Obama under fire as G20 talks open

Barack Obama, the US president, faces a turbulent time trying to defuse potentially explosive trade and currency issues at the Group of 20 summit.

SEOUL // Barack Obama, the US president, faces a turbulent time trying to defuse potentially explosive trade and currency issues at the Group of 20 (G20) summit today.

Mr Obama was forced to leave the Indonesian capital Jakarta ahead of schedule yesterday to avoid the ash plume from the erupting volcano Mount Merapi.

Arriving in Seoul, the US president was widely criticised over his country's quantitative easing policy.

This followed last week's decision by the US Federal Reserve to buy US$600 billion (Dh2.2 trillion) in government bonds to try to spur lending and boost the US economy. Critics say the move will give US goods an unfair advantage.

But Mr Obama stressed a strong US economy was vital to the global recovery and urged other G20 leaders to put aside their differences and do their part to bolster growth.

"The United States will do its part to restore strong growth, reduce economic imbalances and calm markets," he wrote in a letter before the South Korean summit of leading and emerging economies.

"A strong recovery that creates jobs, income and spending is the most important contribution the United States can make to the global recovery."

Mr Obama's comments came after a day of heated arguments as negotiators struggled to hammer out a closing statement that all G20 leaders could sign. Aides pressing mobile phones to their ears shuttled in and out of the hall as they tried to draft a final statement, due to be released tomorrow. But they remained far apart on pivotal issues, including exchange rates.

"We had to open the door because the debate was so animated and the room was getting hot," said Kim Yoon Kyung, a G20 spokesman, during the day-long talks.

In his letter, Mr Obama sought to return the discussion to global imbalances and insisted the US was not the only country that must change its ways.

"Just as the United States must change, so too must those economies that have previously relied on exports to offset weaknesses in their own demand," he wrote in a thinly veiled reference to China, whose politically contentious trade surplus widened to $27.1bn last month.

Mr Obama also faces tricky discussions on getting a final understanding on the US-Korea Free Trade Agreement that was signed during the presidency of his predecessor George W Bush.

Mr Obama hopes to present the bill for ratification by the new US Congress, once negotiators have hammered out the details, to increase the imports of US cars and beef to South Korea.

Ron Kirk, the US special trade representative, has been locked in negotiations for the past three days with Kim Jong-hoon, the South Korean trade minister, on the issue of fuel efficiency and other regulatory and tax problems, including tariffs on spare parts.

The US also wants to speed up the end of quotas on the import of US beef. This has grown to 35 per cent of all beef imports since South Koreans staged mass demonstrations against US meat in 2008 after a television station aired an inaccurate report about mad cow disease in American cattle.

While Mr Obama might be in for a rough ride in Seoul, the two-day summit will provide a better forum for emerging economies.

"The Asian countries are happy," said John Kirton, a member of the G20 research group at the University of Toronto. "They have an equal seat at the table for the first time," he said, referring to the rising role of emerging market countries, such as Brazil, Russia, India and China, since the first G20 meeting in Washington two years ago.

Not everyone, however, agreed. "There's no genuine desire to give real power to developing countries," said Lakhvinder Singh, a senior fellow at the Institute of Far Eastern Studies in Seoul.

"In international institutions like the United Nations, the World Bank, the IMF and the Asia Development Bank, the western countries still dominate. The changes are not nearly enough."

Away from the discussions, authorities in the South Korean capital have increased security. Some 50,000 police officers, more than one-third of the national force, will be deployed, including about 20,000 riot police.

A special law has also been enacted to give police greater authorities to thwart street demonstrations and allow the deployment of troops in public areas.

But, so far, there have been no major flashpoints. Two small protests, against a free trade deal with the US and tax reform in South Korea, were staged yesterday morning.

* with Reuters