Usually when 20 world leaders gather in one place, the scene runs more to style than substance. A lot of posturing and photo ops, but not much tough negotiating.
Things are different at this weekend's G-20 summit. The prime ministers and presidents of the rich industrialized countries and developing countries with emerging markets have gathered in an emergency summit to hash out a plan to get the world's financial markets back on track and prevent future global economic meltdowns.
After a working dinner last night at the White House and a long morning of meetings today, the group released a long, detailed action plan for how to move forward. In short the leaders promised to:
Strengthen Transparency and Accountability
Enhance Sound Regulation
Promote the Integrity of Financial Markets
Reinforce International Cooperation
Reform International Financial Institutions
Speaking after the meetings today, President George W. Bush sought to drive home the need to weather the storm without jeopardizing free market principles. "We recognize that, on the one hand, there's been a severe credit crisis, and on the other hand, our economies are being hit very hard," Bush said. "And so there was a common understanding that all of us should promote pro-growth economic policy."
Bush has found himself having to defend free-market fundamentals amid a crisis that many leaders, in particular in France and Germany, have blamed on a U.S. financial system allowed to run amok without proper regulation and oversight.
Simon Johnson is a senior economist with the Peterson Institute in Washington and the former chief economist at the International Monetary Fund. He says the Europeans wanted an event where they could "come together and wag their fingers at the U.S. to some degree, where they could show leadership in terms of what needs to be done going forward."
As if to punctuate that, the G-20 took a hard line against individual financial institutions for their role in creating the global economic meltdown. The statement reads, "Financial institutions must also bear their responsibility for the turmoil and should do their part to overcome it including by recognizing losses, improving disclosure and strengthening their governance and risk-management practices."
A major fault line during these negotiations has been how much governments should directly intervene in the short and long term. The Europeans want more intervention, the Americans want less.
In particular, Prime Minister Gordon Brown has been pushing some kind of coordinated fiscal stimulus package that all member countries would agree to enact. That's something President Bush has not been keen to do after passing a previous stimulus package earlier this year. But in its statement, the G-20 appeared to approve of the idea in principle without committing on the dotted line.
Despite low expectations, the summit has produced what appears to be on paper a comprehensive and detailed plan of action – complete with a timeline for short-term goals. Among them, to meet again on April 30, 2009. At that point, Bush noted, there will be a new U.S. president at the table.
"Some of you may not have heard yet, but I am retiring. But I told the leaders this: that President-elect Obama's transition team has been fully briefed on what we intended to do here at this meeting…And I hope it was good for them to hear that even though we're from different political parties, that I believe it's in our country's interest that he succeed."