Even as world leaders convened to hammer out some kind of consensus perched on the edge of the river in London's Docklands, Prime Minister Manmohan Singh called on leaders of industrialised nations to take tips from developing countries on how to handle anti-globalisation and protectionist sentiment among their disgruntled populace.
"Leaders of developing countries have struggled to overcome doubts and fears of our public to persuade them of the merits of integrating with the global economy. I believe we have had substantial success... and these hard-won gains will be destroyed if markets in industrialised countries are not kept open in these difficult times. I must emphasise that this is an area where leadership must come from the industrialised countries," he said, addressing his fellow heads of state just before the actual summit.
"As we deal with the immediate problems, we must also be careful not to sacrifice the gains of openness of trade, direct investment and immigration," he said.
Mr Singh also raised and identified concerns of the new 'financial protectionism' saying the biggest hit developing countries have taken is in the collapse in trade, and unprecedented decline of almost 9% in trade volume in 2009, as well as a massive decline of private capital flows at close to $700 billion in 2009, with little prospect of a significant revival in 2010.
This, he warned, has been encouraged by "financial protectionism built into the conditions for assisting banks in industrialised countries," clearly singling out strings attached to billion dollar bank bailouts in western countries.
"We must ensure that countries hurt by the massive withdrawal of private capital that has taken place, which is unlikely to be reversed in 2010, are able to rely upon an increased flow of resources from the international financial institutions," he said.
He also told his rich-country counterparts that while it is hard on their taxpayers, they need to convince their voters and taxpayers that the banking system needs to be revitalised, even if there is justifiable outrage about bankers' mistakes and bonuses.
He also came out on the side of the Anglo-American consensus that more stimulus is better than less, saying that "risks lie in doing too little rather than too much, and we are not doing enough to ensure recovery in 2010. If we cannot agree to do more, we should at least send a clear message that we will watch developments carefully in 2009 and act speedily to do more if necessary."
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