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http://www.independent.co.uk/news/world/politics/obama-hails-the-new-world-order-1661088.html
Obama hails the new world order
Markets soar after President brokers 'historic' G20 deal between world leaders to bring end to recession
By Andrew Grice, Nigel Morris and Sean O'Grady
Friday, 3 April 2009
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AP
President Obama hailed the meeting as 'a turning point in our pursuit of global economic recovery'
Gordon Brown declared that a $1 trillion package to stimulate economic growth agreed at yesterday's G20 summit in London will ensure that the world pulls out of recession more quickly.
Speaking after the one-day summit of the world's richest nations in the Docklands, the Prime Minister said there were "no quick fixes", adding: "Today's decisions will not immediately solve the crisis. But we have begun the process by which it will be solved."
He said: "This is the day that the world came together to fight back against the global recession, not with words, but with a plan for global recovery and for reform and with a clear timetable for its delivery."
Related articles
The US President Barack Obama played a key role in brokering the agreement, resolving tensions between China and France on tax havens.
The $1trn will be made available to countries that run into trouble via the International Monetary Fund (IMF), the World Bank and World Trade Organisation, which will all be beefed up. Half the money will come from IMF loans, with $250bn to finance trade deals and a further $250bn from the IMF's currency reserve.
Mr Brown and President Obama originally wanted the G20 summit to call for higher government spending and tax cuts, but they ran into opposition from European nations, led by Germany and France. However, the summit kept open the option of such action in 2010 if the $5trn fiscal stimulus scheme does not work. The IMF will have a new role in monitoring whether countries are doing enough to help the world economy grow at about 4 per cent a year.
G20 leaders will meet again to review progress, probably in New York in September, to coincide with the annual meeting of the United Nations General Assembly.
Last night British ministers said the real significance of yesterday's agreement was not the $1trn package but the enhanced role it gave to world institutions like the IMF, whose budget will triple to $750bn. "A new world financial order has been born, almost by accident, because of this crisis," one cabinet minister said. "These bodies have been revamped; now they need to raise their game."
The IMF will no longer be regarded as a last-resort option for nations facing bankruptcy, but will instead take preventative action. Many nations have been reluctant to turn to the fund because the stigma of doing so sends bad signals to the financial markets.
The special drawing rights (SDRs) made available by the IMF – which can be converted by national governments into currency to provide a swift injection of liquidity into their economies – will be increased by a further $250bn. The funds will be used in the short term to support the precarious economies of eastern and central Europe. Romania and Turkey are the latest nations to seek help from the IMF; others in recent months include Ukraine, Pakistan, Iceland and Latvia. The IMF has expressed acute concern that a crisis in these economies could spread via the banks to western European countries.
China is playing a notably bigger role, pledging $40bn for the improvement in the IMF's resourcing. Most of the rest comes from the US and Europe. China has publicly called for an increased role for the IMF's own "world currency", the SDR. A long-awaited reform of the governance of the IMF should deliver China more votes and influence.
Last night President Obama hailed the meeting as "a turning point in our pursuit of global economic recovery". He told the press: "By any measure, the London summit was historic. It was historic because of the size and the scope of the challenge that we face and because of the timeliness and the magnitude of our response."
The President said that "former mortal enemies" had come together to agree a common path out of recession. "I am very proud of what has been done, but this alone is not enough. The actions we take in our individual countries is vital." He added: "It's hard for 20 heads of state to bridge their differences. We've all got our own national policies, our own assumptions, and our own politics. But our citizens are hurting – they need us to come together."
The 20 leaders also agreed to reform the financial system to prevent a repeat of the crisis. Mr Brown trumpeted the "start of the end" for tax havens refusing to be transparent about the money they hold; they will be named and shamed.
Last night, the Organisation for Economic Co-operation and Development issued a "blacklist" of four offending countries: Costa Rica, Malaysia, the Philippines and Uruguay. In the run-up to the summit, Switzerland, Austria, Luxembourg, Andorra and Singapore joined a new spirit of openness. Yesterday Brunei and Guatemala agreed to abide by the new rules. The Channel Islands, the Isle of Man and British overseas territories such as the Cayman Islands and British Virgin Islands already comply with the guidelines.
Under yesterday's deal, tax havens would have to open their books to other countries upon request, or face tough sanctions. Banks across the world face a regime of checks to guard against a repeat of the excessive lending that triggered the global financial meltdown.
The leaders pledged to give their regulators the powers to collect all the relevant information about banks and to strengthen links between regulators from different countries to pool information about multinational financial institutions. Hedge funds will be brought into the regulatory system. Bankers' pay will reflect long-term performance, not short-term risk-taking.
Mr Brown pronounced the free-market consensus was over, hailing a "new consensus" among the largest countries. "From today we will together manage the process of globalisation," he said.
