G20 Summit Aims For Agreement On Global Finance Regulations
Ahead of the much publicized G20 economic crisis summit to take place in Washington tomorrow, 15 November, President George W. Bush has come out strongly in defense of U.S.-style free enterprise, more commonly referred to as capitalism, and cautioned foreign leaders against crushing global growth by implementing restrictive rules. He is reported as saying that the aim of the summit should not be to put additional government in place, but rather that government should be smarter. Why did Bush feel the need to defend capitalism so vehemently? It appears that many of the countries that will be participating in tomorrow’s summit are laying the blame for the current crisis squarely at the feet of capitalism – and by extension the United States.
While acknowledging that the crisis was partly sparked by failures by governments, independent regulators, financial firms, lenders and borrowers, he is confident that the crisis was not brought about by failure of the free enterprise system as such, and therefore reinventing the system is not the answer. He also noted that people are mistakenly equating the free enterprise system with greed, exploitation and failure. Having said that, Bush went on to defend his administration against accusations that insufficient regulation and oversight contributed to the crisis, or even caused it. Obama is among those who are suggesting that there was a lack of oversight and U.S. citizens were, in effect, not being protected by the authorities they elected into office.No-one can deny that the United States wields enormous influence in any global response to the ongoing economic crisis, and George Bush will be the host of what is intended to be first in a series of summits bringing together leaders from the world’s biggest economies and emerging nations. However, considering that Bush’s influence is waning as he nears the end of his term as the President of the United States, and that the president-elect Barack Obama will not be attending this summit, many are left wondering how world leaders will respond to the superpower in this transition phase. While former Secretary of State Madeleine Albright and former Iowa Representative Jim Leach will be attending the summit as Obama’s representatives, they will primarily be observers on the sidelines.
World leaders have been preparing for this history-making summit and are coming to Washington with their own ideas for implementing change. British Prime Minister Gordon Brown and French President Nicolas Sarkozy, along with a number of other countries, are advocating for a much broader revamping of current financial regulations than what Bush is hoping for. Gordon Brown has been quoted as saying that there is a “need for urgency” and this sentiment is echoed by many European countries that want a commitment for concrete changes to be made within 100 days. Australian Prime Minister Kevin Rudd intends raising a controversial issue which has been a thorn in the side of taxpayers since the crisis began, being the practice of rewarding top executives of financial firms that have maximized risk to the detriment of the firm, investors and the economy.
World leaders are facing a complex task in the face of what many believe will be a difficult and long-lasting economic crisis. Decisions taken this weekend are sure to have an effect on global markets, and investors are no doubt keen to see what the outcome will be.