Obama seeks unity on stimulus plan

US president to tell G20 leaders that more money is needed to kickstart global economy.

    Obama is looking for G20 leaders to support his call for increased economic stimulus [Reuters]

    Differences over stimulus

    Obama, who is making his first visit to Europe since taking office two months ago, could meet resistance on how best to tackle the global economic crisis when the G20 meets on Thursday.

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    Al Jazeera's coverage of the G20 summit

    While the US president wants member states to inject more money into programmes aimed at kickstarting their flagging economies, France and Germany have said that greater regulation of the financial markets is a more pressing need.

    "Obama does want increased spending. He has been talking about putting together a big stimulus package, as the US and China have already done," Rob Reynolds, Al Jazeera's senior Washington correspondent, said.

    "It looks, however, that he has scaled back considerably on his expectations for receiving any commitments on specific figures for the economic stimulus at the London meeting."

    Nicolas Sarkozy, the French president, has said that examining ways to regulate the global financial system is necessary.

    "The world expects that we rebuild, together, a new form of capitalism, better regulated, with a greater sense of morality and solidarity," he said in a commentary released by the president's office on Wednesday.

    "This crisis is not the crisis of capitalism. On the contrary, it is the crisis of a system which has drifted away from the most fundamental values of capitalism," he said.

    Changes urged

    Paris and Berlin are committed to improving global economic confidence through greater oversight of the financial system rather than through pumping money into their respective domestic economies, Reynolds said.

    "They want to restructure global finance with greater international regulation of banks, hedge funds, offshore tax-havens and executive bonuses," he said. 

    Hu Jintao, China's president, has also called for sweeping changes to be made to the world financial system, as well as action to prevent trade protectionism.

    "The international financial system should undergo necessary reforms in an all-round, balanced, gradual and effective manner to prevent a similar crisis in the future," he was quoted as saying by Xinhua news agency on Tuesday.

    But Mark Burgess Watson, chief operating officer of Japan Invest, an equity research firm in Hong Kong, said that China's recent call for the dollar to be dropped as the world's main reserve currency could be a sticking point in relations between Beijing and Washington.

    "I think the posturing has to end. China has slightly overplayed its hand and, I think, in signalling its interest in pursuing a world reserve currency, rather than accepting the dollar status-quo, smacks rather of opportunism and muscle-flexing to take advantage of US weakness," he said.

    "I think the two countries need to withdraw into positions that are mutually acceptable."

    Managing expectations

    Explaining that some people in Europe were calling for Obama to start the talks by apologising for the excesses of Wall Street and US financial institutions, Al Jazeera's Rob Reynolds said that Obama could be challenged on the central role the US played in the global financial meltdown.


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    Obama is expected to make an array of proposals, including increased oversight for hedge funds and greater powers to deal with troubled financial firms deemed "too big to fail".

    White House aides have sought to manage expectations before the summit, telling reporters Washington was not necessarily asking countries to spend more right away.

    After London, Obama will head to Nato's 60th anniversary summit on the France-Germany border.

    Obama will use the meeting in Strasbourg to further explain his strategy for Afghanistan and urge Nato allies to commit greater resources to the fight against the Taliban and al-Qaeda.

    He said last week that Washington will send an extra 17,000 soldiers and 4,000 advisers to train Afghan forces, plus hundreds more civilians to work on development issues.

    PJ Crowley, an official in the administration of Bill Clinton, the former US president, said Obama may face resistance at the Nato gathering.

    He said the improvement in tone "doesn't necessarily solve the problem that Afghanistan is a very complex situation" and persuading European allies to devote more resources to the war there at a time of economic crisis will be tough.

    SOURCE: Al Jazeera and agencies


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