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WASHINGTON - The leaders of the G20 most powerful nations gathered in Washington last night to plan a new era of international co-operation aimed at preventing a repeat of the financial crisis that has engulfed the global economy.
Diplomats were working on a plan for a "college of supervisors" that would bring together fragmented national regulation of some of the world's biggest banks, whose business practices contributed to the financial meltdown.
Although sharp disagreements remained about the scale and the role of any new international regulatory organisation, officials believed that there was enough common ground to launch a project to remake the financial architecture and establish "early warning systems" that could head off future crises.
Gordon Brown was scheduled to meet the US Treasury Secretary, Hank Paulson, ahead of the formal opening of the summit last night, to discuss more immediate plans to pull major economies out of recession.
Earlier in the day, the Prime Minister had called for co-ordinated tax cuts, and the G20 is expected to at least bless national efforts at stimulating domestic economies.
In the UK, the tax cuts planned for the pre-Budget report are to be targeted at the low paid, Mr Brown hinted.
He pointed out that less than half a recent tax rebate in the US had actually been spent, with the rest being saved.
"People with the propensity to consume, that is lower-income citizens, are more likely to spend when their credits are higher," he said.
Mr Brown's stock on the international stage has risen since the British Government pioneered direct investment in ailing banks as a way of easing the credit crisis, something that the US followed.
Since then, he has called for a much broader shake-up of the way the global economy is managed, and hailed this weekend's summit as a chance to build a "new Bretton Woods", after the post-Second World War agreements that established the International Monetary Fund and the World Bank.
Expectations have been lowered, though, since Barack Obama will not attend the summit, and major decisions will have to await his inauguration and a follow-up summit after that.
The Bush administration initially resisted moves to strengthen international regulation of the financial system, preferring instead to talk of bolstering national regulatory structures.
The French President, Nicolas Sarkozy, has continued to press for a powerful supra-national regulator with a remit to control global banking giants and offshore hedge funds.
The British idea of creating a "college of supervisors" where national regulators could share information about multi-national banks has moved up the agenda as a compromise proposal, although the details are likely to take many months to hash out.
Angela Merkel, Germany's Chancellor, says she backs a "global map" to assess risks in the financial system and President Bush said the G20 "must strengthen co-operation among the world's financial authorities".
In his weekly radio address, President Bush reiterated his opposition to any major regulatory reform that chips away at free market capitalism.
"While reforms in the financial sector are essential, the long-term solution to today's problems is sustained economic growth.
And the surest path to that growth is free markets and free people," he said.
Much of last night's working dinner at the White House, and two negotiating sessions today, are expected to be taken up with haggling over future funding of the IMF, which exists to bail out governments that get into financial difficulties.
George Bush insisted that the summit be wider than the usual G7 industrialised nations and include emerging economic powerhouses, such as China, Russia and Brazil, and these countries are pushing for a much greater say in international bodies.
Mr Brown has been urging them to contribute more money in return, helping to boost the IMF's lending war chest from its current US$250bn.
With just hours to the opening of the summit, many pitfalls remained and participants pushed disparate and sometimes contradictory agendas.
Outstanding issues included the future role of the Chinese in the international system and the trade imbalances that have built up over many years, imbalances that exacerbated the housing bubble in the US which triggered the credit crisis when it went pop.
The Canadian delegation was demanding a "frank discussion" of the value of the Chinese yuan, which it is argued is artificially high.
Meanwhile, aid agencies were urging the G20 not to neglect the world's poor.
- INDEPENDENT
