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Obama calls for more economic stimulus while other countries want deficit reduction.

Associated Press

HUNTSVILLE, Ontario - Fresh from a congressional win on a financial overhaul, President Barack Obama pressed world leaders on Friday to join him in backing stronger rules against banking abuses. He made little headway in his call for more stimulus to keep the world economy growing.

Instead, he ran into strong opposition from countries wanting to put deficit reduction first.

"Those countries with budget deficits need to do that and, as a world, we need to address the imbalances," British Prime Minister David Cameron said Friday after meeting Canadian Prime Minister Stephen Harper, the summit's host. Cameron's government brought forward an emergency budget this week that proposed increased taxes and the toughest cuts in public spending in decades.

As Obama and other leaders sparred over how to keep their economies from slipping back into recession, there was little expectation of economic breakthroughs at the summit.

Divided on economic remedies, the leaders searched for common ground on other issues, such as confronting nuclear standoffs with Iran and North Korea, dealing with the AIDS epidemic, and maternal and infant health care in desperately poor countries such as Afghanistan, Mali and Tanzania - a key project of Harper's.

Harper announced late Friday that leaders of the so-called Group of Eight major industrial democracies - the United States, Canada, Britain, Germany, France, Japan, Italy and Russia - had pledged to contribute $5 billion over the next five years to the initiative.

He said Canada's contribution was $1.1 billion. The White House said the U.S. commitment would total $1.35 billion over two years, with that support subject to congressional approval. Japan pledged $500 million over a five-year period.

Harper was asked at a news conference why he thought the G-8 would honor this commitment when it hadn't honored many past ones. "Because of the tight budgetary situation we are seeing in many countries, leaders are being very cautious as to the pledges they have made," he said. "I'm confident that money will be delivered."

The eight-nation group met at a resort in Canada's sprawling Muskoka region of lakes and vacation cottages several hours drive north of Toronto. Today and on Sunday, the focus shifts to Toronto, where their number will grow to 20 as they are joined by leaders representing developing economies, including China, India and Brazil.

At a time when leaders were discussing fiscal austerity, Harper has come under criticism over the projected costs of the summits, including at least $900 million for security and $2 million for a theme park inside the media center that includes an artificial lake with canoes, deck chairs and a fake dock.

The Group of 20 has been gradually overshadowing the Group of Eight as the world's premier forum for discussing and coordinating economic policy.

Toronto braces for summit protests

Thousands of activists, community groups, students and union members marched toward Toronto's financial district Friday, calling for the abolishment of the Group of 20 summit and rallying over issues from poverty to women's rights. "We will be loud, we will be angry, we will be militant," Gaetan Heroux of the Ontario Coalition Against Poverty shouted into a microphone. Fariah Choudhury of No One is Illegal-Toronto declared, "We got bigger, we got better and we got stronger and we are coming out of the G-20 ready to fight." Toronto's shutdown pleased some. "Downtown is ... quiet," said Paul Reynolds, CEO of Vancouver-based Canaccord Financial Inc. "It's actually quite nice: It's easy to get to work and get back to the hotel in the evenings."

Bloomberg News