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The 2009 G20 London Summit
Assessing the G20 outcome
Analysts talk to Al Jazeera about what the G20's decisions might do for world economy.
Last Modified: 07 Apr 2009 19:36 GMT

Gordon Brown, the British prime minister,
announced the measures [REUTERS]
The leaders of the world's 20 richest nations have promised to triple finances to the International Monetary Fund, enhance supervision for large hedge funds and crack down on tax havens.

The announcement followed a meeting of the G20 leaders in London, the British capital, which prioritised discussion of how to address the world's deepest recession in 80 years.

They were tasked with improving confidence in a financial system that has been widely criticised by governments, analysts and the public alike.

Al Jazeera gained reactions to the G20 leaders' announcement.

Abhisit Vejjajiva, Thailand's prime minister

We are pleased that the agenda and final outcome of the meeting has put a lot of emphasis now on making sure that there is financing for a lot of things that need to be done for emerging and developing economies.

[This includes] stimulus packages, providing social safety nets, trade financing and also carrying on with some infrastructure projects.

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We need to make sure that the losses that occur from the drop of exports and tourism income will be to a certain extent be compensated by a stronger domestic economy following stimulus packages.

What's important, of course, is that we make sure that we are on our way to see a global recovery.

At the G20 meeting we see a clear commitment of swift action of cleaning up the financial systems and moving forward with stimulus packages, and also making sure that trade flows continue.

So we hope that that will go some way to help restore confidence and give us the room and space so that by the end of the year, or at least by the beginning of next year, we will begin to see favourable conditions from outside. 

The [International Monetary] Fund (IMF) has opened up a fresh facility without conditionality, so we hope that it will help to provide financing and liquidity to a number of emerging economies.

The reform of the global financial institutions is also on the agenda; it is part of the communique. But it is not something that you can realistically hope to achieve within a day.

There are some clear principles set out so that, for instance, the upcoming reforms will make sure that the institutions are better equipped to deal with the changing world and respond to the needs of many of the emerging and developing economies.

But that cannot be achieved in one day. What we have got is fresh channels, fresh facilities so that the various economies can tap into these institutions and that can only be a good thing.

The leaders had been united by a common purpose. One is in restoring growth; two is in ensuring that we have a better financial system in the future; and three, that we keep trade going.

What is important at the meeting is unity, a continued commitment in the right direction, and we've got that. 

Samah El-Shahat, Al Jazeera's economic and financial analyst

There has been such a double standard in how the IMF has been dealing with this global recession that we are in.

It has supported fiscal stimulus packages [and] it has very much supported the lowering of interest rates and this sexy quantitative easing, which are things that it does not allow African and other developing nations to pursue.

It truly believes that governments should be incredibly small in developing countries, it sees governments in developing countries as highly corrupt and ones that should have conditions imposed upon them.

Leaders agreed to make tax havens more transparent with new measures [Reuters]
So people in these developing countries don't have ownership over the policies that affect their lives.

Curbing or making tax havens much more transparent is crucial.

Tax havens played a pretty detrimental role in fueling the whole bubble, particularly in relation to sub-prime [mortgages]. No one could really track down what was sub-prime and what wasn't in the derivatives market.

The other good thing is the money being pledged for trade finance. The WTO [World Trade Organisation] has just come out and said that world trade has contracted by nine per cent; it is at its worst level for 80 years.

So anything that can help out with these things are crucial. And it's practical, it's something that we can all understand and could affect us all.

My concern is that it is quite trigger happy with regulations. Regulations are not going to help us get out of this recession now.

It is great for the long term; [however] all of the regulation has been designed for the state of the market pre-crisis, when people were lending money with abandonment.

But right now nobody is lending, and that's the problem. So we have regulations for a situation which don't really fit together.

So the crucial thing is that we have regulations which don't choke off any potential in the market to start lending again.

Uri Dadush, director of international economy, Carnegie Endowment for International Peace

The developing countries got a lot out of this meeting. And I think that the G20 has established itself as the real forum for global economic governance going forward.

The bolstering of the IMF resources, the money for trade finance, the money for the World Bank that has been pledged - furthermore the redesign of the governance mechanisms for a lot of these institutions - go in the favour of countries like Brazil, Mexico, Argentina.

Emerging nations probably had a greater role in the proceedings than in past meetings [AFP]

So I have to believe that, together with the other big developing countries, they have had a very important role in the development of this meeting.

I think that the meeting has taken a significant step forward by committing the G20 to report to the WTO all new trade measures and giving the WTO the authority to disseminate the results.

This is an important and concrete outcome of the meeting. At the same time the pressures towards protectionism are growing and countries will have to be very vigilant.

I also think that unfortunately the meeting did not go far enough in dealing with the enormous economic downturn that the world is confronted with.

In particular, I think the agreement on fiscal stimulus remains extremely general. Very little was said about new policy and very little was committed to in terms of taking toxic assets off the balance sheets of banks.

But the developing countries have made a huge step forward because of all the other things that were agreed.

Source:
Al Jazeera
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