Global Summits Planned to Tackle Economic Crisis
Sunday, October 19, 2008
President Bush announced plans yesterday to host an emergency summit of leaders from the world's top economies to map out a response to the global financial crisis, urging a renewed effort to secure the basis of "democratic capitalism."
The objectives set for the summit are every bit as far-reaching as those of the 1944 landmark meeting in Bretton Woods, N.H., attended by 44 Allied nations to remake the global financial system after the Great Depression. But while that earlier gathering was devoted to coordinating monetary policy and setting up an international currency exchange system, the summit announced yesterday at Camp David would aim to overhaul the regulatory framework for global finance.
The agenda would address a wide range of challenges such as increasing the transparency of markets, revising the rules that govern the flow of investment around the world and improving oversight of big banks, ratings agencies and hedge funds, a senior White House official said. Bush warned, however, that these reforms should not come at the expense of free markets.
Any initiatives that come out of the summit would do little to ease the immediate situation as the meltdown in financial markets takes its increasing toll on livelihoods and living conditions. But the conclave could give Bush a chance to put his stamp on the global financial system before his term runs out.
A joint statement issued after a meeting of Bush, French President Nicolas Sarkozy and European Commission President José Manuel Barroso at Camp David said the European Union, France and the United States had agreed to hold "a series of summits on addressing the challenges facing the global economy," starting with one in the United States "soon after the U.S. elections."
The aim of the first summit would be to "review progress" in the current crisis and "to seek agreement on principles of reform needed to avoid a repetition and assure global prosperity in the future," the statement said. Later summits would be held to implement whatever agreements were made at the first, according to the statement.
The meetings would involve emerging economic powers previously excluded from similar talks as well as those that have dominated the global financial system over the last half century, White House officials said. They would be open to the major industrial states that comprise the Group of Eight -- the United States, Canada, Britain, France, Italy, Germany, Russia and Japan -- as well as leading developing nations such as China, India, and Brazil. Other countries that could be invited include Saudi Arabia, South Korea and Australia.
"As we make the regulatory institutional changes necessary to avoid a repeat of this crisis, it is essential that we preserve the foundations of democratic capitalism -- commitment to free markets, free enterprise and free trade," Bush said, flanked by Sarkozy and Barroso.
"We must resist the dangerous temptation of economic isolationism and continue the policies of open markets that have lifted standards of living and helped millions of people escape poverty around the world," Bush added. His announcement means that Bush, who has already presided over the largest U.S. intervention into the financial markets in 75 years, may also leave a lasting imprint on the structure of the world economy. But many of the key decisions are likely to be left for his successor.
Sarkozy welcomed Bush's announcement of a summit and said it could be held by the end of November. "Since the crisis started in New York, maybe we can find the solution in New York," the French president said.
Barroso, speaking at Camp David, agreed that a "new global financial order" was needed.
But while there is active support within the Bush administration for coordinating with other governments on the response to banking crises, the United States and Europeans could find themselves in conflict over several issues. Leaders from the United States, European countries and other economic powers gathered in Geneva this summer but couldn't agree on a range of issues, including strengthening the global regulatory framework and agricultural tariffs.