The international summit held in Washington DC over the weekend was perhaps the year's biggest news development, yet it received very little coverage by the mainstream news media in the US. The representatives of the world's twenty largest economies converged onto Washington DC to discuss the serious financial crisis plaguing the world. The Russian president also took the opportunity to addressed the Council on Foreign Relations. Yet there has been very little news coverage of this important event. I wonder why...

Arevordi

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World Leaders Pledge Action to Reform Financial System

G20 agree action plan to revive global economy: http://www.youtube.com/watch?v=Rj4XSa_tvV8

Expectations low for G20 summit: http://www.youtube.com/watch?v=txGPLxR9ACA

What can we expect from G20 summit?: http://www.youtube.com/watch?v=PPE_PDG3wl4

November, 2008

World leaders pledged at a summit in Washington to restore global economic growth and start work on reforming financial regulation. Leaders of the G20 nations, which account for 90% of the world's economy, agreed at Saturday's summit to reform the World Bank and International Monetary Fund to improve their effectiveness in helping emerging economies through the credit crunch. Although leaders hailed progress at the talks, concrete agreements will have to wait until a follow-up summit, scheduled for April 2009, likely to be held in London. A joint summit communique said: "We are determined to enhance our cooperation and work together to restore global growth and achieve needed reforms in the world's financial systems." "We must lay the foundation for reform to help to ensure that a global crisis, such as this one, does not happen again. After the talks, World Bank President Robert Zoellick said: "What matters now are the follow-up actions." French President Nicolas Sarkozy stressed that the vast and complex issues discussed at the summit "cannot be resolved in three weeks," but welcomed the U.S. approach to the crisis, saying: "The U.S. administration has accepted to move on subjects where historically all U.S. administrations refused to move." "Never before have Anglo-Saxons agreed to subject rating agencies to oversight and regulation," he said. Acknowledging failings in global financial regulation, the G20 statement said: "Policy-makers, regulators and supervisors, in some advanced countries, did not adequately appreciate and address the risks building up in financial markets, keep pace with financial innovation, or take into account the systemic ramifications of domestic regulatory actions." President George W. Bush, who leaves office in January, said the participants had agreed to modernize financial regulation, making markets more "transparent and accountable." The outgoing leader hailed the summit as "very successful." President-elect Barack Obama's transition team released a statement saying the future leader was ready to work with other G20 countries to tackle the credit crisis when he takes office. He called the summit "an important opportunity to seek a coordinated response to the global financial crisis."

Source: http://en.rian.ru/world/20081116/118338623.html

Medvedev Proposes Reform of Global Finance System

Medvedev goes to Washington: http://www.youtube.com/watch?v=ewm-MsLmB84

Medvedev warns against unilateralism: http://www.youtube.com/watch?v=ltGC_YbK8ek

Russian President Dmitry Medvedev called on Saturday for the reorganization of the global financial system, including the establishment of an international regulatory commission, a presidential aide said. "To make the process of reform as effective as possible, the president suggested the creation of an international commission of independent, influential experts - financial gurus," Arkady Dvorkovich told journalists at the G20 summit in Washington. He said the first part of the summit had been completed, with 14 people, including Medvedev, having had their say. "The key aspects he [Medvedev] drew attention to were that as regards the reasons for the financial crisis, no analogies with the past would work. This is not the Great Depression ... it's a global crisis of the 21st century," Dvorkovich said. The presidential aide said Medvedev emphasized that the present structure of the global financial security is inadequate, and that new financial institutions are needed to meet present demands. "The system of the international financial architecture will have to be rebuilt to make it open, fair, efficient and legitimate," Dvorkovich said. Medvedev also told the meeting that Russia supported the declaration due to be adopted at the end of the summit. "We back the declaration - it shows most of the problems. It takes into account all that worries us now," Medvedev told G20 leaders. Dvorkovich also told journalists that the leaders had not reached an agreement on transforming the G20 into a wider forum. "There are as yet no plans to transform the forum of finance ministers and central bank heads into a regular forum of leaders of the G20 countries," he said. The aide said this meant that the G20 should be where questions of reforming the global financial structures are decided, while the Group of Eight leading industrial countries should remain the forum for issues of world security. Dvorkovich also said the Russian president had called on G20 summit participants to help the world's poorest countries overcome the financial crisis. "It is important to work together to provide all the countries most affected by the crisis, the poorest countries, with resources through the IMF and other international and regional organizations," the aide said, adding that all the summit participants were united on the issue. Dvorkovich said the next G20 summit would be held not later than April 30, 2009. "After the first half of the summit, there is consent that global problems demand global solutions. The participants expressed the readiness to hold the next summit not later than April 30 next year," he said. The G20 comprises 19 of the world's largest economies plus the European Union.

