03.04.09

Yesterday, Presidential Aide Arkady Dvorkovich updated foreign journalists on the current Russian position with regard to the G20 summit scheduled to take place in London on April 2. The Russian Presidential Administration had aired "proposals" for the G20 summit on March 16 and initiated a discourse. President Dmitry Medvedev discussed them in a telephone conversation with British PM Gordon Brown on March 26. He was supposed to discuss the proposals with Angela Merkel of Germany today and with Barack Obama at the face-to-face meeting in London on April 1.

Dvorkovich's speech and attitude yesterday made it plain that Russia's extravagant and truly planetary proposals had failed to impress foreign partners. Aware of this lack of interest, Russia all but recalled most of them.

Reorganization of the system of reserve hard currencies was the key thesis of the whose package - and the most controversial one. Russia asked the G20 to discuss a new system of reserve hard currencies, one based on SDR and independent from the American dollar. (As things stand, however, only Russia and China are prepared to discuss the matter.) SDR was to become central subject of a global financial conference the Kremlin had expected to arrange in Moscow this summer or autumn.

Dvorkovich, however, announced yesterday that a financial conference such as this was a serious matter that warranted serious preparations and so on... "It may even require another G20 summit," he said. In a word, Russia no longer insists on the global SDR-economy. The date of the next G20 summit was never set. Dvorkovich was optimistic enough to suggest that it might take place "before the end of the year." It means that the "Moscow conference" will take place in late 2009 or early 2010 - if at all.

According to the presidential aide, practically all other Russian proposals were met with more or less the same attitude. Dvorkovich all but admitted that the subject of energy security Russia had promoted for the summit would probably remain off the agenda. It will be discussed at the next G8 summit in Italy, but it will only happen in July, 2009.

The whole package of Russian proposals became therefore reduced to the idea of G20 macroeconomic policies harmonization and that of common standards of financial market regulations or the so called SURF. Even these ideas, however, will probably be omitted from the discourse in London.

The closer the G20 summit, the clearer it is that its agenda will be probably centered around financial reforms in the United States (from establishment of a single watchdog body to monitor financial markets to changes in the financial accounting standards). Bloomberg reported yesterday that the US FASB (Financial Accounting Standards Board) suggested a weakening of what was known as the mark-to-market principle. The decision concerning its partial abolition will be made on the G20 summit day, April 2.

Russia, China, and India couldn't care less because this principle is not used in these countries.

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Source: Kommersant