Wednesday

17th Aug 2022

Canadians object to G20's $1 billion bill

  • Mr Harper spent sizeable funds on a fake lake, as well as heavy security (Photo: Karim Rezk)

World leaders have landed in Canada for a three-day session of meetings in the G8 (25-26 June) and G20 formats (26-27 June), part of the ongoing process of restoring global growth and overhauling the world's financial sector rules.

With international eyes focusing on the potential 'stimulus versus austerity' scrap between different member states, Canadian citizens meanwhile have reacted in uproar at news that the weekend's bill is set to total over $1 billion.

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Although 90 percent of that cost comes under the 'security' heading, it is a artificial lake intended to impress journalists in the press area that has come in for the heaviest criticism.

The controversy may not be helped by the forecast lack of tangible results set to emanate from the two sets of meetings, with the Canadian gathering widely seen as more of a stepping stone between the G20 meetings of Pittsburg (September 2009) and Seoul (November 2010).

Leaders set a programme for action in the US city last year, with attention now focused on securing its effective implementation by the end of 2010. "Many of the really critical timelines are for later in the year," Canadian Prime Minister Stephen Harper said earlier this month.

The Conservative leader has singled out financial sector reform, fiscal policy and global trade strategies as this meeting's main topics, with media attention focusing on European calls to restore budgetary discipline versus Washington's push to continue stimulus spending.

"Europe has agreed the time has come to start implementing exit strategies," European Commission President Jose Manuel Barroso said on Thursday evening before the talks started. "There is no room for more deficit spending."

In a letter to G20 members last week, US President Barack Obama warned against cutting national debts too quickly, arguing it would put economic recovery at risk.

Since then, Washington has struck a more emollient tone, with analysts saying differences between the two sides should not be exaggerated. While an end to US stimulus spending will see its own deficit come down considerably in the coming years, Europe's austerity measures are not set to kick in until 2011, and even then will start slowly.

The need for a global bank levy provides one the more concrete topics for discussion, but there is no guarantee that participants around the table will come to an agreement.

"In the G20, the idea of a bank levy is not supported by at least half of the members," Russian ambassador to the EU Vladimir Chizhov told a group of journalists on Friday morning in Brussels. "Neither is it acceptable to Russia," he continued, arguing that banks would merely pass on the extra costs to their clients.

Calls for a global tax on financial transactions are likely to run into even greater opposition, while it remains to be seen what concrete measures leaders can agree to regarding a boost to world trade.

The Basel committee of central bankers is also set to present leaders with plans on new bank capital requirements, known as the Basel III rules, with reports suggesting the latest version is less onerous than previous drafts following intense lobbying from the industry.

Future of the G8?

With the global financial crisis leading the G20 to become the primary economic decision-making forum, speculation has been rife recently that this month's G8 meeting would be the last of its kind.

France, next year's chair of the gathering of rich countries, has said it plans to continue with the format however, with this week's meeting set to focus more on development and security issues, leaving economic topics for the larger format which takes in developing countries as well.

In their final communique, G8 leaders are likely to stress they are not reneging on aid commitments to the world's poorest regions such as parts of Africa, despite ongoing criticism from NGOs regarding backsliding in aid promises and slow progress in achieving the Millennium Development Goals.

European Council President Herman Van Rompuy has also signaled his intention to raise the issue of Iranian sanctions. "I will inform our G8 partners about our deep concerns related to Iran's nuclear programme," he said before the start of Friday's meeting.

EU ambitions to go beyond the recently agreed UN sanctions are unlikely to win applause from the Russian bench however. "We do not support them. We think they are totally wrong in substance and tactics," Russian ambassador Chizhov told Friday's briefing in Brussels.

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