Obama: G-20 helped economy bounce back

PITTSBURGH (AP) — World leaders on Friday issued sweeping promises to fix a malfunctioning global economic system in hopes of heading off future financial meltdowns. President Barack Obama said actions taken so far “brought the global economy back from the brink.”

“We leave here today confident and united,” Obama said at the conclusion of a two-day gathering of the world’s 20 top economies to deal with the worst financial crisis since the 1930s.

The leaders agreed to keep stimulus plans, which include government spending and low interest rates, generally in place in their respective countries for now to avoid derailing still-fragile recoveries. Obama had pressed for just such a course and praised the decision.

“Our coordinated stimulus plans played an indispensable role in averting catastrophe. Now we must make sure that when growth returns, jobs do, too,” he said at a wrap-up news conference. “That’s why we will continue our stimulus efforts until our people are back to work and phase them out when our recovery is strong.”

In a statement, all the G-20 leaders declared major progress from what they called their coordinated efforts and “forceful response.”

“It worked,” they said.

Although many of the pronouncements and actions taken by the leaders lacked specifics or details on follow-through, leaders were bold in pronouncing the gathering — the third G-20 summit in a year — as a big success.

“There was unanimity around the table that the errors of the past won’t happen again,” said French President Nicolas Sarkozy.

“The old system of international economic cooperation is over. The new system, as of today, has begun,” said British Prime Minister Gordon Brown, referring to a decision to enhance the status for the Group of 20 to make it the lead group for dealing with future international economic issues, eclipsing the older, Western-dominated Group of Eight.

“I have the impression that we are on a successful path,” said German Chancellor Angela Merkel, before leaving Pittsburgh to fly back to Berlin, where she faces German voters on Sunday.

They moved to require members to subject their economic policies to the scrutiny of a peer review process that would determine whether they were “collectively consistent” with sustainable global growth. They promised tighter and more coordinated financial regulation.

And, repeating pledges from G-20 summits in November and April, when financial panic was rampant, they vowed anew to “reject protectionism in all its forms.” They also went along with Obama’s push for a pledge to withdraw government subsidies from fossil fuels such as oil, coal and natural gas linked to global warming.

While issuing lofty vows, the leaders failed to define how to accomplish many of them and were quickly back to bickering over details.

They did not suggest, for instance, how the peer review process would be enforced. And they failed to mention that previous pledges to avoid protectionism had been ignored by nearly all 20 members.

Disagreements over whether China should gain voting strength in the International Monetary Fund at the expense of European nations and over global warming language marred the summit.

Obama talked about actions of the G-20 as creating or saving “millions of jobs.” Yet the U.S. economy alone has lost 3.1 million jobs since January when Obama took office. Since the recession started in December, 2007, some 6.9 million jobs have disappeared.

The group agreed to support changes in the makeup of the International Monetary Fund and World Bank.

The final statement said voting powers in the IMF “should reflect the relative weights of its members in the world economy, which have changed substantially in view of the strong growth in dynamic emerging market and developing countries.”

Now, developed industrialized nations wield about 57 percent of the voting rights in the IMF to about 43 percent for developing nations. The G-20 leaders called for shifting shares from developed powers to emerging ones by at least 5 percentage points. They called for a similar shift at the World Bank. European countries, particularly France and Britain, have been resisting such changes.

Said Obama: “We brought the global economy back from the brink. We laid the groundwork today for long term prosperity.”