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  London G-20 Summit: Industrial Nations Celebrate-Trillion Dollar Compromise

London G-20 Summit Industrial Nations Celebrate-Trillion Dollar Compromise

By Carsten Volkery in London

Part 2: Why Obama Was So Reserved

The German government will now face new financial burdens despite Steinbrück's prompt assurances that Germany's share of the IMF funds would not come from the federal budget but from the Bundesbank, the country's central bank. The finance minister also emphasized that none of the G-20 countries is under any obligation to introduce a new economic stimulus program. The point he was trying to make is that the German government held its ground against the United States on this issue.

As is always the case after summit negotiations, each side declared itself the winner. The Germans and the French were pleased to note that Merkel's and Sarkozy's Wednesday riotous press conference was responsible for a complete turnaround. They celebrated the fact that the addendum on regulation of the financial markets was upgraded to a "declaration of the heads of state and government." The passages on hedge funds, ratings agencies, tax havens and executive compensation had also been made significantly longer and more specific.

'We Aren't Finished Yet'

The successes are symbolic in part, and on issues like executive salaries and hedge fund regulation, in particular, the devil is in the details. But Merkel believes that symbols are important, particularly to the public, whose fury against bankers has to be channeled in some way. At the beginning of the summit, Obama said that he didn't want to talk about blame, but preferred to look forward. The continental European, on the other hand, insisted that the question of blame not be ignored. The crisis did not originate in Europe, Sarkozy said bluntly.

Obama said afterwards that he had heard the accusation that the crisis began in the United States several times during summit talks, a charge that he did not dispute. On the whole, he said, his counterparts were extremely nice to him, and many had expressed their admiration.

It does not say much for Brown's diplomatic skills that, as host, he was taken by surprise by the German-French duo's mutiny just before the beginning of the summit. Normally, the final documents have already been largely fleshed out by this point. But this time there was a significant need for adjustments. "We aren't finished yet," Sarkozy said threateningly on Wednesday, and his prediction came true. Work on the revisions lasted until late at night, and the passages on hedge funds and tax havens were only completed shortly before the press conference.

The miniature conflict was waged primarily among the EU members with summit experience, while the new US president remained reserved. Obama used the summit mainly to get to know the players on the world stage. His counterparts were impressed by his calm demeanor, too. Merkel praised Obama for having played a very constructive role.

Obama called it a "productive summit" -- but he added that any comparisons with the Bretton Woods summit, where a new international monetary system was adopted in 1944, would be mistaken. "Well, if there's just Roosevelt and Churchill sitting in a room with a brandy, that's an easier negotiation," he said. "But that's not the world we live in."

Translated from the German by Christopher Sultan

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