David Cameron
Lefteris Pitarakis  /  AP
Britain's Prime Minister David Cameron made a short stop to visit the British Royal Navy's HMS Ark Royal carrier while on his way to attend the G8 and G20 summits.
updated 6/24/2010 8:31:39 PM ET 2010-06-25T00:31:39

World leaders trickled into Canada's largest city on Thursday for global economic talks, but their resolve seemed less focused than at earlier meetings held in the fearful atmosphere of the worst downturn since the 1930s. New leaders in Australia, Japan and Britain could alter the dynamics.

With recoveries in their countries proceeding at starkly different paces, leaders of the 20 largest industrial and developing nations found themselves at odds over how to strike the right balance between continued government stimulus spending and confronting ballooning budget deficits. Divisions also persisted on proposals for a global bank tax and over how much multinational banks should be required to keep on reserve as a cushion against loan losses.

"The most pressing issue is sustainable economic growth," said Canada's finance minister, Jim Flaherty. But he told a news conference before a speech to the Toronto Board of Trade that this means different things in different parts of the world.

"There are clearly some countries, particularly some European countries, that need to fiscally consolidate on an urgent basis," he said.

He noted that Canada's economy is fundamentally strong and that its banks weathered the financial crisis without failures or government bailouts. "We are the envy of the world," he said in voicing opposition to a global bank tax.

Security was tight as foreign leaders arrived during the day and their motorcades tied traffic into knots near the airport and on roads into town. Barricades turned Toronto's downtown core into a virtual fortress.

Police said they took a man into custody Thursday after searching a car and finding containers of gasoline and implements that could be used as weapons, including a cross bow, a chain saw a baseball bat and sledge hammers. A large makeshift container was strapped to the roof. The car was stopped near a hotel where the French delegation is staying for the summit. Workers at the hotel had walked off the job Thursday as part of a labor dispute.

Const. Hugh Smith said the man was being questioned on why he had so many of the items and why he was in the area. He said charges are pending. The vehicle was seized. Const. Tony Vella said there's no reason to believe the incident was summit-related.

Although heavier protests were expected later in the week, demonstrations on Thursday were tame and nonconfrontational. Police with bicycles moved in tandem with several hundred First Nations protesters — descendants of Canada's aboriginal residents. They marched through downtown streets, waving upside-down Canadian flags, pounding on drums and shouting, "No G-20 on stolen native land."

Canadian police patrolled the Lake Ontario waterfront from various boats and jet skis.

One of the first to arrive in Canada was Chinese President Hu Jintao, who met separately on Thursday in Ottawa with Canadian Prime Minister Stephen Harper, the summit host.

Harper and Hu signed an agreement that would allow for more Chinese to visit Canada. Hu also agreed to clear the way for Canadian beef to be exported to China. "In the views ranging from developing our own economies, to sustaining the recovery momentum in the global economy ... there is a need and also a possibility for Canada and China to further scale up their co-operation," said Hu.

Britain, Japan and, unexpectedly, Australia were sending new leaders to the G-20 summit. As leaders began arriving, Australia's ruling Labor Party abruptly ousted Prime Minister Kevin Rudd.

Julia Gillard replaced him, becoming Australia's first female leader. Wayne Swan, her new deputy and the country's finance minister, was to represent Australia at the Canadian meetings.

It will be the first appearance at international forums for British Prime Minister David Cameron and Japanese Prime Minister Naoto Kan. And both were bearing messages that U.S. President Barack Obama might rather not hear.

Cameron comes after his government unveiled an emergency budget that contained higher taxes and the toughest cuts in public spending in decades. And Kan said this week that deficit reduction would be his top agenda item at the Canadian meetings and that Japan would soon start debating a possible sales tax increase to rein in the nation's bulging deficits.

Both are trying to avoid Greece-style government debt crises.

By contrast, the U.S. has generally said that governments worldwide should not pull back stimulus programs too quickly and risk choking growth. Obama in a letter to other leaders cautioned against slamming on the brakes too hard, but encouraged trade "surplus" countries — he didn't mention them but he clearly meant China Germany and Japan — to do more to promote domestic spending.

Obama was to arrive Friday morning. Cameron arrived Thursday evening after a stop in Halifax, Nova Scotia.

Speaking to reporters aboard his plane, Cameron said: "This weekend isn't about a row over fiscal policy. We all agree about the need for fiscal consolidation. For me, this G-20 is about putting the world economy on an irreversible path to recovery."

Cameron said his country was paying a "heavy price" for its involvement in Afghanistan and sent condolences to the families of four soldiers killed in a vehicle accident there on Wednesday.

The summit offers Cameron his first chance to meet as prime minister with Obama since the BP oil spill, which has frayed relations between the two close allies.

Despite U.S. appeals to refrain from removing stimulus measures too quickly, country after country is rushing to slash spending and raise taxes, including austerity moves in Germany and France.

