EU to urge China, India to join finance summit

"With (European Commission) President Jose Manuel Barroso, we are going to visit China, the aim being also to convince China and India to take part in this summit," Sarkozy said.

He was referring to a planned series of meetings to discuss strengthening financial institutions and improving cross-border regulation to avoid a repeat of the credit crisis that has toppled banks and plunged Western economies towards recession.

"This is a global crisis so the response can only be global," Sarkozy told the European Parliament, reporting on the results of last week's EU summit and his talks with U.S. President George W. Bush last Saturday.

He said the summit should comprise the Group of Eight industrial powers -- the United States, Japan, Germany, France, Britain, Italy, Canada and Russia -- plus five major emerging economies -- China, India, Brazil, South Africa and Mexico.

The French leader, who was first to propose a global finance summit, said he would call an emergency EU summit soon to prepare for that meeting, expected to be held in New York shortly after the Nov. 4 U.S. presidential election.

Sarkozy set out a series of broad principles he said the global summit should adopt: - "no bank that works with state money should be able to work with tax havens"; - no financial institution should be allowed to work without being covered by financial regulation; - remuneration packages for traders in financial markets should be calculated and organised to encourage responsible behaviour and not excessive risk-taking; - international accounting rules should be adapted to enable banks to survive the financial crisis; - the international monetary system should be rethought to find the right path between fixed and free exchange rates among major currencies; - the rest of the world cannot continue to finance U.S. deficits without having a voice in its policies.

Sarkozy also advocated regular summits of leaders of the 15 nations that share the euro currency to provide what he called an economic government for Europe that would work in partnership with the independent European Central Bank.

Euro zone leaders held their first summit in Paris this month in an emergency response to the credit crisis. Several members, notably Germany and the Netherlands, had previously opposed such summits as politically divisive and a potential interference in the ECB's independence.

Photo: AFP