Crisis in focus at G20 summit

From climate change discussions and meetings with the world’s political leaders in New York to Pittsburgh to discuss ways to solve the financial and economic crisis. After some intensive days, Fredrik Reinfeldt today leaves the UN corridors to represent the EU when the leaders of the world’s 20 largest economies meet at the G20 summit in Pittsburgh.

At the EU summit last week a common position was agreed ahead of the G20 summit. What is the EU’s main message in Pittsburgh?

“One of the main issues is to discuss macro-economic development and the need for exit strategies. The origin of the financial crisis was that private individuals had got into too much debt, so the solution cannot be for governments to behave in the same way. Formulating exit strategies is especially important in our current situation, with a rapidly growing elderly population and much greater deficits in the world’s largest economies. On this issue I am sure we will have a discussion on proceeding with caution, so as not to risk disrupting the economic recovery”, says Fredrik Reinfeldt.

“The other main message is about what conclusions we draw from the fact that a year ago the world was on the brink of financial meltdown. We have already done quite a lot to reduce the risk of landing in the same situation again, such as coordinating bank guarantees and putting in place financial stimulus measures, but now we must become better at cross-border coordination of financial market regulations. In Pittsburgh we will look at how we can steer the bonus and compensation systems in a way that does not lead to excessive risk taking in the financial sector.”

The EU heads of state and government have agreed to introduce binding rules and bonus ceilings, but the USA, for example, is less positive. What do you think will happen on the bonus issue?

“President Obama has been on Wall Street and said that the USA must also draw conclusions that ensure we avoid ending up in the same situation as a year ago. It is true that they don’t like the idea of an individual ceiling like the one we have agreed on in Europe, but we will have to discuss that. There are also other aspects to this issue, such as preventing bonus payments when companies make a loss, ensuring real board decisions are made, grounded in the taking of real responsibility in companies, and the removal of guaranteed bonuses that are seen as something that are paid out regardless of results. I hope that we can reach a coordinated consensus on this in Pittsburgh, since it is coordination that I consider the key to many of the solutions to the world’s financial problems.”

The financing of action on climate change is also on the agenda in Pittsburgh. Is there something from the UN discussions that you will be taking with you to the G20 summit?

“We have not yet seen any clear initiatives in this area, but we will quite likely continue the discussion from the UN climate change conference that was held on Tuesday. It is a very important issue that means a lot to a lot of countries, not least for the developing countries who need additional funding in order to be able to implement adaptation measures to tackle climate problems that they are already experiencing. And if we are to reach a global agreement in Copenhagen and get a global response to the climate crisis, then this type of financial support will be absolutely necessary.”

What do you hope to have achieved by the time you leave Pittsburgh on Friday evening?

“This summit is a continuation of a process that has been going on for a long time and which aims both to remove the effects of the financial crisis and to better vaccinate us against it happening again. I hope that we will be able to see that it has been possible to take further steps in that process. At the same time, there may also be a discussion on the G20 process itself, on which countries should be represented and on whether the G20 is the right forum for these discussions. The smaller the Group is made, the more countries there are who feel that they aren't allowed to join in. This is nothing strange. We are all democratically elected and have a responsibility towards our voters. Of course everyone wants to have an influence in the processes that we help to finance.”