(Reuters) - Leaders from the Group of Eight industrial nations and leading developing nations will hold talks from July 8-10 in the central Italian city of L’Aquila.
The talks are expected to focus on the state of the world economy, financial regulation, climate change, trade, food security and aid. Following are the major themes which will be discussed and possible outcomes from the meeting:
G8 talks will open with a discussion of the financial crisis, with the first day’s statement likely to focus on signs of stabilisation in major economies and aiming to send a positive message on the global economic outlook. Talks may also broach possible exit strategies from the downturn, though G8 leaders are likely to emphasise it is too early yet to wind down policy stimulus.
The World Bank cautioned G8 leaders in a letter ahead of the summit it was premature to assume a recovery was at hand and the outlook for 2010 remained uncertain.
Italy is pushing for the adoption of an agreement on “global standards” of regulation — an international charter covering everything from executive pay, corporate governance, banking, taxation, trade, corruption and regulation of financial markets.
Critics of the 70-page “Lecce Framework” — named after the Italian city where it was drafted by finance ministers last month — say it is a compilation of existing guidelines, too broad to be effective and toothless because its lacks penalties.
While the G8 is unlikely to officially adopt a new global charter, it may recommend a document to the forthcoming G20 summit in Pittsburgh in September.
With eyes on December’s U.N. climate change summit in Copenhagen, due to produce a replacement for the 1997 Kyoto pact, leaders will try to narrow differences over cuts in greenhouse gas emissions and funding for low carbon technology.
G8 leaders are likely to agree on a goal to limit global warming to no more than 2 degrees Celsius since pre-industrial times and to strengthen the vaguely-worded “vision” of halving global carbon emissions by 2050, agreed last year.
These commitments could also be adopted by the 17-member Major Economies Forum, which meets on the second day of the summit and includes major developing economies.
India and China have so far refused to adopt a 2050 target until rich nations set ambitious near term aims: A deal here would be a significant step towards a new U.N. climate pact in December.
China has requested discussion of the position of the dollar as the world’s global reserve currency when the G8 broadens its talks to include the G5 emerging economies, but some other members appear to be playing down this issue.
Officials from G8 and emerging economies suggest there will be no comment on a reserve currency in the summit’s statements.
Monetary officials in China — the largest holder of U.S. Treasury debt which has some 70 percent of its $1.95 trillion (1.19 trillion pounds) currency reserves in dollars — have expressed interest in using IMF Special Drawing Rights (SDRs) as a super-sovereign currency.
China’s Deputy Foreign Minister He Yafei played down the issue on Sunday, saying the dollar would stay as the world’s dominant currency for “many years to come.”
German Finance Minister Peer Steinbrueck on Monday also backed the dollar as the reserve currency but said China’s yuan and the euro would gain in significance.
G8 nations are under pressure to ensure they are meeting commitments to boost aid to the developing world, and members will discuss setting up a taskforce to monitor the possibility of a food security fund.
“I am keeping my fingers crossed for success in adopting a fund for Africa on food security with at least $15 billion,” Italian Foreign Minister Franco Frattini said in an interview published on Monday.
A draft declaration on Global Food Security referred to the need to increase sustainable agricultural output and to set a three-year funding goal, but did not include a figure.
The Financial Times reported on Monday the Group of Eight would commit more than $12 billion for agricultural development over the next three years.
Washington, the world’s biggest food aid donor, said last week it was shifting its emphasis from emergency food aid to boosting sustainable farm output. But any moves will be closely watched by U.S. farmers who produce crops used for food aid.
Italian President Silvio Berlusconi said the G8 summit could move to tighten sanctions against Iran, already adopted over its nuclear programme, after disputed presidential elections last month which triggered violent protests.
However, G8 officials have said it is not the appropriate forum for such a move and any “sanctions” would be limited to a condemnation or measures such as the withdrawal of diplomats.
Germany’s Angela Merkel called for the summit to send a strong signal to Iran on human rights while keeping open the possibility of talks on its nuclear programme, in line with a foreign ministers meeting last month.
Leaders will attempt to give a push to the Doha development round of world trade talks, launched in 2001, which ran aground a year ago over differences between the United States and developing nations like India over agricultural subsidies.
Delegates will focus on agreeing procedures for negotiating Doha, and may express hopes for concluding a deal in 2010, G8 diplomats say. A draft G8 communique seen by Reuters rejected protectionism and new trade barriers.
World Trade Organisation Director General Pascal Lamy will be present at the talks and hold bilateral meetings. Brazil, an important agricultural player at the talks, has played down hopes for a breakthrough at the L’Aquila summit.
French President Nicolas Sarkozy wants G8 nations to discuss regulating oil prices to prevent the wild swings of recent years and ensure fair value for consuming and producing nations.
France says oil prices need to be high enough to spur investment in the sector and incentivise green technology, but previous attempts at “regulating” oil prices have fallen flat and there are doubts whether a consensus exists in the group.
A draft G8 communique obtained by Reuters vowed to analyse commodity price volatility and the role of speculators.
Crude oil soared to almost $150 per barrel last year, only to fall to under $40 some months later due to the global economic crisis. It is now trading around $70.
G8 leaders are expected to condemn North Korea’s nuclear test in May, in violation of U.N. Security Council resolutions, and its missile test last week. Japan is pressing for a hard line from the summit.
A G8 foreign ministers meeting last week branded the programmes as “a threat to regional peace and stability.”
Reporting by Daniel Flynn; Editing by Sophie Hares