WASHINGTON — The leaders of 20 of the world's largest economies will gather Friday and Saturday in Washington to search for a way out of the biggest global economic meltdown in decades.
What they'll accomplish in a session presided over by lame-duck President George W. Bush remains to be seen.
So far, the run-up to the Group of 20 summit has been marked by disagreement between European and U.S. officials over how much additional regulation is needed to end the crisis and to prevent similar problems from breaking out again.
European leaders have supported more regulations on the financial institutions that have been widely blamed for the credit crunch that's strangling global economies. The Bush administration, however, has warned against interfering too much in economies and opposed creating a global regulator of financial markets.
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The leaders of developing countries have complained bitterly that the financial turmoil started by irresponsibility in the United States and Europe has dragged down their booming economies.
Such debate promises to be the summit's main attraction as world leaders hesitate to take any concrete steps while the Bush administration remains in power. President-elect Barack Obama won't attend the meeting, sending in his place former Clinton administration Secretary of State Madeleine Albright and former U.S. Rep. Jim Leach of Iowa, a Republican.
Stock markets around the world could tumble anew if the debate gets too contentious, said Charles Freeman, a former U.S. assistant trade representative for China affairs.
"There's nothing positive that can come out of this meeting," Freeman said. "If you're Obama, you don't want your fingerprints anywhere near this."
Officials in Europe and the United States, however, said the summit would be the beginning of a long process of reshaping global financial institutions weakened by the crisis. They plan a follow-up meeting early next year.
U.S. officials said they'd like to see greater transparency and tighter accountability rules for financial institutions while governments more closely regulate the financial instruments, such as credit default swaps, that helped spark the problems.
European and U.S. leaders also singled out credit-rating agencies as culprits in the crisis that needed an international code of conduct.
Financial ministers who attended a preparatory G-20 meeting over the weekend in Brazil emphasized the need for more market regulation and coordinated government action.
U.S. support for more regulation will be limited, however, as Bush made clear in a speech Thursday.
"History has shown that the greater threat to economic prosperity is not too little government involvement in the market, it is too much government involvement in the market," he said.
The G-20 is composed of Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, the United States and the European Union.
European leaders have raised expectations about the meeting ever since French President Nicolas Sarkozy broached the idea of the summit at the United Nations in late September.
Sarkozy and his top aides have signaled that they intend to use the meeting to press for fundamental revisions of the global economic system and for new regulations, beyond where the Bush administration would like to go.
In a speech in Washington this week, French Foreign Minister Bernard Kouchner called for far-reaching global restructuring, including of the International Monetary Fund and the World Bank, which sometimes are known as the Bretton Woods institutions after the town in New Hampshire where they were conceived at a conference in 1944.
"We should start with the reform of the Bretton Woods system and the establishment of an effective and fair system of global economic governance. I know this is an immense hope," Kouchner told the Washington-based Brookings Institution, a center-left policy-research organization. "The institutions that we created in the middle of the last century are just not adapted to the complexity of the next century."
In a conference call, World Bank President Robert Zoellick said he supported such changes, while noting that his organization has been confronting the crisis, including committing to $35 billion in new loans to help countries get through it.
Nonetheless, the bank estimates that industrial economies will shrink by a tenth of a percent next year, while the world economy expands by only 1 percent.
"While there are differences between (countries), I see increasing convergence on the big issues," Zoellick said. "The world faces economic crisis, and all countries need to use their national policies to address these core issues."
Zoellick, like other officials, stressed the short-term need to inject more liquidity into financial institutions and praised the Chinese government for launching a $586 billion economic stimulus plan days before the summit.
(Warren P. Strobel contributed to this report.)
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