Sarkozy warns G20 over "false compromises"

[Ghost Dog]

Source: Reuters

LONDON (Reuters) - French President Nicolas Sarkozy said on Wednesday neither France nor Germany were satisfied with proposals for the G20 summit, underlining the difficulties in reaching an accord to haul the world out of recession.

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"I will not associate myself with a summit that would end with a communique made of false compromises that would not tackle the issues that concern us," he told Europe 1 radio in an interview. "As of today, there is no firm agreement in place."

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Sarkozy and German Chancellor Angela Merkel are pushing hard for visible results on regulation, such as closer tabs on hedge funds and credit rating agencies, and naming and shaming of tax havens if they fail to bow to pressure and end bank secrecy.

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China and Russia want the West to give them more say over matters of global economic importance and have gone as far as to suggest the dollar should one day be dropped as the world's main reserve currency, though the latter is not seen as an issue the summit will broach in any depth.

Read more: http://www.reuters.com/article/topNews/idUSLV94802020090401?sp=true

[Matilda]

1. The piece about dropping the dollar as the main reserve currency is interesting.

I recall that it was said that one of the things that Saddam did to earn
the ire of the Bush Administration was to threaten to trade in euros for
Iraq's oil sales.

The movers and shakers in the financial world haven't changed, and they
probably haven't learned much in the past months either.

[dipsydoodle]

3. Wasn't just a threat

Saddam actually went ahead and did it. At the time it was was a bit like cutting his nose to spite his face. However - his reserves were held by the UN under the oil for food program and subsquently the US$ sunk against the Euro producing a truly massive windfall profit for Iraq.

[tomm2thumbs]

2. Starting to sound like everyone is going to kick up a bunch of dust, wipe their shoes and go home

Except Obama, who I hope will be working on a new addition to the White House - he deserves to enjoy a day or three in Paris with Michelle.

[Ghost Dog]

4. Americans appear to be primed not to expect much from the G20

summit. Primed by the media. Is that the case?

I think most of the world is expecting significant decisions to come out of it, either through pragmatic negotiations or unconsciously by default. Also note the reference to a possible "separate summit on currency imbalances" suggested by (French Finance Minister) Lagarde below, and discussion here: http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x3809639

"I want results," French president Nicolas Sarkozy told reporters. "We have to get results, there's no choice, the crisis is too serious to allow us to have a summit for nothing."

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Lagarde has said France may do more on the spending front if necessary, but that nations should wait to see the effect of current stimulus measures before taking any further action. Also, Europe has pushed for a strict overhaul of financial regulation while Britain and the United States appear to favor a lighter touch.

"Leaders meeting in London must supply the oxygen of confidence to today's global economy and give people in all of our countries renewed hope for the future," Brown said.

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"The first major risk comes from a potential economic collapse of emerging markets," Australian Prime Minister Kevin Rudd said as he arrived in London. "The second major risk to global recovery is the process of deleveraging."

To prevent that, the G20 is expected to more than double the $250 billion available to the IMF to help struggling nations. Rudd said its funding should be tripled if necessary.

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A draft of the communique, obtained by Reuters this week, shows the G20 will pledge to avoid competitive devaluation of their currencies and other protectionist measures.

Lagarde told Reuters on Tuesday that currency imbalances will not be a feature of Thursday's meeting but the issue may require a separate summit.

China and Russia have started a debate about reserve currencies by raising the prospect of developing the IMF's Special Drawing Rights as the basis for a new global currency.

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The U.S. dollar is now and will remain the world's currency, a spokesman for the White House said as President Barack Obama's plane touched down at London's Stansted Airport for his first trip to Europe.

/... http://finance.yahoo.com/news/France-threatens-G20-rb-14803547.html