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What Will Come From Crisis Summit?

Background and analysis by CBS News State Department reporter Charles Wolfson.

Speaking about the current global economic meltdown, President George W. Bush had this to say: "This crisis did not develop overnight and it is not going to be solved overnight."

Ditto for this weekend, when world leaders representing the so-called G-20 gather in Washington to confront the current state of global economic turmoil.

Large gatherings of world leaders are not uncommon. However, this weekend's meeting in Washington is unusual -- and the telling factor to gauge this meeting can be seen in the nameplates around the table. Everyone, from President George W. Bush (who is playing host) on, is a head of government.

Another key factor which makes this meeting unusual is that the list of attendees includes leaders not only of twenty-one countries but also of five international institutions, such as the World Bank, the International Monetary Fund and the United Nations, who will be represented at the bureaucratically-named Summit on Financial Markets and the World Economy.

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No one needs to be told there is a crisis. What everyone wants to know is what new steps the political and financial leaders who control economic and monetary policy are going to take to stop the seemingly endless downward spiral which has forced Mr. Bush to convene this meeting even as he has one foot out the door of the Oval Office.

The British ambassador to America, Sir Nigel Sheinwald, said "we need a global response to a global crisis." In briefings this week in Washington and in foreign capitals, diplomats and economic advisors have been talking about some of their concerns: that there be a cooperative global response; that such technical areas as the regulation of hedge funds and rating agencies be addressed; that financial instruments such as derivatives come under more scrutiny; and that institutions which lend money should not be able to pass off all the risk but should share it to some extent, thus making them more responsible lenders.

On another level, there is recognition that the international organizations which deal with economic and financial matters be strengthened. One way to do this, informed experts say, is to give the IMF more power.

Another possibility would be to strengthen a smaller group, the Financial Stability Forum, which represents central bankers of the biggest countries. But bolstering the FSF is less popular with developing countries, since they are not well represented in that organization (while all nations are represented in the IMF).

Another open question is what role prosperous developing countries will play. China and Saudi Arabia have lots of cash but it is not yet clear how much they will put on the line to prop up those in a weaker economic position.

Coming to grips with such problems and getting agreement on solutions of course will not happen in one weekend meeting. While some sort of positive statement is likely to result, to give the financial markets a certain level of confidence (if for no other reason), the major decisions will be put off until experts can deal with them in detail.

Perhaps finance ministers will be tasked by their leaders to come back with proposals after a few months.

After all, President-elect Barack Obama, who will not attend this weekend's meeting, will not take office until late January, and he and his team will certainly play a big part in how we resolve this crisis.

On one level, what is going on this weekend represents a global shift in both economic and political power. Ten or twenty years ago, the G-7 major industrialized nations would have convened to confront such a crisis. Now there is agreement the developing world must be represented - thus the gathering of the G-20, which includes such nations as Indonesia, Brazil, Mexico and Turkey.

Speaking at the Brookings Institution ahead of the summit, France's Foreign Minister Bernard Kouchner openly acknowledging this move, saying, "The balance of power is shifting from West to East; from North to South. … Globalization means we are not alone."

Before arriving in Washington, British Prime Minister Gordon Brown spoke of the urgency of the situation, saying, "The cost of inaction will be far greater than the cost of any action."

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