German Chancellor Angela Merkel on Thursday defended her government's moves, saying in an interview with German public broadcaster ARD that "Germany has done much more to revive the global economy than most other nations." Germany is Europe's strongest.

The first of this week's two economic sessions is a meeting of the Group of Eight, the world's older leading industrial democracies — the U.S., Canada, Britain, Germany, France, Italy, Japan — plus Russia on Friday and parts of Saturday at a lakeside resort about 140 miles north of Toronto. The larger group of 20 nations, including such major developing powers as China, Brazil and India, will meet at the Metro Toronto Convention Centre on Saturday and Sunday.

The leaders maintained remarkable unity at three previous summits, but that unity is now fragmented.

However, a move by China to let its currency appreciate against the dollar appeared to lessen trade frictions. Hu's government began Monday to allow the Chinese yuan to rise after having fixed the yuan-dollar exchange rate for the past two years.

A more flexible yuan was seen as a critical development by the Obama administration to fulfill one of the G-20 pledges to address dangerous imbalances, such as China's massive trade surpluses and the United States' huge trade and budget deficits. A stronger yuan, which is also called the renminbi, should provide relief for American, European and Japanese manufacturers which have struggled to compete with low-price exports from China.

Critics in Congress are still threatening China with sanctions unless the yuan moves significantly.

The G-20 final statement expected to be issued on Sunday notes that "while growth is returning in many countries, the recovery is uneven and fragile, and unemployment remains at unacceptable levels," according to an early draft that the environmental group Greenpeace said it obtained.

"We recognize the important progress made since our last meeting in Pittsburgh, but we also agree that much work remains," said the draft, posted on Greenpeace's website.

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Photos: Security tight for G-20 summit

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  1. Police in Toronto, Canada, arrest a woman on Sunday, June 27, outside a building where others detained during the G-20 summit were being held. (Warren Toda / EPA) Back to slideshow navigation
  2. Police speed off in an unmarked van after a "snatch and Grab" arrest of a protestor in Toronto on Sunday. (Jemal Countess / Getty Images) Back to slideshow navigation
  3. Protesters run from police who were surging with shields and clubs during the G-20 summit on Saturday in Toronto. (Don Emmert / AFP - Getty Images) Back to slideshow navigation
  4. Protesters stage a sit-in in front of riot police during a demonstration in Toronto on Saturday. (Christinne Muschi / Reuters) Back to slideshow navigation
  5. Protestors burn a police car in Toronto on Saturday during demonstrations as the G-20 Summit gets underway. (Gerry Broome / AP) Back to slideshow navigation
  6. Riot police watch as two police vehicles set on fire by anarchist demonstrators burn in the midst of protests on the streets of downtown Toronto, during the G20 summit in Toronto on June 26. (Jill Kitchener / Reuters) Back to slideshow navigation
  7. Police officers clash with protesters during a demonstration of the G20 summit in Toronto on June 26. (Christinne Muschi / Reuters) Back to slideshow navigation
  8. Protesters and police clash during a march against the G-8 and the G-20 summits in Toronto, Canada, on Friday, June 25. The G-8 summit is Friday and Saturday in Huntsville, Ontario, about two hours' drive north of Toronto. The G-20 summit is Saturday and Sunday in Toronto. (Sergei Ilnitsky / EPA) Back to slideshow navigation
  9. Police officers use their bicycles to control demonstrators during a protest ahead of the G-8 and G-20 summits, in downtown Toronto on Friday. (Mark Blinch / Reuters) Back to slideshow navigation
  10. A woman prepares a prop coffin before a rally ahead the G-8 and G-20 summits on Friday. (Mike Segar / Reuters) Back to slideshow navigation
  11. Police and protesters clash in downtown Toronto on Friday. (Mike Segar / Reuters) Back to slideshow navigation
  12. President Barack Obama is greeted by officials upon his arrival in Toronto on Friday. (Charles Dharapak / AP) Back to slideshow navigation
  13. A Royal Canadian Mounted Police officer salutes as Russian President Dmitry Medvedev and his wife, Svetlana, disembark at Toronto's airport Friday. (Dmitry Astakhov / AFP - Getty Images) Back to slideshow navigation
  14. A family crosses a largely empty street in downtown Toronto on Friday. (Christinne Muschi / Reuters) Back to slideshow navigation
  15. The helicopter in center carries British Prime Minister David Cameron after his arrival in Toronto on Thursday for the summits. (Justin Lane / EPA) Back to slideshow navigation
  16. City of Toronto workers clear rocks from gardens in a park close to the security zone around the G-20 site on Friday to prevent protesters from using them. (Geoff Robins / AFP - Getty Images) Back to slideshow navigation
  17. Police officers stand with riot gear as demonstrators move through the streets of Toronto on Thursday, protesting for indigenous people's rights and against the upcoming summits. (Carolyn Kaster / AP) Back to slideshow navigation
  18. Protester Rachelle Sauve yells during a march through the streets of Toronto for indigenous people's rights on Thursday. (Carolyn Kaster / AP) Back to slideshow navigation
  19. A police officer patrols a security fence in downtown Toronto that walls off an area where the G-20 summit will be held. (Christinne Muschi / Reuters) Back to slideshow navigation
  20. Protesters march from the Ontario legislature building in Toronto. (Jacques Boissinot / AP) Back to slideshow navigation
  21. A police officer stands by items removed from a car they seized near the intersection of Scott Street and Esplanade in Toronto. The driver was arrested, but police said the incident wasn't related to the G-20 summit. Also in the car were gas cans, a chainsaw and a crossbow. (Carolyn Kaster / AP) Back to slideshow navigation
  22. Canadian police arrest the driver of a car laden with five gas cans, a chainsaw and a home-made crossbow close to the Toronto center where G-20 leaders will meet. (Geoff Robins / AFP - Getty Images) Back to slideshow navigation
  23. World Vision activists dressed as "pregnant with promises" G-8 leaders demonstrate in Toronto. (Christinne Muschi / Reuters) Back to slideshow navigation
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Video: Stimulus, debt looms over G-20