On the fiscal stimulus, the Prime Minister insisted: "The issues that people thought divided us did not divide us at all. There was substantial agreement on the need for us to do whatever is necessary to return to growth."
Nicolas Sarkozy, the French President, who had threatened to walk out if he was not happy with the outcome, said: "There were moments of tension. Never would we have thought to get as big an agreement." He praised President Obama for helping to create consensus and persuade China to agree to publish lists of tax havens. Angela Merkel, the German Chancellor, called the measures "a very, very good, almost historic compromise" that will give the world "a clear financial markets architecture". But the anti-poverty campaigner Bob Geldof said: "A key question the African delegation is asking is whether this will be real new money for their countries, and will it be grants or expensive loans?"
David Cameron, the Tory leader, said: "Now the focus should switch back to our domestic economy because small businessmen needing a loan to keep their businesses going are still suffering. And our public finances here in Britain, the level of our deficit, is truly horrific and we need to act on that."
The deal: Key points
Boosting world economy...
An extra $1 trillion pumped into the global economy via the International Monetary Fund. IMF reserves increased by $500bn to $750bn.
Help for ailing economies...
IMF will boost by $250bn the cash countries can access through "special drawing rights". It is similar to "quantitative easing" – printing money.
Cleaning up banks...
Greater powers for regulators and strong supervision of multinational institutions. Curbs on pay and bonuses. Hedge funds regulated.
Increasing trade....
$250bn trade support package offered to developing countries.
Tax havens...
Must open their books or be "named and shamed" and face sanctions.
Reform of IMF...
IMF and the World Bank beefed up. Fast-growing countries gain influence.
Crisis? What crisis? The other good news
The optimism of the G20 summit's conclusion was shared by the markets yesterday. The FTSE 100 index of leading UK shares closed almost 170 points higher at 4124.97. There were similar gains across Europe and in America. There was also some good news for the British economy as the Nationwide building society revealed that house prices rose in March. The increase of 0.9 per cent was the first rise since October 2007.
Obama hails the new world order
Markets soar after President brokers 'historic' G20 deal between world leaders to bring end to recession
By Andrew Grice, Nigel Morris and Sean O'Grady
Friday, 3 April 2009
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AP
President Obama hailed the meeting as 'a turning point in our pursuit of global economic recovery'
More pictures Gordon Brown declared that a $1 trillion package to stimulate economic growth agreed at yesterday's G20 summit in London will ensure that the world pulls out of recession more quickly.
Speaking after the one-day summit of the world's richest nations in the Docklands, the Prime Minister said there were "no quick fixes", adding: "Today's decisions will not immediately solve the crisis. But we have begun the process by which it will be solved."
He said: "This is the day that the world came together to fight back against the global recession, not with words, but with a plan for global recovery and for reform and with a clear timetable for its delivery."
Related articles
- A summit that shows the new balance of power
- Everything you need to know about the G20 deal
- The negotiations: Huddles with heads of state pay off as Brown gets his deal
- The protests: Complaints of heavy-handed tactics after raids on squats
- Hamish McRae: The downturn will go on, but this should restore confidence
- Leading article: Not a grand bargain, but a step towards recovery
- The First Lady: Michelle's touchy-feely tour of London
- Johann Hari: The protesters are the ones we should listen to at this summit
- Steve Richards: Give Brown credit for some success
- Andreas Whittam Smith: They didn't make history, but that's no bad thing
- Leading article: An economic giant takes the stage
- Sean O'Grady: Not so much green shoots as seeds of hope, but welcome all the same
- Jeremy Warner: G20 communiqué gives some reason for optimism
- The Sketch: A poetic end to boom and bust, with no rhyme or reason
- Zaki Cooper: Religion has a key part to play in ensuring economic recovery
- G20 Diary: An arresting scene
The US President Barack Obama played a key role in brokering the agreement, resolving tensions between China and France on tax havens.
The $1trn will be made available to countries that run into trouble via the International Monetary Fund (IMF), the World Bank and World Trade Organisation, which will all be beefed up. Half the money will come from IMF loans, with $250bn to finance trade deals and a further $250bn from the IMF's currency reserve.
Mr Brown and President Obama originally wanted the G20 summit to call for higher government spending and tax cuts, but they ran into opposition from European nations, led by Germany and France. However, the summit kept open the option of such action in 2010 if the $5trn fiscal stimulus scheme does not work. The IMF will have a new role in monitoring whether countries are doing enough to help the world economy grow at about 4 per cent a year.
G20 leaders will meet again to review progress, probably in New York in September, to coincide with the annual meeting of the United Nations General Assembly.
Last night British ministers said the real significance of yesterday's agreement was not the $1trn package but the enhanced role it gave to world institutions like the IMF, whose budget will triple to $750bn. "A new world financial order has been born, almost by accident, because of this crisis," one cabinet minister said. "These bodies have been revamped; now they need to raise their game."
