Leaders from 20 industrial and developing countries are in Washington for an emergency summit to deal with the global financial crisis that has dramatically slowed world growth. VOA's Barry Wood has more.
Financial experts say the leaders are likely to agree on coordinated increases in government spending to sustain purchasing power. The Chinese have already announced such a package and similar programs are in the works in North America and Western Europe. The countries participating in the one day Washington summit account for over 75 percent of global output.
But experts say beyond the need to stimulate a weakening global economy, the leaders do not hold unified positions on other economic and financial matters. They said the troubled financial market world-wide is waiting for an answer from the summit leaders, such as: Should there be stronger cross-border regulation of financial institutions? What formula should be used to boost the voting power of fast-growing economies like China and India in the International Monetary Fund? And should this group of 20 countries take the place of the informal grouping of sevenmajor industrial nations,plus Russia that have long held annual economic summits ?
British Prime Minister Gordon Brown was instrumental in convening the Washington financial summit. Together with French President Nicholas Sarkozy, Brown favors tighter regulation of financial institutions. "Unless we build a global system of coordination and supervision, we are as likely to have another crisis somewhere else that we didn't understand was happening, because we had no idea of the risk people were taking. So, I think it is actually a new relationship between markets and governments that we are looking for," he said.
But outgoing US President George Bush opposes global regulation of banks, regarding it as bureaucratic and unnecessary. "The (current) crisis was not a crisis of the free market system and the answer is not to try to reinvent that system. It is to fix the problems we face, make the reforms we need and move forward with the free market principles that have brought prosperity and hope to people around the world," he said.
The financial crisis was triggered over a year ago by defaults on sub-prime mortgage loans in the United States. Banks worldwide absorbed billions of dollars of losses that led to a tightening of lending standards that has made it difficult for businesses and consumers to get credit. As stock markets plunged, frightened consumers turned cautious and economic activity has fallen precipitously. Some analysts say the global economy may be caught in a downward spiral that only be corrected by coordinated intervention.
The summit itself, hosted by President Bush, is scheduled to last only five hours. A joint statement will come at the end late Saturday, after which some of the leaders will meet with reporters.