PITTSBURGH: The third round of the Group of 20 (G20) Summit, which was widely expected to seek a new direction for the global economy, ended here on Friday with encouraging outcomes, but key challenges remain.
Multiple aspects of the result
Before the summit, some commentators observed it had a big agenda but it would get small results, due to the different goals of its participants.
The summit will be "language without teeth," Edward Luce, Washington Bureau Chief of the Financial Times told Xinhua. "The longer the communique is, the less action it will be."
True, G20 Pittsburgh Leaders' Statement addressing comprehensive global economic and financial issues totals 23 pages.
Still, it contains a number of results that seem not that small.
The No. 1 result worth mentioning is the confirmation of the legitimacy of the G20's status as the top coordinating mechanism of the world's economic issues.
"We designated the G20 to be the premier forum for our international economic cooperation," the statement said.
The move means that the G20 supplants the G7 and G8, institutions dominated by rich Western economies that will now be forums for discussing geopolitical issues, experts say.
"The old system of international economic cooperation is over. The new system, as of today, has begun," declared British Prime Minister Gordon Brown. He said the G20, which included not only developed nations but fast-growing emerging economies such as China, Brazil and India, would become the "premier economic organization for dealing with economic management around the world."
"The G20 has consolidated itself as the institutional forum to take care of economic issues. I think it's an extremely important decision that was made today," Brazilian President Luiz Inacio Lula da Silva told a press briefing.
Some consensus was also reached on economic and financial issues, which were the main topics of the summit.
On the world economic recovery, G20 countries, which account for 90 percent of the world's output, vowed to keep emergency economic support in place until a recovery was secured. Leaders agreed to avoid premature exit strategies that might kill the fragile recovery.
On financial regulatory issues, the G20 agreed to strengthen the regulation of areas where financial industry excesses triggered the credit crisis two years ago. Tighter rules on how much capital banks must have to absorb losses should be ready by the end of 2010 and will be phased in during the following two years.
Notably, a breakthrough has been made for international financial institutions' governance reform, with developing countries' rising strength being recognized. The G20 committed to a shift of at least five percent in the International Monetary Fund (IMF) quota share to dynamic emerging market and developing countries.
Dominique Strauss-Kahn, IMF managing director, welcomed the G20's decision.
"I am very encouraged by the outcome of the G20 summit, including the new role given to the IMF," Strauss-Kahn said at a briefing. "The commitment by the leaders of the G20 to a shift in representation is a groundbreaking step to improve the IMF's legitimacy and effectiveness."
The quota-based governance of the IMF had been criticized for mismatching the world economy's reality, in which emerging economies, such as the BRICs (China, India, Brazil and Russia) have grown at a much more rapid pace than the advanced economies.
On rebalancing the world economy, G20 leaders agreed "to reform the global architecture to meet the needs of the 21st century."
"After this crisis, critical players need to be at the table and fully vested in our institutions to allow us to cooperate to lay the foundation for strong, sustainable and balanced growth," the statement said.
That rebalancing act involves the debt-laden United States saving more and export powerhouse China consuming more.
"It is a positive progress for the summit since it is a new issue for the G20 statement," Hong Pingfan, chief of global economic monitoring for the Department of Economic and Social Affairs at the United Nations, told Xinhua.
On world trade issues, the G20 set a timetable to secure a deal next year in long-running world trade talks. "We will fight protectionism. We are committed to bringing the Doha Round to a successful conclusion in 2010," the statement said.
The leaders also vowed to support the poorer, especially African countries.