Source: http://en.rian.ru/russia/20081115/118335777.html

Russia's Medvedev Speaks on Foreign Policy in Washington

Medvedev's speech at US Council on Foreign Relations: http://www.youtube.com/watch?v=0ss_LzlxjUA

Russia will respond to the U.S. missile defense plans for Europe if the U.S. steps are unacceptable for Moscow, President Dmitry Medvedev said Sunday. "We would act only in response and only if the [U.S. missile defense] program continues in a variant unacceptable for us," Medvedev said after the G20 economic summit, while speaking to the Council on Foreign Relations in Washington. Washington recently said it had provided new proposals to ease Russia's concerns over the planned deployment of 10 U.S. interceptor missiles in Poland and a tracking radar in the Czech Republic, which the George Bush administration has said are needed to counter possible attacks from "rogue" states such as Iran. Russia, which says the missile defense system is a threat to its national security, has indicated it will not address the U.S. proposals until after president-elect Barack Obama is inaugurated as U.S. president in January. Medvedev announced last week the possible deployment of Iskander-M short-range missile systems in the country's Kaliningrad exclave, sandwiched between Poland and Lithuania on the Baltic Sea. However, the Russian leader said in an interview with France's Figaro newspaper published on Thursday that, "We could reconsider this response if the new U.S. administration is ready to once again review and analyze all the consequences of its decisions to deploy the missiles and radar facilities." Medvedev also told the council that Russia hopes relations with the U.S. will improve under Obama. Medvedev proposed on Sunday creating a forum uniting European countries, international organizations and NATO to discuss possible threats to security. Speaking about Russia's tense relations with Georgia, Medvedev told the council that his country is ready to deal with Georgia but not with the Mikheil Saakashvili regime. "We are ready to build relations with Georgia but not with the current regime," the Russian leader said. In early August, Russia fought a brief war with Georgia over South Ossetia after Georgian forces attacked the republic in an attempt to bring it back under central control. On August 26, Russia recognized South Ossetia and Abkhazia, the other Georgian breakaway republic, as independent states. Abkhazia and South Ossetia broke away from Georgia following the collapse of the Soviet Union in the early 1990s amid armed conflicts that claimed thousands of lives.

Source: http://en.rian.ru/world/20081116/118337082.html

Russian National Debt Lowest of All G20 Countries

Russian President Dmitry Medvedev can look around the summit table on Saturday knowing his government has less debt than any other G20 country, according to the Guardian newspaper. The British paper put Russia's debt at $76 billion - less than 1% of the United States' $8.4 trillion. As a percentage of gross domestic product, Moscow's situation is not quite as rosy, but President George Bush would probably take a national debt running at 6% rather than 60% of GDP. But by that measure, Japan may be in even worse shape - its $7.45 trillion public debt is more than 1 1/2 times the country's GDP. But Japan has spent so much of the last decade or so in economic difficulties that maybe the country has grown used to it. Things could hardly be more different in Britain, where a decade of almost uninterrupted growth has come to a grinding halt. But the $1.2 trillion debt is still less than half of GDP. The other three European members of the G8 are in even worse shape. They all owe more than half their GDP. Italy, with the lowest GDP of the three, has the highest debt according to the Guardian, at $2.19 trillion. Next is Germany with $2.07 trillion, followed by France at $1.63 trillion. Of the so-called BRIC countries, China's $580 billion debt is hardly daunting at less than a fifth of GDP, while Brazil's $590 billion is still less than half its GDP. India, on the other hand, is up there with the United States with a public debt of $637 billion totaling more than 60% of its 2007 GDP. Down the bottom of the Guardian chart with Russia are Saudi Arabia, owing $91 billion, and South Africa, with a debt of $88 billion.

