G-20 Summit: Ignore the Rumors

The G-20 Summit opens tomorrow in London. This gathering of the leaders of the world's 20 biggest economies meets with much at stake due to the global recession and financial industry crisis. The countries represented account for between 80% and 90% of the world's economic output, so any decisions reached in concert will prove decisive to a recovery strategy.

Much attention has been directed toward the seeming recalcitrance of France and Germany to get on board with the kind of stimulus ideas the U.S. and Britain are advocating. It has even been said that French President Nicholas Sarkozy is threatening to walk out of the meeting if it pushes the stimulus idea too hard. I wouldn't take that likelihood too seriously, given an op-ed Sarkozy circulated to the world this morning. Click on this link to read Sarkozy's entire text printed in the Washington Post.

In his editorial the French President recalls the G-20 meeting last November in Washington and reiterates his determination to stick to the four goals outlined at that time. He writes, "In November, we agreed on four principles that would guide our response: enhanced coordination and cooperation; the rejection of protectionist measures; the strengthening of regulatory systems in financial markets; and a new global governance." He then reported good progress on the first two--no protectionism and that, "many nations have injected massive support into their economies, undertaking ambitious stimulus programs. Countries that offer their citizens a high level of social protection, such as France, have also significantly increased their levels of crisis-related welfare spending." He even goes on to say, "...we must be ready to do even more if circumstances require it." This certainly does not sound like someone diametrically at odds with U.S. President Barack Obama's approach.

Of the summit, Sarkozy says, "This week we must attach the same sense of urgency to the regulation of financial markets," and expands this to add, "We agreed in November that not one financial player, institution or product could be beyond the control of a regulatory authority. This rule must be applied to credit rating agencies, speculative investment funds and tax havens." For his bottom line, Sarkozy concludes, "We must achieve practical results beginning with tomorrow's summit. And failure is not an option."

I wouldn't hold my breath waiting for discord and people walking out in a huff. The stakes are too high and the remedies too obvious for that.