By Katrin Bennhold
Tuesday, October 28, 2008
PARIS: Prime Minister Gordon Brown of Britain grabbed the limelight from President Nicolas Sarkozy of France ahead of their meeting Tuesday, calling for China and the Gulf states to stump up more money to help the International Monetary Fund deal with the fallout of the credit crisis.
Sarkozy, who met with Brown at the presidential Lanterne residence in Versailles, southwest of Paris, called Brown's proposal interesting and vowed to work "hand in hand" with the British prime minister - just as they had on a coordinated rescue plan for European banks.
Sarkozy said that he also believed that the fund needed "additional means" to help ailing economies.
"Our first priority at the moment is to stop the contagion to other countries, including in eastern Europe where there are problems emerging," Brown said before the meeting with Sarkozy.
The talks were arranged to prepare the European Union's position ahead of the Nov. 15 summit meeting in Washington, which is intended to explore ways to reorder the global financial system.
Brown's appeal to resource-rich emerging economies to help pay for bailout plans highlights how stretched the Group of 7 industrialized countries have become in dealing with the global economic rout.
It also laid the groundwork for the type of grand bargain that may take center stage at the November summit: In return for a greater voice in an overhauled financial architecture, large developing countries will be asked to make a greater contribution.
The British leader, whose bank bailout plan has become a blueprint for the European Union and the United States, said the IMF needed a fund that was "substantially" larger than the current pool of $250 billion earmarked for nations in difficulty. Over the past month alone, several countries have appealed for emergency help, including Iceland, Hungary, Ukraine and Belarus.
"There are lessons to be learned from what happened in the subprime market," Brown said. "We need to learn the lesson quickly. We will be looking at how we will reform the international financial system."
In London earlier Tuesday, Brown said it was urgent to set up the IMF bailout fund "as quickly as possible."
It will have to be "the countries that have got substantial reserves, the oil-rich countries and others, who are going to be the biggest contributors to this fund," Brown said.
"China also has very substantial reserves," he added. "There are a number of countries that actually can do quite a lot in the immediate future to make sure that the international community has sufficient resources to support countries that get themselves into difficulties."
In an effort to sell his idea, Brown will travel to the Gulf region Saturday and confer with Prime Minister Wen Jiabao of China by telephone.
Sarkozy, in welcoming Brown on Tuesday evening, said, "We both want concrete decisions to be made" so that the causes of the financial crisis would "never" happen again.
Analysts warned that some of the countries cited as potential contributors might be more fragile than appeared at first glimpse.
While Chinese banks are less exposed to the subprime U.S. mortgage assets that have caused problems elsewhere, the country's export-driven economy is vulnerable to falling demand in Western markets.
Oil-rich Middle Eastern countries, meanwhile, are concerned that the recent slump in energy prices will deprive them of significant revenues in the months to come.
The American political calendar could also stall any far-reaching agreements, analysts said. The new president is to be elected Tuesday but will only take office on Jan. 20.
Tuesday, October 28, 2008
PARIS: Prime Minister Gordon Brown of Britain grabbed the limelight from President Nicolas Sarkozy of France ahead of their meeting Tuesday, calling for China and the Gulf states to stump up more money to help the International Monetary Fund deal with the fallout of the credit crisis.
Sarkozy, who met with Brown at the presidential Lanterne residence in Versailles, southwest of Paris, called Brown's proposal interesting and vowed to work "hand in hand" with the British prime minister - just as they had on a coordinated rescue plan for European banks.
Sarkozy said that he also believed that the fund needed "additional means" to help ailing economies.
"Our first priority at the moment is to stop the contagion to other countries, including in eastern Europe where there are problems emerging," Brown said before the meeting with Sarkozy.
The talks were arranged to prepare the European Union's position ahead of the Nov. 15 summit meeting in Washington, which is intended to explore ways to reorder the global financial system.
Brown's appeal to resource-rich emerging economies to help pay for bailout plans highlights how stretched the Group of 7 industrialized countries have become in dealing with the global economic rout.
It also laid the groundwork for the type of grand bargain that may take center stage at the November summit: In return for a greater voice in an overhauled financial architecture, large developing countries will be asked to make a greater contribution.
The British leader, whose bank bailout plan has become a blueprint for the European Union and the United States, said the IMF needed a fund that was "substantially" larger than the current pool of $250 billion earmarked for nations in difficulty. Over the past month alone, several countries have appealed for emergency help, including Iceland, Hungary, Ukraine and Belarus.
"There are lessons to be learned from what happened in the subprime market," Brown said. "We need to learn the lesson quickly. We will be looking at how we will reform the international financial system."
In London earlier Tuesday, Brown said it was urgent to set up the IMF bailout fund "as quickly as possible."
It will have to be "the countries that have got substantial reserves, the oil-rich countries and others, who are going to be the biggest contributors to this fund," Brown said.
"China also has very substantial reserves," he added. "There are a number of countries that actually can do quite a lot in the immediate future to make sure that the international community has sufficient resources to support countries that get themselves into difficulties."
In an effort to sell his idea, Brown will travel to the Gulf region Saturday and confer with Prime Minister Wen Jiabao of China by telephone.
Sarkozy, in welcoming Brown on Tuesday evening, said, "We both want concrete decisions to be made" so that the causes of the financial crisis would "never" happen again.
Analysts warned that some of the countries cited as potential contributors might be more fragile than appeared at first glimpse.
While Chinese banks are less exposed to the subprime U.S. mortgage assets that have caused problems elsewhere, the country's export-driven economy is vulnerable to falling demand in Western markets.
Oil-rich Middle Eastern countries, meanwhile, are concerned that the recent slump in energy prices will deprive them of significant revenues in the months to come.
The American political calendar could also stall any far-reaching agreements, analysts said. The new president is to be elected Tuesday but will only take office on Jan. 20.
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