US seeks aggressive action on economy from G20 members (3rd Roundup)

By Chris Cermak Mar 11, 2009, 22:06 GMT

Washington - The world's largest economies must do more to halt a global economic slide, and more government stimulus will be a top US priority at an international financial summit next month, President Barack Obama said Wednesday.

Ahead of April's Group of 20 (G20) gathering of the world's leading economies, Obama warned against protectionist moves and acknowledged that poorer countries were being 'hard hit' by the fallout from an economic crisis that largely began in the United States.

Obama cited the unprecedented actions already taken by the United States - including a 787-billion-dollar stimulus package - and suggested other countries must do more to halt the slide of their own economies.

'As aggressive as the actions we are taking have been so far, it's very important to make sure that other countries are moving in the same direction, because the global economy is all tied together,' Obama said in a meeting with Treasury Secretary Timothy Geithner.

Geithner and other G20 finance ministers will gather outside London this weekend to prepare for the April 2 summit, which will mark Obama's first trip overseas since taking office in January.

The April meeting will be only the second time world leaders from the G20 have come together. Former US president George W Bush hosted the first emergency summit in November, a little more than a month after the global financial system nearly ground to a complete halt with the collapse of Lehman Brothers.

Obama's comments came amid a growing rift with the European Union over how to deal with the economic crisis. Luxembourg Prime Minister Jean-Claude Juncker on Monday rejected US pressure on EU governments to inject more funds into their economies.

EU leaders want the G20 summit to focus more on a broad overhaul of global financial regulations, which failed to avert the near- collapse of the US financial system in September that sparked the global crisis. Geithner said regulation was a 'critical priority' on par with the needs for more short-term stimulus.

Chinese Foreign Minister Yang Jiechi was also in Washington on Wednesday to help lay the groundwork for the London summit. The US and China - the world's first and third largest economies respectively - are considered critical to the health of the wider global economy.

The Treasury Department said G20 countries were 'falling short' of what was needed to boost global demand, pointing to an International Monetary Fund call for governments to commit at least 2 per cent of their country's economic output to the cause. The global economy is expected to contract this year for the first time since World War II.

'Obviously we're facing a deepening recession globally,' Geithner told reporters. The US wants 'to make sure we're putting in place the kind of substantial, sustained commitment to stimulus necessary to lay the foundation of recovery.'

The US also said it would push for an additional 500 billion dollars for the International Monetary Fund to help developing countries deal with massive budget shortfalls and plummeting demand due to the global recession.

Obama said he would use the London gathering to 'make sure also that we are not falling into protectionist patterns' in reaction to the global recession.

The US will suggest the creation of a new financing mechanism to help revive world trade, which the World Bank predicts will fall this year to its lowest level in 80 years.

A number of countries have increased trade barriers in efforts to protect domestic jobs and industries. The United States has sought to block government funds from the stimulus package from going to foreign companies and offered emergency loans to US banks and car manufacturers to keep them alive.

'The United States is part of an integrated global economy and so we have to think not only about what's going on here at home,' Obama said. 'We also have to be mindful about what's happening overseas.'