U.S. to push for new economic world order at G20

http://www.reuters.com/article/topNews/idUSTRE58G34Z20090921?sp=true

WASHINGTON (Reuters) - The United States will urge world leaders this
week to launch a new push in November to rebalance the world economy,
but there are doubts national governments will bow to external advice.

A document outlining the U.S. position ahead of the September 24-25
Group of 20 summit in Pittsburgh said exporters, which include China,
Germany and Japan, should consume more, while debtors like the United
States ought to boost savings.

"The world will face anemic growth if adjustments in one part of the
global economy are not matched by offsetting adjustments in other
parts," said the document, which was obtained by Reuters on Monday.

The framework drafted by U.S. policy makers foresaw analysis of G20
members' economic policies by the International Monetary Fund to
figure out if they were consistent with better balanced growth.

"We call on our finance ministers to launch the new framework by
November," the document said, signaling a determined effort to
maintain momentum for change created by last year's global financial
crisis.

The United States envisages the IMF playing a central role in a
process of "mutual assessment" by making policy recommendations to the
G20 every six months.

Finance ministers and central bankers from the G20 countries are due
to meet November 7-8 in Scotland.

European Central Bank President Jean-Claude Trichet said persuading
Europe, the United States and China to accept IMF advice on economic
policy may be difficult. In the past, many countries have ignored
suggestions the IMF dished out in regular reviews.

Trichet told French newspaper Le Monde the G20 had made progress on
reforms to make the financial system more stable after the crisis.

"The most difficult question is still open: Europe, America, China,
are they ready to modify their macroeconomic policies in the future --
by following the advice of the IMF and under pressure from their
peers, for the common good, and world economic stability?" he said in
the piece on Monday.

G7 sources told Reuters there was a renewed determination to cooperate
because the crisis had driven home the interconnected nature of the
global system. That said, governments would not allow themselves to be
told what to do.

"We can't get to a situation where any country is giving up its own
decision-making," said one source, who spoke on the condition of
anonymity.

Germany, a major exporter to the United States, was singled out on
Sunday by U.S. President Barack Obama as a country that, like China,
exports a lot but does not buy much back.

But a top European Union official said that the euro zone, where 16
countries share a common currency, had to act as a collective.

"It is difficult to think about one country without taking into
consideration what is the impact in the euro area," European
Commission President Jose Manuel Barroso told reporters in New York.

Taxpayer money to the tune of $5 trillion has been pumped into the
world economy to keep it from seizing up since the beginning of the
crisis last September.

G20 leaders will maintain that pace of stimulus while acknowledging
that at some point it will have to be wound down, the document said.

But, mindful of how a disorderly rush to raise interest rates could
roil world markets again, they will also ask finance ministers to
thrash out a "transparent and credible" exit strategy.

There were no details of how to achieve this in practice, but the
document echoed the caution of G20 finance ministers at their meeting
in London earlier this month acknowledging the pace of change would
vary by country.

Simon Johnson, a former chief economist at the IMF, warned there was a
risk the Pittsburgh summit would be an empty public relations
exercise.

"The point of the meetings is to try to reassure themselves and
everyone else that they're broadly on track and have a round of
applause and some back patting," he said.

But John Bruton, the EU ambassador to Washington, said it was
important not to ignore the summit's symbolic power.

"I think we're seeing the beginning of a conversation between world
leaders," he told Reuters in an interview.

(Additional reporting by Anna Willard in Paris, Sumeet Desai in
London, Leslie Wroughton and Emily Kaiser in Washington, Caren Bohan
in Troy, Walter Brandimarte in New York and Darren Ennis in Brussels;
Editing by Andrew Hay)