Harper to push banking regulation, economic recovery measures in Davos

OTTAWA, Ont. - Prime Minister Stephen Harper will find himself smack in the middle of a complicated high-stakes battle when he broaches the topic of banking regulation at the Davos World Economic Forum this week.
Harper plans to use his Thursday speech to urge the countries of the G20 not to let up on banking regulation and measures for economic recovery, and he plans to use Canada as a prime example.
"A big part of the problem (causing the global financial crisis of 2008) was weak banking regulations," said Harper spokesman Dimitri Soudas. "Therefore, an important part of the solution is reforming those regulations.
"Here in Canada we did not have that problem."
Harper has his eye on the G20 summit in Toronto this June, when his job will be to form a united front that attacks the lax banking standards that were at the root of the global financial crisis.
But the message comes at a delicate time, when major economic powers are heading off in divergent directions in their efforts to prevent future financial crises.
Last week, U.S. President Barack Obama called for aggressive measures to limit the size and range of activities of banks and investment firms.
But Europe would rather focus on taxing financial transactions.
At Davos - where politicians, business leaders, economists and deep-thinkers will spend days hashing out their ideas - politicians of all stripes will feel the heat from financial institutions not to impinge on their freedom to make money.
Many analysts fear the Obama reforms are aimed more at garnering popular support rather than attacking the underlying problems in the financial services industry. And Canadian officials have said they fear international resolve to strengthen the financial system is fading now that recovery looks more certain.
Despite the fluctuating dynamics, Davos is an ideal place for Harper to send his message reminding other G20 leaders that they have promised to work together in a methodical and co-ordinated way, said former foreign affairs minister John Manley, who now heads the Canadian Council of Chief Executives.
"It's not a place to build a consensus. It's a place to set agendas and get ideas out," said Manley, who has attended the conference about nine times but is not going this year.
"It's a very good opportunity for him. He'll have to get the tone right, to talk about Canada's performance in the financial crisis. I think the Canadian model is a little less intrusive than what's been proposed. And yet it's been effective."
In his speech, Harper will for the first time outline his priorities for the G20 and G8 summits in Ontario at the end of June.
For the G8, he'll discuss his plans to put a spotlight on the health of children and mothers in developing countries. Nuclear proliferation and climate change are also expected to figure prominently on that summit's agenda.
For the G20 - the world's leading economic decision-making body - Harper will stress in Davos that the recovery is fragile and shouldn't be taken for granted.
He'll also focus on the need for G20 countries to continue with their stimulus efforts until the employment situation starts to improve. And he'll point out that the G20 needs to stifle any protectionist sentiment bubbling up as the world recovers.
Harper will likely participate in a roundtable discussion with business executives on Wednesday.
Then on Thursday after his speech, he'll appear on a panel with heads of state from Mexico, South Korea, Vietnam, Spain and South Africa.
That panel will open another can of worms for Harper.
Emerging economies have been clamouring for a larger voice in international affairs, especially after the financial crisis made it clear that rich countries were doing a lousy job keeping their financial institutions on a sustainable track.
As a result, the G20 has been given a new legitimacy. Canada is co-hosting the G20 this year, sharing that role with South Korea. Despite Canada's initial reluctance to embrace the G20 as the prime economic decision-making body instead of the G8, Ottawa is now on-side.
But now, there is pressure to include more, different voices in the G20. Africa wants a say, Spain wants in, the European Union wants an official seat, as do some other growing markets.
Harper has not yet said where he stands on the issue, which promises to dog him until the summit takes place.