G20 leaders close to a compromise
Almost all G20 leaders have supported the idea of reforming the International Monetary Fund, and a compromise was reached with France over the summit's final declaration, despite earlier disagreements.
One point of discussion at the 20-nation summit at London's ExCel centre is the proposal to double the reserves of the IMF. It’s likely the proposal to give the fund, which helps economies struggling because of the financial crisis, more than $500 billion will be approved.
It is also expected the G20 leaders will want to tighten regulation of the banks to fix the economies in their countries, but they are divided about how to do it.
Put bluntly, the summit boils down to regulation vs. spending, which means that the US and the UK are standing in support of the stimulus package, while the rest of Europe, including Germany and France, blame the first two for the crisis.
For instance, Germany's Chancellor Angela Merkel is leading the charge against countries trying to spend their way out of the crisis.
As the German chancellor put it "We don't want results that have no impact in practice, but results that change the world."
Both rivaling camps understand that they will need a better regulation and it has become clear that the system failed to work properly. They also understand they will have to pay more to help those countries severely hit by the crisis.
Should the G20 leaders fail to reach any sort of consensus they risk becoming the subject of further public contempt. The summit itself is only approximately four and a half hours long, but the final declaration has been in preparation for months, so there is sure to be some kind of declaration already in draft form.
The main intrigue of the day remains – will French President Nicolas Sarkozy storm out if he does not have it his way as he has promised?
The French president told his cabinet earlier that "If things don't advance in London, there will be an empty chair. I'll get up and leave."
It is not likely to happen. Most likely there is going to be a compromise between tougher regulations and more spending so that both camps can proclaim themselves winners.
As the G20 leaders get down to business there are expected to be more protests. The security is extremely tight around the location of the summit.
The demonstrations in London yesterday started peacefully, but eventually degraded into violent clashes with police, leaving one man dead.
Day two of the G20 meeting follows a series of pre-summit bilateral consultations yesterday, and an evening reception hosted by the Queen at Buckingham Palace.