 Journalists work at the G20 International Media Center, which officially opened at the Coex in Samseong-dong, southern Seoul, Tuesday. The Coex is the official venue for the G20 Seoul Summit that starts Thursday. / Korea Times photo by Shim Hyun-chul |
SSakong Il adds credibility to Geithner’s pessimism on target
By Cho Jin-seo
The world’s 20 leading economies won’t try hard to have a numerical target for current account balances at the G20 Seoul Summit, a top official of South Korea’s G20 preparation team said Tuesday.
The remark by Sakong Il, chairman of the Presidential Committee for the G20 Summit, adds credibility to that of Tim Geithner, the U.S. secretary of treasury, in downplaying the need to have a ceiling on the trade surpluses of countries such as China and Germany.
“If (G20) can agree on a time frame that alone will be a big achievement, we will endeavor to do that,” Sakong told reporters when asked about setting a specific target for current account balances. He was attending the opening ceremony of the Seoul summit’s press room at the Coex in southern Seoul.
Before Sakong’s remark, there has been a disagreement inside Korea’s G20 team on whether it was possible or even necessary to announce fixed surpluses and deficits caps at the Seoul summit. The confusion raised doubts on the international level as Korea is playing a critical role at the G20 negotiations as the arbiter and pacesetter of the multilateral talks.
Strategy and Finance Minister Yoon Jeung-hyun has been optimistic that there should be numerical guidelines laid out in the Seoul summit’s final statement for each member country. A close advisor to Yoon confirmed this view last week, saying “there will be numbers.”
But others at the presidential committee have expressed doubts on the minister’s optimism. In an interview with The Korea Times, Friday, an official in charge of global economic policy coordination flatly rejected Minister Yoon’s claim, saying the committee “is not working in such a way.”
Another top official at the committee also said it would actually be better not to have a specific target “from the perspective of economic principles.”
The cloud of confusion is slowly being cleared as Tuesday’s remark by Sakong as well as Geithner’s Monday speech shows that the G20 is now opting for a more comprehensive and flexible approach to the issue.
On Monday, Geithner reversed his previous position, saying, “It makes no economic sense to try and do that,” according to the Financial Times.
Germany, China and Japan have large surpluses from their strong exports, so they have been openly objecting to the idea of an artificial cap system.
The loosened stance from Korea and the United States will be pleasing for them in the ongoing multilateral negotiations between vice finance ministers, lubricating the path to an agreement on more sensitive items such as currency devaluation. The United States has been under attack from virtually all other G20 nations since last week when it decided to pump in $600 billion into the American economy.
China’s Vice Finance Minister Zhu Guangyao said Monday that the United States must recognize its role and responsibility in the global economy, and the two countries will have “frank discussions” over the printing of money, Reuters reported.
The so-called quantitative easing of the United States drew so much criticism that the governor of the World Bank even suggested that the world should say goodbye to the dollar-based monetary system and embrace gold or other assets as a new global currency base.
The proposal from Robert Zoellick was received mainly as an attempt to stimulate debate on the reform of the global monetary system, with due skepticism.
“Going back to the gold standard is simply not possible anymore. The quantity is so limited that it cannot represent the global economy properly,” an official at Seoul’s G20 presidential committee said, adding that it is not likely to be included in the final statement of the Seoul Summit.
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