PITTSBURGH — Leaders of the world's major economies began gathering Thursday for a two-day summit aimed at making sure a fledgling global recovery remains on track while laying down tougher rules for global financial institutions.
The meeting is the third held to review strategy since the worst global recession to come after the Great Depression struck with force a year ago.
This summit seems free of the crisis atmosphere that hung over the past two meetings.
It was less calm on the streets, where police threw canisters of pepper spray and smoke at demonstrators after marchers responded to calls to disperse by rolling trash bins and throwing rocks.
The leaders gathered Thursday evening for an opening dinner, to be followed by a full day of talks. They'll be taking stock of the overall world economy, deciding whether to curb bankers' pay, setting universal rules for bank reserves and plotting an exit strategy from trillions of dollars in stimulus spending. The leaders will also grapple with next steps in combating global warming.
On the pay issue, Europeans in particular pressed for strict limits on salaries and bonuses for executives of financial institutions to keep them from being rewarded for the risky practices that contributed to the financial crisis.
"Europeans are horrified by banks, some reliant on taxpayers' money, once again paying exorbitant bonuses," said European Commission President Jose Manuel Barroso. Insisting "this is not a witch-hunt against bankers," Barroso said the EU was urging G-20 partners to stop the pay practice, "building on measures already taken in Europe and elsewhere."
The U.S. favors some restrictions but wants them linked to the health of the companies involved and does not want numerical limits as do leaders of Germany and France. The leaders seemed to be moving toward a compromise.
Treasury Secretary Timothy Geithner said Thursday that the leaders have reached basic agreement on limiting the bonuses.
British Prime Minister Gordon Brown, speaking with reporters in New York before heading to Pittsburgh, said he hoped the group would agree to a new compact on jobs and growth. He warned, as President Barack Obama has, that nations should not move too quickly to end low interest rates and stimulus-spending packages.
"The recession is not automatically over," Brown said.
Brown said he hoped the G-20 would eventually replace the older Group of Eight major industrial democracies as the world's "forum of international cooperation." It includes many fast-growing economies, including China, India and Brazil, that are not among the original eight: the U.S., Japan, Britain, Germany, France, Italy, Canada and Russia.
Obama, who arrived from U.N. meetings in New York at midafternoon Thursday, chose Pittsburgh as the summit site because the formerly struggling Rust Belt city has transformed itself economically into a rebounding, environmentally conscious community with a diverse economy.
Summit partners are in basic agreement on a strategy to encourage big exporting countries such as China, Japan and Germany to shift their economies more toward domestic spending and to encourage more savings and fiscal discipline in the United States. Ahead of the Pittsburgh gathering, Obama challenged world leaders at the United Nations to overcome an "almost reflexive anti-Americanism" while at the same time viewing U.S. consumers as a market of last resort.
But differences remained on tactics, including how quickly to move away from stimulation policies.
Washington wants the group to agree to a "framework for sustainable and balanced growth" that could include monitoring by an international group such as the International Monetary Fund that could detect policies that could lead to global imbalances.
Obama argues that the global economy cannot continually rely on huge borrowing and spending by Americans and abundant exports by countries such as China.
Information for this article was contributed by Charles Babington, Pan Pylas and Daniel Lovering of The Associated Press.
Front Section, Pages 8 on 09/25/2009