LONDON (AP) - Desperate but divided on ways to lift their
nations from economic misery, world leaders converged for an
emergency summit Tuesday holding scant hopes of finding a
magic-bullet solution for the crisis that brought them hurrying to
Even as President Barack Obama and the others were arriving, the
U.S. acknowledged its allies would not go along with a massive
burst of stimulus spending, while Europe was forced to backpedal
from hopes for tighter financial regulation.
Instead, leaders are trumpeting the limited common ground they
could reach, including more money for the International Monetary
Fund and closer scrutiny of hedge funds and tax havens. As for the
broader issues, they're hoping for the best - or at least that they
will do no harm.
With turbulent world markets watching closely, the stakes are
high, especially for America's new president, stepping onto the
world stage for the first time to deal with the economic crisis and
to meet face-to-face with many other leaders.
One global change is being acknowledged: The forum for grappling
with world economic problems has grown beyond the established eight
post-war economies that dominated previous economic summits - the
U.S., Britain, Germany France, Japan, Canada, Italy and Russia.
Now, 20 nations are coming together in London, with fast-growing
developing economies such as China, India, Brazil and Saudi Arabia
- important players in any effort to coordinate economic policy -
sitting as full negotiating partners.
"For the first time, there's a recognition that major emerging
markets and developing countries have a critical role at the
table," said Mike Froman, a White House international economic
But will that mean action to stop a global downward spiral?
Froman acknowledged that there have been few examples of
international gains in times of crisis. "The depression was made
'great' by the lack of cooperation," he said, noting that nations
like to keep control over their own fiscal and monetary policies.
And global leaders were quarreling up to the last minute before
Adding to the pressure, French President Nicolas Sarkozy said
Tuesday the leaders cannot afford to let the week pass without
making substantial progress in fixing the world's economy.
"We have to obtain results, there is no choice, the crisis is
too serious to allow us to have a summit for nothing," he said.
European countries are pushing for a tougher regulatory system
for global finance, while the U.S. is emphasizing more spending -
an idea that holds little interest for Europeans wary about debt.
Obama planned a round of meetings with leaders on Wednesday,
including Queen Elizabeth II, summit host British Prime Minister
Gordon Brown and the presidents of Russia and China.
The world economy is in far worse shape than when the group of
rich and developing countries last met in November and set lofty
goals for international cooperation.
Trade is deteriorating, protectionism is on the march and
joblessness is rising. Street demonstrations have increased, and
widespread protests are expected in London this week.
Brown, the host, had initially trumpeted the gathering as "a
new Bretton Woods - a new financial architecture for the years
ahead." But the meeting was shaping up as bearing little
similarity to the 1944 conference in New Hampshire where the
winners of World War II gathered to set postwar global monetary and
Brown's spokesman said the prime minister had spoken briefly by
telephone on Tuesday with Obama, who was on Air Force One.
"It's an opportunity for both of them to take stock of where we
were," Brown's spokesman Michael Ellam said.
World Bank President Robert Zoellick called for the G20 to back
a $50 billion liquidity fund to keep global trade moving. In rich
countries, he said, "people talk of bonuses or no bonuses. In
parts of Africa, South Asia and Latin America, the struggle is for
food or no food."
London does not have a good history for successful economic
summits. One held in London in 1933, attended by more than 1,000
world leaders and financial officials - although not President
Franklin D. Roosevelt - met for six weeks and then gave up.
Still, most leaders were upbeat Tuesday as they headed to
"It is important and necessary for the summit to take credible
decisions which will help to halt and reverse the current slowdown
and to instill a sense of confidence in the global economy," said
Indian Prime Minister Manmohan Singh.
Summit partners will meet for dinner on Wednesday evening, then
hold a business meeting on Thursday.
A draft of the communique circulating ahead of the meeting
suggested that global leaders will embrace stimulus spending
totaling about $2 trillion. But that includes a number of measures
Leaders of European countries, led by Germany's Angela Merkel,
continued to resist calls for more stimulus and for printing money
as the U.S. Federal Reserve and the Bank of England have done to
try to jump-start a recovery.
Memories of the hyperinflation in the 1920s in Germany that gave
way to the rise of Adolf Hitler's Nazi party still haunt modern-day
On Wednesday, Obama will have separate meetings with Brown,
Russian President Dmitry Medvedev, and with Chinese President Hu
With Moscow, the agenda will include disputes over energy,
Russia's continued opposition to U.S. missile defense sites in
Eastern Europe and warhead cutbacks. Obama has indicated less
enthusiasm for the missile system than predecessor George W. Bush,
raising hopeful expectations in Moscow. But Russian leaders have
engaged in tough talk lately in terms regaining their own status in
the world, posing an early test for Obama.
Obama's meeting with Hu is likely to touch on recent Chinese
concern about the safety of its vast holdings in U.S. Treasury
bonds, given dollar-eroding U.S. stimulus programs. China surpassed
Japan last year as the largest holder of U.S. debt, and any Chinese
flight away from those investments would rock global markets.
On the way to Europe, Obama aides made clear expectations have
Instead of focusing on the additional stimulus spending the U.S.
had sought, White House press secretary Robert Gibbs emphasized
what already has been accomplished. G20 nations have spent so far
an amount equal to 1.8 percent of their collective gross domestic
product, he said, calling that "a significant commitment."
Gibbs also said he expects a joint pledge that the leaders will
act further if developments warrant, and he said that commitment
satisfies Obama. He also touted new regulatory proposals and the
intention to boost contributions to the IMF.