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PP RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV RUEHSR
DE RUEHLO #0821/01 0961610
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P 061610Z APR 09
FM AMEMBASSY LONDON
TO RUEHC/SECSTATE WASHDC PRIORITY 1915
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUEHBL/AMCONSUL BELFAST PRIORITY 1280
RUEHED/AMCONSUL EDINBURGH PRIORITY 1111

UNCLAS SECTION 01 OF 02 LONDON 000821 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EFIN ETRD EINV UK
SUBJECT: G20 REFLECTIONS: GORDON BROWN DESERVES CREDIT FOR 
"WATERSHED" SUMMIT, BUT NO SILVER BULLETS 
 
LONDON 00000821  001.2 OF 002 
 
 
¶1.  (SBU) Summary:  The London G20 Summit emphasized a new global 
partnership and produced impressive commitments on trade, the IMF 
and regulatory reform, according to panelists at a Business for New 
Europe seminar.  They were impressed by the G20's recognition of the 
need for global coordinated action and acknowledgement that no 
country can solve the economic problems alone.  Panel members were 
cautiously optimistic about commitments on protectionism and trade 
and were impressed by the extent of the announced changes to the 
IMF.  However, panelists cautioned that the commitments will take 
time to implement and don't provide any silver bullets to global 
economic recovery.  The panelists were disappointed at the lack of 
detail on toxic assets and would have welcomed further discussion on 
global macro balances.  There was consensus that Gordon Brown 
deserved credit for the Summit and that the EU, or at least France, 
Germany and the UK, were particularly successful.  The G20's 
relevance going forward will depend, they agreed, on its ability to 
turn its commitments into reality.  End summary. 
 
Morning After 
------------- 
 
¶2.  (SBU) Panelists at a Business for New Europe (BNE) seminar were 
cautiously optimistic about the outcomes of the G20 Summit.  During 
a "Morning after the Day Before" discussion, they said commitments 
from the G20 leaders were encouraging and impressive.  There was a 
consensus that the G20 communique took positive, significant steps 
on a number of important issues.  They were impressed by the G20's 
recognition of the importance of greater coordinated action, with 
Baroness Ashton, the European Commissioner for Trade, calling it a 
"watershed" Summit that removed the distinction between developed 
and developing worlds and replaced it with a new global partnership. 
 The panelists were impressed with the leaders' clear understanding 
that the most vulnerable countries must be considered and that no 
one country can solve the economic problems alone.  Peter Sands, 
chief executive of Standard Chartered, said the markets were 
particularly encouraged by the outcome of the Summit and dismissed a 
press report that the FTSE's 5 percent gain was more about the ECB's 
interest rate decision than the G20 action.  He noted that the 2009 
Summit's achievements stand in stark contrast to the failure of the 
1933 London Summit. 
 
Action Items 
------------ 
 
¶3.  (SBU) The panel was largely enthusiastic about the discussions 
on protectionism and trade.  The G20's acknowledgement that talk 
about the perils of protectionism needed to be accompanied by a 
mechanism for naming and shaming was particularly welcomed.  The 
communique, they said, importantly signaled movement beyond just 
finger pointing and established a firm commitment to preserve free 
trade.  On Doha, Baroness Ashton highlighted the significance of the 
G20 leaders putting a figure of $150 billion on the deal - noting it 
was the first time there had been recognition across the G20 of the 
value of an agreement.  She said the lack of a concrete timetable 
for concluding the development round was not surprising, given the 
new U.S. administration and the Indian elections.  She noted that 
the EC is pushing to ensure that the U.S. does not reopen issues 
that have already been agreed. 
 
¶4.  (SBU) Panelists were similarly impressed by discussions of IMF 
reforms, which equated to a "revolution," according to Sands.  Sands 
was surprised how tangible the IMF commitments were.  He was 
encouraged by the consensus that a more powerful, independent and 
representative IMF is needed.  He warned that the difficulty will 
come when trying to balance the IMF's independence with its 
representational role.  "Smart regulation" will be the watchword of 
the future, according to Baroness Ashton.  Roland Rudd, Chairman of 
the BNE, said the most important part of the Summit was that it 
didn't result in greater regulation in Europe than elsewhere, which 
could have harmed London's position as a global financial center. 
Going forward, panelists agreed the leaders will need to focus on 
how the big numbers can be converted into concrete actions. 
 
