G20 leaders drew a veil over their economic policy disputes today, agreeing to tackle tensions that have raised the spectre of a currency war and trade protectionism, but they fell short of already low expectations.
The developed and emerging nations agreed at a summit in Seoul to set vague "indicative guidelines" measuring imbalances between their multi-speed economies but, calling a timeout to let tempers cool, left the details to be discussed in the first half of next year.
In a communique signed off at the end of the gathering, the group's fifth since the financial crisis exploded in 2008, the leaders vowed to move towards market-determined exchange rates and shun competitive devaluations.
They also agreed that there was a critical, but narrow, window of opportunity to conclude the long-elusive Doha round of trade liberalisation talks launched in 2001.
"Risks remain," the communique said. "Some of us are experiencing strong growth, while others face high levels of unemployment and sluggish recovery. Uneven growth and widening imbalances are fuelling the temptation to diverge from global solutions into uncoordinated actions."
The G20's accord sought to recapture the unity that was forged in crisis two years ago, but deep divides meant the leaders could not venture much beyond what was already agreed by their finance ministers last month.
Negotiators had laboured until the early hours of the morning to thrash out an agreement their leaders could all endorse, despite sharp disagreements that were on public display in the days before the meeting.
Tempers had flared over the US Federal Reserve's latest bond-buying programme aimed at strengthening a shaky recovery, while Ireland's worsening debt troubles served as a reminder that the financial system is far from fully healed.
"This hasn't been a love-fest," an official who participated in the negotiations said.
In particular, the leaders were unable to reach a consensus on how to identify when global imbalances pose a threat to economic stability, merely committing themselves to a discussion of a range of indicators in first half of 2011.
The G20 has fragmented since a synchronised global recession gave way to a multi-speed recovery. Slow-growing advanced economies have kept interest rates at record lows to try to kickstart growth, while big emerging markets have come roaring back so fast that many are worried about overheating.
"G20 credibility does depend on showing results ... we cannot get out of this with beggar-thy-neighbour policies," Canadian Prime Minister Stephen Harper said. "We need instead to continue to coordinate our actions going forward. The recovery is fragile."
"I don't think the fact that we aren't there yet, we haven't resolved all these problems, means we will fall back."
Reuters