September 25, 2009
THE Group of 20 developed and developing nations will become the top economic forum, spreading influence to emerging powers such as China and India.
The dramatic shift, announced by the White House, came as President Barack Obama hosted his first major summit in Pittsburgh, Pennsylvania, which was marred by occasional violence as anti-capitalist protesters clashed with police.
“Today, leaders endorsed the G20 as the premier forum for their international economic cooperation,” a statement said.
“This decision brings to the table the countries needed to build a stronger, more balanced global economy, reform the financial system, and lift the lives of the poorest.”
The G8 has served as the premier economic forum for decades and held closely watched annual summits.
Australia is a member of the G20 but not the G8, which comprises Britain, Canada, France, Germany, Italy, Japan, Russia, and the United States.
The announcement came as G20 leaders closed in on a deal to tighten financial regulations after last year's meltdown, with China signalling emerging countries would be granted more clout on the IMF.
At the first day of the two-day summit in Pittsburgh, there was broad agreement on curbing bankers' bonuses and a Chinese central bank official even predicted a move on International Monetary Fund voting rights.
Xie Duo said developing countries had for too long been under-represented in international financial institutions like the IMF.
“We believe that at tomorrow's summit a very important political decision will be made on this matter,” he added, on the sidelines of the summit.
G20 leaders have pledged to work for a comprehensive IMF reform and there is a long-term consensus on the need to address imbalances in voting power, but some European nations have baulked at losing their influence.
For Brazil, China, India and other emerging countries, it is crucial to achieve a breakthrough in negotiations in Pittsburgh so the IMF can endorse the reform at its annual meeting on October 6 to 7 in Istanbul.
Mr Obama and First Lady Michelle Obama opened the G20 summit with a gala dinner in Pittsburgh - chosen as host city to showcase its stunning economic transformation from down-at-heel steel town to high-tech hub.
The start of the gathering was marred by isolated incidents of violence as small groups of anti-capitalist protesters defied police warnings not to march on the summit venue.
Police fired capsicum spray and non-lethal rounds and deployed loudspeakers blasting piercing sound waves to repel the mostly young protesters.
Fifteen people were arrested, police said.
The G20 is a forum for the world's biggest developed and emerging economies and its meetings are a magnet for anti-capitalists opposed to what they see as an undemocratic body promoting globalisation and free market policies.
The summit of the world's 19 biggest developed and emerging economies plus the European Union comes just over a year after a US credit collapse triggered a global economic slowdown.
It also comes six months after the same G20 chiefs met in London to coordinate their response to the crisis, and their performance in Pittsburgh will be judged in part on whether they have lived up to their earlier vows.
After a series of bilateral meetings with Japanese and Chinese officials, US Treasury Secretary Timothy Geithner said Europe and the United States were close to agreeing tough new rules on limiting bankers' bonuses.
In the run-up to the summit there was friction between Washington and some European capitals, with France and Germany in particular pushing for stricter caps on the pay-outs, which they say encourage excessive risks in trading.
“We actually are very close and I believe we are in the same place,” Mr Geithner said.
“We want to have very strong standards to limit the risk.”
Prime Minister Fredrik Reinfeldt of Sweden, who holds the rotating presidency of the European Union, took a similar line.
“I expect the G20 will make a clear statement about the need for global rules on bonuses and compensation, and I also expect broad agreement on how to strengthen supervision in general.”
Summit delegates have all pledged to take tough and lasting measures to bring order back to the markets, shore up failing institutions, save jobs and rekindle growth, but each arrives in Pittsburgh with their own priorities.