(News Analysis) Lee seeks to rev up Seoul's role in G-20

By Lee Chi-dong
DAVOS, Switzerland, Jan. 28 (Yonhap) -- South Korean President Lee Myung-bak
announced Thursday a plan to propose setting up a "Global Financial Safety Net"
high on the agenda at the G-20 summit to be held in Seoul later this year, a show
of his will to enhance Seoul's role in bridging the development gap between
advanced, emerging and poorer countries.

So far, discussions on the proposed network have been unproductive due to
differences on concrete methods among China, the U.S. and other developed and
developing nations.
In a special address at Davos Forum, Lee especially emphasized the need to
establish the Global Financial Safety Net designed to minimize the impact on
emerging countries from sudden flows of international capital.
"At the G-20 Summit (in Seoul) in November, we will place on the agenda the
establishment of what we call a 'Global Financial Safety Net' that can put in
place a global mechanism for addressing such sudden reversals," he said in the
speech to the world's business and political elites.
He used the 15-minute speech to present his vision for the direction of the G-20,
a newfound bedrock of global economic governance. It marked his debut on the
global stage as the leader of a country to chair and host the G-20 this year.
Many emerging countries, susceptible to sudden reversals in the flow of global
capital, are trying to stack up enormous foreign currency reserves in case of a
liquidity problem.
Lee said such a global safety network would help the balanced growth of the
world's economy. He said South Korea is well-placed to coordinate conflicts of
interest among relevant countries in the process, citing its experience and
expertise as an underdeveloped and emerging country itself.
South Korea is the only nation that has changed its status from a recipient of
international development aid to a donor. It joined the OECD's Development
Assistance Committee last month. South Korea is also emboldened by the planned
hosting of the G-20, a fruit of its "Global Korea" campaign aiming to take the
center stage of the international community.
Lee said Seoul will try to actively represent the opinions of countries not
participating in the G-20.
"We will consult our G-20 partners in placing development issues firmly on the
agenda for the Seoul G-20 summit," he said. "We will not limit our discussions to
the G-20 member countries, but instead will reach out to partners outside the
G-20."
Lee's aides in charge of the G-20 affairs said his comments demonstrate Seoul's
commitment to listen to the opinions of those countries not participating in G-20
and make their voices heard as loud as possible in the G-20 summit.
"We will reach out to 172 countries that are not participating in the G-20 and
add new agenda items for the sake of them," Sakong Il, chairman of the
Presidential Committee for the G-20 Summit said.
To that end, he pointed out, the creation of the Global Financial Safety Network
is important, which would contribute to the balanced growth of the global
economy.
He said the proposed global safety network will require regional systems like the
Chiang Mai Initiative (CMI), a multilateral currency swap arrangement among
Southeast Asian nations plus South Korea, China, and Japan, along with various
bilateral interactions. The CMI calls for a foreign exchange reserves pool worth
US$120 billion to be launched in March this year.
Sakong, an international finance pundit, acknowledged launching such a global
safety net is not an easy task due to possible conflicts of interest among
nations. Coordinating differences among countries in the post-crisis management
is the G-20's responsibility, he said.
The upcoming G-20 summit also faces daunting tasks of drawing up action plans on
several issues agreed only in principle at the previous rounds in Washington,
London, and Pittsburgh. Those include the reform of financial regulation and the
overhaul of international financial institutions such as the International
Monetary Fund and World Bank, and private and public financial institutions that
are "too big to fail."
In that sense, Sakong and the president agreed, the G-20 summit in Seoul can be
seen as the first major test of the new forum, arguably the premier forum for
international economic policy cooperation.
The old groups, G-7 and G-8, are expected to focus more on political and social
issues, while the G-20 will deal more with finance and economy.
Sakong said South Korea is effectively dividing works with Canada, which
co-chairs this year's G-20 meetings, adding Canada's June summit will place more
weight on drawing up an "exit strategy" from massive stimulus packages while the
following Seoul session slated for November will mainly discuss the ways for
countries to stave off possible recurrence of an economic crisis worldwide.
As chair of this year's G-20, South Korea has a good chance to prove its
potential to emerge as a leading player in the world. For his part, Lee's
leadership has been also put to a test. The president has already gained
international fame for his "Green Growth" initiative and "Me First" proposal at
the global conference in Copenhagen last month.
lcd@yna.co.kr
(END)

Delete & Prev | Delete & Next