By Brian Love and Tamora Vidaillet
PARIS, Feb 9 (Reuters) - World leaders must do more to fight the economic crisis than publish declarations of intent, and the next G20 summit is "time to deliver", South Korea's chief G20 envoy and presidential economics adviser told Reuters.
In an interview in Paris, Il Sakong, the man who accompanied President Lee Myung-bak to the first crisis summit last November in Washington explained the stakes, as he sees them, for a G20 follow-up summit that Britain's Gordon Brown hosts on April 2.
http://www.londonsummit.gov.uk/en/ http://www.g20.org/
Most of all, he said, leaders must show they can honour a pledge they made last November to preserve the status quo on free trade, and they must agree how much fiscal stimulus is deployed to counter recession.
"The global community is looking for any kind of strand of hope," said Sakong, who will be in charge of G20 events next year. "We need more concrete action and measures -- and not just principles and rhetoric. Otherwise the G20 process will become just another talk shop."
With recession raging, resisting protectionism and agreeing how much public money had to be pumped into economies took precedence over more forward-looking reforms of the financial system, he said in the interview conducted on Friday.
On stimulus, IMF chief Dominique Strauss-Kahn had suggested the overall aim should be to have programmes worth around two percent of gross domestic product, which seemed like a good starting point, said Sakong. G20 leaders might also want to agree in April that they could go further if needed.
SLOWBURN REFORMS
On the reform front, Sakong said progress was slow if steady on the plans the G20 announced in November to better regulate and supervise financial markets.
Better regulation of derivatives trading and registration of hedge funds are two areas where the April summit should perhaps be able to move from planning to implementation, he said.
Less advanced areas included reforms of bodies such as the International Monetary Fund, accounting rules regarding asset valuations and governance issues.
South Korea takes over the presidency next year of the G20, a forum many expect to assume a fuller role in global economic governance alongside, if not instead of, the G7/G8 group which is controlled solely by industrialised countries.
Sakong only referred when prompted to the G7 -- the United States, Japan, Germany, France, Britain, Italy and Canada, plus Russia to make the G8 -- whose finance ministers meet in Rome later this week about the economic crisis. [ID:nL5229613] [ID:nL5706416] http://www.g8italia2009.it/G8/Home/VersoIlVerticeG8/G8-G8_Layout_locale-1199882116809_IncontriMinisteriali.htm
The G20, including economies such as China, India, Brazil, South Africa and Saudi Arabia, represents about 80 percent of global economic output, something the G7 countries used to account for alone, but no longer.
After talks with his counterparts in Germany, France and G20 presidency-holder Britain, Sakong is due to meet U.S. President Barack Obama's top economic adviser Lawrence Summers this week.
Like everyone else, he is eager to see how cooperatively the new team plays it on issues of global economic impact, following years when George W. Bush ignored calls for greater supervision and regulation of the financial sector.
The current global financial crisis blew out of the United States when a housing boom turned to bust, triggering a collapse in debt derivatives that had been sold on and emulated worldwide.
While Britain, with a financial centre to rival New York, also turned a deaf ear to calls for greater market regulation over the decade when Brown was finance minister, Brown the prime minister is saying something must be done now that financial markets are engulfed in the worst crisis in decades.
STANDING STILL
Fear that protectionism, 1930s-style, could make a comeback is one of the overriding concerns right now, said Sakong, who stressed that everything should be done to avoid a repeat of the mistakes made in the Great Depression years.
Sakong pointed out that G20 leaders signed what he calls a standstill pact against protectionism in November under which no country would do anything in the next 12 months that restricted existing free trade channels.
http://www.g20.utoronto.ca/2008-leaders-declaration-081115.html
The commitment was ignored by some signatories in the days and weeks after the ink dried, he said and a growing number of countries appeared to be doing or considering doing likewise.
When pressed to name names, Sakong cited Russia, India and Indonesia, but added that they were not alone. There was concern about policies being adopted even by countries who are members of the OECD, an organisation that promotes free markets.
The possibility of a 'buy American' clause being included in the next U.S. economic stimulus package was one among the many areas of concern, he said.
The World Trade Organisation and the OECD have been asked to do a stocktaking exercise on protectionism and report to the G20 finance ministers and their deputies, who are due to meet before the leaders' summit on April 2, Sakong said.
(Editing by Ruth Pitchford)