G-20 Leaders Divided Over Economic Recovery
GUY RAZ, host:
President Obama and other world leaders are meeting this weekend at the G-20 conference in Toronto to discuss the global economy. There are signs of improvement, but there are still major differences between the White House and leaders from the other member states over how best to sustain the recovery.
NPR's Scott Horsley is there and has this report.
SCOTT HORSLEY: This weekend's summit comes at a sensitive time for the world's economy. The worst of the recession may have passed, but the recovery hasn't taken solid hold and deep scars remain.
President Obama is reminding his fellow leaders of the aggressive actions they took at two previous summits to confront the global downturn.
President BARACK OBAMA: I hope we can build on this progress by coordinating our efforts to promote economic growth, to pursue financial reform and to strengthen the global economy.
HORSLEY: But as the economy begins to recover at widely varying rates around the world, G-20 leaders aren't necessarily singing from the same hymnal anymore.
Professor SIMON JOHNSON (Global Economics and Management, MIT Sloan School of Management): That united front is definitely fraying.
HORSLEY: MIT professor Simon Johnson is a former chief economist for the International Monetary Fund. He notes that while President Obama wants governments to keep their foot on the gas with further spending to accelerate the recovery, some other world leaders are already tapping the brakes.
Prof. JOHNSON: The Europeans are moving into a phase of austerity to varying degrees, of course, across different countries, but even such country as France that until recently was regarded as a relative safe haven now finds the need to change their pension rules and to generally move towards tightening government spending.
HORSLEY: President Obama is no stranger to this kind of tension. Back in the U.S., conservative lawmakers have begun to challenge his calls for additional spending on unemployment benefits or aid to the states, for example, for fear of adding to the federal budget deficit.
The White House argument in the U.S. and internationally is that government should concentrate on stronger growth now and worry about cutting budget deficits later.
Treasury Secretary Timothy Geithner downplayed the differences among the G-20 leaders, saying while countries won't all strike the same balance, there is general consensus about what they're trying to achieve.
Secretary TIMOTHY GEITHNER (Treasury Department): What matters to everyone here is to make sure that these economies are growing in the future, the world economy is growing. And we're acting to reinforce confidence that that growth is going to happen and be sustainable. And we all understand that you're not going to have growth in the future that's going to be strong enough, healthy enough, unless people believe you have the political will to bring these deficits down over time.
HORSLEY: The G-20 leaders are also talking this weekend about financial reform. House and Senate negotiators gave Mr. Obama a lift heading into the summit by agreeing to a major overhaul of America's financial rules, enhancing consumer protection, limiting risky bank behavior and giving the government power to dismantle big financial firms before they can jeopardize the broader economy.
Secretary Geithner wants other countries to follow suit with their own financial reforms.
Sec. GEITHNER: You know, we want to have a level playing field. In these markets today, you know, risk can move very quickly to evade the strongest standards. And we think the system will be stronger as a whole if these measures in the U.S. we're about to enact are complemented by strong actions by other countries.
HORSLEY: Geithner points to some progress. Europe is pursuing its own bank stress test, and he said an international agreement on bank capital requirements could be in place this fall.
The G-20 summit has replaced the smaller G-8 meeting as the main forum for economic talks. Mr. Obama did meet briefly in Canada with his G-8 colleagues. They promised more development aid for women and children in poor countries. They urged Iran to show more respect for human rights. And they condemned North Korea for the sinking of a South Korean navy vessel in March.
Scott Horsley, NPR News, Toronto.
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