EU, US to host global financial crisis summit

After meeting outgoing US President George W. Bush at Camp David on Saturday (18 October), French President Nicolas Sarkozy and Commission President José Manuel Barroso unveiled plans for a series of global summits to address the financial meltdown.

“The three leaders […] agreed they would reach out to other world leaders next week with the idea of beginning a series of summits on addressing the challenges facing the global economy,” stated a joint communiqué released after the meeting. 

The idea had already received the backing of EU heads of state and government at their regular October summit last week (EURACTIV 16/10/08). 

The bloc hopes to convince world leaders to agree to sweeping reform of the international financial system, which would include stricter regulation and supervision of hedge funds, tax havens and cross-border financial institutions, as well as a global ‘early warning’ system and an overhaul of the sixty-year old International Monetary Fund (IMF), which critics say is ill-equipped to deal with the global economy and the complexities of modern finance. 

Sarkozy, in particular, appears to have a bold vision of what could be achieved, saying the crisis offered a “great opportunity” to leave behind the “hateful practices” of the past and to build the capitalism of the future. “We cannot continue along the same lines because the same problems will trigger the same disasters […] We must reform capitalism so that the most efficient system ever created doesn’t destroy its own foundations,” he said, warning that the world could not “continue to run the economy of the 21st century with instruments of the economy of the 20th century”. 

President Bush, however, was predictably reluctant to fully embrace Sarkozy’s plans for more “regulated capitalism”, saying any proposal to re-think the mechanisms of the global financial system must not be allowed to undermine the free market. “It is essential that we preserve the foundations of democratic capitalism – commitment to free markets, free enterprise and free trade,” he stressed. 

But it remains unclear how much say Bush will actually have in the process as his term will come to an end on 20 January. The first meeting will nevertheless take place while he is still in office – shortly after the presidential election of 4 November. It will seek to “review progress being made to address the current crisis and to seek agreement on principles of reform needed to avoid a repetition,” according to the statement. 

“Later summits would be designed to implement agreement on specific steps to be taken to meet those principles,” the communiqué adds. 

The meetings will evoke comparisons with the famous post-World War II ‘Bretton Woods’ conference, where world leaders laid the foundations for the IMF and the World Bank Group in a bid to prevent a repeat of the depression of the 1930s. 

The upcoming summits are expected to involve not only the leaders of the G8 countries (US, Canada, Great Britain, France, Germany, Italy, Japan and Russia) that have dominated the financial system since the Bretton Woods conference, but also emerging economies such as China, India, Brazil and South Africa, as well as the likes of Saudi Arabia, South Korea and Australia. The US president-elect — Obama or McCain — should also attend. 

Japan, which chairs the G8, has backed the summits, but Finance Minister Shoichi Nakagawa warned that they would only be worthwhile if they produced “a strong action plan or a decision,” according to AFP. 

Read more with Euractiv

Summit: Minor progress on banking supervision

Despite pleas to go further, EU leaders gathering in Brussels for the European Council only managed to agree upon limited steps to improve the cross-border supervision of banks, widely seen as one of the missing links behind the current financial crisis.