Priority No.1: World Growth
Nicolas SARKOZY
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Nicolas
Sarkozy. AFP |
Today, for the second time in only five months, the leaders of the
world’s top 20 economies will meet to seek a joint response to the
unprecedented global economic crisis.
Since this crisis began, I have argued that when we are faced by a
challenge of this magnitude, cooperation is a necessity, not an option.
In September, I called upon the world to rally together with a response
based on coordination and cooperation. Brought forward in concert by the
European nations, that initiative led to November’s Group of 20 meeting
in Washington, where we laid the foundations for far-reaching reform of
the international financial system. The Summit must enable us to put
into practice the principles we established.
The world expects that we will speed up the reform of the
international financial system and rebuild, together, a better-regulated
form of capitalism with a greater sense of morality and solidarity. This
is a precondition for mobilizing the global economy and achieving
sustainable growth. This crisis is not a crisis of capitalism but the
breakdown of a system that drifted away from capitalism’s most
fundamental values.
In November, we agreed on four principles that would guide our
response: enhanced coordination and cooperation; the rejection of
protectionist measures; the strengthening of regulatory systems in
financial markets; and a new global governance.
On the first two points, we have made a good deal of progress. We
have managed to hold off the specter of protectionism, and many nations
have injected massive support for their economies, undertaking ambitious
stimulus programs. Countries that offer their citizens a high level of
social protection, such as France, have also significantly increased
their levels of crisis-related welfare spending. Overall, the world’s
leading economies have made comparably gigantic efforts to combat the
crisis.
These measures are beginning to take effect and produce tangible
benefits, but we must be ready to do even more if circumstances require
it. I plan to defend this principle in London: We must do everything
necessary for world growth. This week we must attach the same sense of
urgency to the regulation of financial markets. World growth will be all
the stronger for being sustained by a stable, efficient financial system
and by the kind of renewed confidence in the markets that would enable
resources to be better allocated, encourage lending to pick up again and
foster the return of private investment capital to developing countries.
We agreed in November that not one financial player, institution or
product could be beyond the control of a regulatory authority.
This rule must be applied to credit rating agencies, speculative
investment funds and tax havens. On the latter point, I want us to go
far indeed, adopting a resolution that identifies tax havens and that
details the changes we expect from them and the consequences should they
fail to respond. The debate on tax havens initiated by the Washington
summit has begun to bear fruit, particularly in Europe.
We must reform the required disclosure standards and levels of
prudential oversight for financial firms. Sadly, in many countries, this
issue has not been getting the attention it deserves.
As we make progress toward reforming global economic governance, we
must offer much more space to emerging nations, in keeping with their
real weight and the responsibilities they should take on.
This holds true for all international bodies, especially
international financial institutions. While I am particularly pleased by
the expanded membership of the Financial Stability Forum, we must go
even further.
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Masses
protesting in London ahead of the G20 Summit. AP |
Over the coming months, we must pursue a process of renewal
throughout the entire multilateral system. In the short term, we must
help those who have been hit hardest by the crisis. A good start would
be raising the level of funding we make available to the International
Monetary Fund.
At the European Union level, I have taken up the question of our
contribution to the IMF and have found the member states ready and
willing. I have also taken up at the E.U. level the question of our
contribution to the risks to which certain countries in Central and
Eastern Europe are exposed; again, the E.U. member states have been
ready and willing.
It is necessary to offer support to the poorer nations falling victim
to this crisis. If we do not show solidarity, some risk seeing their
considerable efforts toward achieving the millennium development goals
nullified.
While in Africa last month, I stated my belief that the destinies of
Europe and Africa are inextricably linked.
We must be ready and willing to stand by Africa and all developing
nations that are in difficulty, on every continent.
I remain convinced that the world can emerge from these troubled
times stronger, more united and with a greater sense of solidarity,
provided we have the will to do so.
We cannot achieve radical change overnight, and much remains to be
done. We may need future meetings to implement the reforms undertaken in
London. I am certain of two additional things: We must achieve practical
results beginning with tomorrow’s summit. And failure is not an option.
(The writer is President of France.) Washington Post |