Overtaken by Greek threats of a referendum which could have potentially damaged the17-nation fragile monetary union, much of the time of the Summit was consumed in making sure that the “comprehensive framework” (October 26) of EU leaders to save the zone, survived, and the latter would determinantly implement it, mobilising resources available within, to build “fire-walls” to protect countries like Greece and Italy with imminent debt defaults.

By the time the G-20 leaders ended the Summit, the Greek drama had played out and the Prime Minister George Papandreou, who had thrown the referendum bomb-shell for a while, survived the vote of no-confidence in Parliament. He then offered to form a coalition government that would ratify EU’s bail-out package by Greece’s creditors. The Summit outcome and the Greek solution could help to rev up global financial markets in the week beginning November 7.

Faced with an extensive agenda - growth, jobs, social inclusion, financial regulations, banking transparency,, fuel subsidies, Doha Round and climate change - the Sixth Summit of world’s major economies, advanced and emerging, made “significant progress” on many items with Prime Minister Dr Manmohan Singh describing the outcome on EU at best as “work in progress”.

In pre-Summit diplomacy, President Obama enjoined on the French President Sarkozy and German Chancellor Merkel the crucial role that euro-zone leaders must play to flesh out details of the comprehensive plan and ensure its swift implementation to bring stability to the euro-zone and to financial markets worldwide. European nations needed to send a strong signal to markets they would preserve their currency, Mr Obama said.

The United States, for its part, would stand ready to help “our partners” as they worked to resolve the crisis, he said. This would be in ways other than the involvement of US tax-payer.

To euro-zone leaders looking for China to buttress their stability fund (EFSF), there were no direct individual responses in Cannes. The G-20 Communique, taking note of IMF’s current participation in European bail-out efforts, embodied a commitment to give the Fund whatever resources are necessary to respond adequately in case of systemic crises in member-countries.

To further strengthen global financial safety nets, G-20 backed IMF proposal for a Precautionary and Liquidity Line (PLL) ”to provide on a case by case basis increased and more flexible short-term liquidity to countries with strong policies and fundamentals facing exogenous shocks” To enable the Fund continue to play its systemic role for the benefit of its whole membership, a point stressed by Dr. Manmohan Singh, the Summit asked G-20 Finance Ministers to work on deploying “a range of various options including bilateral contributions to the IMF, SDRs, and voluntary contributions to an IMF special structure such as an administered account”.

This would open a channel for countries like China wishing to augment Fund resources directly. USA has not favoured bilateral investment in EU stability fund by China or other countries, as it feels the European problem is essentially one for the Europeans themselves to solve, given their resource capacity, institutions and available tools.. IMF Managing Director Christine Lagarde said it would be for member-states to decide exactly how they would contribute to the several vehicles in the Fund.

The French President Nicolas Sarkozy said after the Summit: “We will fight to defend Europe and the euro.” He noted G20 had agreed to boost the resources of IMF and hoped specific steps would be agreed on by February next. The euro-crisis was an anti-climax to the ambitions of the French Presidency of G-20 at the start of 2011for reforming the international monetary system and framing a new agenda on commodities, food security, development etc. Mexico takes over the Presidency for 2012 on December 1 this year itself.

The Cannes Summit commitments included one for countries to “move rapidly” towards greater exchange rate flexibility, without specifically mentioning China and for countries with strong public finance to boost domestic demand and take steps to address short-term vulnerabilities and strengthen medium-term foundations for growth. USA would implement a package of tax reforms and targeted jobs and investment measures to support the U.S. recovery, consistent with a credible plan for achieving fiscal sustainability in the medium-term, the communique said.,

Japan would quickly implement reconstruction measure while other economies including Brazil and China with relatively strong public finances would take additional discretionary fiscal measures, if needed. Emerging economies with external surpluses commit to implement policies that will support domestic demand-led growth and move more rapidly toward market-determined exchange rates. The leaders undertook to preserve the stability of banking systems and financial markets and ensure that banks are adequately capitalized.

The G-20 welcomed China’s determination to increase exchange rate flexibility consistent with underlying market fundamentals, the communique said. IMF Chief M. Lagarde welcomed the many “takeaways” for the Fund at the Summit (resources, social inclusion etc) but said much work remained to be done at a time the world economy had entered “a more uncertain phase”. She would move quickly on adopting the new PLL to provide increased and more flexible short-term liquidity to countries with strong policies and fundamentals facing systemic shocks.

M. Lagarde commended the spirit of multilateral cooperation embodied in the Cannes Action Plan for Growth and Jobs and on Financial Regulation, and said the Fund would work in cooperation with ILO on employment and social safety net issues. IMF would also provide even-handed “integrated surveillance” of major economies early in 2012. If collective action as envisaged in MAP (Mutual Adjustment Process) takes Place, IMF estimates a rise in world GDP by 1.5 per cent and a 20 to 40 million new jobs.

The Summit said SDR basket composition should continue to reflect the role of currencies in the global trading and financial system. To adjust to currencies’ changing role and characteristics over time, the composition basket would be reviewed in 2015, as part of building a more stable and resilient international monetary system. Standstill commitment on protectionism is extended till the end of 2013 The Summit directed Trade Ministers to explore “credible approaches” for further Doha Round negotiations, especially in regard to concessions for LDCs and such remaining elements of Doha agenda that would bear fruit.

In a keynote address, Prime Minister Manmohan Singh underlined the critical challenges for the world economy. Later, he welcomed Summit progress on Mutual Assessment Process (MAP), financial regulation, banking transparency, and improvements in the functioning of agricultural and energy markets .For the first time, he said, there is a collective commitment by countries to follow policies which meet national objectives while also being consistent with promoting global growth.

Dr Singh had called for increased banking transparency and exchange of information to combat tax fraud and evasion and other illicit flows and this had endorsement in the G-20 communique. He also welcomed Summit outcomes on social inclusion and social protection and promotion of youth employment. A G20 Task Force is being set up to work on youth employment. (IPA Service)