Sarkozy pushes eurozone 'economic government'

Read Business editor Douglas Herbert's commentary: 'Sarkozy's economic axis of evil'

French President Nicolas Sarkozy called Tuesday for "clearly identified economic government" for the eurozone, working alongside the European Central Bank.

"It is not possible for the eurozone to continue without clearly identified economic government" Sarkozy told the European Parliament in Strasbourg.

The European Central Bank, currently the only joint institution overseeing the 15-nation eurozone, "must be independent," but the Frankfurt-based monetary body "should be able to discuss with an economic government," Sarkozy added.

 Sarkozy backed  the creation of sovereign wealth funds in Europe which, when coordinated, could provide an "industrial response" to the financial crisis.

"I'm asking that we think about the possibility of creating, each one of us, sovereign funds and that perhaps they could be coordinated to provide an industrial response to the crisis," he told members of the European Parliament.

Sovereign wealth funds are investment vehicles typically controlled by hydrocarbon-rich countries like Russia or Gulf nations with trillions of dollars at their disposal ready to invest abroad.

The funds, which are generally defined as state-controlled investment vehicles, have been around since the early 1950s but their ranks have swollen in recent years.

However, their rise has been accompanied by fears in some European countries and Washington that the governments which control sovereign wealth funds could use them to advance their political and strategic aims.

"I am well aware of disagreements among certain countries" on this subject, Sarkozy said, "but I cannot imagine being told that a united European response was needed for the financial crisis, but not for the economic crisis."

Sarkozy, whose country holds the European Union's rotating presidency, said it was important for the 27-nation bloc to coordinate economic policy as it responds to the crisis.

"Our duty is that in Europe we can continue to build ships, aircraft, cars," he said.