The mood at the ExCel Conference Center seems to be swinging between optimism and fear that things might collapse at the last second. The uncertainty is the result of the rift between American-British calls for more spending and French-German demands for more regulation. French President Nicolas Sarkozy called for a “global regulator” and said tougher regulation is “nonnegotiable.”
It seems that there are three camps now. First, you have the US, UK, and Japan who are pushing for greater fiscal spending to stimulate their economies. Then you have Germany, France, and probably the Czech Republic, who are pushing in the opposite direction. And finally you have countries like China, Russia, India, and Saudi Arabia, who will consider joining the first or the second camp, depending on where their interests are.
It is expected, though, that these difference will be played down and the final communique will come out in a language that each party can interpret differently.
Now when it comes to reforming the IMF, it is agreed that the need to reform the institution is urgent. However, G20 countries have yet to reach an agreement over the contributions every country will make to help the IMF fight the financial crisis. Thanks to a cushion of reserves Saudi Arabia built during six years of soaring oil price, the country was not hit very hard by the financial crisis, and that’s why the US and UK asked Saudi Arabia to increase its contribution to the IMF.
Rumors circulated last week that Saudi Arabia was considering increasing its IMF contribution in exchange for higher quotas. Finance Minister Ibrahim al-Assaf denied these reports, adding: “What is on the table now is for support from all the major member states of the fund.” Saudi Arabia is expected to contribute $100bn, but some sources suggest that the government prefers to decrease its contribution to $90bn.
Some Saudis think that the government should not listen to these demands. Fawaz al-Alami says it is time for big countries to realize that globalization rules do not give them the right to exploit the resources of the developing countries to fix their failed economic policies.