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World Leaders Wary Of U.S. Finance Plan

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The Associated Press

Published: March 14, 2009

WASHINGTON - The leaders of the world's most powerful economies are deeply split over how to fight a downturn that is intensifying around the globe, with no nation in a position of strength as finance ministers gather to talk about the crisis.

The United States is pushing for more worldwide stimulus measures, but Europe wants world leaders to focus instead on stricter oversight, arguing that lax U.S. regulation is to blame for the economic decline.

Cracks in the global fight against the economic downturn were on display as finance ministers of the Group of 20 nations gathered in southern England, many of them voicing alarm that the United States is trying to spend its way out of the recession.

The G-20 represents more than 80 percent of the global economy, and the meeting beginning today in Horsham is supposed to lay groundwork for a full summit of heads of state in April. But fears grew Friday that fissures over how to solve the crisis could prevent even that.

"The danger now is doing too little, too late," World Bank President Robert Zoellick warned after arriving in Britain for the meeting.
Treasury Secretary Timothy Geithner said earlier this week that the U.S. economy "needs a revival of global growth to complement the stimulus we are injecting at home."

But European nations, particularly Germany, are wary about pursuing such a course. Many European governments say their banks may need large bailouts. And they say the United States doesn't bring much credibility to the talks.

"The issue is not spending even more but to put in place a regulatory system to prevent the economic catastrophe that the world is experiencing from being repeated," German Chancellor Angela Merkel said.

As leaders quarrel over the answer, the decline is getting worse. The World Bank has forecast trade to fall to its lowest point in 80 years.

U.S. DEBT WORRIES CHINA

BEIJING - China's premier didn't say it in so many words, but the implied warning to Washington was blunt: Don't devalue the dollar through reckless spending.

Premier Wen Jiabao's message is unlikely to be misunderstood at the White House. It is counting on Beijing to help pay for its stimulus package by buying U.S. bonds. China already is Washington's biggest foreign creditor, with an estimated $1 trillion in U.S. government debt. A weaker dollar would erode the value of those assets.

The appeal suggests the outlines of Chinese President Hu Jintao's stance when he meets with President Barack Obama at a summit April 2 in London of the Group of 20 major economies on possible remedies for the global crisis.

In Washington, White House press secretary Robert Gibbs responded to Wen's concerns by saying the Chinese should rest assured because investments in the United States are the safest in the world.

The Associated Press

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