G-15 turns balancing act on crisis<\/p>\n
By Nelson Graves<\/p>\n
KUALA LUMPUR (Reuters): The Group of 15 (G-15) developing
\ncountries has executed a diplomatic balancing act with a
\nstatement that weighs deep concern over financial instability
\nwith a reluctance to write rules that could hamstring markets.<\/p>\n
Delegates to the three-day G-15 summit that started on Monday
\nsaid the host, Malaysian Prime Minister Mahathir Mohamad, won an
\nimportant victory by steering through the statement expressing
\n\"deep concern\" over market volatility and speculative activity.<\/p>\n
But other nations led by the large Latin American bloc managed
\nto adjust the statement's language to offset the call for new
\nregulations with support for open markets, delegates said.<\/p>\n
The first version of the statement called on the International
\nMonetary Fund and World Bank to study recent developments in
\ncurrency markets \"with a view to making them more open,
\ntransparent and regulated\".<\/p>\n
That squared neatly with Mahathir's drive for new rules to
\ngovern currency speculators who he has blamed for dragging down
\nthe value of the ringgit and, with it, stock prices.<\/p>\n
\"A world trading system cannot rely entirely on market
\nforces,\" Mahathir said in a speech opening the summit. \"It is
\ntime that we draw up fair rules for the market place.\"<\/p>\n
Mahathir argues that foreign exchange traders are not
\ncontrolled by the same type of regulations that govern stock or
\nbond markets.<\/p>\n
He has said the World Bank is interested in pursuing the
\nproblem, and Malaysia's Deputy Prime Minister Anwar Ibrahim said
\nlast Saturday that the IMF would make a report on currencies to a
\nmeeting of Southeast Asian finance ministers next month.<\/p>\n
But the emphasis on new regulations did not sit well with most
\nof the Latin American members, the largest bloc comprised of
\nArgentina, Brazil, Chile, Jamaica, Mexico, Peru and Venezuela.
\nThe other members are Algeria, Egypt, India, Indonesia, Malaysia,
\nNigeria, Senegal, and Zimbabwe. Kenya was admitted as the
\nsixteenth member on Monday.<\/p>\n
Argentine Vice President Carlos Ruckauf told Reuters that the
\nstatement was adjusted to reflect the concerns of many countries
\nincluding his own as well as Brazil, Chile and Mexico.<\/p>\n
The final version called on the IMF and World Bank to conduct
\nthe study \"with a view to appropriately regulating them, in order
\nto make them more open and transparent\".<\/p>\n
\"The original text was a policy of regulation, and Argentina
\nsupported a policy of transparency and free markets,\" Ruckauf
\ntold Reuters in an interview.<\/p>\n
\"Of course there is concern, a very real concern about what
\nhas happened in emerging markets, but the prescription for this
\nsituation is at best more transparency and liberalization,\" he
\nsaid.<\/p>\n
\"The real problem with markets is there still exists too many
\nregulations all over the world.\"<\/p>\n
Delegates said the real challenge would be to try to establish
\na regulatory framework that would meet the concerns of both
\nMahathir and the Latin American nations.<\/p>\n
A trade minister from a G-15 country said one other concern
\nwas that the push for currency regulations could have the effect
\nof putting developing nations' longstanding trade demands on the
\nback burner.<\/p>\n
But delegates hailed the statement on currency volatility as a
\ncompromise that kept the G-15 intact despite its regional and
\neconomic diversity.<\/p>\n
\"What was most heartening was the level of commitment,
\nparticularly at the political level, even from Latin Americans,\"
\nan Indian delegate said. \"This augurs well for the future of G-
\n15.\"<\/p>",
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