Sarkozy and Merkel call for world financial reform
Whether or not Washington agrees, economies need stronger governmental regulation, leaders say.Paris -- France's President Nicolas Sarkozy and Germany's Chancellor Angela Merkel on Thursday called for more government regulation of world finance in the wake of the global economic crisis.
Welcoming international experts to a conference on the future of capitalism in Paris, Sarkozy said governments should have the bones of a new system of regulation ready before April's Group of 20 summit in London.
Merkel came with an idea of her own -- a powerful new economic council at the United Nations to oversee the financial markets.
Both leaders urged the United States not to stand in the way of tighter controls on world financial markets, which they blamed for the crisis battering the global economy.
"I've always in my political life been a supporter of a close alliance with the United States but let's be clear -- in the 21st century, a single nation can no longer say what we must do or what we must think," Sarkozy said. "We'll take our decisions on April 2 in London."
Sarkozy did signal that the new American president could produce a renewed spirit of cooperation. "Perhaps the United States will join us in this change -- I hope so with all my heart because a new president will bring his intelligence, dynamism and his open mind -- and we will change the world with the United States," he said. "But we will not accept the status quo, we will not accept stagnation."
For the German leader, the United Nations could serve as a forum for creating a new international regulatory framework.
"It is possible that alongside the Security Council, we could also have an economic council that would have a different role from ECOSOC," Merkel said, referring to the UN Economic and Social Council.
The German leader said ECOSOC -- set up to coordinate policy between the UN's various agencies -- was not a viable forum for economic decision-making as it "spends months, sometimes years writing up expert reports."
She called for the creation of a world charter for "a long-term sustainable economy" along the lines of the UN charter of human rights.
"No country can act alone in this day and age ... even the United States, however powerful they may be," she said.
The European leaders said their goal was neither to abolish capitalism nor finance but to back what Sarkozy called the "return of the state" as a regulator, intervening to support enterprise and limit speculation.
Washington has been less keen to increase market regulation but its allies hope that incoming President Barack Obama will be more amenable to change than his predecessor.
"I hope that these new rules will take shape from the month of April and that the actors on the financial markets will not this time try to stop the politicians putting this regulation into practice," Merkel said.
Sarkozy repeated his demand that the bankers responsible for the collapse in credit markets should be identified and punished. "Public opinion demands it and it is right," he said. "Capitalism is responsibility. We must find who was responsible for the billions of dollars that went up in smoke."
Globetrotting statesman Tony Blair took a break from his role as Middle East peace mediator to chair the two-day meeting dubbed "New World, New Capitalism," and welcomed Liberia's President Ellen Johnson Sirleaf.
European central bank chief Jean-Claude Trichet and World Trade Organization head Pascal Lamy also took part, alongside Nobel economics laureates Amartya Sen, Joseph Stiglitz and Edmund Phelps.
"This economic crisis is the biggest, most complex, most delicate economic challenge of our lifetime -- it is the most tricky intellectual challenge of any kind I have ever encountered and it is still evolving," former British Prime Minister Blair said. "What is plain is that the financial system has altered in its fundamentals and can never be the same again. What is unavoidable in the longer term is a recasting of the system of international supervision."
Blair said that the Group of Seven system of rich world nations deciding on economic rules had become an "absurdity" and must be expanded to include China, India, Brazil and representatives from Africa and the Middle East.
"We have mid-20th century international institutions governing a 21st century world," he said. "This is true of the global economy. The reform of the IMF and World Bank, of the financial regulatory system are long overdue."
The G-20 group of developed and major developing nations met three months ago in Washington to address the world economic crisis and discuss "refounding capitalism."
Sarkozy said European members would meet in Berlin ahead of the April 2 London summit.