France and Germany Take Deal to the Brink
Grice, Andrew, The Independent (London, England)
GORDON BROWN'S hopes of forging a united response to the global recession at today's G20 summit were thrown into jeopardy when France and Germany demanded much tougher rules for the financial system to prevent a repeat of the crisis.
Nicolas Sarkozy, the French President, and Angela Merkel, the German Chancellor, also rebuffed a plea by Barack Obama for them to stimulate their economies further to help kick-start a worldwide recovery.
The surprise Franco-German offensive, launched at a joint press conference in London last night, left Mr Brown, as the summit chairman, battling to broker a deal ahead of the critical meeting at the ExCeL Centre in London's Docklands. Over a working dinner of the G20 leaders at Downing Street last night, the Prime Minister was trying to persuade emerging economies, particularly China, to swallow some of France and Germany's demands on financial regulation.
British officials claimed that M. Sarkozy and Ms Merkel are playing to their domestic audience. They dismissed the French President's threat to walk away from the summit, saying he would not want to be blamed for wrecking it and predicting that he would claim victory today.
However, Mr Brown is more worried about Germany's opposition to an immediate further fiscal stimulus. Berlin may also object to a proposal for the International Monetary Fund to "name and shame" countries which should do more to boost global growth.
On a day of frantic negotiations, Mr Brown met five G20 leaders for one-to-one sessions and spoke to others, including M. Sarkozy, on the telephone. The leaders saw at least five different draft communiques during the course of yesterday.
Although the Prime Minister said the leaders could be hours away from agreeing a "global plan for economic recovery and reform", the intervention by France and Germany threw a last-minute spanner into the works.
Setting out their demands for a deal, the leaders declared that the summit must focus on cracking down on tax havens, reforming the financial system and tackling the bonus culture among bankers, rather than the need for more government spending or tax cuts. They warned against a "vague" communique today, saying that moves to tackle the root causes of the crisis could not be put off until another summit.
It was a deliberate riposte to a joint press conference earlier yesterday by President Obama and Mr Brown, who agreed that countries should boost their spending to ensure the recession ends as soon as possible. In a broadside against the "Anglo-Saxon" economic model and "light touch" regulation blamed for the crisis, M Sarkozy said: "This is a historic opportunity afforded us to give capitalism a conscience, because capitalism has lost its conscience. We have to seize this opportunity.
"These are our red lines. We are totally prepared to discuss other things so long as these issues are clearly dealt with and solved."
On tax havens, he said a blacklist of countries that refused to be bound by international standards should be published either today or within days. The French President said: "Germany and France will speak with one and the same voice. …