• G-20 divided between fiscal discipline and economic recovery


    G-20 divided between fiscal discipline and economic recovery

    Russia and France: it is important to continue reform of international financial institutions

    Five days before G-20 leaders meet in Toronto, the economic-policy divide between Europe and the U.S. is hardening. President Barack Obama, in a letter to his G-20 counterparts dated June 16, urged a focus on economic growth, saying order to public finances should be restored in the “medium term”.

    Berlin supports having financial control procedures even at the expense of the global economic recovery.

    German Economy Minister Rainer Bruederle, at a separate press conference earlier today, said the U.S. must join Europe in “urgently” cutting spending.
    Beware the Double Dip. That's the key message in a new letter from U.S. President Barack Obama to his G20 colleagues, and the underlying thought in a soon-to-be released essay by Prime Minister Stephen Harper, obtained by The Canadian Press.

    Following are more details:

    In other words, Mr. Obama does not want other countries to cut their stimulus packages before the giant U.S. economy has a solid chance to regain its momentum. And if necessary, more stimulus should be at the ready.

    “In fact, should confidence in the strength of our recoveries diminish, we should be prepared to respond again as quickly and as forcefully as needed to avert a slowdown in economic activity,” he writes.
    The leaders meet at the G8 summit next week in Huntsville, and then at the G20 summit right afterwards in Toronto.
    ST. PETERSBURG, Russia -- French President Nicolas Sarkozy said Saturday that he wanted to work with Russia to give developing nations a larger say in how to regulate the global economy.

    Global financial institutions such as the World Bank and International Monetary Fund — created at the Bretton Woods conference in New Hampshire 1944 — are outdated and must be replaced, Sarkozy told an economic forum in St. Petersburg hosted by Russian President Dmitry Medvedev.

    The French president pledged to work with Russia during next week's session of the G-20 in Canada to address some of the most urgent issues that have emerged from the global financial crisis, such as restricting offshore financial zones and abolishing the “law of the jungle” that he says governs the global economy.
    China's yuan surged to a five-year peak on Monday, sending stocks higher across the globe as Beijing signalled ahead of this weekend's G20 summit that it would deliver on pledges of greater currency flexibility. China's central bank has maintained a de facto peg since the middle of 2008, a controversial policy aimed at steadying the world's fastest-growing major economy during the global economic downturn.

    U.S. Ambassador to China Jon Huntsman called China's move on the yuan a "genuine attempt" at currency reform and predicted it could smooth sometimes testy relations between Beijing and Washington.

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