Source: http://en.rian.ru/business/20081115/118335408.html

In related news:

Russia: Pushing the Ruble

Summary

Russia and its former Soviet neighbors are meeting to discuss a proposal to carry out energy transactions in rubles instead of U.S. dollars. The plan theoretically offers an economic benefit to importer states, but they might not go for it given the political strings attached.

Analysis

National bank chiefs and finance ministers from the Commonwealth of Independent States (CIS) — which includes Russia, Belarus, Moldova, Armenia, Azerbaijan, Kazakhstan, Uzbekistan, Tajikistan and Kyrgyzstan — are meeting Nov. 17 to discuss the possibility of using the Russian ruble for payment of energy deliveries from Russia. This initiative has been on the table for some time, but now Moscow is pushing the plan in order to prop up its own currency and solidify its control over other CIS countries. Currently, Russia accepts energy payments in U.S. dollars from its export customers and then converts the money to rubles. However, Russia tacks on a hefty fee for the currency conversion, making energy imports from Russia just that much more expensive. The offer on the table is to allow importers of Russian energy (at least within the CIS) to pay in rubles, which Moscow says will help eliminate that costly conversion fee for those states.

Russia is interested in pushing the plan for two reasons. First, it would give a real boost to the struggling ruble. Having CIS countries pay in rubles would artificially increase demand for the currency, thus buoying its value. The Russian ruble has been declining steadily, falling 19 percent between July and November. Meanwhile, there have been growing signs that Russians themselves are less confident in the currency, making bank runs in fear of a devaluation and increasingly using foreign currency. The Kremlin has been looking for a way to increase the use of the ruble and is now pushing CIS countries to do so. The second reason for the proposal is to move toward making the ruble the regional currency — thus increasing Russia’s influence over the CIS states. Russia is in the process of consolidating control over its former Soviet sphere, and creating a currency dependency and connection would help strengthen its hold over the region.

The rubles-for-energy scheme is being presented to the CIS members as an option — for the moment. Potential cost savings aside, however, the CIS states understand the political subtext; they also understand that options presented by Moscow have a way of turning into ultimatums when they are in Russia’s strategic interest. But such an ultimatum can only work if the country paying has no other option than to buy Russian energy — which is not the case for most of the CIS. Kazakhstan, Uzbekistan and Azerbaijan are now energy exporters themselves; Tajikistan and Kyrgyzstan receive most of their energy supplies from other Central Asian suppliers; Armenia receives shipments from Iran; and Moldova is hooked into Europe’s energy infrastructure through Romania and Ukraine.

The only CIS country that is wholly dependent on Russian energy is Belarus — which, while it could theoretically take shipments of some fuels from other sources, pays far below market prices for Russian energy and would take a severe economic hit if it shunned Moscow as a supplier. Belarus has little choice but to adhere to the terms set up by the Kremlin — which would explain why Minsk has already agreed to pay for the oil and natural gas it receives from Russia in rubles. Russia also awarded Belarus a credit of 50 billion rubles (US$2 billion) credit for its energy supplies to sweeten the deal. All the other CIS countries have options, and therefore cannot be forced to accept the rubles-for-energy scheme. Russia could strengthen its argument for switching to the ruble by making it a requirement for all trade, not just energy; but even then, the CIS states would have other options.

Source: http://www.stratfor.com/analysis/200..._pushing_ruble

Russia, Syria May Establish Joint Bank

Syria is interested in establishing a joint bank with Russia with the purpose of a possible switchover to the Russian ruble in mutual settlements, the Russian communications minister said on Thursday. Igor Shchegolev said the issue was raised on Thursday during the sixth meeting of a Russian-Syrian commission on trade-economic and scientific-technical cooperation. Shchegolev is the commission's co-chairman. He said the establishment of the bank would help remove problems regarding access by Syrian producers to the Russian market. The Russian minister added that the bank would mainly service the activities of small and medium businesses.

Source: http://en.rian.ru/business/20081120/118434662.html