WASHINGTON: Leaders of the world’s 20 largest economies yesterday thrashed out steps to reverse a looming global recession and prevent future upheaval.
Custodian of the Two Holy Mosques King Abdullah called for greater international cooperation and coordination to offset the impact of the financial crisis.
Speaking at the G-20 economic summit, he blamed a failure in monitoring regimes for the world’s worst crisis. “This emphasizes the need to develop effective monitoring systems,” the king said, calling on the International Monetary Fund (IMF) to play a greater role in supervising the financial sectors of developed countries.
European officials at the extraordinary summit said a draft agreement would likely call for intensified government efforts at bolstering national economies, cooperation on internationally regulating the financial system and a reform of global structures to aid needy developing countries. Signaling a shift away from the traditional global economic dominance of the United States, the European Union and Japan as well as developing economic powerhouses like China, India and Brazil took a seat at the key summit.
In his keynote speech, King Abdullah said Saudi Arabia would continue government spending on infrastructure and service projects to reduce global impact. “We expect that investment projects in the public sector would cross $400 billion during the next five years,” he said.
“We’ll continue to coordinate with Arab countries to reduce the impact of the global crisis in our region,” he told world leaders.
King Abdullah urged donor countries, the IMF, World Bank and other financial institutions to support developing countries, especially the poorer ones, to face the present global crisis.
He reiterated that the Kingdom would do its best to stabilize the world oil market. “We have made a lot of sacrifices in this respect,” he said. “We look forward to the cooperation of consumer countries ... they should stop targeting oil through negative policies.”
King Abdullah added that Saudi Arabia would continue its financial aid to developing countries.
US President George W. Bush agreed that there was progress at the summit, with world leaders moving closer to a deal to better detect risky investment and regulatory weak spots.
European officials said a follow-up meeting was likely in April in London, Paris or Tokyo, after President-elect Barack Obama takes over the White House.
In a radio address, Obama said he was pleased Bush brought world leaders to Washington to discuss the turmoil in the financial markets, “because our global economic crisis requires a coordinated global response.”
In an effort to avoid calamities like the one now sweeping the globe, the assembled leaders focused on a commitment to toughen accounting rules and promote greater transparency.
The summit saw countries competing with ideas on how best to combat the crisis.
French President Nicolas Sarkozy declared that “laissez-faire capitalism is over” and railed against the “dictatorship of the market.”
Even as the world leaders were discussing ways to tackle the global meltdown, the economic climate showed no sign of improvement.
Friday brought news that the 15 nations in the Eurozone were now gripped by recession after two quarters of economic contraction and the leading index of the US stock market plunged 3.9 percent.
In other initiatives announced yesterday, the IMF and the Financial Stability Forum said they would cooperate to provide an early-warning system to prevent financial crises.
Japan, China and South Korea also agreed to play “a pivotal role” in stabilizing Asia’s economy by extending currency swap agreements and funding the Asian Development Bank. They are to meet at a separate summit in December.
