24 January 2009

Italy scales back G8 ambition to "legal standard"

By Gavin Jones, Reuters in The Guardian, Tuesday January 20 2009

ROME, Jan 20 (Reuters) - Italy appears to have drastically lowered its ambitions for its presidency of the Group of Eight rich powers this year, no longer hoping to be remembered for a rebuilding of global finance.

Economy Minister Giulio Tremonti has recently stopped promising "a New Bretton Woods", a reference to the 1944 agreements on monetary and exchange rate policy which established the International Monetary Fund and World Bank.

Instead, Italy's contribution to tackle market turmoil and recession will be something called a "legal standard".

This would constitute a set of rules, guidelines and conventions mostly drawn up by the Organisation for Economic Cooperation and Development and to which most developed countries already adhere.

Italy took over the G8 leadership from Japan this month. But the exclusive club has lost much of its prestige as nations have agreed that the broader Group of 20, which also includes leading developing economies, is a better forum to work on solutions to the international financial crisis.

Britain will stage the second summit of G20 leaders in April, making a meeting of rich nations' finance ministers and central bankers in Rome on Feb. 13-14 appear little more than a curtain raiser.

Details of the "legal standard" remain sketchy and Tremonti said last week he had still not presented the idea to Italy's G8 partners: the United States, Japan, Germany, Britain, France, Canada and Russia. However, the principles are set out on Italy's dedicated G8 website (www.g8italia2009.it).

"The Italian G8 Presidency plans to put forward a proposal for the establishment of an international ethical legal standard with which all countries will be bound to comply," the website says. "Such a method will make it possible to establish as convergent a network as possible of legal systems governing financial affairs, in order to safeguard savers and citizens."

Minimum Rules

A briefing paper drafted by Italy and the Paris-based OECD, obtained by Reuters, makes clear that the "legal standard" project is still far from defined and says it would be made up of a combination of binding and voluntary recommendations.

These "could contain the minimum basic set of rules on the propriety of international activities and transparency," the paper says.

It notes that "many of the instruments of the 'legal standard' are actually OECD instruments", before listing a series of principles the 30 OECD countries have already signed up to and which the rest of the world would also be expected to adopt.

These include the OECD anti-bribery convention, OECD principles on corporate governance, undefined "standards of transparency and cooperation on tax" and "principles on disclosure of financial and non-financial information".

It also includes already widely-accepted recommendations against money laundering and standards on protection of property rights, "either existing or to be developed".

To ensure effective compliance, including among the developed countries which have already signed the commitments, the paper suggests "a wide range of monitoring tools could be used".

It cites, "peer review and peer pressure, naming and praising and naming and shaming, indicators, black listing ... for rogue economies".

(additional reporting by Brian Love in Paris)
guardian.co.uk © Guardian News and Media Limited 2009

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