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Sarkozy, Brown warn against spread of financial crisis

Video by Louis MASSIE

Text by AFP

Latest update : 2008-10-29

The French President and British Prime Minister called for the IMF to do more to help poorer countries threatened by economic meltdown and talked of stopping the "contagion" from spreading eastward to Europe's emerging economies.

British Prime Minister Gordon Brown and French President Nicolas Sarkozy called Tuesday for international intervention to stop the financial crisis from infecting eastern Europe's emerging economies.
   
Speaking as he headed into talks with Sarkozy, who currently holds the European Union presidency, Brown said it was essential to rapidly boost the IMF's ability to help poorer countries threatened by economic meltdown.
   
"Our first priority at the moment is to stop the contagion to other countries, including in eastern Europe where there are problems emerging and action has to be taken," he said.
   
Brown said he and Sarkozy would discuss "the global fund that the International Monetary Fund will have now to create to build on its own resources, to help economies that are in difficulty."
   
The British leader -- who leaves Saturday for the oil-rich Gulf -- had earlier pressed China and the Gulf states to contribute to a new IMF bail-out fund, arguing that its current 250 billion dollars were not enough.
   
Sarkozy also called for the IMF to step in.
   
"We have to find ways and means for the IMF to have more resources to help a certain number of states, I am thinking in particular of emerging nations."
   
The British and French leaders were meeting in hope of building a common European front at a Brussels summit next week, ahead of a meeting of the G20 group of current and emerging powers in Washington on November 15.
   
Sarkozy said he was "very interested by Gordon Brown's proposals on the future role of the IMF," one of the issues set to be tackled at the G20 summit.
   
The French leader also said he would ask fellow EU members to increase the size of a standby financial mechanism designed to support emerging European economies, from 12 billion to 20 billion euros (25 billion dollars).
   
The European Commission said Tuesday it was finalising financial aid for Hungary's ailing economy, without specifying its amount, under the procedure in question, which allows Brussels to raise funds on the markets.
   
The money would come in addition to a "substantial" aid package for Hungary announced by the IMF on Sunday.
   
Hungary, one of 10 mainly ex-communist nations that joined the EU in 2004, has been hit hard by the global financial crisis, with its currency, stocks and bonds plunging and serious liquidity problems.
   
It is so far the only EU state to have sought such help from the EU and the IMF, but the Fund was forced Tuesday to deny reports it was also negotiating a financial package for Romania.
   
Sarkozy said he and Brown were "really working hand in hand," as they headed into talks at his private residence in a forested park near the Palace of Versailles west of Paris.
   
"Since the start of the crisis we have been trying to coordinate our positions, to make sure Europe has a common position and to find solutions together to the historic and unprecedented financial crisis rocking the world."
   
Brown has become a regular visitor to Paris since the credit crunch hit, while France's traditionally close bond with Germany has been tested by sniping between the offices of Sarkozy and Chancellor Angela Merkel.
   
Long known as a sceptic towards the European Union, Brown was thrust centre stage this month as the 15 nations sharing the euro single currency used Britain as the model for a united bank rescue plan.
   
On wider financial reform, Brown and Sarkozy have also led calls for greater global regulation and a new role for the IMF, with the spectre of recession haunting Europe and the world.
   
In contrast, France has clashed repeatedly with its traditional ally Germany over the response to the crisis, with Merkel leading resistance to Sarkozy's proposal to create an "economic government" for the eurozone.
   
Sarkozy would also like to see Europe set up national sovereign wealth funds to shelter strategic parts of their economies from global turmoil -- anathema to Merkel's more laissez-faire approach.

Date created : 2008-10-28

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