Pittsburgh, Pennsylvania, US: Leaders of the main world economies began a summit hosted by Barack Obama, looking to curb bankers' pay and agree on how best to overhaul the financial system.
Even before the US president and First Lady Michelle Obama sat down for a gala dinner to host their first major summit, tough new rules on limiting bonuses and executive pay were in the offing.
Disputes on the long-awaited reform of the International Monetary Fund, however, opened a rift between Europe and emerging nations as voting rights came to the fore at the Group of 20 summit.
The start of the gathering was marred by isolated incidents of violence as small groups of anti-capitalist protesters defied police warnings not to march on the summit venue.
Police fired pepper spray and non-lethal rounds and deployed loudspeakers blasting piercing sound waves to repel the mostly young protesters. Fifteen people were arrested, police said.
The G20 is a forum for the world's biggest developed and emerging economies and its meetings are a magnet for anti-capitalists opposed to what they see as an undemocratic body promoting globalization and free market policies.
After a series of bilateral meetings ahead of the main summit with Japanese and Chinese officials, US Treasury Secretary Timothy Geithner reaffirmed the US strong-dollar policy.
Following China-led calls to review its role as a reserve currency, he reminded Beijing that: "A strong dollar is very important to the United States."
But Geithner said Europe and the United States were close to agreeing tough new rules on limiting bankers' bonuses despite earlier differences.
In the run-up to the summit there was friction between Washington and some European capitals, with France and Germany in particular pushing for stricter caps on the pay-outs, which they say encourage excessive risks in trading.
"We actually are very close and I believe we are in the same place," Geithner told reporters. "We want to have very strong standards to limit the risk."
Prime Minister Fredrik Reinfeldt of Sweden, who holds the rotating presidency of the European Union, took a similar line.
"I expect the G20 will make a clear statement about the need for global rules on bonuses and compensation, and I also expect broad agreement on how to strengthen supervision in general."
There was some discord in the air however, with a top advisor to Brazilian President Luiz Inacio Lula da Silva hitting out at European "resistance" to giving more voting weights to emerging nations.
For Brazil, China and other emerging countries, it is crucial to achieve a breakthrough in negotiations in Pittsburgh so the IMF can endorse the reform at its annual meeting on October 6 to 7 in Istanbul.
The summit of the world's 19 biggest developed and emerging economies plus the European Union comes just over a year after a US credit collapse triggered a global economic slowdown.
It also comes six months after the same G20 chiefs met in London to coordinate their response to the crisis, and their performance in Pittsburgh will be judged in part on whether they have lived up to their earlier vows.
International Monetary Fund spokeswoman Caroline Atkinson, addressing a news conference in Washington ahead of the summit, said G20 leaders had implemented many promises but needed to stay focused on nurturing a lasting recovery.
"I expect leaders this time will be focused on what they need to do and what the world needs to do to make sure that the recovery we're seeing the beginnings of now is one that's sustained."
Summit delegates have all pledged to take tough and lasting measures to bring order back to the markets, shore up failing institutions, save jobs and rekindle growth, but each arrives in Pittsburgh with their own priorities.
French President Nicolas Sarkozy said he would push other nations to impose sanctions on uncooperative tax havens starting next year.
"Tax havens, banking secrecy, that's all over," he told French television. "I will fight for sanctions tomorrow in Pittsburgh."
Aside from financial regulation and climate change, the summit is also expected to discuss when and how to begin scaling back the multi-trillion dollar stimulus packages countries established to fight the recession.
Japan and Europe have begun to edge out of the slump and are starting to look at cuts -- cheered on by China, which fears US deficits will destabilize the dollar -- but others feel such a move would be premature.
First Published: Friday, September 25, 2009, 09:19