TORONTO (AP) - World leaders, facing serious differences over
the best way to nurture a fragile global recovery, are agreeing to
disagree in a variety of key areas.
Even before the economic talks were to begin over lunch Friday,
the leaders engaged in a series of dueling letters and interviews
that exposed their conflicts.
The three days of talks were starting at a lakeside resort north
of Toronto where the Group of Eight countries - the United States,
Japan, Germany, France, Britain, Italy, Canada and Russia - will
discuss proposals to increase support for maternal and child health
care in poor nations and hold an outreach meeting with leaders of
seven African nations.
The G-8 will also spend time exchanging views on hot-button
issues, such as Iran's nuclear program and possible sanctions on
North Korea following the sinking of a South Korean warship.
President Barack Obama, following a tough two months dealing
with the worst offshore oil spill in U.S. history, was arriving
with a mixed record of persuading his own country's Congress to
follow his ideas.
On Thursday, solid Republican opposition caused the defeat of
legislation that would have provided billions of dollars for job
creation and extended benefits for unemployed people. But in a win
for the president, House-Senate bargainers shook hands before dawn
Friday on a sweeping overhaul of financial regulations aimed at
preventing the next worldwide economic swoon.
So far, world leaders have not signaled much support for Obama's
cautionary warnings that countries should not pull back their
stimulus efforts too quickly.
Britain, Germany, France and Japan have all unveiled
deficit-cutting plans. Canadian Prime Minister Stephen Harper, the
host for the summit meetings, was urging the countries to agree to
concrete deficit-reduction goals as a way of restoring investor
confidence following the turmoil caused by the Greek debt crisis.
Asked about the disputes over stimulus spending versus deficit
reductions, Canadian Finance Minister Jim Flaherty said, "One size
doesn't fit all."
The countries were also struggling to resolve major differences
over reform of the financial system, including setting tougher
standards for bank capital, the cushion banks must hold to cover
losses, and over whether countries should impose taxes on banks to
reimburse taxpayers for the bank bailouts and to build up funds to
cover future bailouts.
Toronto was braced for the potential of disruptive protests that
so far have not materialized.
Toronto's downtown core resembled a fortress with a big steel
and concrete fence erected over several blocks to protect the
summit site. Canadian police patrolled the Lake Ontario waterfront
from boats and jet skis. The number of security forces protecting
the summit meetings was estimated to total 19,000, drawn from all
The G-20 leaders' summits began in the fall of 2008 in response
to the global economic crisis that struck with fury after the
collapse of Lehman Brothers, a major U.S. investment bank.
At that time, the leaders joined to assemble multibillion-dollar
support packages to restart economic growth and financial rescue
efforts to rescue a froze global banking system.
But now that the banks are back from the brink and the world's
economies are growing again, unity is proving more elusive.
Obama sent a letter last week warning that removing the massive
government stimulus spending too quickly could represent a repeat
of the disastrous mistakes of the 1930s that prolonged the Great
But Harper sent out his own letter urging establishment of firm
deficit reduction goals.
Some leaders didn't appreciate being lectured by Obama on the
need for countries running trade surpluses, which would include
China, Germany and Japan, to do more to boost domestic spending to
help the global economy while U.S. consumers, long the driver of
global growth, begin to save more.
"German export successes reflect the high competitiveness and
innovation strength of our companies," German Chancellor Angela
Merkel said in an interview published in The Wall Street Journal.
"Artificially reducing Germany's competitiveness would be of no
use to anyone."
Britain, Japan and, unexpectedly, Australia were sending new
leaders to the G-20 summit. Australia's ruling Labor Party abruptly
ousted Prime Minister Kevin Rudd. Julia Gillard replaced him,
becoming Australia's first female leader. Wayne Swan, her new
deputy and the country's finance minister, was to represent
Australia at the Canadian meetings.
It will be the first appearance at the G-20 table for British
Prime Minister David Cameron and Japanese Prime Minister Naoto Kan.
And both were bearing deficit-cutting messages.
Cameron comes after his Conservative government unveiled an
emergency budget Tuesday that contained higher taxes and the
toughest cuts in public spending in decades. And Kan said this week
that deficit reduction would be his top agenda item at the Canadian
meetings and that Japan would soon start debating a possible sales
tax increase to rein in the nation's bulging deficits.
Both are trying to avoid Greece-style government debt crises.
Talking to reporters on the flight from London, Cameron sought
to play down any differences with the United States.
"This weekend isn't about a row over fiscal policy. We all
agree about the need for fiscal consolidation," he said. "This is
about putting the world economy on an irreversible path to
After the G-8 discussions in the Muskoka lake region of Canada,
Obama and the other G-8 leaders will reconvene in Toronto for the
The larger group of nations, including such major developing
powers as China, Brazil and India, will begin discussions over
dinner Saturday night and will wrap up after further talks on
The G-20 final statement expected to be issued on Sunday notes
that "while growth is returning in many countries, the recovery is
uneven and fragile, and unemployment remains at unacceptable
levels," according to an early draft that the environmental group
Greenpeace said it obtained.