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Obama hopes for S. Korea's leadership role in global efforts to combat recession

All Headlines 12:00 November 13, 2009

By Hwang Doo-hyong

WASHINGTON, Nov. 12 (Yonhap) -- U.S. President Barack Obama expressed hope Thursday for South Korea's leading role in the global efforts to overcome the worst recession in decades, saying South Korea's hosting of G-20 summit next November exemplifies its rags-to-riches record.

"South Korea's emergence as host of the G-20 leaders meeting next year is the latest evidence that South Korea is playing an important leadership role on the world stage," Obama said in an exclusive written interview with Yonhap News Agency. "I am pleased that South Korea has agreed to host the G-20 meeting next year and the U.S. will help support their efforts to ensure that the meeting is a success."

Obama is said to be one of the strongest supporters of South Korea's hosting of the G-20 and its annualization, although Japan, which unsuccessfully lobbied to host the second or third G-20 summit this year, and a few advanced economies dislike the idea of the G-20 replacing the G-8.

South Korea was chosen as the host of the fifth G-20 summit at the third summit in Pittsburgh in September amid talks of a shift of power from the world's richest countries to China and other emerging economies, as reflected by its eclipse of the G-8 as the primary forum for global economic cooperation.

The fourth G-20 summit will be held in Canada in June on the sidelines of the G-8 forum, and Canadian Prime Minister Stephen Harper has said that the Canada G-8 will focus on security issues.

Obama said that South Korea's success serves as a "prime example" for still-developing economies, and its hosting of the G-20 next year is demonstrative of the global leadership role that it is undertaking.

"South Korea's hosting of the G-20 next year is also a prime example of the economic success it has had in a relatively short period of time and its movement into the ranks of the world's leading economies," he said.

The U.S. president also lauded the role of South Korean President Lee Myung-bak in South Korea's fast economic recovery.

"President Lee has done a superb job steering South Korea's economy through the economic downturn and now on an upward trajectory, and I am looking forward to his continued strong leadership in the Asia-Pacific region on the economic policy front," Obama said.

Lee has forecast a 4-percent growth next year, with the world's 13th biggest economy having expanded 2.9 percent in the July-September period over the previous quarter, the fastest gain in more than seven years. Growth was 2.6 percent in the second quarter.

After early quarterly losses, the South Korean government forecast an upwardly revised near-zero percent growth for all of this year.

South Korea's stock value and foreign exchange reserves have also recovered to pre-recession levels, with the reserves surpassing a record US$264 billion, helped by a burgeoning trade surplus. The Seoul bourse is also approaching the 1,600-point mark, boosted by foreign investors.

Experts believe South Korea's hosting of the fifth G-20 summit will officially terminate decades of dominance by the rich G-8 nations, and South Korea is being given a major role in this new order as leaders discuss how to move into the post-financial crisis era.

The G-20 summit is an extension of the G-20 finance ministers' meeting established in 1999 to tackle the Asian financial crisis.

Then-U.S. President George W. Bush convened the G-20 summit in November last year amid calls for reform of the Bretton Woods institutions launched after World War II and buttressed by the International Monetary Fund and the World Bank, saying, "They were based on an economic order of 1944."

The IMF has been under criticism for its governance and failure to warn of the economic crisis and then to properly deal with it.

The 20 leaders in September agreed to transfer at least 5 percent of the IMF equities and 3 percent of the World Bank quota to developing nations by early 2011 to better represent the economic strength of China and other developing nations.

China's foreign exchange reserves have surpassed $2 trillion, with a large portion of those reserves being U.S. Treasury bonds -- a factor that could ultimately destabilize the dollar and the credibility of the U.S., which holds huge trade and budget deficits.

China's output is expected to surpass Japan's by the end of this year to become the world's second biggest economy after the U.S -- and to outperform the U.S. within decades.

A senior White House official, asking anonymity, said that Obama will discuss South Korea's global leadership with Lee in Seoul.

"I think that the story of Korea for us is one of dynamic transformation from a local Korea to a global Korea," he said. "We will talk not just about Korea but we will talk about world problems, transnational problems and how the U.S. and the Republic of Korea can begin making a difference."

The Obama aide took note of the strong personal relationship Obama has maintained with Lee.

"President Obama and President Lee have established a very strong working relationship," the official said. "President Lee was given an extraordinarily high profile and extensive profile when he visited Washington in June and I think that's a reflection of the quality and importance of the bilateral relationship."

hdh@yna.co.kr
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