Image: G-8, G-20 summit preotest in Toronto
Michael Reynolds  /  EPA
Protesters march against the G-8 and G-20 summits in Toronto on Friday.
updated 6/25/2010 6:54:35 PM ET 2010-06-25T22:54:35

Fresh from a congressional win on a financial overhaul, President Barack Obama pressed world leaders on Friday to join him in backing stronger rules against banking abuses. He made little headway in his call for more stimulus to keep the world economy growing.

Instead, he ran into strong opposition from countries wanting to put deficit reduction first.

"Those countries with budget deficits need to do that and, as a world, we need to address the imbalances," Britain's conservative new prime minister, David Cameron, said Friday after meeting summit host Stephen Harper, Canada's prime minister. His government brought forward an emergency budget this week that proposed increased taxes and the toughest cuts in public spending in decades.

As Obama and other leaders sparred over how to keep their economies from slipping back into recession, there was little expectation of economic breakthroughs from sessions here and in Toronto.

Divided on economic remedies, the leaders searched for common ground on other issues, such as confronting nuclear standoffs with Iran and North Korea, dealing with the AIDS epidemic, and maternal and infant health care in desperately poor countries such as Afghanistan, Mali and Tanzania— a key project of Harper's.

Harper announced that Canada was spending an additional $1.1 billion on such an initiative, bringing Canada's contribution to nearly $3 billion over five years — and invited other nations to do likewise.

Leaders of the so-called Group of Eight — an aging club of rich democracies made up of the U.S., Canada, Britain, Germany, France, Japan, Italy and Russia, — met for their annual session at a resort in Canada's sprawling Muskoka region of lakes and vacation cottages several hours drive north of Toronto.

On Saturday and Sunday, the focus shifts to Toronto, where they will be joined by leaders representing fast-growing developing economies including China, India and Brazil.

At a time when leaders were discussing fiscal austerity, Canada's Harper has come under criticism over the projected costs of the summits, including at least $900 million for security and $2 million for a theme park inside the media center that includes an artificial lake with canoes, deck chairs and a fake dock.

Leaders divided
The Group of 20 has been gradually overshadowing the Group of Eight as the world's premier forum for discussing and coordinating economic policy.

Obama was able to claim a big victory in Washington early Friday as congressional negotiators reached a hard-fought compromise on new Wall Street banking rules. He urged other countries to follow suit. "We need to act in concert for a simple reason," Obama said as he left the White House. "This crisis proved and events continue to affirm that our national economies are inextricably linked."

Some leaders congratulated Obama at the opening G-8 lunch session for tightening financial regulations, U.S. aides said.

A Cameron spokesman said Britain welcomes the U.S. steps and is at work on its own measures "to ensure the future resilience of the financial sector."

Obama's call for more temporary stimulus spending was being rebuffed by leaders in Europe and Japan who instead emphasized cutting government spending and even raising taxes, much as he's been stymied at home on his pleas to Congress for more jobs and stimulus money.

After showing strong solidarity during the height of the financial crisis, the leaders are divided now over whether to stimulate economic growth with more spending — as Obama wants — or to rein in budget deficits in light of debt crises in Greece and other heavily indebted nations.

Obama made the point that stimulus to keep the recovery going and austerity are not exclusive.

Protests in Toronto
In Toronto, hundreds of protesters vowing to set up a tent city near the summit security zone moved through city streets. Police in riot gear appeared to be holding them back and were making few arrests in the early going.

The leaders were giving special attention this year to some unmet pledges from the past; namely the G-8's vow in Scotland five years ago to double international aid to Africa by 2010 and to make significant strides in providing AIDS treatment to all who need it. Neither goal has been achieved.

The G-8 held an outreach session with leaders of seven African nations.

While most attention focused on economic issues, the leaders planned an in-depth discussion Saturday of the war in Afghanistan, tensions in the Middle East and nuclear ambitions of Iran and North Korea.

The U.S. and its allies hope to persuade China to support U.N. Security Council action to hold North Korea accountable for the sinking of a South Korean warship in March.

A Japanese spokesman, Kazuo Kodama, said Friday that new Japanese Prime Minister Naoto Kan told his counterparts from Canada and Germany that North Korea's alleged torpedo attack is a "threat to the peace and stability of the region." Kan wants summit partners to issue a "clear message of condemnation" of North Korea, the spokesman said.

On Afghanistan, Cameron said he did not expect British troops — now numbering about 10,000 — to be in Afghanistan in five years' time. "We can't be there for another five years, having been there for nine years already," he told Britain's Sky News.

Aides traveling with the prime minister said he was not setting a deadline for the withdrawal of British troops.

On Iran, the U.S. and European nations will push other powers to join them in imposing tough new sanctions on Tehran over its nuclear program, building on new U.N. measures adopted earlier this month.

But China and Russia only reluctantly supported the sanctions, and have balked at new unilateral steps against Iran, saying any measures should not exceed those called for by the Security Council.

Russia's bid to join the World Trade Organization — for which Obama voiced strong support on Thursday after a meeting in Washington with Russian President Dmitry Medvedev — could also come up. Obama pledged to help Russia speed up its more than decade-long bid in hopes that Moscow could win acceptance as early as Sept. 30.

The G-20 group represents 85 percent of the world economy and the United States wants this group to endorse the outlines for a global financial overhaul to eliminate the threat that banks facing tougher regulations in one jurisdiction will move their operations to countries with more lax rules.

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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