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Cannes curtain raiser for reality show that is the G20 summit
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Les Whittington-The Toronto Star-
Prime Minister Stephen Harper and other world leaders will hit the red carpet in Cannes this week as the never-ending drama of the teetering world economy airs yet again.
Relieved that the European Union survived the near-death experience of an out-of-control financial meltdown last week, G20 leaders meeting in this glitzy Riviera movie mecca will try to lay out a strategy to steer clear of another global recession.
But the two days of closed-door talks starting Thursday could be upstaged by massive protest marches by anti-globalization and anti-capitalist groups. The police are planning to shut down part of the Côte d’Azur, including closing the French border with Italy to keep demonstrators out.
Residents who live on the glamorous, palm-lined seafront of Cannes have been warned to expect major disruptions in their lives and daily commerce as security forces set up a security zone around the summit site, centred on the Palais des Festival et des Congres where the annual international film extravaganza takes place.
It’s not known whether the anarchists who ran amok in Toronto last year will be part of the protests here. But French authorities want to prevent a repeat of violence that erupted during the 2000 European Union summit in nearby Nice, when riot police clashed in the streets with 50,000 anti-capitalism protesters.
The G20 includes industrialized countries such as Canada, the United States and Germany as well as emerging powerhouses like China, India and Brazil. Established in 1999, it came to the forefront in 2008 when leaders committed to joint recession-fighting action around the globe, and it has largely replaced the smaller G8 as the main global decision-making forum.
But since the worst of the worldwide economic slump receded, the collective resolve has been as much a matter of good intentions as action.
Prime Minister Stephen Harper will likely use the meeting to press the 17 eurozone leaders to stick to their new-found determination to work together to ensure all countries in the group reduce spending and trim massive government deficits. In hopes of heading off a wave of government debt defaults that would have caused economic damage around the world, the Europeans agreed last week to a package of measures to trim Greece’s debt and shore up the continent’s banks.
But immediate euphoria over the last-minute European deal has given way to widespread questions about where the bailout money will come from and if the package may once again prove too little, too late.
Harper, who has been urging Europe’s debtor countries to reform their free-spending ways to pave the way for long-term economic growth, suggested the bailout agreement is only a first step in solving the continent’s economic troubles.
The investor fears that have battered European and global markets will not fade until financial markets are convinced the problem of government debt-financing in Europe “is being tackled and the pain (of budget cutbacks) is being accepted,” Harper said.
As one of the longer-serving government heads at the summit, Harper will have some clout. But the stars of this show, once dominated by the United States and other western industrial countries, are fast giving up the spotlight to the leaders of China, Brazil and other new economic giants not burdened by sputtering economies and large debts.
With a changing cast come changing priorities, and reaching unity of purpose among nearly two dozen leaders from all over the globe is not an easy task once the threat of imminent global catastrophe is removed.
Desperate for cash to stabilize their financial system, the Europeans are looking to emerging economies — principally China — as possible investors. China has so far been non-committal. At the same time, EU leaders are throwing their weight behind the push to convince China to stop keeping its currency fixed at what is widely seen as an unrealistically low rate — a practice that is generally seen as contributing to trade and investment imbalances that are distorting the global economy.
In a letter on Saturday to G20 leaders about Europe’s efforts to cooperate to end the financial crisis on the continent, Herman Van Rompuy, president of the European Council, and José Manuel Barroso, president of the European Commission, said, “Many distortions underlying the large pre-crisis imbalances are still to be addressed — including undervalued exchange rates in key emerging surplus economies.” It was an obvious reference to the debate about the Chinese renminbi.
Chinese exchange rates are a sore point with the Americans as well, and the issue is likely to cause considerable strain as G20 leaders try to overcome their disparate interests and find an effective post-recession strategy.
Most important, from the European point of view, is enlisting the support of their G20 partners, and the International Monetary Fund, to help euro zone countries fulfill their new debt-fighting agreement without sliding into a deep recession.
“It’s a critical juncture for Europe, and I think it’s just too premature to say this was the summit that made the difference,” European Commission economic spokesperson Amadeu Altafaj Tardio said of the bailout agreement by euro zone countries at last week’s meeting in Brussels.
“The sequence of events — including the next G20 meeting in Cannes — will also be decisive. Because of course this meeting in Cannes could be the endorsement by our main international partners or the expression of doubts, of uncertainties,” he said. “The assessment of our G20 partners will be crucial for the success or failure of this agreement.”
Another source of friction may be the European push to slap a transaction tax on banks, something that Canada and many developing countries adamantly oppose.
This summit is certain to test the ability of the group to move forward with coordinated actions to promote sustainable global growth and job-creation.
“The key is just a sense that the policymakers are aware of the challenges that the world economy faces, which are profound, and have the conviction to enact the right policies to deal with this,” said Chris Cheetham, chief investment officer of HSBC Global Asset Management.
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