Obama Says ‘Historic’ G-20 Summit Put World on Path to Recovery
President Barack Obama wrapped up his first international summit by declaring the event “historic” and a “turning point” toward recovery from a worldwide recession.
Obama, who used personal diplomacy to help push through an agreement on regulations and emergency aid, said he and his counterparts at the Group of 20 summit are taking “unprecedented steps” to prevent another financial crisis.
Economic risks remain and there are “no guarantees,” he said at a news conference in London yesterday. “I have no doubt, though, that the steps that have been taken are critical to preventing us sliding into a depression.”
The leaders agreed on principles for financial market regulation, including expanded controls on hedge funds and derivatives trading, and tax havens, as well as rules on compensation and bonuses. They also pledged additional financing for the International Monetary Fund and other institutions.
The summit ended amid signs the world economy is stabilizing after months of sliding. Confidence among U.S. consumers climbed in March after reaching the lowest level on record a month earlier, according to the Conference Board. U.K. house prices unexpectedly rose in March for the first time since October 2007, while Chinese manufacturing increased, reports today showed.
Warning Signs
Still, the World Bank is warning of an “unemployment crisis,” and the U.S. Labor Department is forecast to report today that the jobless rate is now the highest in a quarter- century. It was 8.1 percent in February.
“The challenge is clear,” Obama, 47, said. “The global economy is contracting, trade is shrinking, unemployment is rising, the international finance system is nearly frozen.” Obama said the U.S. will benefit from collective action on the economy by other nations to maintain growth and exports.
“If we’re taking actions in isolation in the United States, and those actions are contradicted overseas, we’re only going to be halfway effective,” he said.
He cited the experience of construction equipment manufacturer Caterpillar Inc. in his home state of Illinois, which has been hit by a “drastic decline” in U.S. exports because of the recession overseas.
Free Trade
The G-20 members affirmed their rejection of taking protectionist measures that would further hurt the economy, Obama said. He said he recognized trade deals would hurt certain industries, arguing that government’s role was to retrain affected workers. Some companies “will go out of business because of free trade,” said Obama.
The biggest accomplishment may be the pledge of about $1.1 trillion for loans and guarantees to boost trade and cushion the effects of the crisis on the most fragile economies, said Stephen P. Schrage, an international business expert at the Center for Strategic and International Studies in Washington compare car insurance prices.
“Now we’ll see if the dollars actually get there,” he said. “They pumped up the few areas they could agree on and papered over what may be the more critical areas that they couldn’t get any agreement on.” Those disagreements centered on European resistance to pumping more money into their economies and calls for even stricter financial regulations.
“To expect them to solve the world’s problems probably isn’t realistic,” said Schrage, a former trade adviser in the Bush administration.
Differences ‘Amplified’
Jared Bernstein, the chief economist for Vice President Joe Biden, said in Washington that the divisions over stimulus and regulation were “very much amplified, unjustly so to some extent.”
Obama was able to bridge differences on regulation by making direct appeals to French President Nicolas Sarkozy and Chinese President Hu Jintao, according to an administration official who briefed reporters afterward.
In his first foray into international diplomacy, Obama “handled himself very well,” Schrage said.
Obama will try to replicate that success when he leaves London this morning for the 60th anniversary summit of the North Atlantic Treaty Organization. He’ll meet today with Sarkozy in Strasbourg, France, and with German Chancellor Angela Merkel in Baden-Baden, Germany.
More Allied Resources
The president is seeking to line up more allied troops and money for his new plan to step up the fight against the Taliban and al-Qaeda in Afghanistan.
He laid out his strategy for the conflict there on March 27. It calls for more U.S. forces, establishes benchmarks for improving Afghanistan’s governance and focuses more aid and attention on neighboring Pakistan.
Obama emphasized in outlining his strategy that Afghanistan “is not simply an American problem.”
In his London news conference, Obama signaled the approach he’s taking on world affairs.
“We exercise our leadership best when we are listening, when we recognize that the world is a complicated place, and that we are going to have to act in partnership with other countries,” he said.
He also took a swipe at his predecessor, former President George W. Bush, saying America’s standing in the world was damaged by “very specific decisions that the previous administration had made.”
“In a world that is as complex as it is, that it is very important for us to be able to forge partnerships as opposed to simply dictating solutions,” he said.
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