Currency war moves to G20 Seoul Summit
By Cho Jin-seo
WASHINGTON — The international tension on economic policies is looking to reach a climax at the G20 Seoul Summit, as the International Monetary Fund (IMF) ended a general meeting without any clear solutions on sensitive issues such as voting share reform and exchange rate rebalancing.
The issues will now be passed on to G20 meetings to be held in Seoul later this month and the summit in November. Development of discussions over the next four weeks will decide whether the G20 can claim its legitimacy as a premier global decision-making body, with Seoul playing a crucial role as the host and mediator between global powers.
IMF Managing Director Dominique Strauss-Kahn wrapped up the IMF’s policy steering committee meeting on Saturday by masterfully avoiding touching thorny issues such as the U.S.-China tussle over their currencies exchange rate.
“What I want to explain is that the discussion which takes place, not only between China and the United States but with other partners, is a very important one and I think that we are now arriving at the moment where the people are discussing the right stuff, and discussing the right stuff is not that of a declaration on the exchange rate,” he said at an official press briefing.
The IMF chief also tried to tone down the tension, saying the term “currency war” from the media is “probably too strong a word.”
South Korean Finance Minister Yoon Jeung-hyun also dodged reporters’ questions on the foreign exchange rate issue, which dominated the week in Washington.
“There is no single right answer on what is the right exchange rate,” Yoon said in a meeting with Korean reporters after the IMF conference. “It is a moral law that government officials must not comment on exchange rates.”
Over the issue of IMF voting share and financial governance reform, both men said progress was being made and they expect a result soon. South Korea hopes that the G20 can reach a general consensus on the IMF reform issue at a ministerial meeting to be held in Gyeongju on Oct. 22, and produce a final agreement at November’s Seoul Summit.
“I think an agreement will be found in the coming, say, weeks, maybe days..... I think we are on the right track,” Strauss-Kahn said.
But there are still diverging opinions on crucial topics, such as how to redistribute the voting share inside the IMF from advanced to emerging nations, said Kim Yong-beom, director of financial reform at Seoul’s G20 preparation committee.
“Things are changing very fast as the deadline approaches. Today’s situation is very different from a week ago, and I expect it will be very different again next week,” he told The Korea Times. “But I believe the agreement will be made in time for the summit. It must be.”
At the Korean delegation’s briefing held in a nearby Korean restaurant, many officials seemed to believe that it is Korea’s responsibility as host to make sure the G20 meetings produce solid results. One senior official even said that they are considering a shutdown of roads and the local airport in Gyeongju once the finance ministers from the G20 countries come, so that they cannot go home unless they reach an agreement on every agenda.
It was meant to be a joke. But their mood was not so light-hearted. Working without holidays over the past five months, one of the senior officials was limping because he has not found time to get treatment for an injury. Another could not stand for long because of back pain.
Minister Yoon summarized their obsession with the G20’s success, saying it is “the fate of Koreans that we have to work 24 hours.” He also said that other nations too should have the courage to leave their national interest behind at the G20 meetings.
“The IMF is the arbiter of the global economy. Now the G20 may have to play the role of a secondary IMF. We need the spirit of moderation. No country can have 100 percent satisfaction,” he said.
Back at the IMF headquarters, Strauss-Kahn was also stressing the importance of global cooperation at the G20.
“This is the message from the framework that we are going to provide for the G20, and I think it is more and more understood by the different capitals and the authorities,” he said. “A win-win situation in which everybody is better off, rather than trying to find a domestic solution to global problems, which, as we know, doesn’t work.”
The chief of the World Bank also showed high expectations on the role of G20 and of South Korea. Robert Zoellick, the president, said that the G20 can make a difference in the field of economic development of underdeveloped nations _ a topic largely ignored during the financial crisis.
“We are very pleased that Korea has highlighted development as an item on the G20 agenda, and it is a good example of why the G20 expands perspectives that you did not have in the old G7,” he said.
Four weeks from now, the G20 will be able to prove whether it is really better than the old G7.
‘환율전쟁’ 서울 G20 정상회의로
미 워싱턴에서 열린 국제통화기금 (IMF) 총회가 글로벌 금융불균형 등 민감한 이슈들에 대한 명확한 해결책을 제시하지 못함에 따라 환율 갈등은 서울 주요 20개국(G20) 정상회의에서 최고조에 달할 것으로 보인다.
이러한 중요 이슈들에 대한 논의는 이달과 11월에 열리는 G20 회의로 넘겨졌다. 이들 문제들에 대한 논의는 G20 정상회의가 국제적인 의사 결정기구로서의 합법성을 가질 수 있는가를 정하는 분수령이 될 것이다.
IMF 도미니크 스트로스 칸 총재는 지난 8일 미국과 중국 간 환율 갈등 등의 문제에 대한 논의를 하지 않고 IMF 정책조정위원회 회의를 마쳤다.
칸 총재는 기자간담회에서 “내가 설명하고자 하는 것은 이 문제에 대한 미-중간 뿐 아니라 다른 나라들과의 논의가 매우 중요하다는 것” 이라며 “이제 우리는 바로 그 문제를 논의 한다는 것이며 그것은 환율에 대한 선언을 논의 하는 것은 아니다”라고 말했다.
그는 국제 환율갈등을 가라 앉히려 하며 언론에서 사용하는 “환율전쟁”은 강한 용어 사용이라고 말했다.