G8 summit in new push for global financial reform

2009-07-08 02:03:28  

    L'AQUILA, Italy, July 7 (Xinhua) --

Leaders from the Group of Eight (G8) industrialized countries and emerging economies are expected to make a new push for reform of the global financial system when they meet for a summit as from Wednesday.

    While the venue for the summit, namely the Italian town of L'Aquila, is an earthquake-stricken area which is still under reconstruction, the global financial system and the world economy also need rebuilding amid the financial crisis.

    NEW PUSH FOR NEW RULES

    As the host, Italy has put it high on the agenda of the three-day summit to revamp the global financial system and rewrite ground rules for world economic activities.

    "The main issues on the Italian presidency's agenda are a response to the global economic and financial crisis, and the restoration of grassroots confidence and a boost to growth on a more solid and balanced basis, also through the definition of new, shared ground rules for economic activities," the Italian government said on its official website for the G8 summit.

    The financial crisis, which broke out last autumn, has dragged the world into the worst-ever recession in 60 years, prompting international efforts to strengthen financial regulation so as to prevent recurrence of the crisis.

    Leaders from the Group of 20 (G20) major economies met for the first time on the financial crisis in Washington last November, marking the beginning of global financial reform.

    The Washington summit was soon followed by a similar one in London early April, where G20 leaders reached broad agreements on stricter financial rules and an overhaul of international financial institutions.

    A third summit is scheduled to be held in Pittsburgh of the United States this September, while the G8 summit goes between.

    "The L'Aquila summit will set out principles, which will be the basis for the G20 summit to establish specific measures, including reform of the World Bank and the International Monetary Fund," Italian Foreign Minister Franco Frattini said in a recent interview with Xinhua.

    LECCE FRAMEWORK TO BE DEBATED

    In preparation for the G8 summit, finance ministers of the eight rich countries met in Lecce, south of Italy, one month ago. They hammered out an agreement on the new push for global financial reform, which would be discussed by G8 leaders this time.

    The so-called Lecce Framework includes a set of common principles and standards regarding the conduct of international business and finance.

    "We agreed on the need to develop the Lecce Framework which builds on existing initiatives and lays the foundation for a stable growth path over the long term," G8 finance ministers said in a statement then. "We are committed to working with our international partners to make progress with this initiative, with a view to reaching out to broader fora, including the G20 and beyond."

    They said for the market economy to generate sustained prosperity, fundamental norms of propriety, integrity and transparency in economic interactions must be respected.

    "Reform efforts must address these flaws in international economic and financial systems with resolve. This will require promoting appropriate levels of transparency, strengthening regulatory and supervisory systems, better protecting investors, and strengthening business ethics," the statement said.

    The Lecce Framework classified a wide range of instruments into five categories, namely corporate governance, market integrity, financial regulation and supervision, tax cooperation, and transparency of macroeconomic policy and data.

    Specific issues covered include, inter alia, executive compensation, regulation of systemically important institutions, credit rating agencies, accounting standards, the cross-border exchange of information, bribery, tax havens, non-cooperative jurisdictions, money laundering and the financing of terrorism, and the quality and dissemination of economic and financial data.

    ONE STEP IN A LONG PROCESS

    So far, both the United States and the European Union (EU) have adopted an ambitious package to strengthen financial regulation, but differences remain on how far they should go in the international push.

    Even within the EU, Germany and France even can not see eye to eye with Britain. While Berlin and Paris strongly support tougher financial regulation, London is simply afraid that its financial power would be undermined.

    German Chancellor Angela Merkel warned ahead of the G8 summit that governments would fight off any attempt by banks to water down tough reforms of financial regulations.

    "There is perhaps a certain danger that banks which are doing quite well again might try to not exactly support the regulation efforts, but to put them in doubt again," Merkel told the Wall Street Journal Europe in an interview.

    She said that bank reforms must not wane although the economy is showing tentative signs of improvement.

    Putting the results of the G8 summit into doubt, Italian Prime Minister Silvio Berlusconi played down on Friday any prospect of the summit agreeing new rules for global finance, saying it will be just "one step" in a long process.

    "We will need many steps before we arrive at a common rulebook," Berlusconi said. "L'Aquila is one step towards further analysis." 

Editor: Mu Xuequan

Anti-G8 demonstrators clash with police in Italy

By Ian Simpson Ian Simpson – Sat Jul 4, 2009,2:39 pm ET

VICENZA, Italy (Reuters) –

Anti-G8 demonstrators clashed briefly with Italian police on Saturday in the first big protest ahead of next week's summit of the world's richest nations.

Police in riot gear fired teargas at protesters to prevent them from crossing a bridge and moving closer to a controversial U.S. military base in the northeastern city of Vicenza.

A group of demonstrators, some of them wearing motorcycle helmets and with their faces covered, threw bottles, rocks and lit firecrackers they were pushed back by security forces.

Protesters were later allowed to continue their march, which broke up peacefully in the early evening. There were no reports of injuries.

Several thousand people attended the demonstration, launched against expansion plans that would make the U.S. base one of the biggest in Europe, and more generally against the July 8-10 G8 summit which Italy chairs.

"We are sick of the powerful governing without consulting the people," said Martina Vultaggio, 29, one of the protest organizers.

The leaders of the United States, Japan, Germany, France, Britain, Italy, Canada and Russia, together with those of major emerging economies, will hold talks in the central city of L'Aquila focusing on the state of the world economy, financial regulation, climate change, trade and development.

Anti-capitalist protesters have planned a series of demonstrations at different sites, starting with the one in Vicenza -- where locals oppose the doubling of the size of the U.S. base, home to 3,000 soldiers of the 173 Airborne Brigade.

The Italian government has approved construction of a new 6,000 square meter (64,600 sq ft) base on the site of the old Molin airport on the city's outskirts. But Vicenza residents have rejected the base expansion in a referendum.

Opponents contend the base poses a threat to ground water, is dangerous for residents and for Vicenza's historic center, a treasure of Renaissance architecture.

The protesters had vowed to march about 3.5 km (2 miles) to the construction site, which was sealed off by local authorities, and plant flags with anti-base slogans. Around 1,000 police were deployed on Saturday along the route.

Prime Minister Silvio Berlusconi is keen to avoid a repeat of the violence that marred a 2001 G8 summit hosted by Italy in Genoa, when a protester was killed and scores of others were beaten up by police.

Summit organizers have said the choice of L'Aquila, which was badly damaged by an earthquake in April that killed nearly 300 people and left 60,000 homeless, should deter violent protests out of respect for the plight of local people.

Demonstrators plan to stage a candle-lit night march in the city on July 6 -- three months after the quake struck.

(Writing by Silvia Aloisi; Editing by Sophie Hares)