ROAR: G20 doesn't have the answer

Vladimir Kremlev for RT
World leaders want to reform the global financial system, but do not know how to do it, analysts say.

The agenda of the G20 summit in Pittsburgh is focused on overcoming the current global financial crisis and developing ways to block the repetition of such upheavals in the world economy in the future.

However, analysts believe that the participants of the summit are relying "more on the mechanisms of the economy itself rather than on their own decisions," Nezavisimaya Gazeta daily wrote.

Despite the fact that the world leaders seem to have a similar understanding of what the world economy needs, "the summit is unlikely to ensure considerable progress towards finding concrete steps" to overcome the crisis, the daily said.

The paper explained this by "the differences in approaches of the Western countries." In particular, the heads of France, Britain and Germany are recommending limiting bankers' bonuses, but the US is opposing this measure, the daily said.

Many analysts see the summit as a new test for US President Barack Obama's policies. He said in his United Nations’ speech that the present problems are global in nature and demand global collective solutions.

At the same time, developing countries have their own programs. "They want first of all to gain a more important role in global financial institutions – the International Monetary Fund and the World Bank," Nezavisimaya Gazeta wrote. The US is ready to give them more votes, but "at the expense of European countries," the paper said.

In addition, China has agreed to reduce trade imbalance only gradually, and, in return, is recommending the US to secure the stability of the dollar, the daily added.

Russia this time is not going to put forward any new initiatives, the government daily Rossiyskaya Gazeta wrote. "They were announced long ago, and the time has now come to sum up the results," the source in the Russian delegation told the paper. Reforming international financial institutions remains the main point of Russia's initiatives, the daily stressed.

Concrete decisions are badly needed to give markets "guidelines" and to stop the emergence of "another bubble," Rossiyskaya Gazeta wrote. However, "as the first signs of stabilization appeared, the finance ministers of leading countries asked themselves if it was better to end their anti-crisis measures," the paper said.

At the same time, some analysts expect new proposals from the participants of the meeting in Pittsburgh. The US and French delegations will be the most active at the gathering, Maksim Minaev, analyst at the Center for Political Conjuncture, believes.

"For Russia, the summit is important from the point of view of promoting its idea of global political development," Minaev said. In the discussion on economic issues Moscow is likely to support France's position, he added.

Rossiyskaya Gazeta questions the efficiency of new international agreements in the financial sphere because every country is trying to overcome the crisis "on its own." The increasing influence of non-Western countries also seems to be "a fantastic thing," the daily notes.

"However, this pessimism is not shared by all analysts," Rossiyskaya Gazeta said. But they believe that it is unlikely to happen in the near future, the paper added.

Yevgeny Yasin, head of research at the Higher School of Economics in Moscow, thinks that the participants of the summit should focus on a new financial architecture. "Additional regulatory activities" for international markets should be determined," Yasin told Vesti.ru website.

At the same time, the regulation from the governments should not be excessive, Yasin said, and the role of international financial markets as an independent regulator of the world economy should be retained. But this problem will not be solved at the summit in the US – this issue is not even on its agenda, Yasin added.

Analysts predict disagreements at the summit over proposals on regulating systemic economic risks. There is also another factor that may make it more difficult to reach consensus at the summit. "It seems that the state of concern and anxiety that prevailed during the two previous summits – in Washington and London – have decreased in a way," analyst Aleksey Portansky believes.

"Some signs of the end of the crisis have been noticed in the US, Russia and several other countries, and politicians have hurried to announce it," Portansky wrote on Politcom.ru website.

However, serious economists warn that a new wave of recession cannot be ruled out, he added. Thus, two possibilities of the discussion are possible: continuing to fight the crisis or a strategy for post-crisis recovery, the analyst noted.

Coordinating further anti-crisis steps to stimulate economies remains the main issue for leaders of G20 countries, Portansky believes. "There is no coordinated approach so far," the analyst noted. If the participants of the meeting in Pittsburgh fail to come to an agreement in this sphere, it may "prompt a number of countries to end anti-crisis programs, while others will continue the previous anti-crisis course," he added.

Many analysts warn that the third G20 summit may bring only general statements. "So far there is no clear understanding about how the modern international financial system would look, Yegor Susin, head of the analytical department at Alpari Group, told Gazeta.ru website. "To want to do something and to know how to do it are different things," he said.

However, Russian President Dmitry Medvedev said that the G20 countries had "practically agreed on the outline of the future global financial system." Speaking at the University of Pennsylvania, Medvedev said: "We will most likely have some closure on this issue already here in Pittsburgh."

The summit in Pittsburgh is “a kind of psychotherapy, the main aim of which is demonstrating to the world that the leaders of the G20 are fighting the crisis,” Aleksandr Krylov, analyst at the Institute of International Economy and International relations, said.

The leaders are showing that they are working on this to urge people “to start buying again,” Krylov told Strana.ru website. “Then the economy will work by itself, and this may be a better method in fighting the crisis than giving money to banks and financial structures.”

Sergey Borisov, RT