Harper officials make first contact with Obama camp ahead of summit

Prime Minister Stephen Harper boards a plane as he departs the Conservative convention in Winnipeg on Friday to attend the G20 economic summit in Washington, D.C.(Adrian Wyld/Canadian Press)As Stephen Harper echoed U.S. President George Bush's call for no overhaul of global market regulations, the prime minister's officials met Friday with representatives of the man who holds the real power in Washington — Barack Obama.

The officials sat down with former U.S. Secretary of State Madeleine Albright and onetime Republican congressman Jim Leach, both of whom are attending a G20 summit of world leaders in Washington, D.C., on behalf of U.S. president-elect Obama.

The meeting in the U.S. capital marks the first in-person contact between Canadian government representatives and members of the Obama camp since the Illinois senator won the Nov. 4 U.S. presidential election.

A senior Harper official wouldn't provide details on what specifically was discussed, other than to say the conversation centred on the G20 summit.

"It was a positive meeting," he said. "We were able to articulate our position clearly, and we look forward to future discussions and meetings with the president-elect's transition team as they move forward on their work."

Canada is keen to advance one proposal in particular at the summit this weekend: an international "peer review" of every G20 country's national financial regulations.

Harper, meanwhile, dined with Bush and other world leaders at the White House Friday night ahead of the summit, due to begin Saturday.

Harper looks for regulatory middle ground

Before heading to the weekend conference, the prime minister said earlier Friday that leaders will be discussing the scope of possible regulations to prevent future market meltdowns, adding there are two opposing views, both of which Canada rejects.

"Canada will be seeking consensus on a communiqué that focuses on the world's macro economic fundamentals to restore growth, recognizes that good regulation begins at home, and supports mechanisms for peer review that are transparent and accountable," Harper told reporters in Winnipeg.

Harper said some leaders believe they should "strictly keep their own house in order," while others are seeking "wide-ranging global governance of financial markets."

"I believe the government of Canada is in neither of these camps," he said. "We actually believe that neither of these positions are feasible or realistic."

World leaders arrived in Washington on Friday for a series of meetings over two days to discuss ways to turn around the global financial crisis.

The Group of 20 countries represents about 85 per cent of the world's economy and two-thirds of its population. The countries in the group are Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, United States and the European Union.

Leaders at the summit, which will also include officials from the World Bank and the International Monetary Fund, are expected to discuss the underlying causes of the global financial crisis and review the progress that has been made by various nations.

But with so many diverse interests and economies at play, some analysts were suggesting ahead of the meetings that it is unlikely agreement will be reached over whether more regulation of markets can protect consumers, savers and companies from the fallout of such a financial crisis.

Canada a model: Flaherty

Finance Minister Jim Flaherty will also attend the meeting and plans to promote Canada's financial system as a model for the world.

"Our financial system is sometimes described as boring but it has weathered the storm well — unlike the financial systems in some of the other countries," Flaherty told CBC News.

And while Canada could set the example for other nations in administering their own financial sectors, Flaherty has argued that some minimum level of global regulation needs to be introduced.

"We need to ensure that all financial institutions that are leveraged are subject to regulation because the current crisis to a large extent came out of institutions that were not adequately regulated," he said.

The existing International Monetary Fund and World Bank should be adequate to oversee the global economy's recovery from the current crisis, Flaherty said. "We're in the middle of a crisis now — probably not the best time to create a new structure."

Harper on Friday also appeared to reject a one-size-fits-all solution.

"I don't think the major economies of the world will obviously consent to have external control over their regulatory systems, but at the same time, I think we do need something where all of us can give each other a significant reassurance about the nature of our system," he said.

One suggestion Flaherty has put forward is to make the International Monetary Fund-World Bank financial sector assessment program mandatory and public.

U.S. wants freer market

Meanwhile, President George W. Bush said the U.S. will emphasize the need for a free-market system, continued investment and increased trade.

"While reforms in the financial sector are essential, the long-term solution to today's problems is sustained economic growth, and the surest path to that growth is free markets and free people," Bush said in New York on Thursday.

Some European countries are arguing that without more regulation, a repeat of the financial turmoil will be inevitable.

British Prime Minister Gordon Brown has called for more co-ordinated measures to spur economic growth.

"By acting now we can stimulate growth in all our economies. The cost of inaction will be far greater than the cost of any action," he told reporters in New York on Thursday.

European Commission President Jose Manuel Barroso said he also hoped to draw more emerging economies into global financial institutions such as the International Monetary Fund.

Japan to lend $100 billion to IMF

Japan is ready to lend as much as $100 billion US to the International Monetary Fund to support nations reeling from the global financial crisis, Prime Minister Taro Aso said Friday in a statement.

Aso blamed much of the crisis on individual governments' failure to monitor and regulate the emergence of new financial products.

"We should not forget, however, that at the root of this problem lies the issue of global imbalances … that the deficit of the U.S., the key-currency country, is being financed by capital inflows from around the world," Aso said.

In the statement, Aso called for improvements in the IMF's role in monitoring financial markets and detecting potential crises early and urged member countries to boost the IMF's financial resources for emerging countries.

The Washington-based IMF has dipped into its reserves to provide emergency loans to Iceland, Hungary and Ukraine worth more than $30 billion.

Corporations warn against protectionism

Some of the world's top corporations issued a statement on Friday urging world leaders not to overreact by reverting to protectionism and prolonged state intervention.

In the joint communiqué, corporate leaders from around the globe said members of the G20 should take bold action to bolster economies but cures that focus on protectionism would only make things worse.

Open and innovative markets are essential to achieving a healthy and sustainable recovery, said Thomas d'Aquino of the Canadian Council of Chief Executives.

The corporate leaders are calling for measures like tougher regulations for financial systems and a mix of tax cuts and government spending to try to stimulate economies.

Markets in Asia and Europe rebounded slightly on Friday while investors waited to see what policy announcements would be made at the G20 meeting. But some leaders were trying to dampen expectations.

"This will need to be seen as just the starting point," Mexican President Felipe Calderon told reporters in Mexico City ahead of the summit. "There will be results, but they will be moderate."

The meeting is the first in a series of summits to bring the leaders together. Working groups are also expected to be established to develop recommendations to be considered by leaders in subsequent summits.

With files from the Associated Press, the Canadian Press and Reuters