news Obama downplays G20 split on eve of summit

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Obama downplays G20 split on eve of summit



1 hour, 47 minutes ago





By Caren Bohan and Sumeet Desai


LONDON (Reuters) - U.S. President Barack Obama said on Wednesday there was "enormous consensus" between the world's largest developed and emerging economies on plans to haul the world out of the deepest downturn since the 1930s.

Obama played down any differences with France and Germany, which insisted again on the eve of the summit that G20 countries must agree on measures to tighten financial regulation and crack down on tax havens rather than simply make promises.

Protesters smashed windows and clashed with police in London's financial district. Up to 400 demonstrators attacked offices of the Royal Bank of Scotland, shouting "These streets, our streets! These banks, our banks!"

The Royal Bank of Scotland has become a lightning rod for anger over banker excess that is blamed for the financial crisis. Rescued by the British government last October, RBS continues to pay its former boss an annual pension of around 700,000 pounds ($1 million).

Obama, making his first official visit to Europe, said G20 nations were not going to agree on every point but pushed aside suggestions the summit would falter because countries were split over the importance of regulation versus new stimulus packages.

"The core notion that government has to take some steps to deal with a contracting global market place and that we should be promoting growth -- that's not in dispute," Obama said at a news conference with British Prime Minister Gordon Brown.

"On the regulatory side, this notion that somehow there are those who are pushing for regulation and those who are resisting regulation is belied by the facts."

French President Nicholas Sarkozy earlier threatened to disassociate himself from any "false compromises" at Thursday's summit in London, the second such meeting of world leaders to try to tackle the problems created by the credit crunch.

German Chancellor Angela Merkel supported Sarkozy's stance and said she would make sure concrete decisions were taken.

Analysts said both were posturing largely for their own voters and staking their positions ahead of the meeting.

MOMEY FOR TRADE, IMF

Sarkozy's office said both Brown and the French president had reaffirmed their support for more financial regulation in a telephone call. Sarkozy is due to arrive in London on Wednesday afternoon before Thursday's summit.

Brown saw likely agreement on issues including a possible $100 billion boost for global trade, financial regulation, and support for economic growth and job creation.

G20 leaders are also expected to more than double the $250 billion available to the International Monetary Fund to help emerging market countries pushed to the brink.

"We are within a few hours, I think, of agreeing a global plan for economic recovery and reform and I think the significance of this is that we are looking at every aspect."

Sarkozy earlier did not explicitly repeat a threat to walk out of the gathering but voiced pessimism.

"I will not associate myself with a summit that would end with a communique made of false compromises that would not tackle the issues that concern us," he told Europe 1 radio in an interview. "As of today, there is no firm agreement in place."

In a further sign of division, Japan criticized the German approach. Japanese Prime Minister Taro Aso was quoted as saying that Germany did not understand the importance of fiscal stimulus.

Sarkozy and Merkel are pushing hard for visible results on regulation, such as closer tabs on hedge funds and credit rating agencies, and naming and shaming of tax havens if they fail to bow to pressure and end bank secrecy.

Those are not the only demands.

China and Russia want the West to give them more say over matters of global economic importance and have gone as far as to suggest the dollar should one day be dropped as the world's main reserve currency, though the latter is not seen as an issue the summit will broach in any depth.

The rest of the developing world is hoping aid flows will not dry up as governments elsewhere pump trillions of dollars of public money into bank rescues and tax breaks or fork out on big building projects to support demand and jobs.

(Writing by Keith Weir, editing by Elizabeth Piper and Janet McBride)