Crisis

“There is no such thing as a free lunch,” Dominique Strauss-Kahn, head of the IMF, told a news conference more than once after lunch at the G8 summit, expressing his concerns that world leaders had to start thinking seriously about their “exit strategy” after massive fiscal stimulus packages.

Asked by the FT who had paid for his lunch, Mr Strauss-Kahn replied: “Probably you”.

But he defended these ever more frequent gatherings of world leaders – in April in London, this week in L’Aquila and then next to Pittsburgh in September.

“Globalisation is not just a topic for  FT editorial  pages,” he added.

But he also expressed the view that the days of the G8 were numbered as it evolved into something bigger and broader.

By Guy Dinmore in Rome and Giulia Segreti in L’Aquila

Polemics are flying on the eve of the G8 summit with Italy being the host very much in the thick of it.

Franco Frattini, Italy’s foreign minister, was outraged by an article in London’s Guardian newspaper headlined “Calls grow within G8 to expel Italy as summit plans descend into chaos”, citing unnamed officials as saying the US had been forced to take control and organise “sherpa calls” between the main organisers.

Launching into Twitter and Facebook, Frattini spluttered from Bucharest that the Guardian had got confused with the G20 summit organised by the Brits in London in April. “This is a friendly fire case,” said the minister. “If only the Guardian could be honest to recognise it!”

The Guardian’s suggestion that Spain should replace Italy as a member of the G8 even had opposition newspaper editorialists reaching for their pens to vent their indignation.

On the streets of Rome, rocks and bottles were flying instead. But by all accounts the skirmishes between small groups of Italian and foreign anarchists with riot police were isolated and had little impact except to make traffic even worse than usual.

Slightly more sinister were eye-witness accounts that Italian ministry of finance riot police were reinforced by unidentified plainclothes men in white T-shirts wielding batons. Memories are strong in Italy of the mass no-global protests at their last G8 summit in Genoa in 2001 when one demonstrator was shot dead and many brutally assaulted by police in night attacks on their shelters.

A group of Belgian socialists who came all the way from Antwerp to protest peacefully were dismayed at how the no-global movement had disintegrated, in spite of the impact of the financial crisis on workers. “The Anarchists are so disorganised,” one complained, saying he could get no information on where and when their actions were planned.

Just a mile away in another state, Pope Benedict XVI launched his own personal protest in the form of his third encyclical issued since he assumed the papacy four years ago. Timed for the G8 summit and titled Charity in Truth, the German-born pontiff weighed in against unbridled capitalism and called for  a “true world political authority” to oversee and regulate a return to ethics in the global economy.

But he dashed any chance of winning the hearts of mainstream development agencies by also attacking NGOs that encouraged abortion, sterilisation and contraception.

As one Belgian socialist pointed out they shared in common the pope’s desire to change but not reject globalisation, but that their approach ended there. “He wants change to come from people, leading to material change. We want the conditions to change first,” said the socialist attending an authorised anti-G8 rally what was outnumbered by riot police, tourists and reporters.

In L’Aquila, where 39 or so heads of government and international institutions will meet from on Wednesday, security forces have imposed such a lockdown that many of those residents who managed to stay after the devastating April 6 earthquake, decided to head for the hills, leaving the town even more ghost-like.

Journalists taken in buses to the summit venue – the finance ministry police college – were pleasantly surprised to find a well equipped media centre with telephones and computers provided. Whether it can really take the 3,500 or so reporters applying for accreditation remains to be seen.

And diplomats with one European delegation told the FT they were impressed by arrangements, so far.

L’Aquila’s 22,000 people living like refugees in tents will be joined by one more though on a rather more glamorous scale. Libya’s Muammar Gadaffi, attending the summit as head of the African Union, will be pitching his inside the well guarded police compound, not very far from where Barack Obama’s mobile basketball hoop is parked.

Sherpas tonight are busy tweaking communiqués and filling the blanks. It remains to be seen how forthright there will be condemnation of Iran’s crackdown on opposition demonstrators and what will be said about China’s far bloodier suppression of ethnic unrest among Muslim Uighurs in Xinjiang. Agreements on climate change and how much money will be put into a food security scheme also remain to be hammered out.