The IMF will no longer be regarded as a last-resort option for nations facing bankruptcy, but will instead take preventative action. Many nations have been reluctant to turn to the fund because the stigma of doing so sends bad signals to the financial markets.
The special drawing rights (SDRs) made available by the IMF – which can be converted by national governments into currency to provide a swift injection of liquidity into their economies – will be increased by a further $250bn. The funds will be used in the short term to support the precarious economies of eastern and central Europe. Romania and Turkey are the latest nations to seek help from the IMF; others in recent months include Ukraine, Pakistan, Iceland and Latvia. The IMF has expressed acute concern that a crisis in these economies could spread via the banks to western European countries.
China is playing a notably bigger role, pledging $40bn for the improvement in the IMF's resourcing. Most of the rest comes from the US and Europe. China has publicly called for an increased role for the IMF's own "world currency", the SDR. A long-awaited reform of the governance of the IMF should deliver China more votes and influence.
Last night President Obama hailed the meeting as "a turning point in our pursuit of global economic recovery". He told the press: "By any measure, the London summit was historic. It was historic because of the size and the scope of the challenge that we face and because of the timeliness and the magnitude of our response."
The President said that "former mortal enemies" had come together to agree a common path out of recession. "I am very proud of what has been done, but this alone is not enough. The actions we take in our individual countries is vital." He added: "It's hard for 20 heads of state to bridge their differences. We've all got our own national policies, our own assumptions, and our own politics. But our citizens are hurting – they need us to come together."
The 20 leaders also agreed to reform the financial system to prevent a repeat of the crisis. Mr Brown trumpeted the "start of the end" for tax havens refusing to be transparent about the money they hold; they will be named and shamed.
Last night, the Organisation for Economic Co-operation and Development issued a "blacklist" of four offending countries: Costa Rica, Malaysia, the Philippines and Uruguay. In the run-up to the summit, Switzerland, Austria, Luxembourg, Andorra and Singapore joined a new spirit of openness. Yesterday Brunei and Guatemala agreed to abide by the new rules. The Channel Islands, the Isle of Man and British overseas territories such as the Cayman Islands and British Virgin Islands already comply with the guidelines.
Under yesterday's deal, tax havens would have to open their books to other countries upon request, or face tough sanctions. Banks across the world face a regime of checks to guard against a repeat of the excessive lending that triggered the global financial meltdown.
The leaders pledged to give their regulators the powers to collect all the relevant information about banks and to strengthen links between regulators from different countries to pool information about multinational financial institutions. Hedge funds will be brought into the regulatory system. Bankers' pay will reflect long-term performance, not short-term risk-taking.
Mr Brown pronounced the free-market consensus was over, hailing a "new consensus" among the largest countries. "From today we will together manage the process of globalisation," he said.
On the fiscal stimulus, the Prime Minister insisted: "The issues that people thought divided us did not divide us at all. There was substantial agreement on the need for us to do whatever is necessary to return to growth."
Nicolas Sarkozy, the French President, who had threatened to walk out if he was not happy with the outcome, said: "There were moments of tension. Never would we have thought to get as big an agreement." He praised President Obama for helping to create consensus and persuade China to agree to publish lists of tax havens. Angela Merkel, the German Chancellor, called the measures "a very, very good, almost historic compromise" that will give the world "a clear financial markets architecture". But the anti-poverty campaigner Bob Geldof said: "A key question the African delegation is asking is whether this will be real new money for their countries, and will it be grants or expensive loans?"
David Cameron, the Tory leader, said: "Now the focus should switch back to our domestic economy because small businessmen needing a loan to keep their businesses going are still suffering. And our public finances here in Britain, the level of our deficit, is truly horrific and we need to act on that."
The deal: Key points
Boosting world economy...
An extra $1 trillion pumped into the global economy via the International Monetary Fund. IMF reserves increased by $500bn to $750bn.
Help for ailing economies...
IMF will boost by $250bn the cash countries can access through "special drawing rights". It is similar to "quantitative easing" – printing money.
Cleaning up banks...
Greater powers for regulators and strong supervision of multinational institutions. Curbs on pay and bonuses. Hedge funds regulated.
Increasing trade....
$250bn trade support package offered to developing countries.
Tax havens...
Must open their books or be "named and shamed" and face sanctions.
Reform of IMF...
IMF and the World Bank beefed up. Fast-growing countries gain influence.
Crisis? What crisis? The other good news
The optimism of the G20 summit's conclusion was shared by the markets yesterday. The FTSE 100 index of leading UK shares closed almost 170 points higher at 4124.97. There were similar gains across Europe and in America. There was also some good news for the British economy as the Nationwide building society revealed that house prices rose in March. The increase of 0.9 per cent was the first rise since October 2007.
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