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29th Mar 2024

Sarkozy urges closer co-ordination of EU economic policies

EU states should work on closer co-ordination of their economic policies in the face of the looming economic crisis, French leader and EU president-in-office Nicolas Sarkozy said on Thursday (16 October), adding that industry is a sector that should receive particular attention.

"The economic crisis is here and the question [I have asked] is: If we managed to bring a co-ordinated response to the financial crisis in Europe, should we not bring a coordinated response to the economic crisis in Europe [as well]?" Mr Sarkozy told journalists at the end of an EU leaders meeting in Brussels.

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  • “The economic crisis is here," says Mr Sarkozy. (Photo: The Council of the European Union)

"There was a vicious circle, we have started a virtuous circle, well, let's continue it. Before 1 January 2009 [the end of the French EU presidency] France will take initiatives in that respect," he added.

"The emergence of this economic governance of Europe, which we had been waiting for for such a long time and which started last Sunday in Paris, should not be stopped."

The French president's comments came as reports roll in that Europe's economies may be moving towards recession.

Mr Sarkozy also called on eurozone countries in particular to strengthen the co-ordination of their economic policies.

"The countries that have got the same central bank, the same currency, must try to co-ordinate their economic policies," he said.

"I have several ideas in that respect, but it is not the time, it is not the place to present them," he added.

Before EU leaders meet again in December, the French EU presidency has asked the European Commission to reflect on how to support growth and employment, "with a particular reference to industry."

Mr Sarkozy said European car makers in particular might need a "helping hand," echoing statements he had made last week that he would propose a revision of EU state aid rules to encourage car makers to produce greener cars.

Mixed response

The French president's remarks received mixed reactions, however, with UK Prime Minister Gordon Brown saying it was "important to look at all aspects in the real economy to see what we can do."

Nonetheless, he and his foreign minister, David Miliband, emphasised the importance of adhering to the existing free-market orientation of EU policies. Mr Miliband underscored to reporters that EU leaders had agreed to language in their final statement at the end of the summit wherein: "The European Council supports the commission's implementation ... of the rules on competition policy, particularly state aid."

German Foreign Minister Frank-Walter Steinmeier stressed that any plan for a co-ordinated response to the economic crisis "was not yet ripe for discussion," according to the Associated Press.

Mr Sarkozy himself admitted he did not expect an unanimous and immediate backing of his idea.

"Do we need the same co-ordination for the economic policy as for the financial policy? From the French EU presidency's point of view the answer is 'yes, yes, yes, yes'," he said.

"Do we have unanimity at this stage? No, no, no," he added, while stressing he remained optimistic nevertheless.

A Bretton Woods II summit

Meanwhile, Mr Sarkozy reiterated calls for an international summit on a global financial overhaul to be held before the end of this year, preferably in November.

The so-called "Bretton Woods II" summit - in reference to the Bretton Woods accords which in 1944 constructed the postwar financial order - would gather EU countries, the US and emerging economies such as China and India.

Among the topics he would like to see discussed at such a summit, Mr Sarkozy cited tax havens, financial supervision, hedge funds, and how to deal with credit rating agencies in the future.

Additionally, the French president said he would raise the topic of the role of international financial institutions, notably that of the International Monetary Fund (IMF).

"Clearly I would like to ask the question of the IMF, of its future and its role," he said, adding he would like the institution to have expanded responsibilities.

"All these topics must be on the table. We must prepare an ambitious agenda … We do not have the right to miss this opportunity for reconstructing our system of finance in the 21st century," Mr Sarkozy added.

He, together with EU commission President Jose Manuel Barroso, will on Saturday (18 October) hold talks with US president George W. Bush on these topics in preparation for the summit that should pave the way to what Mr Sarkozy calls the "re-foundation of capitalism."

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