Bolstering the world economic recovery and crafting a deal to fight climate change will be top of the agenda for G20 finance ministers meeting in Scotland from Friday.


Ministers plus central bankers from the 20 richest and fastest-emerging economies will hold their third get-together of 2009 over two days in St Andrews, a seaside town known as the home of golf.

Building a ‘secure economic future’

Now that countries like the US, Japan, Germany and France have emerged from recession after last year’s global financial crisis, the G20’s focus has switched from disaster management to building a secure economic future.

But this time, the grouping will also have to turn its attention to climate finance ahead of December’s key UN conference in Copenhagen which aims to seal a deal to replace the Kyoto Protocol, although hopes of an accord are fading.

Rodrigo Delgado Aguilera, a researcher at foreign affairs think-tank Chatham House, said the St Andrews meeting was likely to produce only “incremental” changes, rather than major developments.

“This crisis is evidence enough that we don’t really understand how the world works. Maybe for now these smaller steps are better but it shouldn’t be an excuse not to think big,” he told AFP.

In a bid to ensure there is no repeat of last year’s near-meltdown which saw the collapse of US investment bank Lehman Brothers, world leaders at September’s Pittsburgh G20 summit agreed a new system to coordinate economic decision-making and encourage stable, long-term growth.

Key working out a mutual assesment system

A key priority this weekend will be working out details of how this mutual assessment system will work, G20 officials said, speaking on condition of anonymity.

Exit strategies from emergency measures put in place to fight the global slump will also be discussed.

But it is thought ministers are likely to echo the need to keep them in place until “a durable recovery is secured”, as leaders said at Pittsburgh.

Speaking before the meeting, a senior US Treasury official stressed the US had only seen one quarter of growth — announced last week — and that the economy was still in a fragile state.

British Prime Minister Gordon Brown has insisted Europe was in harmony on the issue following an EU summit last week.

“We agreed unanimously with no country dissenting that the supporting policies should not be withdrawn until recovery is assured,” he said.

The US Federal Reserve on Wednesday kept its near-zero interest rate policy and maintained a trillion-dollar support of the ailing economy, adding that it had “continued to pick up” since September.

Meeting follows bad economic news for British hosts

The St Andrews meeting comes after a week of embarrassing economic news for host country Britain, which is still in recession.

It said Tuesday it was pumping in an extra 30 billion pounds (33 billion euros, 49 billion dollars) to support Royal Bank of Scotland and Lloyds Banking Group, which are now 84 percent and 43 percent state-owned respectively.

And the Bank of England will decide Thursday whether to inject billions of pounds of extra money into the economy to help it out of its slump.

On the environment, climate change campaigners are hoping for progress ahead of Copenhagen.

G20 sources said discussions in Scotland would focus on how cash from rich countries to help developing nations tackle climate change should be delivered.

Danish Prime Minister Lars Loekke Rasmussen, whose country is hosting the UN climate conference, is attending to monitor progress.

Hopes for developing nation support

European Union leaders agreed last week that developing nations will need 100 billion euros (150 billion dollars) annually by 2020, but failed to put a figure on Europe’s own contribution.

The Pittsburgh summit also saw progress on bank regulatory reform issues, including deferred bonuses for bankers and making the payments subject to clawback in the event of poor performance.

But France has revived the issue in the run-up to St Andrews, with an official saying it is “worried” by a lack of progress since then.

In particular, the US “launched a consultation under the aegis of the Fed but without putting a figure on it,” a French official said, speaking on condition of anonymity.