European Union heads of state and government have agreed on a common stance on the thorny issue of bankers’ bonuses, and will tell the G20 summit in Pittsburgh on September 24 and 26 2009 that bankers’ bonuses for short-term successes should be pared back.
 
"Enough is enough. We must move away from compensation for short-term successes," Fredrik Reinfeldt, prime minister of Sweden – the country currently holding the rotating presidency of the EU – told a news conference after the September 17 European Council informal meeting.
 
As envisaged in the document agreed to at the meeting, the EU will ask the G20 to agree on a global policy that will see banks threatened with sanctions unless bonuses are given only on the basis of long-term performance.
 
Those who favour acting against the short-term bonus culture believe that giving bonuses under those circumstances encourages decision-makers at banks to take risks, a circumstance that was a major contributing factor to the current global economic crisis.
 
The Swedish presidency of the EU said after the meeting that EU leaders had discussed three issues.
 
The first was the recovery of the economy, public finances and "exit strategies", which deal with the phasing out of stimulus measures.
 
Reinfeldt said that the EU countries had agreed to formulate exit strategies now, but to implement them first when the economic recovery became clear.
 
"The origin of the financial crisis was that banks incurred debts, so governments must not incur debts in order to emerge from the crisis. We must stand equipped for the next economic decline."
 
The evening’s third issue was the climate and how developing countries’ measures to tackle climate change are to be financed.
 
In the text to which EU leaders agreed, the European Council makes reference to the European Commission’s figures, which indicate 100 billion euro annually in the long term and five to seven billion euro in the short term, between 2010 and 2012.
 
"Our demand to developing countries is that this money is met with reduction targets," Reinfeldt said.
 
He emphasised that world leaders must raise the tempo in the negotiations and increase their efforts.
 
The G20 countries, or the Group of 20 that the name refers to, consist of the world’s 20 largest economies.

The G20 was formally established in 1999 as a way to gather the world’s largest industrialised nations and developing nations to discuss global economic issues. The G20 comprises Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom and the United States, along with the EU.

The G20 summit in Pittsburgh will address the overall economic situation, compensation and bonuses in the financial sector and how to strengthen supervision and regulation of the financial markets.

It will also address the issue of resources and governance of the International Monetary Fund, job creation, energy efficiency and trade/Doha-negotiations and increased support to Low Income Countries.

At the initiative of US president Barack Obama, the G20 summit will also discuss climate financing.