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The G-20 Summit: Highlights

 April 04, 2009 01:46 PM

The much awaited G-20 summit fell short of being called a qualified success. It fell short of being called a failure.

Prime Minister Gordon Brown of Britain, host of the Group of 20 summit meeting announced at its conclusion that the leaders had committed to $1.1 trillion in new funds that would greatly increase the capital available to the International Monetary Fund. The goal would be a revival in trade, which is expected to contract this year for the first time in 30 years. But President Obama conceded that there were "no guarantees" that those measures would reverse the biggest global downturn in six decades.

The outcome of G-20 summit seems to address the symptoms of global economic malaise such as shrinking global trade and weakening IMF capital base. The combination of loans and guarantees fell short of an injection of fresh fiscal stimuli into the global economy as leaders of Continental Europe and the United States differed over whether to act now or wait to see whether existing spending measures took effect. But, the final accord was far more forceful in addressing the plight of emerging economies that had been sideswiped by the financial crisis than it was in addressing the deep recession in the largest countries where the crisis began. Moreover, the proposed remedies treat some peripheral effects of the crisis rather than its thorniest causes. On the critical question of how to grapple with trillions of dollars in "toxic assets" clotting the financial system in Europe and the United States, there was a declaration of goals but few specific actions. However in two aspects the summit is a qualified success. First, the meeting eased fears that leaders would repeat the failure of a similar gathering in 1933, which was followed by a surge of protectionism that prolonged the Great Depression. Second, the meeting exemplified the power of developing nations, heralding a new age in which decisions about the future of the global economy will no longer be made by an elite club of Western powers that have set the global rules since the Bretton Woods agreement in July 1944.

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Mr. Obama lived up to his reputation as a leader in the visionary mould. He projected remorse about America's role in starting the meltdown, extolled global resolve to find a way to end the downturn and mediated a dispute between the presidents of France and China over tax havens.

Mr. Brown, host of the summit said: "This is the day the world came together to fight against the global recession. Our message today is clear and certain: we believe that global problems require global solutions."

IMF has been entrusted with the global responsibility of being the first responder in this crisis, lending billions of dollars in emergency loans to dozens of countries. To enable IMF's responsibility, the leaders agreed to infuse $750 billion into its balance sheet.

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