Hope and Conflict at the G20 Summit

Powerhouse economies near an accord, but trade disagreements linger

The G20 meeting is underway, with reports of the countries nearing a deal about correcting economic imbalances—one of the main challenges of the summit. How far will the deal go? Here's the background on what experts focusing on different aspects of the meeting see happening.

• One Important Part: Capital Controls  These are "attempts by countries to limit the flow of money across their borders," explains Leo Lewis at The Australian. "For years, as the tenets of globalisation spread, the acceptability of capital controls declined." But they've gained "new repectability" recently with "the widespread market failures associated with the financial crisis."
  

• What the G20 Could Do About Them  "Some capital controls are more excusable than others," argues The Economist. "To help distinguish good controls from bad, some dos and don'ts endorsed by the G20 might help. ... Over time, regulation of the capital account might become as respectable as banking regulation."

• The General Currency Problem  "The United States is telling other countries that it's willing to make a simple bargain," summarizes The Atlantic's Derek Thompson. "We'll reduce our deficit and stop flooding the world with dollars if other countries promise to raise their currencies to give their citizens more buyer power, which will help close global trade imbalances. We get lower deficits and lower trade deficits. Other countries get buying power in the world economy." Though it sounds "easy," the problem is that " not everybody shares our interest in correcting these trade imbalances."

• And Why It May Prove Tricky  "Emerging economies cite the Fed's quantitative easing (QE) plans as proof Washington will unfairly devalue the dollar to increase its export competitiveness," writes Roya Wolverson at the Council on Foreign Relations. The Australian's Leo Lewis also chronicles U.S. attempts to patch this matter up with Chinese officials. But soon after peace seemed to have been secured, "China's foreign exchange regulator, far from praising the Fed's billions, was publicly back in the mode of condemning them as a threat to global recovery."

• What the Deal Will Likely Involve  It's "not expected to go as far as U.S. officials had hoped in defining the specific commitments countries will make to keep their surpluses or deficits with the rest of the world from getting out of line," report The Washington Post's Howard Schneider and Scott Wilson. That's been put off a bit. But they add that "U.S. officials say they will regard it as a success if they leave the Group of 20 summit with an endorsement of the principles and will consider it a victory if China signs on."

• The Good News  "As G20 members gather," writes former Fed chairman Alan Greenspan at the Financial Times, "they appreciate that despite heated political rhetoric, protectionism has failed to emerge in full force. This may have been one of this year’s most pleasant surprises."