(Reuters) - Finance chiefs from the Group of 20 nations met in Mexico City at the weekend and talks were dominated by the euro zone debt crisis.
Following is a summary of the outcome of the meetings:
EUROPE‘S FIREWALL AND IMF RESOURCES
Europe was told in stark terms that it must put up more money to help struggling euro zone countries before the rest of the world contributes extra cash to the IMF’s crisis war chest. Germany resisted as it has already made hefty contributions and says it doesn’t believe more cash is needed. Domestic political considerations also play a part as voters are against more bailouts for Greece. Germany has agreed to discuss a possible increase in funds during March but it still looked isolated in the G20 negotiations. Some non-European countries, led by China and Japan, seem willing to give more cash to the IMF but only if Europe moves first. The United States led the push for more European action, although it has no intention of sending extra money to the IMF this year, which would need approval by a deeply split Congress, even if Europe does its part.
There was tangible relief among policymakers that measures already taken to ease the euro crisis have calmed investors, and there is also some good news on economic recovery. But growth is still patchy at best and G20 admits downside risks remain high. It noted that key emerging markets are generally growing much faster than advanced economies.
The United States faced some resistance to the tradition that an American should head the World Bank as emerging markets spoke vaguely about the possibility of putting up their own candidate for the job, which falls open when Robert Zoellick steps down in June. It’s not clear if the BRICS - Brazil, Russia, India, China, and South Africa -- really plan a serious challenge or whether they are just rolling out some rhetoric and maneuvering to have the job go to a non-American when it comes open next time.
The G20 said in its communique that it was “alert to the risks of higher oil prices”, and it welcomed a commitment by oil-producing countries “to continue to ensure adequate supply”. The world’s top oil producer, Saudi Arabia, is a member of the G20. Other petroleum exporters in the group include Russia, Canada and Mexico. Saudi Arabia increased exports sharply in the past week.
The group again committed itself to implementing a 2010 reform that would give emerging economies more say at the IMF at the expense of Europe. Brazil’s finance minister said that would be a condition for developing countries when it comes to providing the IMF with more resources to help deal with fallout from the euro zone crisis.
U.S. plans to curb speculative trading by banks for their own profit came under double-barrelled fire -- first from bankers meeting on the sidelines and then from the G20 leaders. Public officials from Mexico and ministers from countries such as Britain and Canada were openly critical. Some said it could even hamper monetary policy because only trading in U.S. government debt will be exempted from the rule. The head of the IMF said she did not have a position in the debate but said the IMF was “very attentive” to the complaints. U.S. Treasury chief Timothy Geithner said Washington would be “mindful of cross border impacts and committed to managing them carefully.” For a story, click on
Reporting by Bill Schomberg and Kieran Murray