In Pittsburgh

Obama seems likely to obtain the support he sought for Washington's economic agenda, writes LARA MARLOWE

AS THE leaders of G20 nations put finishing touches on an agreement intended to usher in a new era of economic co-operation yesterday afternoon, anti-capitalist demonstrators clashed with police a mile away, unseen and ignored by the summit.

Some 6,000 policemen and national guardsmen had been dispatched to the rejuvenated steel town, from as far away as Alabama, Georgia, Illinois and Maine.

The banners saying “Pittsburgh Welcomes the World!” looked forlorn in the deserted downtown district. The barricades and police lines gave the town an eerie feeling of being under siege.

Fewer protesters showed up on the second day of the summit – perhaps 1,000 – carrying placards saying “Kick Capitalism while it is Down” and “We Say No to Corporate Greed”. Dozens of windows were broken. Police used tear gas and arrested 80 people. But by comparison with Seattle in 1999, the protest was tame.

While US president Barack Obama charmed the Chinese, Russians, Europeans and others into accepting Washingtons agenda, his wife Michelle gave honey from the White House hive and porcelain tea sets to the spouses of G20 members, invited them to dinner in the home of the Heinz ketchup heiress, took them to a performing arts school and the Andy Warhol museum.

Obama appeared likely to obtain the agreement he sought on a Framework for Sustainable and Balanced Growth. “Weve seen very broad support for that proposal,” US treasury secretary Tim Geithner said at a press conference. The objective of the framework was to ensure that countries “make sure that the collective policies they are pursuing are not going to lead to unsustainable imbalances; are going to make sure we’re less vulnerable to future cycles of booms and busts.”

Geithner admitted the agreement will be difficult to enforce. “On the broader growth agenda,” he said, “to be honest it’s a harder thing to do, because we’re a world of sovereign nations, and no country is going to cede sovereignty over fundamental choices about economic policy.”

The framework targets China’s trade surpluses and US deficits. China is already showing signs of recalcitrance: Yu Jianhua, director general for international trade and economic affairs in the Chinese commerce ministry, told a news conference: “I’m not sure that one country’s leader calling on another to import more represents market economic practices.”

Geithner said reforming financial regulations will be comparatively easier than rebalancing growth. The agreement was expected to require banks to raise capital reserves and limit bankers’ pay and bonuses. It was important to “reach agreement on a clear set of standards that are measurable and enforceable,” Geithner said.

Pre-summit reports said such regulations might not be enacted for some time. But Geithner was in a hurry. “We don’t want to see these reforms take effect two years from now. We dont want to see them take effect next year – we want them to take effect now so they affect compensation practice today, not tomorrow, and that they bring about reforms in compensation by the end of this calendar year.”

The EU objected to US plans to restructure the IMF and World Bank to reflect the growing economic power of developing countries. Geithner minimised the rift, saying: “Were trying to do is to bridge this difference between a number of nations in Europe that are going to . . . have to adjust over time given the change of balance of activity in the world . . . And I think the Europeans actually recognise that shift is going to happen. It’s the right thing to do and it’s going to happen.”

German chancellor Angela Merkel was particularly cheerful at Thursday nights dinner and German sources said she was satisfied with the results of the summit.

Obama made a point of mentioning her support when he, British prime minister Gordon Brown and French president Nicolas Sarkozy emerged to reveal the existence of a secret Iranian nuclear facility. The Iranian issue overshadowed the economic importance of the summit.

Geithner dismissed reports of disagreement with France over the need for a cap on pay and bonuses.