G20 replaces G8 as main world economic forum

[Naveed Yaseen]

PITTSBURGH, Pennsylvania: World leaders announced on Friday the Group of 20 developed and developing nations would become the top economic forum, spreading influence to emerging powers such as China and India.

The dramatic shift was announced by the White House as President Barack Obama hosted his first major summit in Pittsburgh, which was marred by occasional violence as anti-capitalist protesters clashed with police.

“Today, leaders endorsed the G20 as the premier forum for their international economic cooperation,” a statement said.

“This decision brings to the table the countries needed to build a stronger, more balanced global economy, reform the financial system, and lift the lives of the poorest.”

The G8, which included only wealthy nations Britain, Canada, France, Germany, Italy, Japan, Russia, and the United States, has served in various forms as the premier economic forum since 1975 and held closely watched annual summits.

The announcement came as G20 leaders closed in on a deal on Friday to tighten financial regulations after last year’s meltdown.

A draft text, excerpts of which were obtained by AFP, said the summit would agree that bankers’ bonuses should be curbed and call for government stimulus measures to be maintained until the global economic recovery was cemented.

Leaders would advise “limiting bonuses to a percentage of total net revenues when it is inconsistent with maintenance of a sound capital base,” a G20 source said, quoting from the draft.

“We’ll avoid any premature withdrawal of stimulus,” the source said, adding that measures which have seen trillions poured into the key sectors over the past year should be maintained “until a durable recovery is secured.”

A Chinese central bank official also predicted a move on International Monetary Fund voting rights, telling journalists that developing countries had for too long been under-represented in key financial institutions.

“We believe that at tomorrow’s summit a very important political decision will be made on this matter,” Xie Duo said on the sidelines of the summit.

World leaders have pledged to work for comprehensive IMF reform and there is a long-term consensus on the need to address imbalances in voting power, but some European nations have balked at losing their influence.

For Brazil, China, India and other emerging countries, it is crucial to achieve a breakthrough in negotiations in Pittsburgh so the IMF can endorse the reform at its annual meeting on October 6 to 7 in Istanbul.

President Barack Obama and First Lady Michelle Obama opened the two-day summit with a gala dinner in Pittsburgh chosen as host city to showcase its stunning economic transformation from down-at-heel steel town to high-tech hub.

The start of the gathering was marred by isolated incidents of violence as small groups of anti-capitalist protesters defied police warnings not to march on the summit venue.

Police fired pepper spray and non-lethal rounds and deployed loudspeakers blasting piercing sound waves to repel the mostly young protesters. Fifteen people were arrested, police said.

Later protests involving hundreds of students fleeing from riot police firing rounds of tear gas were reported at the University of Pittsburgh campus in nearby Oakland.

G20 meetings are a magnet for anti-capitalists opposed to what they see as an undemocratic body promoting globalisation and free market policies.

The summit of the world’s 19 biggest developed and emerging economies plus the European Union comes just over a year after a US credit collapse triggered a global economic slowdown.

It also comes six months after the same G20 chiefs met in London to coordinate their response to the crisis.

Summit delegates have all pledged to take tough and lasting measures to bring order back to the markets, shore up failing institutions, save jobs and rekindle growth.

Not all seemed enthusiastic about the White House’s landmark announcement on the G20.

At Thursday’s G20 dinner hosted by Obama, Japan’s new left-leaning Prime Minister Yukio Hatoyama cautioned that the group may be too unwieldy to make quick decisions.

“Under such circumstances, talks could easily be led by bureaucrats. It should be leaders themselves who exercise leadership,” he told the closed-door dinner, as quoted by a Japanese official.

Japan has relished its role as the only Asian nation in the G8, using the forum to showcase Japan as a responsible global power as attention drifts to neighboring China.

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