G-20: $1 trillion and 'a new world order'

By Christi Parsons and Mark Silva

LONDON - The world's economic powers are offering $1 trillion in aid for struggling economies, with official communiqués and promises of "a new world order'' starting to roll out of the G-20 summit today: G-20 communique

Gordon Brown, prime minister of Great Britain and host of the summit, said: "We will do what it takes to restore global growth and hasten recovery...

"This is the day that the world came together to fight back against the global recession,'' Brown said. "Our message today is clear and certain. We believe that in this new global age, our prosperity is indivisible...We believe that growth to be sustained must be shared, and that trade must once again become an engine of growth."

This is "largest economic stimulus" the world has ever seen, the prime minister said, vowing to save or create millions of jobs "in a period when we must combat unemployment."

The European nations, the United States, Russia, Japan, China, India, Brazil and others that comprise the Group of 20 have committed $1 trillion for the International Monetary Fund and other institutions.

They have agreed to triple resources for the IMF to $750 billion and support a new Special Drawing Rights allocation of $250 billion, support at least $100 billion of additional lending by the Multilateral Development Banks, ensure $250 billion of support for trade finance, use additional resources from the IMF for concessional finance for the poorest countries and restore credit, growth and jobs

"This is available to all IMF members, and at the same time we will treble the resources of the IMF itself with up to an additional $500 billion,'' Brown said. "Together these actions give us confidence that the global economy can return to trend growth even faster than the IMF is predicting.''

The official communiqué emerging from the summit states: "We start from the belief that prosperity is indivisible; that growth, to be sustained, has to be shared; and that our global plan for recovery must have at its heart the needs and jobs of hard-working families, not just in developed countries but in emerging markets and the poorest countries of the world, too; and must reflect the interests not just of today's population but of future generations, too."

French President Nicholas Sarkozy, who had threatened to walk out of the summit if it didn't produce what he was seeking, came out today a happy leader:

"Never could we have imagined that we would achieve such a broad-based agreement,'' Sarkozy said. "And this is not the victory of one camp over another, one way of looking at things over another.

"It's an awareness by all that the world needs to change.,'' he said. "Of course there were tensions, of course there were wrestling matches, as it were....But even our Anglo-Saxon friends are totally convinced that, yes, we need rules.

"Getting the British, getting ourselves, all of us to agree with the British and Americans on a reasonable trade and remuneration regime, if that is not capitalism with a conscience, I don't know what is."

The nations' leaders have pledged to do "whatever is necessary" to restore confidence, growth and jobs... repair the financial system to restore lending.. strengthen financial regulation to rebuild trust.. fund and reform our international financial institutions to overcome this crisis and prevent future ones... promote global trade and investment and reject protectionism... build an inclusive, green and sustainable recovery.''

"There are no quick fixes,'' Brown said, "But with the six pledges that we make today, we can shorten the recession and save jobs."

In financial regulation, they have agreed to bring "the shadow banking system, including hedge funds, into the global regulatory net'' and employ international accounting standards.

They have pledged to regulate credit-ratings agencies to remove conflicts of interest, end tax havens that aren't open and create a new financial stability board that will spot risks and have global early-warning system.

"We will clean up the banks so that they increase lending to families and businesses,'' Brown said. "And to enable this, we've agreed for the first time on a common global approach to how we deal with impaired or toxic assets."

"We will ask the international institutions to strengthen their independent surveyance of the world economy" and to promote growth and economic stability, he said.

And they have pledged to "kick-start international trade,'' encouraging the completion of world trade talks.

"We will act also to make our global recovery fair and more sustainable,'' Brown said.

Finally, they have agreed that their fiscal stimulus should "promote low-carbon growth and... create the green jobs on which our future prosperity depends." This includes looking for a global agreement on climate change controls at a summit in Copenhagen at year's end.

When the Wall Street crashed in 1929, he said, it took 15 years to restore order.

"This time I think people will agree that it is different,'' Brown said. "Today's decisions of course will not immediately solve the crisis, but we have begun the process by which it will be solved.... Today the largest countries of the world have agreed a global plan of recovery and reform.... This is collective action, people working together at their best.

"I think a new world order is emerging,'' he said. "We are resolved that from today we will manage the process of globalization to secure responsibility from all and fairness to all."

Christi Parsons reported from London, Mark Silva from Washington. Michael Chu also contributed from London