Dec 19

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Mexico Launches G-20 Presidency with calls for the U.S. and Eurozone to get their public finances in order, a stronger IMF and increased financial regulation

“Without a doubt, more than ever, the world needs today the sum of talents, the sum of ideas to explore alternatives, to find innovative solutions that will enable the international economy to deal with the challenges it faces, to recover its balance and to get back onto the path of growth.”  With these words, Mexican President Calderón launched Mexico’s presidency of the G-20.  As the first Latin American country to host such a prestigious forum, it is being hailed by the government as a sign of global recognition of its sound economy and confidence in its ability to manage its shaky security situation.  Self-congratulating rhetoric aside, there is a certain irony when, in his opening speech, a Mexican president admonishes Europe and the United States for not assuming their responsibilities and making “clear and firm decisions in order to balance their public finances.”

Following what Mexico believed was an overly broad French agenda and a presidency that was too involved in its own crisis to consider all points of view, they are determined to ‘get back to basics’.  In this regard, Mexico has identified 5 priorities:

  • Address macroeconomic imbalances both within domestic economies in terms of government spending and public debt (with an explicit nod to the Eurozone and the United States) and current account imbalances between certain countries (a nod toward China).  Under this banner, Calderón also underscored the importance of international trade as an engine for growth and urged countries to reject protectionist measures as a response to the ongoing crisis.
  • Strengthen financial systems at a global level and foster financial inclusion within developing countries.
  • Improve the international financial architecture.  By this, Mexico means that they will strongly push for a stronger IMF including increased short-term contributions and the creation of a new supervision framework that incorporates exchange rate policies, capital flows, the status of international reserves and regulation of financial markets.
  • Address the variables impacting food security whether they be market based (e.g., greater demand from China and India), caused by financial manipulation, or even by the expansive monetary policies adopted by some countries in response to the crisis (another nod to the United States).
  • Promote green growth and sustainable development financing via the creation of a Green Climate Fund.

All in all, a tall order especially if the euro zone crisis continues to monopolize the G-20 as it did under the French presidency.  And, although the presidency officially lasts until next December, they plan to have it all wrapped up by mid-June, when leaders will meet in Los Cabos.  Why the rush?  The anwer: politics.  Presidential elections are scheduled for July and President Calderón wants to make full use of the G-20 stage to support his party’s reelection prospects.

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