France, Germany say new financial rules 'non-negotiable'

2nd April 2009, Comments 0 comments

Speaking as leaders struggled to resolve differences over finding a way out of the global economic crisis, Merkel said world powers could not wait until a subsequent meeting to take action on a new rule book for global finance.

London -- France and Germany vowed Wednesday to stand together to press for "non-negotiable" new global finance rules, at a G20 summit clouded by US-Europe tensions over how to fix the global economy.

French President Nicolas Sarkozy and German Chancellor Angela Merkel underlined their unity in an unusual joint news conference ahead of the Thursday gathering of the Group of 20 countries.

"Without new regulations there will be no confidence. And without confidence there will be no recovery. It's a major aim, non-negotiable," said Sarkozy, who did not repeat a threat to walk out of the summit.

Speaking as leaders struggled to resolve differences over finding a way out of the global economic crisis, Merkel said world powers could not wait until a subsequent meeting to take action on a new rule book for global finance.

"The important thing is that we have a new architecture to the world financial system," she said.

"We must not be content with generalizations," she said, referring to the final communique leaders are to draw up at the London summit.

While France and Germany are pushing for global regulations, the United States and other major economic powers would prefer to see the London meeting produce guidelines for reforms on the national level.

Speaking of the last G20 summit in Washington last November, Sarkozy added: "In Washington we set out the principles. In London we want concrete things, results."

When asked about his threat made Tuesday to walk out of the summit if leaders failed to agree on sufficient new regulations, he said: "This is a historic moment and we cannot run away."

But Sarkozy said Germany and France had nevertheless laid out "red lines" where they wouldn't budge, including a demand for action on tackling offshore tax havens and on supervision of hedge funds.

"The 20 heads of state and government must say to the entire world: are they for the end of tax havens or for their continuation," he said.

"It is very clear that there must be a list and the margin for negotiation is on whether the list will be published right away or in a few days.

"We also want hedge funds to be registered and supervised. The principle is no financial institution without supervision."

Merkel also underlined her call for new international accounting standards and a framework for pay in the financial sector, putting an end to bonus systems that reward particularly risky behaviour.

"We must not forget how we got into this crisis," she said.

Sarkozy dismissed criticism, most recently by Japanese Prime Minister Taro Aso, that countries such as Germany and France were doing too little to fire up their ailing economies.

"Germany and France have put everything into (promoting) recovery, we have to fuel that, and we have done that," he said.

Sarkozy said he was "confident" that Barack Obama, on his first trip overseas as US president, would join the effort to promote a stronger regulatory framework for the way the world does business.

"I am sure that he will help us. I am sure that he understands us," he said.

"But the day after tomorrow is too late. The time for taking decisions is today and tomorrow."

Merkel also signalled fresh support for beefing up the International Monetary Fund's means to rescue poor countries stricken by the economic meltdown.

"This crisis has created thousands of victims who are totally blameless," she said.

"We need to ensure fiscal stimulus for those who cannot do it themselves."

Deborah Cole/AFP/Expatica

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