 
¶5.  (SBU) Despite these achievements, the Summit didn't provide any 
silver bullets and its commitments will take time to implement. 
Additionally, the lack of detail about how to clean up toxic assets 
from banks' balance sheets was worrying, according to George Parker, 
political editor of the FT.  He added that supporters of fiscal 
stimulus will be disappointed by the communique.  In contrast to 
other panelists, he said the communique's language on Doha moved 
backwards from the language at the Washington Summit.  Sands was 
disappointed that little was discussed about global macro balances. 
He cautioned that some of the "warm fuzzy" feeling will be lost in 
the short term when leaders will need to politically reconcile the 
big G20 commitments with continued bad economic news. 
 
 
LONDON 00000821  002.2 OF 002 
 
 
Who Won? 
-------- 
 
¶6.  (SBU) There was consensus that Gordon Brown deserves credit for 
the Summit.  Parker noted that few other world leaders have 
sufficient grasp of the technical details or are as passionate about 
the issues as the British Prime Minister. He said the PM's work on 
establishing the importance and relevance of the G20 will be an 
important part of his legacy.  He added that while each country will 
claim its own domestic victory, the Summit proved particularly 
successful for the EU.  France and Germany in particular, he said, 
overcame U.S./UK resistance to calls for tighter regulation.  He 
said their position was strengthened by the de Larosiere report 
combined with a new U.S. administration.  Parker suggested that 
Gordon Brown saw the value of the EU for the first time, because it 
could draw real weight to push ahead its agenda.  The panelists 
acknowledged, however, that it is not entirely clear whether the EU 
was effective, or whether it was French/German/UK intergovernmental 
effectiveness.  They said the three countries act like an informal 
directorate of the EU, with Jose Manuel Barroso acting as the fourth 
member, representing the other 24 states.  Baroness Ashton noted, 
however, that Barroso is an effective politician, mindful of 
representing smaller states 
 
¶7.  (SBU) Barroso achieved his five aims for the summit, according 
to Ashton.  Prior to the Summit, he called for the coordination of 
fiscal stimulus, more effective regulation, global governance 
stimulus (namely reform of the international financial 
institutions), a commitment to free and fair trade, and a 
development and climate stimulus.  Ashton said Barroso was 
successful in achieving these five goals.  Parker highlighted 
another Summit "hero," Mario Draghi, chair of the Financial 
Stability Forum, who produced consensus on complicated, technical 
issues.  While there is still a lot to do on financial architecture, 
Parker was surprised at how much Draghi was able to achieve. 
Although Parker was impressed by the summit results and the Prime 
Minister's performance, he, as an aside, ridiculed the $5 trillion 
figure touted by HMG as the size of the G20's combined stimulus 
packages as a "ludicrous figure" based on a crude and misleading 
calculation. 
 
Future Relevance of the G20 
--------------------------- 
 
¶8.  (SBU) One of the most important aspects of the Summit, according 
to the panelists, was that it showed the G20 functioning properly 
for the first time.  Whether the G20 delivers on its action items 
will determine its relevance going forward.  If the G20 works, and 
proves to be an effective decision-making forum, panelists agreed 
that more items will be taken from the G8 agenda.  Parker expects 
the G8 to "whither on the vine" because it hasn't "covered itself in 
glory" in terms of delivering on its commitments.  The focus, he 
said, will shift to the G20 which will outlast the current financial 
crisis.  Baroness Ashton suggested the importance of the G8 as a 
decision-making forum will remain and said the G20 needs to be more 
than just summitry, it needs concrete results if it is to remain 
relevant.  The panelists were encouraged by the move beyond the G8 
clique and said the G20 feels like a more representative, effective 
body.  Despite the G20's raised profile, Parker noted that there is 
still no permanent secretariat and that its success depends on the 
strength of its chair. 
 
LEBARON