G-20 leaders today agreed to a watered-down commitment to watch out for dangerous imbalances, yet left enough on the table for India to feel triumphant and count several gains. Many points India had been arguing for have been included in the communiqué signed at the end of the gathering today.
Prime Minister Manmohan Singh credited team effort for the inclusion of things like the Mutual Assessment Process (MAP) for measuring imbalances between surplus and deficit economies. However, he claimed personal credit for putting sustainable, manageable development on the global agenda at a time when trade surpluses and deficits have cast a shadow on global economic parlays.
“I do claim some credit that in my speech, I brought the development issue into the very forefront of sustainable, manageable growth process, that you should not only look at mainly surpluses and deficits but you should also see that these imbalances become an opportunity to deal with a more fundamental imbalance which is the development gap between the rich and poor countries. And that point, after I made that in my opening speech, was caught up by several other speakers and they complimented that I focussed and brought development to the forefront of the international dialogue,” Singh told journalists on board Air India One, the Prime Minister’s special aircraft.
The Summit began on a fractious note, as the US and China debated trade imbalances and currency valuations. European leaders later broke away for a mini-gathering in the middle of the summit to discuss a deepening credit crisis in Ireland. However, Singh listed several positive outcomes.
As the first of these, he listed completion of the second stage of the International Monetary Fund’s quota reforms and restructuring of its executive board, with new and more flexible credit lines. Basel III, a key pillar of the global financial reforms, has been democratised to include all G20 members. It has been agreed to review MAP at the next G20 meeting in 2011 as a first step towards country-led policy coordination. Development has been placed on the agenda of G20, a South Korean initiative fully backed by India. And there was also discussion on the Doha round of trade negotiations and Cancun Summit on environment-related issues.
The leaders vowed to move towards market-determined exchange rates, a reference to China's tightly-managed yuan that the US has long complained is undervalued.
They pledged to shun competitive devaluations, a line addressing other countries' concern that the US Federal Reserve's easy-money policy was aimed at weakening the dollar. In a nod to emerging markets struggling to contain huge capital inflows, the G-20 gave the okay to impose "carefully designed" control measures.
