G-20 leaders gather for global economic checkup

PITTSBURGH — Turning from outright fear to cautious optimism, world leaders descended on the comeback city of Pittsburgh Thursday to debate how to nurture a recovering but still-wobbly global economy.

Nerves are still on edge, but this summit of the world’s 20 leading economies seems free of the crisis atmosphere that hung over the past two.

A year after the financial meltdown began, the leaders had a panic-free agenda for an opening dinner, to be followed by a full day of talks. They’ll be taking stock of the overall world economy, deciding whether to curb bankers’ pay, setting universal rules for bank reserves and plotting an exit strategy from trillions in stimulus spending. The leaders will also grapple with next steps in combating global warming.

British Prime Minister Gordon Brown, speaking with reporters in New York before heading to Pittsburgh, said he hoped the group would agree to a new compact on jobs and growth. He warned, as President Barack Obama has, that nations should not move to quickly to end low-interest rates and stimulus spending packages.

“The recession is not automatically over,” Brown said.

Brown said he hoped the G-20 would eventually replace the older Group of Eight major industrial democracies as the world’s “forum of international cooperation.” It includes many fast-growing economies, including China, India and Brazil, that are not among the original eight: the U.S., Japan, Britain, Germany, France, Italy, Canada and Russia.

Obama, who arrived from U.N. meetings in New York at mid-afternoon Thursday, chose Pittsburgh as the summit site because the formerly struggling Rust Belt city has transformed itself economically into a rebounding, environmentally conscious community with a diversified economy.

It is the third time within a year that the G-20 leaders have met to deal with the global financial meltdown.

The atmosphere is a lot more relaxed than at the fear-driven sessions in Washington last November and in London in April. Still, the global recovery remains fragile, with many big financial institutions under strain.

Obama is perhaps under more pressure now than he was at the April session, his first venture on the world stage. At that meeting he got points, analysts suggested, just for not being George W. Bush, who was widely disliked overseas, especially in European countries.

Summit partners are in basic agreement on a joint strategy to encourage big exporting countries like China, Japan and Germany to shift their economies more toward domestic spending, and to encourage more savings and fiscal discipline the United States. Ahead of the Pittsburgh gathering, Obama challenged world leaders at the United Nations to overcome an “almost reflexive anti-Americanism” while at the same time viewing U.S. consumers as a market of last resort.

But differences remained on tactics, including how quickly to move away from full-bore stimulation policies.

Washington wants the group to agree to a “framework for sustainable and balanced growth” that could include monitoring by an international group such as the International Monetary Fund that could detect policies that could lead to global imbalances.

Obama argues that the global economy cannot continually rely on huge borrowing and spending by Americans and massive exports by countries such as China.

But there remained disputes over details. Also, European countries pressed for tougher limits on bankers’ salaries and bonuses. And China was pushing for greater voting rights in the IMF, which could dilute the influence now held by European countries.

The two-day summit was to end Friday with a joint communique likely to paper over many remaining disagreements.

Many of the streets in downtown Pittsburgh were deserted after police and National Guard troops erected a heavy security perimeter around the David Lawrence Convention Center where the talks were being held.

The Group of 20 has had a mixed record so far.

In November and again in April, the leaders vowed to resist erecting new trade barriers or other protectionist steps. But since then, the 20 countries together have enacted about 100 “blatantly protectionist” restrictions, according to the London-based Centre for Economic Policy Research.

The latest trade-restricting provision was the U.S. decision earlier this month to slap a 35 percent tariff on Chinese tires — which provoked Chinese threats to retaliate against U.S. chicken and auto-parts exports.

Obama plans no one-on-one meetings with world leaders or extensive discussions of Iran, White House officials said. Also, the group is not expected to discuss currency matters, including a revaluation of the Chinese yuan that some members are seeking.

Associated Press writers Pan Pylas and Daniel Lovering contributed to this report.