CFK in Mexico for G20 Summit

Los Cabos, Mexico — President Cristina Fernández de Kirchner arrived yesterday for the G20 summit unfolding here between today and tomorrow in a torrid Mexican summer.

Her agenda yesterday was largely limited to attending the dinner hosted by Mexican President Felipe Calderón for G20 leaders amid tight security while meetings with Russian and French colleagues Vladimir Putin and François Hollande are being set up for the next two days.

The G20 summit will probably be dominated by the euro zone crisis for the third year in a row, the more so starting the dayfter Greece’s crucial elections. While the expropriation of YPF oil company in April raised many eyebrows across the world and while Argentina’s escalating protectionism this year has sparked protests elsewhere, these issues pale when measured against fears of a further disintegration of the euro zone and CFK is not expected to play a star role.

Nor will she necessarily pose as a maverick on the central issue of the global financial crisis because weekend comments by the World Bank seemed to favour the strategy of Europe growing its way out of crisis rather than saving its way — the anti-austerity approach has been constantly urged by CFK (including at the last G20 summit in Cannes, France).

The World Bank yesterday called for “enhanced G20 focus” on policies to reinvigorate growth in a report while in media interviews over the weekend, its chief Robert Zoellick even spoke of “a plan quickly to overhaul the single currency area.”

The subject of today’s first G20 session is also in the same direction: “Global economy in a framework for vigorous, sustained and balanced growth.” Two of tomorrow’s sessions are entitled: “Strengthening the international financial architecture and promoting financial inclusion” and “Trade, job creation and growth.”

“Europeans have to display the awesome firepower that they have at their disposal” added Angel Gu-rria, secretary-general of the Organization for Economic Co-operation and Development (OECD), while Canadian Finance Minister Jim Flaherty commented that this crisis was unusual in “dealing with some of the wealthiest countries in the world.”

The World Bank report accused the rich countries of “buying time” with short-term stabilization when they also needed “growth-enhancing structural measures.” Austerity was “not enough” with increased growth needed to address fiscal and debt problems, the report said.

Economic growth averaging above six percent in most developing regions was also praised as “a vital source of strength for the world economy since the financial crisis erupted in 2008,” thus implying that Argentina is not considered part of the problem.

The main area where the World Bank report potentially clashes with Argentine policy is where it says that “with growth in advanced economies likely to be lower for some time, developing countries would have to trade more” but “the global financial crisis had led to a rise in trade protectionist measures,” mostly by G20 countries. The World Bank thus urged the G20 to go beyond its usual call to refrain from protectionism and instead issue a collective pledge to reverse measures impinging on trade.

The Group of 20 was created in 1999 precisely to bring together financial policymaking from traditional economic powers with the fast-growing developing economies such as China and Brazil. Its 20 members house 90 percent of the world economy, 80 percent of its trade and two-thirds of its population.