Obama the summit veteran

This post from Evening Standard political editor Paul Waugh is a must-read:

Much ink will be spilled tonight and tomorrow about Gordon Brown personally securing various victories in the G20 London summit.

But here’s a fascinating clue to the real power broker. Conducting himself assuredly as if he were a summit veteran rather than a first-timer, Barack Obama appears to have been the crucial player in securing a form of words on the thorny issue of tax havens.

American sources have now revealed that it was the US President who stepped in to knock heads together (in the nicest possible way) to get Sarko and China’s President Hu to come to an agreement.

In the final plenary session with just minutes to go before a deal had to be signed, Sarkozy and Hu were having a heated disagreement about tax havens. France wants urgent action, while China fears a crackdown would hurt banking centers in Macao, Shanghai and Hong Kong.

As they went through a revised draft, the exchange between Sarkozy and Hu got so heated that it was threatening the unity of the G-20 leaders’ meeting.

Sarkozy specifically was pushing for a list from the OECD to be included in the G20 Leaders’ Statement. China, which is not a party to the OECD, opposed any such list being included in the final Leaders’ Statement.

But Mr. Obama stepped between the two men, urging them to try to find consensus, and giving them a “pep talk” about the importance of working together.

He continues:

A senior adminstration official said that the President pulled Mr. Sarkozy aside, took him to a corner, “and discussed possible alternatives,”. Once they arrived at one, President Obama “sent a message to the Chinese” that a counter-offer was on the table. The Chinese spent some time considering the offer. But they took a few minutes.

Obama, accompanied by translators, suggested that he and Mr. Hu have a conversation as well. They, too went to the corner to talk. After a few minutes, Mr. Obama called upon Mr. Sarkozy to join them. Translators and sherpas in tow, they reached an agreement, and then everybody shook  hands..

The final statement declared that the G20 “stand ready to deploy sanctions to protect our public finances and financial systems. The era of banking secrecy is over. We note that the OECD has today published a list of countries assessed by the Global Forum against the international standard for exchange of tax information.”

This classic summit compromise allowed China to save face. The word “note” — as in “we note the OECD has today published a list” — doesn’t necessarily carry any weight. Macao and Hong Kong are not included in the blacklist (although China itself gets a clean bill of health on a ‘whitelist’ of transparent nations). Furthermore, any sanctions are “future-oriented,” the senior official said, meaning there are as of now no actual sanctions.

Soon after the US President sorted out the issue, Gordon Brown announced that “we have agreed to tough standards for those (tax shelters) who don’t come into line in the future.” The Americans said that this seems to overstate the case. “I’d suggest we’d still be in there had he not done this,” one senior Obama administration official said.

FOOTNOTE: Sarko wouldn’t have even got a hearing from the Chinese but for Paris releasing a statement backing off independence for Tibet. Sadly, it just goes to show that human rights will always be trumped by high finance and sheer economic power.