LONDON – Prime Minister Stephen Harper couldn’t resist a little Canadian bragging Thursday as leaders of the world’s biggest economies agreed to prime the recession pump and put some constraints on unfettered banking giants.
“I think we’re back to where Canada has been all along,” Harper told a news conference after the two-day Group of 20 economic summit concluded.
Leaders of the G20, representing industrialized nations and the world’s major developing economies, emerged from the talks uniformly heralding “unprecedented” international co-operation.
With some $1 trillion US in new stimulus money, a promised crackdown on tax havens and hedge funds and the creation of a new oversight body to red-flag global financial problems, the summit was able to paper over its divisions and declare itself a success. A commitment to reduce trade barriers and resist protectionist domestic policies was voiced by all.
British Prime Minister Gordon Brown called it the “day the world came together to fight back against the recession.”
Even the protests outside the east London riverside summit site seemed muted, perhaps drowned by the steady rain or the overwhelming police presence.
U.S. President Barack Obama called it “a turning point” and said that “by any measure,” the summit was historic.
All were forced to concede, however, that no turnaround is imminent in a world economy uniformly battered by what’s agreed to be the worst downturn in half a century.
“We’re seeing some degree of stability,” Harper cautioned. “Stability is different than recovery.”
But Brown, the summit host, said nothing less than a new global economic template is afoot.
“The old Washington consensus is over,” he said, a reference to the roaring globalization and deregulation of the past two decades. “Today we have reached a new consensus.”
The leaders agreed that credit agencies will be regulated to end conflicts of interest, tax havens will be forced to disclose their banking details and a new Financial Stability Board will be created to provide, in Brown’s words, an “early warning mechanism that the global economy needs.”
The group pledged $1.1 trillion US in loans and guarantees to countries struggling with the deep recession, including $250 billion over the next two years to finance trade.
Canada ponied up an additional $10.2 billion US for the International Monetary Fund, which will manage the bulk of the new stimulus through a variety of measures.
Harper said Canada’s “major influence here … our overwhelming achievement,” was the recommendations for international financial reforms. Canada co-chaired a working group that built the consensus reached Thursday.
But the prime minister was less ready than his British counterpart to switch the channel on globalization.
“To the extent that some have interpreted the ‘Washington consensus’ as the phenomenon of unregulated or barely regulated financial and other sectors we’ve seen in recent years, certainly that era is over,” said Harper.
“I think we’re back to where Canada has been all along.”
French President Nicolas Sarkozy called it “the moralization of capitalism.”
But Sarkozy, the most ardent voice for a single global regulator, was denied his demand for a body that could actually enforce the reforms agreed to by the G20 leaders.
And Obama, who came in seeking much larger direct stimulus contributions from European nations, did not get his wish.
Harper said several European countries made “a pretty persuasive case” that their generous social safety programs rise dramatically in cost as their economies falter, providing “automatic stabilizers” that have to be counted as stimulus.
The prime minister had nothing but praise for the summit outcome.
“This really is unprecedented, co-ordinated and fast action by the international community to an economic crisis – frankly at a speed and a level of engagement we have never seen in the past.”