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Banking industry

G20 Summit: Obama and Brown Defy Protests as France and Germany Push for Tough Financial Regulation

Strategic Insights

— 2 min read

As protests raged in the City and anarchy was unleashed on the streets of London, U.S. President Barack Obama and British Prime Minister Gordon Brown defied the chaos to celebrate a "special relationship" between the two nations. The G20 summit, convening in London's Docklands, is heading for a tense confrontation between the U.S. and Old Europe, with France and Germany pushing for stricter global rules on financial markets and regulation.

Key Takeaways:

  • The G20 summit is expected to agree on a coordinated international code of conduct for banks, a system to "name and shame" countries retreating into protectionism, and to boost the resources of the International Monetary Fund (IMF).
  • France and Germany are pushing for a more stringent crackdown on tax havens, hedge fund regulation, and banking transparency, and have expressed opposition to a proposed second round of debt-funded fiscal stimulus packages.
  • The U.S. is resistant to stricter regulation, with President Obama saying that the issue is not about ego or temper tantrums, but about whether the world is "up to the challenges ahead".
  • Russian President Dmitry Medvedev and U.S. President Barack Obama agreed to cut their nuclear arsenals, with a pledge to move further than the treaty signed in 2002, limiting the number of operationally deployed nuclear weapons to between 1,500 and 1,700 warheads each.
  • China is emerging as a source of tensions over tax havens, with France's President Sarkozy fearing that China will not want regulation of Hong Kong and Macau.
  • British Prime Minister Gordon Brown has proposed a system of improved regulation as one of his "five tests" for the summit, and has expressed confidence that a significant deal will be reached.

Statistics:

  • $2 trillion fiscal stimulus already mounted across the globe in the shape of tax cuts and spending hikes.
  • 1930s-style depression to be avoided, according to British Prime Minister Gordon Brown.
  • 1,500-1,700 warheads proposed for operationally deployed nuclear weapons by Russia and the U.S. under a new treaty.
  • 2,200 warheads currently operationally deployed nuclear weapons.

Sources:

  • "The full gathering of the G20 in London's Docklands appeared to be heading for a tense confrontation between 'two worlds' - the U.S. and Old Europe." (The Times)
  • French President Nicolas Sarkozy: "We have to make compromises... but compromise has to be engaged in by all regions of the world." (Source unknown)
  • British Prime Minister Gordon Brown: "I'm absolutely confident that President Sarkozy will not only be here for the first course at our dinner, but still be sitting as we complete our dinner." (The Daily Mail)
  • U.S. President Barack Obama: "The thing I love about Great Britain is its people. There's just an extraordinary affinity and kinship which we have." (The Daily Mail)
  • Drafts of the G20 communique circulating suggest leaders will agree to disavow economic policies that hurt each other's prospects with protectionism, to boost the resources of the IMF, and to underwrite world trade.

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