an upcoming meeting in April — once the U.S. administration of President-elect Barack Obama has taken office. Analysts said the summit failed to produce any coordinated stimulus measures to rescue the world economy from a downturn, and as such was not likely to prevent further market turbulence in coming weeks and months.
“At least it avoided the knee-jerk responses … that would have made things worse,” said Julian Jessop, chief international economist at London-based Capital Economics.
Mitul Kotecha, head of global foreign exchange strategy at French investment bank Calyon, said the summit conclusions “will not do much to prevent further market hemorrhaging over coming weeks as economic data continues to reveal a worsening picture.”
European analysts said the main winners were developing economies such as China and India, which have emerged from it wielding more influence in global decision-making than they have until now.
China got a promise of a bigger role for developing countries in global finance — a longtime goal for Beijing. Its foreign ministry called the summit an “important and positive” step toward “the reform of the international financial structure.”
The meeting marked an end to the “Atlantic Club,” with the U.S. on one side and Europe on the other, said Saumitra Chaudury, a member of the Economic Advisory Council of Indian Prime Minister Manmohan Singh and chief economist at the credit rating agency ICRA Ltd.
Summit leaders promised more access for developing countries to financing from the International Monetary Fund and other international organizations, but gave no figures on the possible size of lending or other details.
European analysts also pointed to a growing acceptance among summit participants for more regulation and supervision for financial markets and the often complex instruments they have developed. And it paved the way for another summit, tentatively to be held in London next year.
“The real purpose of this summit was to agree a work program for reform of the global financial system,” said Capital Economics’ Jessop. “In that respect we would suggest that it has been a success.”
Australia said it was pleased that the meeting did not endorse a retreat to protectionism as a means of shielding countries’ domestic economies from cheaper imports.
But the conservative Yomiuri, Japan’s largest newspaper, said in an editorial today that while the summit was an important chance for the leaders to come together, they failed to address the impact the crisis had had on the role the U.S. dollar plays in international markets, and its impact when it loses value.
“This will definitely be an issue in future discussions,” it said.
Meanwhile, The Nikkei, a major business newspaper, said now — not April — is the time to act.
“There are two months left in the Bush administration,” it said in an editorial. “In that period it is necessary to reassure markets with effective measures.”
AP writers Erika Kinetz in Mumbai, Tomoko Hosaka and Eric Talmadge in Tokyo, Rod McGuirk in Canberra and Joe McDonald in Beijing contributed to this report.