By Brian Love
HORSHAM, England, March 15 (Reuters) - G20 leaders cannot solve all of the world's economic woes on April 2, no matter how high British Prime Minister Gordon Brown builds expectations for a landmark financial summit that he will host in London.
As Angel Gurria, head of the Organisation for Economic Co-operation and Development, describes it: "There is no 'open sesame'. We're not talking about pulling rabbits out of hats."
G20 finance ministers made tentative advances during their preparatory talks at a countryside hotel south of London at the weekend, promising to raise the amount of funds available for emerging market economies that cry out for help.
Absent was the public bickering over economic stimulus versus regulation that had plagued the runup to their session.
Beyond that, they rehashed and renewed many other pledges made when G20 leaders held their first summit on the global financial and economic crisis last November, saying free-wheeling hedge funds would no longer escape regulation.
What perhaps counts most right now, economists say, are two things -- their joint commitment to do whatever it takes to keep the world economy afloat, and Washington's plans to tackle the toxic assets that started the crisis and will perpetuate it as long they fester untreated on banks' books.
"We are left hanging on the hope that the U.S. will finally find the magic bullet to restore transparency and confidence in the financial sector, and that they will do it soon," says Marco Annunziata, London-based chief economist at UniCredit.
In essence, financial markets where the trouble began have been looking for quick and easy fixes to a complicated mess.
Governments have already committed trillions of dollars to bank recapitalisation and debt repayment guarantees. Central banks have slashed interest rates and are pumping vast amounts of short-term funds into money markets to keep them functioning as commercial banks clam up.
Now governments are rolling out massive public spending programmes to try to shore up demand to ease the pain of what the IMF calls the Great Recession, the biggest predicted contraction in GDP since before World War Two.
All that has kept the boat afloat while they tackle the hardest issues of all: repairing a system that went very, very badly wrong.
THINK GLOBAL, ACT LOCAL
It is easy to say global problems require global solutions when banks, financial markets and businesses often operate on a worldwide basis. But governments operate within national borders -- hence the attempts to cooperate via the G20, where the large economies of the industrialised and industrialising world with roughly 80 pct of GDP are represented.
"One positive thing that can be said about this summit is the political leaders of the countries that more or less matter for the world economy are at least talking to each other," said Thomas Mayer, global economics specialist at Deutsche Bank.
Small as it sounds when millions are losing their jobs, talk is creating incremental change. Switzerland and several other countries responded to mounting international pressure in recent days by saying they would ease strict bank secrecy in some cases of suspected tax fraud.
"This is a quantum leap," OECD chief Gurria said.
The bottom line is that the G20 process, easy to pillory as all words and no action, is more of a process than an event. Meetings keep up the pressure for change and governments take away one idea or another to work on -- mindful of the need as much as possible to pursue policies that will not be at the expense of others, or they could risk another Great Depression.
Things are inching forward on other fronts at the international level too, including commitments this weekend to regulate hedge funds and impose stricter controls on ratings agencies. But progress on tighter regulation and supervision of banks is slow.
"Let's hope that the victory over tax havens and hedge funds inspires them to eventually take on the big beasts, protectionism and the economic crisis," Deutsche's Mayer said.
The challenge facing policymakers is doing what it takes in terms of emergency measures to stabilise banks and the economy, without losing sight of the need to move ahead on pledges to regulate and restructure a financial markets system that caused the trouble in the first place.
Thus the summit gets pulled between two objectives: the short-term goal of stabilisation of markets and the economy, and the longer-term drive to ensure the crisis isn't repeated.
For the short term, Unicredit's Annunziata says the weekend pledge to provide more funds for emerging market economies is extremely important as credit and investment flows to much of eastern Europe dries up.
On that front, the April 2 summit can be expected, some officials said, to announce that the International Monetary Fund, which has already committed close to $50 billion to economic rescues in Hungary and other countries, will be getting something in the region of $250 billion to double its firepower.
What is less clear is whether the summit will deliver one or two concrete steps to match what Gordon Brown said this weekend would be a "massive change" in oversight of financial markets.