G-8 leaders discuss market instability, oil prices, climate change

Source: Agencies  |   2008-7-8  |     ONLINE EDITION

THE leaders of top industrialized countries focused on two of the world's main concerns today -- the stumbling global economy and climate change -- amid expectations they would act to calm international markets.

The Group of Eight held exclusive meetings throughout the day at the main venue in Toyako, northern Japan, as leading emerging economies such as China and India gathered separately in the city of Sapporo.

Oil prices have hit record highs, roiling world economies, while rising food costs have triggered shortages and social unrest in Africa, South Asia and elsewhere. UN-led talks on a new climate pact, meanwhile, have stalled amid myriad disagreements.

Early in the day, US President George W. Bush and German Chancellor Angela Merkel pledged to keep working together, but progress appeared slow on a climate change consensus at the summit, characterized by a split on the issue between Europe and the US.

"I'm very satisfied with the work that has gone on on the G-8 documents, as regards progress on the issue of climate change, cooperation in the area of food and oil," Merkel said after a bilateral meeting with Bush.

She cited "a very interesting exchange of view, very intensive exchange of view." Merkel also said she hoped international trade negotiators could make progress on restarting long-stalled trade liberalization talks "over the next few weeks to come."

Bush was more terse after the meeting, not mentioning global warming but telling reporters: "We talked about a lot of common problems, and a lot of common opportunities. We talked about the G-8. We talked about the need to work -- continue to work together on Iran."

The two met just before G-8 members plunged into a discussion about the major problems on the agenda: deciding whether to set new targets for reducing emissions that contribute to global warming, and deciding what to do about rising food and oil prices.

The summit partners appeared close to a deal for using international food reserves to help the poorest countries cope with soaring grain prices. But divisions remain on climate change that pitted older, more established economies like those in the Group of Eight with fast rising economies like China and India.

Merkel is one of the G-8's strongest advocates for tough reductions in the emissions that contribute to global warming.

She succeeded in winning Bush's backing last year, when the summit was held in Germany, to a statement pledging that the group would seriously consider a goal of halving greenhouse-gas emissions by 2050 _ while failing to persuade him to commit to more specific targets.

Environmentalists at the summit said they feared the most the group could achieve this year was a final statement saying they "recognized the need" to reach the 2050 target, falling short of demands that they also make commitments for short-term targets for 2020.

Bush is insisting that major emerging economies like China and India be included in any plan to cut emissions, but they insist wealthy nations make the first move. Adding to Bush's isolation on the issue, European Commission President Jose Manuel Barroso said G-8 nations must reach agreement among themselves and avoid taking the approach that "I will do nothing unless you do it first," which he called a "vicious circle."

Philip Clapp, deputy managing director of Pew Environment Group, said a promise from the G-8 on the 2020 target would trigger action by developing nations.

"A clear commitment on the part of the United States to engage in negotiations on a binding treaty with a clear midterm target for 2020 would bring developing countries into a position where they can agree to a long-term global goal," he said.

The G-8 -- the US, Japan, Russia, Britain, Germany, France, Italy and Canada -- takes up the subject in earnest today. On Wednesday, the leaders of these countries will be joined by eight other big-polluting "major economy" nations that are not members, including China and India, to see if a wider agreement is possible.