France rallies China, Russia for G20 reform drive

24th January 2011, Comments 0 comments

France's President Nicolas Sarkozy reached out to China, Russia and other allies on Monday as he launched his plans for world finance reform as head of the G20 economic powers.

Sarkozy said he would meet his Chinese counterpart Hu Jintao in China in March and invited Britain, Germany and Russia to aid his efforts to police financial transactions and stabilise currency and raw commodities markets.

He also said France wants to reform the International Monetary Fund, a support for emerging economies, to broaden its world finance role.

"We propose to the G20 to develop a code of conduct for managing capital flows," Sarkozy said in a televised address. "The role of the IMF should be broadened, possibly by modifying its statutes."

He said the IMF should "carry out surveillance" of international capital transactions -- part of his strategy for ending what he sees as dangerous imbalances in the world financial system.

In a speech setting out his plans for his leadership of the G20 and the G8 group of biggest economies, he also said he would be aided by British Prime Minister David Cameron, German Chancellor Angela Merkel and Russian President Dmitry Medvedev.

Merkel will co-chair a working group on the world monetary system with Mexico's President Felipe Calderon, who will take on the G20 presidency in 2012, and hold a seminar in China at the end of March, Sarkozy said.

Medvedev, meanwhile, will oversee a working group looking at reforms to the agricultural products market, seeking ways to regulate and dampen what Sarkozy sees as the recent dangerous instability in global food prices.

And Cameron, Sarkozy added, has been asked to re-examine the nuts and bolts of global government: studying plans for a permanent G20 secretariat, a world environmental body and a reform of agricultural organisations.

"I'm sure we won't resolve all the problems in one presidency. France wants a debate, because this debate can't wait," Sarkozy said, laying out his plans for his year in charge of the group.

Kicking off Sarkozy's personal calendar for the year are the talks with Hu, when he will tackle the sensitive issue of China's currency policy.

The United States and other western powers accuse China for holding the value of its currency at too low a level, favouring its own exports while holding down Chinese domestic demand for foreign products.

Sarkozy said it "hadn't been easy" to convince China to host the March meeting, but insisted he would not lecture Beijing on its own exchange rate policy.

He also insisted he was not seeking to end the preeminent role in the world monetary system of the dollar, which he said "should remain a strong currency", amid growing calls for other currencies to take on a greater role.

Sarkozy reiterated his desire for a tax on international financial transactions, which he hopes to hammer out during his year at the G20 helm.

"France considers that this tax is moral, given the financial crisis that we have just been through, useful for dissuading speculation and effective for finding new resources for development" of poor countries, he said.

He said he had asked Germany and Mexico to jointly lead a working group on financial reform.

A G8 summit is scheduled in Deauville, western France in the early summer and a G20 summit in November in the southern resort of Cannes.

© 2011 AFP

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