WASHINGTON — President Bush announced plans Saturday to host emergency summits of leaders from the world’s top economies to map out a response to the global financial crisis, urging a renewed effort to secure the basis of “democratic capitalism.”
The objectives set for the summits are every bit as far-reaching as those of the 1944 landmark meeting in Bretton Woods, N.H., attended by 44 Allied nations to remake the global financial system after the Great Depression. But while that earlier gathering was devoted to coordinating monetary policy and setting up an international currency exchange system, the summits announced Saturday at Camp David, Md., would aim to overhaul the regulatory framework for global finance.
The agenda would address a wide range of challenges such as increasing the transparency of markets, revising the rules that govern the flow of investment around the world and improving oversight of big banks, ratings agencies and hedge funds, a senior White House official said. Bush warned, however, that these reforms should not come at the expense of free markets.
Any initiatives that come out of the summits would do little to ease the immediate situation as the meltdown in financial markets takes its increasing toll on livelihoods and living conditions. But the first conclave could give Bush a chance to put his stamp on the global financial system before his term runs out.
A joint statement issued after the meeting said the European Union, France and the United States had agreed to hold “a series of summits on addressing the challenges facing the global economy,” starting with one in the United States “soon after the U.S. elections.”
White House deputy press secretary Tony Fratto later told The Associated Press that it was reasonable to assume that the first summit would be in November, after Election Day. The views of the president-elect, be it John McCain or Barack Obama, would be important in the discussion, but he said he could not say whether the president-elect would attend the first summit.
The aim of the first summit would be to “review progress” in the current crisis and “to seek agreement on principles of reform needed to avoid a repetition and assure global prosperity in the future,” the joint statement said. Later summits would be held to implement whatever agreements were made at the first, according to the statement.
The meetings would involve emerging economic powers previously excluded from similar talks as well as those that have dominated the global financial system over the past half-century, White House officials said. They would be open to the major industrial states that comprise the Group of Eight — the United States, Canada, Britain, France, Italy, Germany, Russia and Japan — as well as leading developing nations such as China, India and Brazil. Other countries that could be invited include Saudi Arabia, South Korea and Australia.
“As we make the regulatory institutional changes necessary to avoid a repeat of this crisis, it is essential that we preserve the foundations of democratic capitalism — commitment to free markets, free enterprise and free trade,” Bush said, flanked by French President Nicolas Sarkozy and European Commission President Jose Manuel Barroso.
“We must resist the dangerous temptation of economic isolationism and continue the policies of open markets that have lifted standards of living and helped millions of people escape poverty around the world,” Bush added.
Sarkozy welcomed Bush’s announcement of a summit. Barroso, speaking at Camp David, agreed that a “new global financial order” was needed.
But while there is active support within the Bush administration for coordinating with other governments on the response to banking crises, the United States and Europeans could find themselves in conflict over a range of issues. Leaders from the United States, European countries and other economic powers gathered in Geneva this summer but couldn’t agree on a range of issues.
The Bush administration, in earlier statements and policy initiatives, has signaled that it is skeptical of the kind of strong medicine that European leaders are prescribing.
Some of the steps envisioned by Sarkozy and Barroso include a global early-warning system to detect economic distress, International Monetary Fund reform and stiffer regulation for international banks, hedge funds and credit-rating companies.
