{"id":359295,"date":"2010-02-24T09:46:21","date_gmt":"2010-02-24T14:46:21","guid":{"rendered":"http:\/\/blogs.wsj.com\/economics\/2010\/02\/24\/south-korea-feels-pressure-to-produce-g-20-results\/"},"modified":"2010-02-24T09:46:21","modified_gmt":"2010-02-24T14:46:21","slug":"south-korea-feels-pressure-to-produce-g-20-results","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/359295","title":{"rendered":"South Korea Feels Pressure to Produce G-20 Results"},"content":{"rendered":"

South Korea doesn\u0092t host the world\u0092s leaders for the G-20 economic summit until November, but organizers here already have one big fear: that nothing will get done at the meeting and interest in the primacy of 20-nation forum will fade as a result.<\/p>\n

Finance ministers from the 20 countries in the group have met since the Asian financial crisis of the late 1990s. When the global financial crisis hit in 2008, presidents and prime ministers started meeting as a group. At their meeting in Pittsburgh last September, they decided the G-20 should take over from the G-7 as the main forum for hammering out global economic problems.<\/p>\n

In South Korea, which will be the first non-member of the G-7 to host a summit of the G-20 leaders, organizers feel a special burden to demonstrate that the bigger group can make progress on the big issues.<\/p>\n

But the risk is high that some of the problems the countries are facing — such as so-called \u0093rebalancing,\u0094 or changing the perceived imbalance of trade and capital between Asian and Western countries — are too intractable to be resolved at either the year\u0092s first G-20 summit in Canada in June or the second one here.<\/p>\n

\u0093We feel great responsibility of making the November G-20 summit a success for the sake of the credibility of the G-20 process itself,\u0094 Sakong Il<\/strong>, chairman of South Korea\u0092s presidential committee on the G-20, told reporters Wednesday. \u0093We have to produce more deliverables, implementable policy measures, rather than just to make the G-20 summit another feast of rhetoric. We have to make it function.\u0094<\/p>\n

Even so, Mr. Sakong wasn\u0092t ready to be pinned down on the direction that some solutions might take.<\/p>\n

For instance, leaders in the U.S. and U.K. in recent weeks have proposed a tax or levy on banks to recover some of the bailout costs during the financial crisis, a step that may also deter some of the excessive investment and capital flows that hurt countries like South Korea. Mr. Sakong said he wouldn\u0092t \u0093pre-determine which is the best idea\u0094 and noted both the International Monetary Fund<\/strong> and Financial Stability Board <\/strong>are studying the feasibility of various taxes.<\/p>\n

\u0093I just hope that the leaders can agree on some of these issues in Seoul,\u0094 he says.<\/p>\n

The Obama idea has gained some traction in parts of the South Korean government, however, because of the perception that it might prevent the big swings in capital the country has seen by virtue of having open equity and currency markets.<\/p>\n

South Korean banks and companies were isolated from the root causes of the 2008 financial crisis because they weren\u0092t heavily invested in instruments backed by U.S. mortgages. But the country saw so much foreign capital flee in 2008 that its export-dependent companies were pinched for access to U.S. dollars and other currencies.<\/p>\n

\u0093What the Obama tax does is to target that path that is likely to be associated with excessive fluctuations in the financial sector,\u0094 says Shin Hyun-song<\/strong>, a Princeton<\/strong> economist who is spending a year in Seoul as senior adviser on international economics to South Korean President Lee Myung-bak<\/strong>.<\/p>\n

\u0093This hasn\u0092t received much emphasis in the U.S. or the economies that suffered the brunt of the crisis,\u0094 Mr. Shin says. \u0093The imperative is to get the money back for the taxpayers, but if you think about this as a long-run shield or preventative tool, it has some very nice properties.\u0094<\/p>\n

Some other South Korean officials have also spoken favorably about the bank-tax idea but the Lee government hasn\u0092t formed an official position. Mr. Shin says, \u0093The view is we are watching very closely what is happening internationally and we stand ready to engage in international discussions whenever that becomes close to fruition.\u0094<\/p>\n

He added that he thinks the G-20 is a natural forum to discuss a financial-industry levy because it will be difficult for any country to act on its own without running into enforcement difficulties and conflicts with the industry.<\/p>\n

\u0093It is best done with international coordination,\u0094 Mr. Shin says. \u0093If we have the big picture behind us, I think it\u0092s something we can agree on, perhaps with different motivations.\u0094<\/p>\n

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South Korea doesn\u0092t host the world\u0092s leaders for the G-20 economic summit until November, but organizers here already have one big fear: that nothing will get done at the meeting and interest in the primacy of 20-nation forum will fade as a result. Finance ministers from the 20 countries in the group have met since […]<\/p>\n","protected":false},"author":850,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-359295","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/359295","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/850"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=359295"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/359295\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=359295"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=359295"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=359295"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}