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G20 Divided on Key Economic Issues

11 November 2010 05:00 (UTC +04:00)

Baku-APA. Leaders of the world’s 20 largest economies have gathered in the South Korean capital. They are hoping to reach consensus on how to avert a so-called currency war and set guidelines for reducing trade imbalances. But even the summit’s host is acknowledging how difficult agreement may be, APA reports quoting voanews.com website.

The Group of 20 summit will try to turn tension and disarray into unity.

The summit’s host, South Korean president Lee Myung-bak, says the member countries are divided on a key issue - whether or not to set numerical targets for current account imbalances.

Mr. Lee, speaking Thursday to international business leaders prior to the summit’s opening, says a little bit of progress has been made since an agreement last month by G20 finance ministers. He acknowledges a divide in opinion among many countries.

The South Korean president expresses hope progress will be made by the leaders at the summit’s opening dinner.

The G20 finance ministers had agreed on reducing trade imbalances, but they avoided setting hard targets for surpluses and deficits in relation to gross domestic product.

Another controversy involves the critical issue of exchange rate policies, especially those of the United States and China.

President Barack Obama is expected to face criticism for the U.S. Federal Reserve’s move to buy hundreds of billions of dollars worth of government bonds to try to reinvigorate the American economy.

China’s leadership, meanwhile, faces pressure from other G20 members,to revalue its currency to narrow its trade surplus.

Summit organizers say there have been heated discussions among the deputies this week who are drafting the language for Friday’s final communiquÃ©.

Some G20 members want tougher language regarding foreign exchange.

Finance ministers, at their meeting last month in Gyeongju, South Korea, set a goal for the market to determine currency rates. But that communiquÃ©, which may be echoed by the leaders Friday, has been criticized for not specifying clear solutions to the currency dispute.

The effectiveness of the G20 itself is under scrutiny.

In recent days, both President Obama and the U.N. Secretary General,Ban Ki-moon, have praised the G20 summits as the premier forum for setting multi-national economic policy.

But former U.S. Federal Reserve chairman Paul Volcker, who now chairs President Obama’s Economic Recovery Advisory Board, expresses cautious optimism about the G20’s capabilities.

"The G20 meets at intervals for a very brief period of time. I think it has a constructive purpose in bringing relevant leaders from around the world together. If it does nothing else it reminds them all that they have a common problem and none of these problems can be solved by unilateral action by any of them," Volcker said.

The G20, representing 90 percent of the world’s economic output, was established in response to the Asian and Russian financial crises of the late 1990’s. It took on an even higher profile two years ago in wake of global financial panic.