Queen Elizabeth and Michelle Obama with their arms around each other at a reception at Buckingham Palace on Wednesday. Michelle’s move set off a buzz because touching a royal is seen as a breach of protocol, but some said the Queen had made the gesture first. The two women parted warmly, with the Queen asking the US First Lady to “keep in touch”. (Picture by AP/BBC News)

London, April 2: Global leaders today sought to “shock and awe” the world out of the deepest downturn in decades by agreeing to raise $1.1-trillion to help countries in need, keep tabs on tax havens and hedge funds and “name and shame” protectionist countries.

But the Group of 20 summit failed to satisfy US and British calls for new stimulus measures. Nor did European politicians get their goal of a global financial super-regulator.

President Barack Obama, however, described the outcome of the meeting a “turning point in our pursuit of global economic recovery”.

Summit host and British Prime Minister Gordon Brown was more effusive. “This is the day that the world came together, to fight back against the global recession. Not with words but a plan for global recovery and for reform and with a clear timetable,” Brown said.

Indian Prime Minister Manmohan Singh was among the leaders who took part in the summit.

The $1.1-trillion figure on new financing, mainly through the International Monetary Fund, exceeded the low expectations before the summit, impressed markets desperate for good news and helped send stocks sharply higher in Europe.

Economists warned against euphoria, saying the package was no silver bullet to end the worst financial crisis since the Great Depression.

“It seems like they’re throwing out huge numbers on stimulus, but it’s unclear whether this is just double-counting things that have already been spent, or whether it’s actually gotten new commitments, and follow-up is going to be key,” said Steven Schrage, from the Center for Strategic and International Studies in Washington.

The deal raises the IMF’s kitty to help countries by $500 billion and adds another $250 billion to the IMF’s Special Drawing Rights — in essence printing money to help countries in need.

The leaders also agreed to a $250-billion package to boost world trade, which is set to shrink this year for the first time since 1982. The amount is higher than the $100 billion that had originally been suggested.

The IMF will get “new money” from the EU, China, Japan and other nations. The Fund will also sell off some of its gold reserves, which could drive down prices.

The extra money for the IMF is probably the most significant as it should lower the risk factor associated with emerging markets and thus reduce the chances of trouble there spreading back to the rich world.

Officials privately said the IMF probably did not need such a huge boost to its crisis-busting firepower. But they hope that the big number would create “shock and awe” for financial markets. They will then have confidence that no country is about to go bust because even the IMF cannot bail it out.

Countries which raise protectionist barriers to trade and house tax havens that refuse to comply with new rules on transparency will be “named and shamed”.

“Members were made very much aware that action that is protectionist will be named and shamed,” Brown declared. Analysts said 17 of the G20, including India, were guilty on this score.

The G20 leaders agreed to publish a blacklist of tax havens that could lead to sanctions, and, for the first time, to impose oversight on large hedge funds and credit rating agencies.

“Today’s agreement begins to crack down on the cow- boys in financial markets,” Australian Prime Minister Kevin Rudd said.

Missing from the deal were specifics on the financial rules, how banks would unload their toxic assets, let alone any clarity on the actual size of stimulus already in the pipeline.

Brown claimed governments already have pledged $5 trillion of public stimulus by the end of next year, without saying how the figure squared with an estimate he gave just a day earlier of about half that amount. Indeed, Obama spoke of around $2 trillion rather than five.

“Today’s decisions, of course, will not immediately solve the crisis. But we have begun the process by which it will be solved,” Brown said.