Developing agenda wins at G20 summit
Sunday, 5 April 2009
The G20 summit could go down as the turning point when the distinction between the developing and developed world, already blurry, ends for good, reports BBC.
Many of the developing nations - China, Brazil, India among them - came to the summit in London with a list of demands to make a more multilateral world. Unlike the past, this time they actually got most of them.
This prompted Brazilian President Luiz Inacio Lula da Silva, whom US President Barack Obama called the world's most popular politician, to say that the richer nations had finally negotiated with emerging countries on "equal terms".
Lula, viewed as something of a leader of the developing world, was pushing for greater influence for countries such as his in the international organisations that are so crucial to the world economy.
The G20 has agreed to give Brazil, India and other developing nations a greater say in the running of the World Bank and the International Monetary Fund, the two big organisations set up to run the world economy after World War II.
After 2011, the US could lose its veto power at those institutions and Western countries could find their voting rights severely reduced.
The convention that an American heads the World Bank and a European heads the IMF will also now be abandoned, the G20 leaders say.
The G20 also created a new Financial Stability Board, incorporating all members of the G20 for the first time, to replace the current Financial Stability Forum, which mainly consists of the central banks and finance ministries of US and European countries.
This fundamentally shifts the importance of developing economies to the financial system.
Brazil has been campaigning for a permanent seat on the United Nations Security Council, as well as a seat for the African continent, and that is likely to be Lula's next big push on the international stage.
Brazil's President Luiz Inacio Lula da Silva, right, meets Brazil's Finance Minister Guido Mantega to discuss the financial crisis in Sao Paulo, Monday 20 October 2008.
President Lula said developing countries had been treated as equals
Before the summit, the world's biggest emerging economy had pushed for a radical idea of a global reserve currency to replace the dollar.
While that did not happen, what did was that the G20 nations agreed on essentially creating more money to help countries that need more aid.
That money comes from an additional $250bn of special drawing rights, the IMF's own currency, consisting of a basket of currencies including the US dollar, the yen and the euro.
IMF managing director Dominique Strauss Kahn noted that this was the first step to the IMF becoming a lender of last resort or, in effect, the world's central bank.
This means that poor countries are less reliant on Western nations, and the value of the US dollar, when they get into trouble and need aid. China also flexed its economic muscles by contributing $40bn to bolster the IMF.
And it won in its battle to keep its territories of Hong Kong and Macau off the blacklist for tax havens.
The developing world also received more in aid, with one of the bigger surprises of the communique being the extra $100bn for multilateral development banks such as the World Bank and Asian Development Bank. That was in addition to the $500bn agreed for the IMF to lend to struggling economies.
Many of the developing nations - China, Brazil, India among them - came to the summit in London with a list of demands to make a more multilateral world. Unlike the past, this time they actually got most of them.
This prompted Brazilian President Luiz Inacio Lula da Silva, whom US President Barack Obama called the world's most popular politician, to say that the richer nations had finally negotiated with emerging countries on "equal terms".
Lula, viewed as something of a leader of the developing world, was pushing for greater influence for countries such as his in the international organisations that are so crucial to the world economy.
The G20 has agreed to give Brazil, India and other developing nations a greater say in the running of the World Bank and the International Monetary Fund, the two big organisations set up to run the world economy after World War II.
After 2011, the US could lose its veto power at those institutions and Western countries could find their voting rights severely reduced.
The convention that an American heads the World Bank and a European heads the IMF will also now be abandoned, the G20 leaders say.
The G20 also created a new Financial Stability Board, incorporating all members of the G20 for the first time, to replace the current Financial Stability Forum, which mainly consists of the central banks and finance ministries of US and European countries.
This fundamentally shifts the importance of developing economies to the financial system.
Brazil has been campaigning for a permanent seat on the United Nations Security Council, as well as a seat for the African continent, and that is likely to be Lula's next big push on the international stage.
Brazil's President Luiz Inacio Lula da Silva, right, meets Brazil's Finance Minister Guido Mantega to discuss the financial crisis in Sao Paulo, Monday 20 October 2008.
President Lula said developing countries had been treated as equals
Before the summit, the world's biggest emerging economy had pushed for a radical idea of a global reserve currency to replace the dollar.
While that did not happen, what did was that the G20 nations agreed on essentially creating more money to help countries that need more aid.
That money comes from an additional $250bn of special drawing rights, the IMF's own currency, consisting of a basket of currencies including the US dollar, the yen and the euro.
IMF managing director Dominique Strauss Kahn noted that this was the first step to the IMF becoming a lender of last resort or, in effect, the world's central bank.
This means that poor countries are less reliant on Western nations, and the value of the US dollar, when they get into trouble and need aid. China also flexed its economic muscles by contributing $40bn to bolster the IMF.
And it won in its battle to keep its territories of Hong Kong and Macau off the blacklist for tax havens.
The developing world also received more in aid, with one of the bigger surprises of the communique being the extra $100bn for multilateral development banks such as the World Bank and Asian Development Bank. That was in addition to the $500bn agreed for the IMF to lend to struggling economies.