G20 to warn of uneven and fragile recovery

TORONTO, Jun 24 – Canada on Wednesday welcomed the first arrivals for the G8 and G20 talks as a leaked draft communique said leaders will warn that the economic recovery remains "uneven and fragile."

The leaders, as well as throngs of journalists, protesters and 20,000 police providing security, will be in Toronto for a June 26-27 G20 summit and a G8 gathering the day before in Huntsville, north of the Canadian city.

The leaked document obtained by environmental activist group Greenpeace noted a still patchy recovery from the worst economic crisis in a generation.

"While growth is returning in many countries, the recovery is uneven and fragile, and unemployment remains at unacceptable levels," the text said.

Skirting a contentious issue that has divided Europe and the United States, leaders are to say stimulus spending had helped stabilize the global economy.

Washington has urged Europe not to cut government spending before the recovery is assured, for fear of plunging a swathe of the world — including the United States — into a double-dip recession.

European nations, led by Germany, France and Britain, argue drastic cuts are needed to put their books in order and create a firm basis for future growth.

"Fiscal and monetary stimulus has helped restore private demand and lending, and we have taken strong steps toward increasing the stability of our financial systems," said the largely incomplete text.

Several G20 nations are expected to fast-track consolidation.

Leaders will also ask trade ministers to move toward the "endgame" of much-delayed World Trade Organization negotiations.

"We instruct our trade ministers to prepare a full assessment of the state of the negotiations and a plan of the way forward for our consideration at the Seoul G20 summit in November of this year."

Host Canada warned this week that pockets of protectionism are hurting the global recovery.

Most G20 countries have held firm on their commitments made at last year\’s summit in Pittsburgh not to impose new trade barriers, Canadian Trade Minister Peter Van Loan said.

"Overall, we haven\’t had a wave of protectionism that was feared," he said. "But there have been some elements of backsliding," he added, pointing to China, Russia and the United States.

In Toronto, G20 countries "will be called to account for what they\’ve done, and (Canada) will try to keep countries focused on the right path for the future," said the minister.

British Prime Minister David Cameron\’s spokesperson told reporters: "We need to see structural reform and we need to see sustainable growth in the world economy and we need to see action on things like trade."

Leaders will also push forward a "voluntary" plan for "identifying inefficient fossil fuel subsidies that encourage wasteful consumption."

"We agree to continue working to develop voluntary, member-specific approaches for the rationalization and phase out of such measures," said the communique.

Agreement on proposed bank levies, favored by Europe and the United States, but opposed by Canada and emerging economies, is unlikely.

Changes to bank capital rules have been shifted to the next G20 meeting in Seoul in November.

China\’s President Hu Jintao arrived in Ottawa on Wednesday for a three-day state visit before heading to the summits. Hu could face new pressure over Beijing\’s currency controls and world efforts to rein in ally North Korea.

A senior US official said US President Barack Obama will meet Hu, South Korean President Lee Myung-Bak, new Japanese Prime Minister Naoto Kan and Indonesian President Susilo Bambang Yudhoyono on the sidelines of the summit.

Indian Prime Minister Manmohan Singh will also meet with Canadian Prime Minister Stephen Harper immediately following the summit, in Ottawa.

G8 talks will focus mainly on international development issues and reducing maternal and child mortality in developing countries, as well as security threats such as the Afghanistan conflict, and nuclear threats.

Canada has invited the leaders of Algeria, Egypt, Ethiopia, Malawi, Nigeria, Senegal and South Africa to participate in "G8 outreach sessions" on development goals.

Colombia, Haiti and Jamaica heads are also coming to talk about transnational crime, terrorism and policing with the G8.

As leaders began to arrive, a rare 5.0 earthquake shook Ottawa, Montreal and Toronto on Wednesday, forcing office workers out onto downtown streets in Canada\’s capital.

Canadian police, meanwhile, are being extra vigilant in the runup to the back-to-back June 25-27 summits. Four Canadians have been arrested in recent days in two separate plots against the G20.