  1. Closed captioning of: Stimulus, debt looms over G-20

    >> taking a little bit of a victory lap on wall street reform. talking how he's able to also have passed health care reform , education reform a few other things, plus wall street reform. running down the various elements that are in this package, but we want to get even deeper. let's bring in cnbc senior economic reporter steve liesman who is actually leer in toronto as well covering this conference. he was listening in. so, steve, make this accessible for folks. wall street reform. what does it mean for the average consumer? i know the president made an effort to try to say what it was. tell us in your words.

    >> i think what it means is that there will be more consumer protection out there. less financial, call it engineering matengineer i ing madgingations. they're going to dial back particular the banks can do and put it in place where is the taxpayer is not necessarily on the hook for it. a big problem. it was private gains and public losses. what they're trying to do is create something of a shield around the places where the taxpayer could end up taking losses. also incentives to make banks smaller and make them less complex, and so the idea is, look. bottom line, we're still fighting the last war but we have to fight that last war. we had to get the things that got us into this mess. we had to get that fixed and now turn our attention to the new one bp just one quick thing politically, chuck. i'll engage you on this, which is -- having this pass for the president is prit important politically coming here to the g-20. the idea of being before he aim came here, like he was going to a concert and had tickets for all the way upstairs and now just given orchestra tickets in the sense, coming here with afghanistan, and the bp spill. didn't have anything in his pocket. much better seats to the show.

    >> yeah, yeah.

    >> comes bearing gifts perhaps. you bring up the g-8 and g-20. set the table a little bit. what are the issues? where are the fights going to be? where do the respective countries stand on some of these big issues like exiting fiscal stimulus and this growing debt crisis?

    >> reporter: that's a big part of it, savannah. it's stimulus versus austerity. you have countries in europe already taking steps , because of the european debt crisis, to roll back stimulus. what the obama administration wants to do, hang on a second. not so fast. we still haven't solidified the recovery and worried about a wider global slowdown triggered by government fiscal tightening all over the world, especially in europe. they want them to do a two-step process. one is to keep stimulus in place until the recovery is on firm footing, and, two, is come forward now with credible deficit reduction plans in the future. and then just quickly on the issue of global capital regulation which is going to be a big issue here, it's almost like, forget what i just said about what's happened domestically. now they're going to have a big discussion about standardizing this, because the big question, i think, for american investors and american taxpayers is this -- do we make tougher rules for our banks than they have overseas so that our banks are at an disadvantage? if that's the case we might have to revisit what's been agreed to today.

    >> whenever we have one of these global economic summits of late, the issue of china and its currency and it's sort of the fact that it really isn't as publicly traded as everything else is around the world comes up. what are we going to hear about that issue?

    >> you know, chuck, you've cover covered more of these than i have. it struck me thinking about china, the benefit of having these meetings, not what happens at the meetings. what countries do before the meeting so they're not embarrassed. what did we have happen jp europeans announcing stress tests on their banks. a big issue and the other thing you allude to, china agreed to more flexible of its currency ahead of the meeting. what does that do? different fuses the issue. they'll talk about the dollar, strengthening dollar, what needs to be done on that score. i don't think currencies are a big issue, because china has shown flexibility. takes it off the table. banking regulation comes to the fore.

    >> exciting weekend for the two of you in toronto . steve liesman .

    >> i'm excited, savannah. come on. global capital reform. what more could you want?

    >> it's the hockey hall of fame . by the way, no humidity.

    >> oh, well, now i am jealous. all right, guys. be good there in toronto . steve liesman , thanks.

    >> thanks.


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