Any delegates looking forward to a bit of Silvio Berlusconi’s renowned hospitality and lavish parties might come away a little disappointed. The theme is rather un-Italian Spartan, supposed to be in keeping with a city recovering from its earthquake and the world from its financial crisis.

Still the surrounding Abruzzo region will be providing the best of its food and wine, while Autogrill, the motorway chain, does the catering.

“Everything is ready. I feel completely serene.”

Silvio Berlusconi, Italy’s three-time prime minister and billionaire media mogul, is confident in the success of the G8 summit he is hosting this week in the quake-ravaged city of L’Aquila.

For Berlusconi, 72, it will be the third G8 summit he has chaired, following Naples in 1994 and Genoa eight years ago. No other leader of the rich countries’ club has such a distinction and this summit will be the biggest to date, bringing together a total of 39 heads of government and international institutions.

The summit venue is the college compound of the Finance Ministry police, a cross between a military barracks and university campus about two km outside L’Aquila which was devastated by an earthquake on April 6. Nearly 300 people in the city and surrounding villages were killed and about 60,000 are still homeless, more than 22,000 living in government-provided tents.

The three-day summit starts on Wednesday but world leaders have already started arriving in Rome. China’s Hu Jintao attended a business conference on Monday where 38 agreements reported to total $2bn were signed between Italian and Chinese companies, including car-maker Fiat and Generali, Italy’s insurance giant breaking into the Chinese pensions market.

Whether everything is really ready in L’Aquila is not clear. The media centre for some 3,500 reporters was to open on Monday but has been put back a day. But sidewalks have been covered in green carpeting and approach roads resurfaced. A blanket security presence will keep away any disgruntled tent people or anti-global protesters.

Almost daily aftershocks have added to the logistics nightmare of shifting the venue to L’Aquila from the original site at La Maddalena, a small island off Sardinia that had presented its own serious accommodation problems.

Italian media report that under Plan B, world leaders could be evacuated and flown to Rome in the event of another major tremor measuring more than 4.0 on the Richter scale, but only if the summit complex showed signs of damage. The April 6 quake measured 6.3. A tremor of 4.1 shook the area last Friday, sending people back out into the streets.

“There is no risk,” Mr Berlusconi told Il Giornale, a newspaper owned by his brother.  “Even if there was another shock, the guests would be completely safe.”

Mr Berlusconi is in serious need of a smooth and successful summit seen to produce concrete results. Communiques on climate change and food security could yield tangible progress. Italy is spearheading an effort, backed by Germany, that is intended to lead to a systematic working out of “global standards” for international business and finance. Ethics has become a buzz-word.

Iran could also come in for a tough verbal lashing although Mr Berlusconi has back-tracked since he earlier indicated he expected sanctions to be imposed, even though the G8 is not the right forum for such decisions.

At home and abroad, the prime minister’s standing has been seriously damaged by a series of scandals surrounding his private life that began when his wife, Veronica Lario, accused him of “frequenting minors” over his unclear relationship with an 18-year-old would-be model. Since then it has emerged that prosecutors are investigating whether a businessman in Bari suspected of corruption also procured prostitutes for the prime minister. Several women have gone public with their salacious tales.

Mr Berlusconi calls it all garbage and lies concocted by the left-wing “walking corpse” opposition. Despite repeated claims that he is completely unmoved by the media furore, his office has threatened to sue foreign newspapers, specifically those belonging to the Murdoch group, if they published photographs of his private parties.

Known for his attention to logistical detail, Mr Berlusconi has overseen preparations in L’Aquila led by Guido Bertolaso, the government’s Mr Fix-it who heads the civil protection agency which is also in charge of earthquake relief.

A basketball hoop has been specially installed for Barack Obama, US president, outside his accommodation block numbered P1.

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Leyla Boulton is an editor on the FT's main newsdesk
Andrew Edgecliffe-Johnson is the FT's media editor
Robin Harding is an FT correspondent in Tokyo
George Parker is the FT's political editor
Sean Smith is an editor on the FT's international companies desk

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