G-20

European leaders are starting to follow suit; Britain's five largest banks have agreed to publish the pay of their key staff members, and will spread bonus payments over three years. French president Sarkozy has announced a set of even tougher and more broadly applied regulations.

Of course, not everyone thinks that bonus reforms are the way to go. Nobel prize-winning conomist Robert F. Engle III says

We shouldn't ban bonuses, but restructure the way they're paid so they're more commensurate with the risk the company is taking....What's important is we give the banking system the right incentives to figure this out. When companies get too big and too complex to fail, they would face a higher tax rate, which would go into a rescue fund. The banks are not excited about it, they would rather go back to business as usual."

The G-20 has just released its "leaders' statement" on the Pittsburgh summit. I'll have more on this in a minute, but the quick overview is that they patted themselves on the back once again for preventing a global recession and outlined what they agreed upon at this conference.

The highlights below the jump:

The British press corps traveling with Gordon Brown -- or tabloid writers, as White House spokesman Robert Gibbs might have it -- had a bit of a laugh this morning when a Downing Street flack announced that the prime minister would be a bit late for his own press conference because "the PM is just having a quick chat with Obama." (The White House had put out a release saying that Brown and Obama would have a bilateral session at 4:05 p.m., but it now appears that this morning's quick impromptu meeting was it.)

Fleet Street hacks are always on the lookout for signs that Brown is being snubbed by the U.S. president, and it was readily apparent that the PM is deeply irritated by all the chatter and speculation about his relationship with Obama.

Asked for a readout of their meeting, Brown launched into a short lecture. "I've been meeting the president all week and I’m not going to get into this game," he said, clearly annoyed.

Saying the two leaders spoke about Iran, Afghanistan, and the global economic crisis, he continued: "You guys should start to understand how international meetings work," directing his comments at British journalists.

"This has been a week in which the big issues have been climate change, nuclear weapons, solidarity in dealing with the Iranian issue, the fight against terrorism and how we deal with it, the economy and what we do now," Brown added. "Newspapers are reporting these as the big issues that have got to be dealt with."

Later today, the spouses of the G-20 leaders will be heading next door to Pittsburgh's Creative and Performing Arts high school to meet students and hear a performance by famed cellist Yo-yo Ma and country star Trisha Yearwood.

But former Argentine President Nestor Kirchner, whose wife is now running the show in Buenos Aires, won't be among them -- he didn't make it to Pittsburgh (guess that means he won't be getting a tea set from Michelle Obama).

In the State Department handout being passed around here, Nestor is incongruously grouped with French first lady Carla Bruni and South Korea's Kim Yoon-ok, the wife of Lee Myung-bak. He looks a little out of place.

Nestor didn't make it to the London G-20 summit in April, either, and nor did German Chancellor Angela Merkel's husband Joachim Sauer. I wonder: If Hillary Clinton had been elected president, would Bill have felt comfortable joining in these sorts of events?

News today that the G-20 has officially replaced the G-8 as "the world's premier economic forum," in the words of South Korean President Lee Myung-bak, was quickly -- and dramatically -- overshadowed by the revelation that Iran has a second, covert uranium enrichment facility.

British Prime Minister Gordon Brown, speaking to reporters here in Pittsburgh, said that "we must have answers from Iran" about its nuclear program by the Oct. 1 meeting of the P5+1, the permanent five members of the U.N. Security Council plus Germany. Any decisions about what to do vis-a-vis Iran would not be made before that meeting, he said.

"It's the third time they've been caught red-handed," Brown said. "There has been serial deception over many years."

The prime minister wouldn't get into specifics about what sorts of penalities Iran might face should it fail to comply, but indicated that if sanctions are needed, they will "clearly be of a banking nature" and would "involve energy" and new restrictions on technologies that could be used for nuclear purposes.

"I think the IAEA will see that there is a breach of regulations," Brown said. According to the evidence he'd seen, "this could not have been for a civil nuclear facility," because the "level of production was not sufficient for a civil nuclear facility but could have been intended for a nuclear facility."

On the G-20, Brown made a more sweeping statement than either Korea's Lee or Canadian Prime Minister Stephen Harper, who earlier insisted that "we are not replacing the G-8 with the G-20."

"The old systems of economic cooperation are over," Brown said. Canada is due to host both the G-8 and the G-20 next year, in cooperation with South Korea, and Harper said that the G-8 would become more of a forum for discussing development issues, security issues, and, "for lack of a better word, geopolitics."

Brown said that the G-20 today would be issuing a "very strong view on remuneration," a somewhat peripheral issue that has nonetheless dominated discussions surrounding the summit, on the insistence of French President Nicolas Sarkozy.

"We cannot be soft on these issues," Brown said some passion. "We have got to be tough … we will not condone the old system of bonuses … there is no return to the bad old days."

Brown also announced that G-20 leaders had agreed that it would be "premature" to remove the fiscal and monetary stimulus measures put in place over the past year, saying that "millions of jobs" would be at stake if countries acted too quickly.

Nevertheless, he said, "The action that we took at the London Summit [in April] has worked."

The extraordinary efforts by governments and central banks to prevent the global economy from collapsing over the past year seem to have worked. Growth is picking up again, and optimism is in the air. The question now on many people's minds here at the G-20: Is it time for an exit strategy?

Not yet, according to China. Despite a recent bout of optimism, including from U.S. Treasury Secretary Timothy Geithner earlier today, Chinese officials said this evening that the international economy remains "quite fragile" and that Beijing isn't ready to support the unwinding of the various stimulus measures that governments have put in place to counteract the effects of the financial crisis.

As the recovery has gained momentum, some analysts have expressed concerns that governments under budget and political pressures would begin dismantling their costly stimulus programs too early.

