By Don Miller
Finance ministers and central bankers from the Group of 20 nations, which account for more than 80% of the world economy, promised at a meeting Saturday to do "whatever is necessary" to fix the global economy. However, Eurozone officials continued to put off a U.S. push for more coordinated government spending to stimulate economies.
Key players in the Eurozone, especially France and Germany, have rejected U.S. demands for spending increases to solve the recession, and said that recovery plans should focus on tighter regulation.
Last weekend's meeting was intended to set the agenda for the group's April 2 summit in London, which is being viewed as the acid test to determine whether the world's leaders can find enough common ground for a solution to the global economic crisis.
U.S. Treasury Secretary Timothy Geithner, who has urged Europe to match Washington's $787 billion package of spending and tax cuts, said there was "broad consensus globally on the need to act aggressively to restore growth to the global economy."
But without further support from his European counterparts, Geithner won't be able to piece together even a flimsy coalition to move forward with further spending programs, let alone establish a consensus.
European policymakers prefer instead to rely on the International Monetary Fund (IMF) to review individual government stimulus actions already taken and what more might be required, rather than racing ahead with accelerated spending.
Britain, led by Prime Minister Gordon Brown, attempted to bridge divisions between the United States and Europe on the stimulus issue, but was thwarted by Germany, whose officials maintain that fixing the financial system must remain priority one.
"," German Finance Minister Peer Steinbrueck told the Associated Press.
Meanwhile, U.S. President Barack Obama dismissed reports that the United States and Europe had taken sides, saying it was a "phony debate."
"I can't be clearer in saying that there are no sides," Obama told reporters.
The meeting was a coming out party of sorts for Angela Merkel, the German chancellor who is now leading European opposition to Obama's call for a global pump-priming package.
"It's Merkel who holds the key to the cashbox, and she doesn't want to give it up," Jean-Dominique Giuliani, chairman of the Robert Schuman Foundation, a research center in Paris, told Bloomberg News.
Merkel's rejection of more stimulus measures ignited the first international clash of the Obama administration, and brought forth criticism that she might be responsible for delaying a recovery.
As if to establish her independent status, Merkel repeatedly rebuffed Obama's call for a united front among nations to jump-start the economy.
"Germany really has contributed its share," said Merkel, as she stood alongside Britain's Brown in London, 42 miles away from the rest of the group.
European leaders will meet this week in Brussels at a EU summit to decide on what approach they should take to the financial crisis, ahead of the summit meeting on April 2. Merkel could decide the fate of a $6.4 billion (5 billion euro) infrastructure proposal during that meeting.
Casting a further shadow on the summit, Czech Prime Minister Mirek Topolanek said the European Union must beware of U.S. protectionism.
Topolanek, who holds the EU's rotating presidency, told a German newspaper he believes Washington was solving the financial crisis by passing the buck to other countries.
"The different bailouts and protectionist appeals to buy American goods, the nationalizations that are being called 'pre-privatizations' of late — all this points to America fixing its problems at the expense of the rest of the world," Topolanek told the Frankfurter Allgemeine Zeitung.
Trying to keep a positive face on the proceedings, Geithner said he was pleased with progress at the talks during the weekend, but noted that the world economic situation remains fluid and volatile.
"This is a very challenging period and this is still evolving," he told reporters.
In one sign of unity, the finance ministers agreed on an "urgent need" for a big increase in the lending resources of the International Monetary Fund to assist struggling governments in the developing world.
However, they left specific amounts, and details about who would contribute how much, open for further discussion.
News and Related Story Links:
- Associated Press:
Merkel Keeps Cashbox Closed as She Spurns Obama's Stimulus Pleas
EU chief says Europe will speak with one voice at G20