Pittsburgh, Pennsylvania, September 25: Leaders of the main world economies began a summit hosted by Barack Obama, looking to curb bankers’ pay and agree on how best to overhaul the financial system.
Even before the US president and First Lady Michelle Obama sat down for a gala dinner to host their first major summit, tough new rules on limiting bonuses and executive pay were in the offing.
Disputes on the long-awaited reform of the International Monetary Fund, however, opened a rift between Europe and emerging nations as voting rights came to the fore at the Group of 20 summit.
The start of the gathering was marred by isolated incidents of violence as small groups of anti-capitalist protesters defied police warnings not to march on the summit venue.
Police fired pepper spray and non-lethal rounds and deployed loudspeakers blasting piercing sound waves to repel the mostly young protesters. Fifteen people were arrested, police said.
The G20 is a forum for the world’s biggest developed and emerging economies and its meetings are a magnet for anti-capitalists opposed to what they see as an undemocratic body promoting globalization and free market policies.
After a series of bilateral meetings ahead of the main summit with Japanese and Chinese officials, US Treasury Secretary Timothy Geithner reaffirmed the US strong-dollar policy.
Following China-led calls to review its role as a reserve currency, he reminded Beijing that: “A strong dollar is very important to the United States.”
But Geithner said Europe and the United States were close to agreeing tough new rules on limiting bankers’ bonuses despite earlier differences.
In the run-up to the summit there was friction between Washington and some European capitals, with France and Germany in particular pushing for stricter caps on the pay-outs, which they say encourage excessive risks in trading.
“We actually are very close and I believe we are in the same place,” Geithner told reporters. “We want to have very strong standards to limit the risk.”
Prime Minister Fredrik Reinfeldt of Sweden
, who holds the rotating presidency of the European Union, took a similar line.
“I expect the G20 will make a clear statement about the need for global rules on bonuses and compensation, and I also expect broad agreement on how to strengthen supervision in general.”
There was some discord in the air however, with a top advisor to Brazilian President Luiz Inacio Lula da Silva hitting out at European “resistance” to giving more voting weights to emerging nations.
For Brazil, China and other emerging countries, it is crucial to achieve a breakthrough in negotiations in Pittsburgh so the IMF can endorse the reform at its annual meeting on October 6 to 7 in Istanbul.
–Agencies