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WASHINGTON (AFP) — More than 20 leaders from the world's richest nations and emerging economic powers meet on Friday for a summit amid mounting divisions on how to tackle the global financial crisis.
While US President George W. Bush has made an impassioned defense of the free market system, critics from much of the rest of the world headed for Washington have focused on strengthening financial regulation.
The summit starts late Friday with a working dinner at the White House, with formal talks scheduled for Saturday.
Bush said Thursday that the world leaders have a clear aim "to address the current crisis, and to lay the foundation for reforms that will help prevent a similar crisis in the future."
But the US leader's term finishes on January 20 and he cannot make firm commitments for president-elect Barack Obama. Other leaders also sought to douse expectations.
"We cannot expect a miracle from this summit, which was Europe's idea, but will rather see the beginning of a process that will create a finished program in 100 days," European Commission president Jose Manuel Barroso said an interview with a German daily published Friday.
Bush sternly warned against imposing heavy-handed regulation.
"The crisis was not a failure of the free market system. And the answer is not to try to reinvent that system," Bush said in a speech laying out his agenda for the expanded Group of 20 summit.
"Our aim should not be more government. It should be smarter government," he said. It would be "a terrible mistake to allow a few months of crisis to undermine 60 years of success."
"Many European countries had much more extensive regulations and still experienced problems almost identical to our own," he said. "We must recognize that government intervention is not a cure-all."
Bush faces mounting pressure from the European Union, Russia and other emerging nations to increase control of financial markets.
French President Nicolas Sarkozy said Thursday: "I leave for Washington tomorrow to explain that the dollar, which at the end of World War II was the only world currency, can no longer claim to be the sole world currency.
"The world changes. We are in the 21st century and the French view is that we cannot continue into the 21st century with a system (established) in the 20th century."
The crisis broke out one year ago when the US real estate market went bust and swamped the financial sector with subprime mortgages turned sour.
Stock markets have crashed and companies around the world are now laying off hundreds of thousands of workers.
Bush outlined some issues he wants considered at the summit, such as improving bank risk management practices, improving accounting rules for securities so that their "true value" is clear, and harmonizing accounting laws among nations.
US officials also want the International Monetary Fund and World Bank overhauled so emerging economies can have a greater voice.
Japan will announce at the summit an offer to lend up to 100 billion dollars to the IMF to provide financial lifelines to emerging countries, Prime Minister Taro Aso announced Friday.
Several products and financial institutions, including hedge funds, credit default swaps (CDS) and rating agencies, are largely if not completely unregulated at present.
France, which advocates increased oversight of international financial transactions, wants tax havens added to the list.
The G20 summit will also likely discuss coordinated efforts to revive the global economy, after China unveiled a four trillion yuan (586 billion dollars) economic stimulus plan.
On Friday Russian President Dmitry Medvedev met Sarkozy -- whose country holds the rotating European Union presidency -- and EU leaders in southern France to hammer out a joint position ahead of the summit.
Russia was pushing for an overhaul of the global financial system even before the credit crisis erupted.
While it seems unlikely that Moscow and the EU would arrive with a joint blueprint, they clearly had similar goals -- despite policy disagreements over issues such as Moscow's troop presence in Georgia.
Created in 1999, the Group of 20 countries account for 85 percent of the world economy and about two-thirds of its population.
Its members are the United States, Germany, Japan, France, Italy, Britain and Canada, the European Union, Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa, South Korea and Turkey. Spain and the Netherlands have also been invited.

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