LONDON (Reuters) - France threatened Tuesday to storm out of this week’s G20 summit if it did not get the results it wanted, despite Britain’s call for countries to unite and restore confidence to a broken world economy.
As leaders of the world’s big powers converged on London for Thursday’s crisis meeting to chart a way out of the worst global downturn since the Great Depression, the World Bank announced a $50 billion (35 billion pound) program to get international trade flowing again.
The International Monetary Fund also looks poised to get a huge cash boost to its ability to help countries being ravaged by the recession, and the leaders will likely announce common codes on financial regulation to prevent future crises.
“I want results,” French president Nicolas Sarkozy told reporters. “We have to get results, there’s no choice, the crisis is too serious to allow us to have a summit for nothing.”
Shattering any impression of unity, his finance minister warned that Sarkozy would not sign the G20 communique if the summit failed to satisfy his objectives.
“(He) was very clear on that front. He said if the deliverables are not there, I won’t sign the communique -- that means walking away,” Christine Lagarde said in a TV interview.
A spokesman for summit host Gordon Brown said the prime minister and French president had talked constructively Monday and that Britain was looking forward to Sarkozy’s participation.
Brown also desperately needs the summit to provide concrete results, just as much to revive his own political fortunes as to get the British economy out of recession.
But the run-up to the April 2 meeting have been marred by divisions between the United States and Britain on one side and the continental Europeans on the other over the right scale of fiscal stimulus and regulation.
Lagarde has said France may do more on the spending front if necessary, but that nations should wait to see the effect of current stimulus measures before taking any further action. Also, Europe has pushed for a strict overhaul of financial regulation while Britain and the United States appear to favour a lighter touch.
“Leaders meeting in London must supply the oxygen of confidence to today’s global economy and give people in all of our countries renewed hope for the future,” Brown said.
OBAMA TO EUROPE
The Organisation for Economic Co-operation and Development (OECD) said Tuesday the economies of its 30 members would shrink by 4.3 percent in 2009, costing 25 million jobs.
“The first major risk comes from a potential economic collapse of emerging markets,” Australian Prime Minister Kevin Rudd said as he arrived in London. “The second major risk to global recovery is the process of deleveraging.”
To prevent that, the G20 is expected to more than double the $250 billion available to the IMF to help struggling nations. Rudd said its funding should be tripled if necessary.
Speaking at a Thomson Reuters event, World Bank President Robert Zoellick announced measures to reverse a sharp drop in trade flows.
He said the $50 billion program would include funding from governments, starting with contributions from Britain and the Netherlands, regional development banks and private-sector banks such as Standard Chartered, Standard Bank and Rabobank.
A draft of the communique, obtained by Reuters this week, shows the G20 will pledge to avoid competitive devaluation of their currencies and other protectionist measures.
Lagarde told Reuters Tuesday that currency imbalances will not be a feature of Thursday’s meeting but the issue may require a separate summit.
China and Russia have started a debate about reserve currencies by raising the prospect of developing the IMF’s Special Drawing Rights as the basis for a new global currency.
“We should think about creating a new currency system...The current system is not ideal,”” Russian President Dmitry Medvedev said. “We cannot develop in the next 10 years if we do not create a new infrastructure including new (currency) systems.”
But for now the dollar’s supremacy looks unchallenged.
The U.S. dollar is now and will remain the world’s currency, a spokesman for the White House said as President Barack Obama’s plane touched down at London’s Stansted Airport for his first trip to Europe.
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