Brown predicts "tough negotiations" at G20 summit (Roundup)

Mar 30, 2009, 17:36 GMT

London - British Prime Minister Gordon Brown urged world leaders Monday to 'rise to the challenge' of beating the global recession but admitted that 'tough negotiations' would be necessary to reach agreement at this week's Group of 20 (G20) summit.

'We no doubt have some long days of negotiation ahead. These are difficult and complex problems. It will not be easy to reach the conclusions that I believe are necessary for the world economy,' said Brown.

The leaders of 20 of the world's major industrial and emerging economies are due to hold a one-day summit in London Thursday aimed at agreeing coordinated action to revive the global economy.

Speaking after talks with Mexican President Felipe Calderon in London Monday, Brown said his recent series of preparatory meetings with world leaders had made him feel certain that 'the world wants to come together.'

However, he would continue to do 'all I can to build consensus and to enable an agreement to take us out of this recession and put the whole world back onto a path of growth.'

'This is a decisive moment for the world economy. We have a choice to make. We can either let the recession take its course and retreat into isolationism and protectionism ... or resolve as a world community to fight back against the global recession that is hurting people in every country and every continent,' said Brown.

Among the 'five tests' he had laid down for the London summit were the 'proper resourcing' of international financial institutions to enable them to help emerging market economies - like Mexico - return to stronger growth, said Brown.

The other 'tests' for G20 leaders included cleaning up the banking system, doing 'whatever is necessary' to bring about the resumption of growth, resisting protectionism and boosting trade as well as delivering a low-carbon and sustainable recovery for the future.

'These are five tests for the G20 summit - the tests the world must pass,' he said. 'This week, I believe, the whole world must rise to this challenge.'

In line with recent attempts to scale down expectations from the summit, Brown made no specific mention of any further economic stimulus packages, something strongly resisted by key participants, led by Germany.

According to Monday's Financial Times, a 24-point draft of the final summit communique contains no specific plan for a fiscal stimulus package, reiterating instead the need to avoid protectionism and revive stalled global trade talks.

'We are determined to restore growth now, resist protectionism, and reform our markets and institutions for the future. ... We are determined to ensure that this crisis is not repeated,' says the communique, according to the FT.

In an interview with the FT published Monday, US President Barack Obama said it was important that the summit should deliver a 'message of unity.'

He rejected the idea of an 'either or approach' between financial stimulus and regulation, saying that both were needed.

'We need stimulus and regulation. We need to deal with the problems right in front of us and we also need to make sure we're taking steps to prevent these types of breakdowns from happening again,' Obama said.

With respect to the stimulus there would be an accord in London that G20 countries 'will do what is necessary to promote growth and trade,' he predicted.

However, he understood the 'legitimate concerns' in some countries which had already initiated significant stimulus programmes and wanted first to see how they worked.

After his talks with Brown in London earlier Monday, Australian Prime Minister Kevin Rudd praised the British leader as being 'the driving force' behind joint international action and said there had already been 'substantial progress on macro-economic coordination.'

There had been an 'unprecedented global response to an unprecedented crisis,' said Rudd. However, he suggested that any substantive decision on a new stimulus would have to wait for a future summit.

'Progress has been achieved, progress will be achieved in London and further progress will be necessary as the year progresses as more data emerges about the challenges in 2010,' Rudd said.

Meanwhile, church leaders in Britain Monday urged G20 participants 'not to forget the poor.' A joint statement they said to ignore the needs of the poor would 'be to compound regrettable past failures with needless future injustices.'

While acknowledging the 'sheer complexity' of the challenge facing politicians, they said it was important to restore the 'lost sense of balance' between market mechanisms and the moral requirement to safeguard human dignity.