Obama proclaims G-20 summit 'a turning point' in economic recovery

Earlier today, we finished a very productive summit that will be, I believe, a turning point in our pursuit of global economic recovery.

LONDON (MCT) - President Barack Obama leaves London Friday for a NATO conference in Europe after a global summit here that he said helped the world turn the corner and chart a course out of the worst economic crisis since the 1930s.

"Earlier today, we finished a very productive summit that will be, I believe, a turning point in our pursuit of global economic recovery," Obama said at the end of the daylong conference Thursday evening.

"The whole world has been touched by this devastating downturn. And today the world's leaders have responded with an unprecedented set of comprehensive and coordinated actions."

The G-20, a group of 19 countries plus the European Union, reached agreement to pump an additional $1.1 trillion into the International Monetary Fund and related institutions to help struggling countries restore growth and create jobs; to expand regulation of all "systemically important" financial institutions such as hedge funds; and to pressure tax-haven nations that let the wealthy hide their riches from taxation.

British Prime Minister Gordon Brown proclaimed the summit's consensus the start of a new financial architecture for a changing world, one in which the U.S. cannot and will not set the course alone.

"The old Washington consensus is over," Brown said. Now, he said, there is "a new consensus" based on "taking global action together ... A new world order is emerging."

Obama didn't dispute Brown's assertion, although he at maintained that the U.S. still plays a pivotal global leadership role.

Obama at first defined the fading "Washington consensus" as pro-globalization and deregulation that took a "cookie cutter" approach to all countries.

Later, he expanded to say that the world is no longer the same as when dominant leaders such as Franklin D. Roosevelt and Winston Churchill could sit down together "in a room with a brandy" and remake the world's financial system at the end of World War II.

"That's not the world we live in. And it shouldn't be the world that we live in. And so, you know, that's not a loss for America ... Europe is now rebuilt and a powerhouse. Japan is rebuilt, is a powerhouse. China, India _ these are all countries on the move. And that's good. That means there are millions of people, billions of people who are working their way out of poverty."

As if to underscore the changing global economic personally in the summit's final hours to mediate a dispute between France and China landscape _ not to mention his own emergence on the world stage _ Obama intervened.

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French President Nicolas Sarkozy was pushing to have the G-20 spotlight offending tax havens based on a list published Thursday by the Organization for Economic Cooperation and Development.

China objected, however. White House aides said it was because China doesn't belong to the OECD. China also has resisted a crackdown that might hit its own tax shelters in Hong Kong and nearby Macau.

Obama pulled Sarkozy aside and offered a compromise, according to a senior White House official, who spoke on the condition of anonymity as a matter of policy. Obama proposed that the G-20 merely "take note" of the OECD list, thus opening the door to implicit but not direct endorsement of that list.

Soon after, Obama spoke with Chinese President Hu Jintao, and then with both men. The deal was reached and his approach was included in the G-20 communique.

"I'm truly happy with the results; we're all happy with the results," said Sarkozy, who had threatened days earlier to walk out of the summit if he didn't get his way.

As his aides boasted about his personal diplomacy, Obama blamed the news media for exaggerating disagreements between France and the U.S. before the summit over whether the summit should stress more spending to stimulate economies or more financial regulation.

"Some of you in the press, some commentators, confused honest and open debate with irreconcilable differences," he said. "But after weeks of preparation and two days of careful negotiation, we have agreed on a series of unprecedented steps to restore growth and prevent a crisis like this from happening again."

Key to the bargain is the use of the OECD list to "name-and-shame" tax havens into more transparency. The OECD list released Thursday included China on its top list of countries that "substantially implemented" international tax standards.

China's "Special Administrative Regions," the former British and Portuguese colonies of Hong Kong and Macau, were listed separately in a second tier of countries that have agreed to standards but not yet implemented them.

"We stand ready to deploy sanctions to protect our public finances and financial systems," the G-20 group said in its final statement. "The era of banking secrecy is over."

The leaders also agreed to pump $1.1 trillion into efforts to shore up the global economy, including an additional $500 billion for the International Monetary Fund and $250 billion to promote trade.

The spending comes atop roughly $2 trillion already pledged by individual countries to create jobs and stimulate growth.

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"Together with the measures we have each taken nationally, this constitutes a global plan for recovery on an unprecedented scale," the leaders said.

Obama heads next to France and Germany, where he'll urge members of the NATO alliance to help with manpower or money in the war in Afghanistan.