G20 summit faces uphill battle for crisis measures

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WASHINGTON, Nov 12 (AFP): With financial markets in deep turmoil, the Group of Twenty (G20) summit this weekend faces stiff challenges to find a plan of attack to shore up the world banking system and avert future crises.
The summit of leaders of G20 major advanced and emerging economies could very well fall short of taking concrete measures, despite the broad-based concern over the possibility of global recession.
The European Union, led by the French, and some other members of the G20 want a new global financial order, as much as an entire remake of the 1944 Bretton Woods accord that set the basis for the world's financial system after World War II.
But host Washington under outgoing President George W Bush has favored more limited initiatives, and has opposed creating a powerful supranational regulator.
The United States and the Europeans recognise the need for improved transparency in global finance and risk management, better coordination among national regulators, and more harmonization of accounting and capitalisation rules.
Bush's Republican administration is looking for a "plan of action"-recommendations for what individual countries can do - - to emerge from the summit Saturday, which will be preceded by an official working dinner Friday.
A senior European diplomat said decisions could be taken in particular on the hitherto unregulated market for CDS's, which were at the core of the near-collapse of world-leading insurer AIG in September.
Even before the crisis broke Washington and the European Union were working together on instituting better oversight.
In any case there is little likelihood that Washington will agree to a global financial regulator that will govern US institutions, like the IMF.
The United States is likely unwilling to cede its sovereignty over its financial products, markets and institutions, whose regulators at any rate answer to the US Congress and not the president.
The US sees the IMF continuing in its official role of helping countries strengthen their economic oversight and managing in crises.
Meanwhile, China will go to the G20 meeting in Washington with a pledge to be an active participant, but it is unlikely to offer itself as lender of last resort for countries reeling from the global downturn.
President Hu Jintao's presence at the meeting of the world's major industrialised countries and its main emerging economies reflects China's transformation into a nation with a crucial role in the world economy.
Analysts say it also shows China's growing concern about the fallout of the world crisis, and its increasing willingness to consult with other nations on major global issues.