Leaders of rich and developing nations on Thursday agreed not to resort to currency devaluation to gain a competitive advantage, while shying away from any discussion of the dollar’s status as the world’s reserve currency.
“We will refrain from competitive devaluations of our currencies and promote a stable and well-functioning international monetary system,” the leaders said in a draft joint declaration titled “Promoting the Global Agenda.”
The statement was signed by 17 countries, including from the Group of Eight and five key emerging market economies.
The three-day summit expanded from just the G8 on Wednesday and is scheduled to include officials from about 30 countries on Friday. Russia, which was admitted as a member to what was then the G7 in 1997, took a favorable view of the broader talks.
“Today talks are being held on the touchy subject of the role of the G8 and its possible expansion. We believe that the G8 is limited in its solutions for some problems and not in a state today to handle everything,” said Alexander Pankin, deputy head of the Interior Ministry’s international organizations department, Interfax reported.
Sergei Prikhodko, President Dmitry Medvedev’s top foreign policy adviser, said that while it’s not time “to bury” the G8 yet, its usefulness as a streamlined body for policy decisions is waning.
Decision-making on many problems “has fallen into the realm of the G20, and it will stay there,” Prikhodko said, Interfax reported. The G20 is a group of finance ministers and central bank governors from industrialized and developing economies.
The group meeting Thursday also said it wanted to finish a long-delayed world trade deal in 2010 and head off trade wars. Completing the so-called Doha round of talks has risen up the agenda because of fears that the economic crisis will lead to protectionist policies like the ones that helped cause the Great Depression of the 1930s.
Another reason often cited as prolonging the Depression was that countries acted independently to protect their interests by undermining their currencies to boost exports.
Though the dollar was not mentioned in the draft declaration, its future as the world’s reserve currency is likely to remain a topic for debate over the coming months or years, as China, Russia and India have expressed their desire to see long-term changes in the international monetary system.
But they have been careful not to push their desire for change too far. If the dollar falls, the value of their large dollar-denominated assets plummets.
China said its officials raised the issue at a working lunch on Thursday, but British Prime Minister Gordon Brown said he could not recall a discussion about it and that it was not on the formal agenda.
n Japan and the European Union will press G8 leaders on Friday to sign up for a code of conduct on foreign agricultural investments in poorer countries, but it is not clear how it might work.
The G8 said Wednesday that it would “work with partner countries and international organizations to develop a joint proposal on principles and best practices” on the issue due to rising purchases of foreign land.
The G8 and countries from Africa, Asia and Latin America are to discuss a food security initiative Friday that could result in pledges of up to $15 billion to boost agriculture in poorer nations, and the land issue is bound to be raised.