Economic crisis keeps G20 divided

Despite a show of unity, US and European responses to the downturn differ sharply.


    City workers have been warned to dress casually because of anti-globalisation protests [AFP]

    Differences between American and European policies to tackle the global financial crisis are likely to dominate the G20 meeting in London on Thursday, April 2.

    London's Excel Centre, which sits on the bank of the Thames, is more used to hosting careers' fairs and trade conferences. This week, for one day only, it will become the centre of the search for a way out of the current international financial crisis.  



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    The G20 was formed in the wake of the 1999 Asian financial crisis. It includes the world's major industrial powers, such as the US and Germany, as well as emerging economic nations such as Brazil, China and India.


    The UK holds the rotating presidency of the group and has set down big aims for the G20 but, as is often the way at events like this, drafts of the final statement are already being circulated.

    Public dissent is unhelpful. This is about putting on a united front and hoping others take their cue from that. 


    There are three main areas for discussion: first, the central demand for co-ordinated action to revive the world economy, countries will be encouraged to cut interest rates and increase public spending. 


    In depth
    Then, there is the understanding that banks and financial institutions must be regulated much more rigorously than in the past to prevent a future global meltdown. 


    And finally, there is the hope there will be a new blueprint for future reform of international bodies such as the International Monetary Fund.


    But while there will be handshakes, smiles and nods of agreement on many of the key points, the G20 is split. Not everyone agrees on the best way forward. 


    US plan 'a way to hell'


    The US wants all countries to share in stimulating the world economy. However, the current holder of the European Union presidency, the Czechs, describe the US plans as "a way to hell".  


    Many European countries have traditionally spent more on public services than the US and have tried hard to cut public debt and to adopt the American approach would put their recent successes at risk.


    So, they do not see why they should create problems in the future just to help bail out America, which they argue was the country where fiscal irresponsibility caused the crisis in the first place.


    Security is tight at the Excel centre as widespread protests are expected [AFP]
    The early drafts of the agreement suggest the countries involved will pat themselves on the back for the measures already taken and will boast of the creation of millions of jobs. The final figure will be agreed in the communiqué.


    There will be a prediction of global growth in 2010 and there will be more money for the IMF. David Miliband, the British foreign minister, says it will get around $500 billion although the final figure has still to be agreed.


    There will also be assistance for developing countries and the G20 will agree to meet again before the end of the year to review progress. 


    While all this is going on, thousands of protesters will take to the streets to demand real action from the politicians.


    Police leave cancelled


    Police leave has been cancelled and there is a worry that many of the demonstrations may turn violent. City workers in London have been told to ditch their business suits and their normal office attire so they do not attract attention and cannot be singled out.


    "While there will be handshakes, smiles and nods of agreement on many of the key points, the G20 is split"

    Alan Fisher
    AL Jazeera correspondent

    One police spokesman said "familiar faces" have returned to the protest scene although he would not clarify what that meant.

    In June 1933, delegates from 66 countries gathered in London to try to agree a way to revive the global economy in the midst of what became known as the Great Depression. 

    Within a month, agreements reached were worthless as a new US president decided he must do what he had to, to revive the US economy. 

    The collapse created bad faith across the world, trade barriers were erected and rising unemployment created political instability in Europe, which contributed to the outbreak of the second world war.

    Political leaders have a big task on their hands to revive confidence and chart the way out of the current crisis. Failure has massive implications which we can only even begin to imagine.

    SOURCE: Al Jazeera


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