G-20 meets on Thursday, India warns against protectionism

From M K Razdan

London, Apr 1 (PTI) Looking for supply of "oxygen of
confidence" to the battered global economy, divided leaders of
world's top 20 rich and emerging economies will meet here
on Thursday with India calling for a more concerted effort to
deal with the crisis and warning that the world would go into
a downward spiral if "we give in to protectionist pressures".

US President Barack Obama, who will be at the centrestage
when Indian Prime Minister Manmohan Singh and other leaders
gather at London Docklands amidst massive security, Wednesday
sought to rally the participants by stating that the challenge
can be met together and dismissing reports of divisions among
them as "vastly overstated".

Obama's optimism, however, flew in the face of sharp
differences highlighted by the tough stand taken by France and
Germany on some of the key issues with French President
Nicolas Sarkozy insisting today that the Summit should agree
to crack down on tax havens and evolve a tough new regulatory
mechanism on global finance.

Sarkozy claimed endorsement for this stand from German
Chancellor Angela Merkel with whom he had spoken.

British Prime Minister Gordon Brown, playing host to the
most important gathering of world leaders in his country in 70
years since the Great Depression, also sought to project a
positive outlook by stating after a meeting with Obama "we are
within a few hours of agreeing on a global plan on economic
recovery and reform".

Earlier, he had emphasised that the leaders must supply
"the oxygen of confidence to today's global economy".

The only economist-turned-politician in the gathering,
Singh on the one hand sought not not to raise too much
expectations from the meeting saying that the Summit should
not not look for "complete agreement in everything", but at
the same time noted that there was a shared sense of urgency
and commonality of purpose.

The key issues the leaders will grapple with include
additional stimulus for boosting global economy, tougher
regulation and more international oversight to avoid another
financial meltdown and more resources for the International
Monetary Fund (IMF) to assist crisis-hit poor economies.

Seeking to moderate expectations, Singh said that while
the leaders of the world were being asked to resolve issues
in one day, "beyond a point there are issues relating to
redistribution of powers among nations". He did not not think
these issues can be resolved in a short time.

At the same time, the Indian Prime Minister noted that
the fact that the G-20 leaders were meeting to focus on the
global crisis suggested a "shared sense of urgency and
commonality of purpose which itself is bound to lead to more
concerted, albeit, national responses".

In Singh's view governments must recognise that they
have to intervene actively to restart the growth process.
"There is also agreement that supervisory and regulatory
structures in the financial sector need to be hugely improved
to reduce the risk of similar crises in the future," he said.

The Indian Prime Minister's most forthright views
pertained to protectionism emanating from the crisis and its
effect on India as it made it clear that protectionism was a
"very real danger".

"It is understandable that in times of a severe downturn
protectionist pressures mount but the lessons of history are
clear. If we give in to protectionist measures we will only
send the world into a downward spiral. This will obviously
hurt all countries and also India," Singh said.

In Berlin, Merkel described the situation as "extremely
difficult" and said the countries have to act and also
recognise their responsibilities.

"I am going to London with a mixture of confidence and
concern. Concern on one hand on whether we can really react to
the serious situation, on whether we are not playing things
down and making them out to be better than they are," she told
reporters.

"Confident, however, that in view of the extremely
difficult situation, we cannot stick our heads in the sand,
that we have to act and also recognise our responsibilities,"
the German Chancellor said.

In Paris, Sarkozy said, "neither France nor Germany are
satisfied with the proposals as they currently stand."

Taking an unrelenting stand, France has insisted on the
Summit coming out with a tough new regulation on global
finance and squeezing out offshore tax havens.

Sarkozy said he spoke with Merkel yesterday and they had
agreed that while no firm accord has been finalised by G20
negotiators, the latest draft deal "didn't add up". PTI VMN
SAK