Korea was a key mediator

Korea played an instrumental role in persuading the G-20 nations to reach a breakthrough agreement on curbing competitive currency devaluations and possibly saving the G-20 Summit in Seoul next month from collapse, according to officials yesterday.

A senior official at the Presidential Committee for the G-20 Summit said the government had been concerned that the exchange rate controversy would overshadow other issues at the Nov. 11-12 G-20 Summit, such as a global financial safety net. As a result, Korea felt the need to come up with solutions to the problem.

“We were worried that the G-20 Summit next month will be dominated by this [the exchange rate issue], when we had put much preparation into other agenda items, such as the global financial safety net, IMF quota reforms and development issues among emerging nations,” the official said.

According to the official, President Lee Myung-bak ordered Korean negotiators in early September to devise ways to resolve the currency dispute and they had proposed linking the currency issue to other problems causing the global economic imbalance.

The G-20 official said the results announced in the joint communique amounted to a dramatic agreement. His comments suggested that China had made a compromise on agreeing to the idea of a market-based exchange rate system in return for the U.S. and Europe approving giving more voting rights at the International Monetary Fund to China and other developing nations.

Korean officials said last week that such a trade in concessions was in the works.

“Korea, as the host, successfully proposed alternatives,” the G-20 official said, speaking on the condition of anonymity. “Now nobody will think of Korea as a figurehead host. Because there were major agreements in Gyeongju, there is going to be more progress at the Seoul Summit.”

Lael Brainard, the U.S. Treasury undersecretary for international affairs, said that Korea had played a “pivotal” role in the G-20 meeting, according to the G-20 official.

The Korean Finance Ministry and the G-20 Organizing Committee are now preparing detailed guidelines for the G-20 Summit based on the agreements reached by the G-20 finance ministers and central bank governors at their weekend meeting in Gyeongju, North Gyeongsang.

The next step likely to be undertaken by the Korean government will be drawing up specific proposals to manage excessive trade surpluses or deficits that threaten to create imbalances in the global economy.

(source:joongangdaily.joins.com)