The uncertainty in the eurozone and the political turmoil in Greece hung over the G20 summit in Cannes, France like a dark cloud. A flurry of crisis sessions came one after the other in a bid by the International Monetary Fund (IMF), the eurozone members and other G20 states to find an answer to the global challenges coming from Athens.

Greece came under massive international pressure over its now aborted attempt at a referendum. Europe's leaders made clear that Athens would not receive any further aid money from the bailout fund until it recognizes and accepts the austerity measures mandated by Brussels.

The French-German tandem of President Nicolas Sarkozy and Chancellor Angela Merkel demonstrated before the G20 that Europe can exercise authoritative leadership after giving Greek Prime Minister George Papandreou no choice but to drop the idea of a national referendum. Only through hectic crisis management could an embarrassment within the G20 over the turbulence in Greece be avoided.

Global economic shift

With resolute decisiveness, the G20 summit managed to ward off a spread of the financial crisis to other highly indebted eurozone states such as Italy. Rome has agreed to allow the International Monetary Fund (IMF) to monitor its progress toward economic reform.

Merkel said that the G20 "has indicated time and again that trust is the most important thing. And therefore the news that Italy is ready to accept monitoring from the EU Commission and the IMF carries tremendous significance."

The balance of economic power is shifting to the emerging economies

Large emerging economies such as Brazil, China and India came out of the summit clearly strengthened. The G20 wants to create a new monetary system in relatively short order that reflects the weight of these states.

"We see that there has been a shift in the international monetary system in which in the future more currencies will play a role," Merkel commented.

China, in turn, now has the responsibility to adopt a more flexible currency policy.

New regulations

The G20 finance ministers have been assigned the task of developing a plan for better control of shadow banks by early next year. That would include hedge funds, which in the future are supposed to be monitored in a similar fashion as banks.

The US remains skeptical of a financial transaction tax

The world's largest banks also have to prepare for more regulation. Immediately after the summit, policymakers are to present a list of the world's 29 "system relevant" banks - among them Commerzbank and Deutsche Bank - which Merkel said "should be restructured so that in the future taxpayers do not have to intervene" in the event that they go belly up. She characterized this development as a major win in her concluding remarks at the summit.

Speculation on food and raw materials is also meant to be restricted in the future.

So-called "position limits" on speculative activities are to be implemented on a global level. This measure is designed to prevent artificially inflated bubbles from creating threatening price spirals on the world food market. In West Africa, the G20 wants to support a pilot project that would create food reserves to help better avoid hunger crises in the future.



Representatives of NGOs, however, were disappointed with the summit overall.

"There was only a little bit of progress," said Jörg Kalinski with the organization Oxfam. "The decisive coup against excessive speculation still has not been implemented."

There was hardly any progress on the implementation of a financial transaction tax, which has high priority on the Franco-German agenda. But a suggestion from the US is to be reviewed, which foresees banks participating in the costs of the financial crisis through a fee on existing obligations.

Author: Daniel Scheschkewitz, Cannes / slk

Editor: Nancy Isenson