Azerbaijan, Baku, Sept. 24 / Trend , A.Badalova/
The upcoming G-20 summit in Pittsburgh will not be fruitful, international analysts believe. "The G-20 seems hopelessly lost at this time," Professor and the President of the U.S. World Marketing Company, Gene Aldridge wrote to Trend in an email.
The G20 Summit to be held in Pittsburgh on Sept. 24-25 will be the third summit of G20. The agenda of the summit will focus on the reform of banking regulation, reform of global financial institutions, as well as an assessment of the current economic situation and the appropriateness of rejecting the use of anti-crisis incentives (the so-called "exit strategies" - steps to avoid government anti-crisis measures).
In addition, the participant countries on run-up to the summit have put forward suggestions which should, in their opinion, be considered at the summit. Thus, British Prime Minister Gordon Brown said that Britain at the forthcoming summit will be asked to sign the Global Compact to promote economic growth and employment in the world. Prime Minister of India Manmohan Singh, in turn, encouraged the G20 leaders at the summit to take measures to combat protectionism.
The summit is also expected to present a unified position of the EU countries to overcome the global economic crisis, which was worked out last week BY the leaders of these countries during the extraordinary summit.
The lack of clarity coming from the G-20 nations will not foster much in Pittsburgh, Aldridge said. He believes beware, however, of any new controls that might sneak out of the summit leading to tighter government regulatory controls on banking.
Aldridge believes we are not out of the woods yet with respect to worldwide stability. "It is going to be a long haul proposition leading to a new economic order that is yet to be fully understood," he said.
Aldridge is skeptical about the ability of the U.S. and, in particular, President Barack Obama do anything to overcome the consequences of the crisis.
The U.S. hopes to create a "new framework" for managing imbalances worldwide, he said.
"Unfortunately, they simply do not understand anything about free market economics. The U.S. is blaming the high savings rate countries for creating capital that was then used by New York and London investors to create the economic crisis in the first place. Second, the U.S. wants the G-20 to agree on a new framework, whatever that is, and then the means to ensure that each nation keeps its part of the bargain (whatever that might be)," Aldridge said.
According to Aldridge, one of the main issues today is whether the G20 countries to provide additional external funding to poor nations.
"According to the IMF, poorer nations will need about $55bn for external financing and the IMF claims that it can provide about one-third of it. The question is can the G-20 nations provide the additional external financing that is needed or will they bow to their own domestic economic needs at this time?," Aldridge said.
Analyst of one of British leading consulting firms for Economic Research Capital Economics Kevin Grice also believes that the G20 summit would not cause many surprises.
"We already know that the summit will focus on issues of global restoration of the balance, as well as financial sector reform and continuation of incentives, discussed at a meeting of the G20 ministers and the central banks earlier this month," says the report of the British company.
Grice said given the fragility of the economic recovery we expect policy makers to remain cautious about withdrawing economic stimulus, though political momentum for tighter regulation of the financial sector is building. Policymakers, he said, have advocated measures to reduce leverage and increase the quantity and quality of capital that must be held by banks, including a substantial cyclical element whereby banks have to put aside more reserves in better times.
Grice believes the G20's Financial Stability Board is expected to make specific proposals in Pittsburgh.
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