"We believe it is still too early to talk about an exit strategy because the world economy is not out of the woods and the U.S. economy is still on a downward trend," said Department of International Cooperation official Ma Xin in a press conference here in Pittsburgh. "If we pull out or wind down the policies completely we may undermine people’s confidence."

John Kirton, a political scientist at the University of Toronto and an expert on the G-8 and the G-20, said in an interview that his biggest worry was that the major economies would unwind their stimulus measures too soon. His hope is that world leaders will issue a "strong, unified message" on staying the course after several countries, notably Japan and Germany, recently indicated they would begin dialing their stimulus measures back.

Chinese officials also responded to questions about one of the hot-button issues hanging over this summit, the ongoing depreciation of the U.S. dollar, which has lost 11 percent in value against a basket of major currencies since January. China, which now holds at least $2 trillion dollars in reserves, has made increasing noises in recent months about its desire to eventually move away from the dollar as a global reserve currency.

Geithner had to reiterate in his press conference today that "a strong dollar is very important in the United States." He added that he expected the dollar to remain the world's main reserve currency for "a very long time."

Xie Duo of the People's Bank of China said that Beijing supported "the stability of major reserve currencies," which he sees as an important condition for the health of the world economy. Nonetheless, he said, "Most experts realize that the composition of the reserve currencies is flawed," and "it is reasonable for politicians to voice their criticisms of the current system."

If you want to influence what happens at a summit like the G-20, where the final communiqué is drafted in advance and most of the agenda items are probably already decided upon at this point, you need to start your advocacy campaign early.

But that isn't deterring groups here from weighing in on what the leaders of the world's most powerful countries ought to be doing this week. Even though it's a rather technocratic gathering driven by the priorities of finance ministries, the G-20 makes for a great bully pulpit, whether your cause is poverty or climate change, women's rights or financial-sector transparency.

Oxfam International and Save the Children, two of the world's largest and most influential NGOs working on global poverty, are separately urging the G-20 to do more to protect the world's most vulnerable populations from the continued fallout of the global economic crisis.

Their worry, group representatives here say, is that as developed countries begin to recover, the plight of the world's poor will fall by the wayside. That could be very bad news indeed, because according to Oxfam, 100 people around the world are currently being driven to poverty each minute. The group is projecting that the budgets of governments in sub-Saharan Africa will be $70 billion smaller this year, leaving them struggling to meet rising needs.

"In the time it takes G-20 leaders to tuck into dinner tonight," said Oxfam senior policy advisor Max Lawson in a statement, "thousands more people will be pushed into poverty and forced to survive on less than $1.25 a day."

Lawson also complained that G-20 countries have yet to deliver on the $50 billion in short-term emergency relief they promised at the London summit in April.

Michael Klosson of Save the Children, which operates in more than 50 countries, said that "from what we see on the ground ... it's still a real problem." Klosson, a former U.S. ambassador to Cyprus who now heads the organization's policy efforts, pointed to the drying up of remittances to and foreign direct investment in places like sub-Saharan Africa as global economic demand has shrunk.

Klosson said he is looking for the G-20 to follow through on commitments on food security made by G-8 leaders in L'Aquila, Italy, in July. At that summit, the G-8 pledged $20 billion for global food security and reassessed, at least on paper, how food assistance ought to be given.

He also warned that the world is falling dramatically short on the Millenium Development Goals, which are to be evaluated next September. Sixty-eight countries are responsible for 97 percent of deaths before the age of five, he said, and only 14 of those countries are on track to meet their child-mortality targets next year. The World Bank has found that as many as 400,000 additional babies could die every year until 2015 because of the recession.

"Why wait until next September?" Klosson asked. "There are things that can be done if we put our minds to it."

World leaders have begun trickling in to the Pittsburgh Airport, and the media center at the convention center downtown – which is in complete lockdown mode, with traffic banished and police everywhere -- has begun filling up. There hasn’t been this much international diplomatic excitement in town since Nikita Kruschev visited Pittsburgh 50 years ago today.

But there’s not going to be much action yet at the G-20 summit -- or at least not until early evening, when Barack Obama hosts what’s being billed as a “working dinner” at the Phipps Conservatory in Schenley Park, 2 1/2 miles from here. The president is due to arrive later this afternoon from New York.

Various do-gooder NGOs, including the World Wildlife Fund, the US Climate Action Network, and the Union of Concerned Scientists, have set up shop in the August Wilson Center a few blocks away, and are making themselves available to discuss their priorities, from climate change to poverty.

Unlike at the U.N. General Assembly, which is a huge public circus, nearly all of the action here happens behind closed doors, and then the leaders issue a communiqué at the end explaining what they are prepared to do next. In the November 2008 summit in Washington, for instance, the G-20 put out an action plan to coordinate reform efforts and bolster the International Monetary Fund’s ability to respond to what at the time was a blinking-red, throw-momma-from-the-train global financial crisis.

This week, the focus is no longer on crisis management but on putting in place the structural reforms that advocates say can prevent the next meltdown. We’ll see if anything with teeth comes out of this meeting -- Nicolas Sarkozy is beating the drums for changes in banker pay, while Obama and his Treasury Secretary Timothy Geithner are pushing for tighter capital requirements, Germany is obsessed with cracking down on tax havens, and the Canadians are trying to beat back a protectionist wave -- but we can expect the usual watered-down, lowest-common-denominator stuff to emerge at a minimum.

I’ll be interested to see if Geithner’s ideas for reforming the IMF gain any traction. The micro story is a technocratic one, but the macro story could be yet another sign that China is being welcomed into the inner circles of global power. The scuttlebutt is that the Treasury secretary hopes to persuade China to sign on to his priorities on capital requirements and other reforms in exchange for getting a larger share of control of the fund. Anyone know the Chinese word for “bribery”?