By Sumeet Desai
LONDON, March 27 (Reuters) - He promised a grand bargain but British Prime Minister Gordon Brown's hopes of an overarching deal to pull the world out of recession look doomed even before the G20 crisis summit has started.
The stakes could not be higher when the world's most powerful leaders meet in London next week. Millions of jobs have already disappeared and millions more could go as the global economy faces its biggest downturn since the Great Depression.
Deals are likely at the April 2 meeting on extra resources for the International Monetary Fund and for credit to get trade flowing more easily -- both of which experts say could prove significant -- as well as rhetorical commitments to free trade.
But preparatory meetings for the summit have revealed deep divisions over the essentials needed to stop the rot and fix a financial system that has been in disrepair since Aug. 2007 because of the weight of banks' toxic assets.
Gone now is the ambitious talk of the summit being a new Bretton Woods -- the 1944 conference that shaped the modern financial world. Officials talk instead of making incremental progress on a new supervisory regime to prevent future crises.
Continental Europeans, meanwhile, have summarily rejected Brown's and U.S. President Barack Obama's call for governments to spend more. German finance minister Peer Steinbrueck said on Friday that fiscal irresponsibility could hurt the euro.
The Americans in turn have sounded less enthusiastic than Europe about aggressive new regulatory regimes.
"The G20 meetings are looking increasingly likely to offer little to boost sentiment or indeed the medium-term economic outlook given the stand-off between the US/UK position and the bulk of the other major economies," said James Knightley, senior economist at ING.
A deal to more than double the $250 billion resources of the IMF to aid countries ravaged by the crisis seems likely given Beijing's more enthusiastic backing for the plan.
The leaders also look poised to approve a multi-billion dollar trade finance package, make more pledges to avoid protectionism and promise tighter control of tax havens.
But that may prove well short of what is needed to revive fragile consumer and business confidence especially as questions still abound on how long it will take for banks to wipe clean their balance sheets from investments now close to worthless.
Even ministers in Brown's government, while insisting next week's summit is only one stop on a long road to global recovery, warn of the risks of rhetoric overriding substance.
Foreign office minister Mark Malloch-Brown said in an online debate on Friday that the core goal of Thursday's summit should be to restore confidence for investors and consumers.
"If they (leaders) don't, they will obviously add to a sense of drift and crisis," he said, before stating the summit would not provide an instant cure.
"We're not going to see the world economy turned around on April 3," Malloch-Brown said. "So maybe it'll be seen as the beginning of the end of the crisis and the moment where leaders were able to galvanise a new direction and a new authority."
STRIVING FOR SUCCESS
Brown has certainly been trying hard. The 58-year-old former finance minister has flown around the world trying to build support. He was in Strasbourg on Tuesday, New York on Wednesday, Brasilia on Thursday and Santiago on Friday.
Ask him whether he thinks he can get a sweeping agreement and he says he would not be making the effort if he did not.
The same determination won him the day in 2005 when he managed to secure a G8 deal to write off the debts of the world's poorest countries after months of opposition from many, including the United States and Japan.
But experts say positions are too intractable and there is no quick fix to end the crisis. Germany and France are not about to do a sudden about-turn and pledge billions more in spending to reflate their economies.
Evem Brown's own scope to practice what he preaches is limited. He was warned by his own central bank governor this week that Britain's budget deficit was already too high and would limit his scope for additional fiscal stimulus.
"He'll have egg on his face after the summit," one member of British opposition leader David Cameron's cabinet told Reuters.
But that may be underestimating the power of a multitude of photocalls with fellow world leaders, most notably Obama.
"I do think the press coverage will help," said Julia Clark, head of political research at IPSOS MORI.
The circus starts in earnest on Tuesday when Obama arrives in London, his first trip out of the Americas as president.
The heads of state meet the Queen on Wednesday and on Thursday will doubtless pledge to do whatever it takes.
Brown's popularity got a big boost in October when he almost managed to erase a 20-point Conservative lead after his plans to recapitalise the banks were emulated around the world.
But with the British recession intensifying, the Conservatives have once again pulled far ahead and Brown aides are desperately hoping for the same kind of bounce again before an election that must take place by June 2010.
A slip of the tongue in December meant Brown claimed to have saved the world, he now needs the world to save him.