G20 meeting 'all going according to plan'

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Stephen Harper chats with Barack Obama as leaders arrive on the opening day of the G20 Summit in Pittsburgh. (SEAN KILPATRICK / THE CANADIAN PRESS)

PITTSBURGH -- Prime Minister Stephen Harper will join other leaders from rich and emerging market countries in agreeing to key reforms to the banking sector on Friday, but the G20 is under mounting pressure to say how it will pay for crucial climate change efforts.

Harper joined U.S. President Barack Obama and the rest of the G20 at a dinner meeting in a garden-ringed glass building in Steeltown Thursday night, as more than 4,000 police kept protesters at bay with tear gas and batons.

Even before the dinner had concluded, it was clear the summit would be productive.

Harper announced that Canada would temporarily make $2.6-billion available to the African Development Bank, so that it could increase its lending base and improve financing conditions in Africa.

His officials indicated the summit would likely produce a deal on how to control pay for banking executives -- a pact that will appease taxpayers upset about rich bankers getting government bailouts, and will also modify the amount of risk traders are willing to take on.

Leaders are also likely to agree a framework to increase the level and quality of capital that banks need to keep on hand -- a key crisis-prevention measure that will eventually make the rest of the world's banks look more like Canada's, officials said.

And U.S. officials said talks among the G20 could also produce an agreement that would lead to more balance among world powers. The deal would encourage China to rely more on domestic demand to prop up its economy, and also encourage U.S. consumers to save more.

"It's all going according to plan," analyst John Kirton said of the summit. He is the director of the G20 Research Group at the University of Toronto. "It's moving towards the success it was planned to be."

The main goal of the G20 leaders is to make sure the stimulus measures they agreed to over the past few months to staunch the global recession stay in place long enough to ensure recovery is well entrenched.

In a pre-summit meeting with labour leader Ken Georgetti on Thursday, Harper said he had no intention of letting up on stimulus, and would urge other countries to stay the course, Georgetti, the president of the Canadian Labour Congress, said in an interview.

"He acknowledged that this crisis isn't over, and that government support will continue."

Japan and Germany, however, have shown signs of withdrawing their stimulus -- moves that are no doubt worrisome to Canada since its trade depends on a strong global economy.

On climate change, the leaders will consider supporting a U.S. proposal to gradually reduce subsidies for fossil fuels. Such a measure would mean major changes in Indonesia and China, where gasoline is subsidized.

Canada would not have to make any changes to support such a proposal, officials said, although experts questioned whether the tax treatment of oil investment might eventually come under a spotlight.

But the larger question of how to finance climate change efforts in developing countries still has no answer. The G20 agreed at its second summit in London last spring that rich countries should set up a fund that would help poor countries pay for cutting emissions, but only a few countries have made firm financial commitments.

New climate-change commitments this week from China and Japan have ratcheted up pressure on Canada and other countries to put money and measures on the table at the G20 summit in Pittsburgh.

Obama has seen his own carbon cap-and-trade commitment stall. Harper and the other leaders will be watching to see whether Obama will make some kind of firm commitment on greenhouse gases to reciprocate the goodwill shown by the two Asian powers.

"I think there will be pressure on President Obama to deliver something at the G20 on financing climate mitigation and adaptation in developing countries," said Dale Marshall, the climate-change policy analyst for the David Suzuki Foundation.

-- The Canadian Press

Republished from the Winnipeg Free Press print edition September 25, 2009 A15