The Outcomes of the G20 Summit

The G20 Summit, on the 2nd of April, 2009, in London, was largely successful – because of the better than expected outcomes. The world leaders agreed on the large means of reviving the global economy. But, there could certainly have been better results out of the grand meeting. I guess; it was very hard to generate more fruitful, conducive, enforceable decisions because of the lack of the clear picture of the end-to-end implications of the global, spiral downturn.

The fruitful outcomes, as they appear, of the meeting were:
1) A pledge of USD 1.1 Trillion to tackle global crisis through the International Monetary Fund (IMF), focusing to bail out developing countries. After all, developing countries are where the developed countries’ cost-centers, manufacturing hubs, cheap resources, and greenfield markets are.

2) An agreement on stimulating world trade, and regulating financial firms more stringently, with a strict focus on Hedge Funds – which willfully play with stocks on plethora of stock exchanges worldwide -- and Rating Agencies – which whimsically provide AAA ratings to sick financial instruments.

3) A crackdown on tax havens, as there are countries that provide large tax holidays to their companies to gain a cost-based, unfair competitive-edge against competitors on the global and regional markets.

4) New global rules to govern the pay and bonuses of bankers.

5) A clear-cut intent to restrict growing protectionism, and trade barriers.

The issue that the US wanted others to agree upon, but, somehow, couldn’t was that Europe, specifically France and Germany, should enact greater fiscal stimuli than they had already enacted.

The issue that Europe wanted others to agree upon, but, somehow, couldn’t was that there should be a global regulation of the financial markets – the issue was restricted specifically by the US.

Overall, the meeting was successful in addressing the concerns of emerging economies, and was a showcase of the power of emerging economies. Moreover, it gave a re-birth to the International Monetary Fund (IMF).