Editorial

World leaders meeting in the G20 summit in London today week face the most formidable economic and social challenges since the end of World War II.

No wonder many economic observers are fretting about the likely effects of the constant bickering among world leaders on the strategy to apply to address the prevailing global economic crisis. The disagreements range from the different tactics favoured by the US and the UK to use ever more liberal fiscal tools to buy their way out of the economic slump to the more conservative continental EU countries that favour better regulation on the financial system.

There are also major differences in the priorities of other countries forming part of the G20. The World Bank has issued a stiff warning to the G20 leaders not to forget the importance of helping the poorer countries to overcome the worst effects of the recent substantial fall in world trade.

If the G20 leaders concentrate on an agenda that addresses the threats facing the world economy, they are more likely to banish the ever-increasing economic experts' scepticism. An important factor that will bring the world out of this difficult economic crisis is the proliferation of free trade.

"Deglobalisation" - a new term coined to describe the antithesis of globalisation - is certainly not the way forward. Unfortunately, some political leaders are using the kind of rhetoric that is blatantly anti-free-market.

French President Nicolas Sarkozy has not helped the prospects of consensus in the G20 summit on concrete measures to fight protectionism. His appeal to French car companies to "repatriate" jobs from Eastern European assembly plants to France on the pretext of "economic nationalism" was uncalled for. President Barack Obama was equally wrong in introducing a Buy American condition in his economic stimulus package.

Another crucial issue relates to the importance of banks making credit more easily available to businesses. Mr Obama has announced a very comprehensive set of incentives to encourage US banks to help small enterprises. The G20 leaders, including those coming from the EU, should consider a similar plan.

Equally important is the need to reform the financial sector regulations that have proven largely inadequate in preventing the prevailing crisis. The culture of rewarding failure and bailing out zombie financial institutions with taxpayers' money needs to be eradicated immediately.

On the home front, Malta will be affected by anything that is decided in London on April 2, even if this country will not be directly represented there. In particular, there are two major issues that can bring enormous benefit to the Maltese economy.

Malta will benefit if world trade continues to be freed from unnecessary protectionism. This country's economic vocation will always be one tied to maximising the export of goods and services to enable it to import all the things it needs.

Equally important, Malta will benefit substantially if the countries it does business with recover from the economic slump as early as possible. The eurozone countries, Britain and the US remain the island's main trading partners. When their economies bounce back, Malta's own economic fortunes will turn for the better.

There are no easy solutions to the present world crisis. But, at least, everyone must agree that rhetoric can never replace sound pragmatic economic strategies to stimulate growth.