The European Union vowed on Tuesday to work to enlist emerging Asian economic giants China and India in a summit to reform the global financial system.
French President Nicolas Sarkozy and European Commission President Jose Manuel Barroso said they would use an Asia-Europe Meeting (ASEM) in Beijing this week to urge the two fast-growing export powerhouses to join in taking responsibility for stabilising the world economy in the wake of the credit crisis.
"With President Barroso, we are going to visit China, the aim being also to convince China and India to take part in this summit," Sarkozy, whose country holds the EU's rotating presidency until end-December, told the European Parliament.
He was referring to a planned series of meetings to discuss strengthening financial institutions and improving cross-border regulation to avoid a repeat of the turmoil that has toppled banks and plunged Western economies towards recession.
"This is a global crisis so the response can only be global," Sarkozy said, reporting on the results of last week's EU summit and talks with U.S. President George W. Bush at Camp David last Saturday.
"We are facing the worst at the moment, and if we are not bold, it will be fatal," he said.
Sarkozy said the summit should comprise the Group of Eight industrial powers — the United States, Japan, Germany, France, Britain, Italy, Canada and Russia — plus five major emerging economies — China, India, Brazil, South Africa and Mexico.
China, believed to hold as much as $1 trillion in U.S. Treasury bonds, has not commented on whether it would attend such a meeting, although its central bank joined Western central banks in a concerted interest rate cut on Oct. 8 designed to restore confidence in global lending.
India has been seeking a larger role in global financial leadership but has not officially said anything about attending a summit.
EU officials said the two Asian countries' attendance may depend on their being assured of full participation rather than a second-fiddle role attending an enlarged meeting after the main event, as has happened at recent G8 summits.
Sarkozy, who was first to propose a global finance summit, said he would call an emergency summit of EU leaders soon to prepare for that meeting, expected to be held in New York shortly after the Nov. 4 U.S. presidential election.
PRINCIPLES
Speaking hours after France became the latest country to announce an emergency state capital injection in its main banks, Sarkozy set out a series of broad principles he said the global summit should adopt:
– no bank that works with state money should be able to work with tax havens;
– no financial institution should be allowed to work without being covered by financial regulation;
– remuneration packages for traders in financial markets should be calculated and organised to encourage responsible behaviour and not excessive risk-taking;
– international accounting rules should be adapted to enable banks to survive the financial crisis;
– the international monetary system should be rethought to find a path between fixed and free-floating exchange rates among major currencies;
– the rest of the world cannot continue to finance U.S. deficits without having a voice in the global financial system.
Sarkozy also advocated regular summits of leaders of the 15 nations that share the euro currency to provide what he called an economic government for Europe that would work in partnership with the independent European Central Bank.
Euro zone leaders held their first summit in Paris this month in an emergency response to the credit crisis. Several members, notably Germany and the Netherlands, had previously opposed such summits as politically divisive and a potential interference in the ECB's independence.
The French leader said Europe needed a pro-active industrial policy to promote growth and suggested creating sovereign wealth funds in EU countries to coordinate a response to the economic slowdown wrought by the crisis.
He also said the EU should respond jointly to a distortion of competition caused by U.S. cheap state loans to the auto industry to produce cleaner cars.
