World Affairs

London's Dooms Day Summit

London is preparing for a summit of the leaders of the 20 most powerful nations (G20) on April 2, which political and economist analysts say could make or break the existing global financial system.

An economic analyst, Franch Bioncherry of the Centre of Research on Globalisation has called the London Summit the 'Last chance before global geopolitical dislocation' and he warns that his organisation had been predicting the current global financial crisis for quite sometime before it fell on us all.

Grave warnings are being sounded all round about the impending crisis and the consequences of the failure of a London Summit in 1931 to come up with solution before the great depression of the 1930s is being recalled. Both the American President Barack Obama and British Prime Minister Gordon Brown who is hosting the summit have stressed on the importance of all countries to promote massive spending on stimulus packages to boost economies of member countries while calling upon measures to enforce strict banking regulations but some European nations are not as enthusiastic if not downright caustic in their criticisms. 

'Way to hell'

On Tuesday the Czech President Mirek Topolenek who is now the President of the European Union - on the basis of appointment on a rotational system - called Obama's stimulus package a 'way to hell.' After that attempts were being made at damage control before the London Summit by pointing out the Czech Republic does not represent European consensus.

Analysts however point out that newer members of the European Union with weak economies are not as supportive as richer Western European members about massive investments on stimulus packages. Topolenek had said that Obama's package will put a huge strain on the global financial markets. Nonetheless even the richest of European nations such as Germany and France have not been as enthusiastic about massive investments on stimulus packages and have not come up with anything close to the American government investments.

Too great investments could lead to inflation, it is feared by these Europeans. However both Obama and Gordon Brown are trying to cover up differences on the issue between them and most European nations. Obama writing in the International Herald Tribune last week has said that'bold, comprehensive and coordinated action was needed to stem the global economic crisis' and that economic challenges the world faces today cannot be met with halfway measures or isolated efforts of any nation.'

Some agreements already made

The London Summit is a follow up to the G20 meeting held in Washington in November last year. Already preparatory meetings have been held and progress made. Agreements have been reached on many steps that can help restore global economic growth through enhanced international coordination and further measures are to be recommended at the London summit.

The IMF has also announced plans to reform its lending rules and adopt measures to make IMF lending more attractive to emerging market economies. Reports also say that steps to improve regulation of the global financial systems have already been agreed by G- 20 economic ministers and central bank governors.

The prime objectives of the London Summit are: To take whatever action necessary to stabilise financial markets and enable families and businesses to get through the recession; strengthen the global financial economic system and restore trust and confidence and put the global economy on the track of sustainable development. 

Chinese clout

The Hindu on March 26 reported that Gordon Brown and UN Secretary General Ban Ki Moonhad met last week on the forthcoming summit and agreed that the UN should seek a stimulus package of one trillion dollars to help poor nations tackle the financial crisis for the next two years. 

Analysts have already commented that the role of China at the London Summit would be crucial. Chinese President Hu Jin Tao will meet Barack Obama, Gordon Brown and Russian President Dmitry Medvedev on the sidelines of the London Summit. Even though an estimated 20 million Chinese have lost their jobs in the current global meltdown and much of its export industries affected, China is said to be the least affected of countries in the global meltdown.

Chinese spokesmen are on record saying that China would be for solidarity in international financial reform and would oppose trade protectionism. A Chinese Professor Zhao Xigun has been quoted by the Xinhua news agency suggesting that emerging economies like China, India, Brazil and even Russia might take a different stand for developing economies. They are likely to call for greater voting rights for developing countries within international financial organisations. 

China has two trillion dollars of foreign exchange reserves and how much China would contribute to help the world to weather this crisis is being eagerly watched. The Vice Governor of the Chinese Peoples' Bank Hu Xiaolian has been quoted in China View that they would support IMF's innovative financing attempts and more efficient and timely financing.

China would also continue investing in US bonds while paying close attention to the fluctuating value of their assets Hu Xiaolian has said.  Despite its financial clout China realises well the need for international cooperation and open access to markets for their goods. Even in this crisis where Western economies are down on their knees, China poses no threats even though the China bogey will be hard to erase from the minds of the West. 

Whether East and West can meet quite contrary to predictions of the English poet of imperial days, Rudyard Kipling, will be evident in London on April 2. 

And no summit will be without demonstrations least of all in London. British demonstrators will mark the event on April 2 as 'Financial Fools Day' with Four 'Horsefolk' of Apocalypse - Climate, Chaos, War and Jobs opposite the Bank of England while another group will stage Fossil Fools' Day also opposite the Bank of England.