G20 Summit: Press conference given by Nicolas Sarkozy, President of the Republic, 4 November 2011
Press conference given by Nicolas Sarkozy, President of the Republic,
4 November 2011
- Excerpts -
Hello ladies and gentlemen.
In two days of very intense discussions in an atmosphere dominated both by the gravity of the situation and the international community’s need for unity, we’ve worked on both short-term challenges to reduce the impact of the crises and, in the long term, putting the global economy back on the path of growth.
I’d like to share with you, in a few words, the three messages of the summit.
The first one concerns Europe, which has made every effort to provide a credible response to the crisis. It was essential for Europe to arrive at the G20 united. We also have the unanimous support of our partners, and it seems to me we’ve made progress on three essential points in the implementation of the 27 October agreement.
The first point is Europe’s firm stance towards Greece, which led to a crucial collective realization of the challenges for that great country’s future. The conditions are currently being created for consensus in Greece on the 26 October agreement, and we’re really delighted that the atmosphere in Greece today bears no resemblance at the end of this week to what it was at the beginning of last week.
Secondly on the European crisis, I’d like to pay tribute to the effort of Italy, who has taken the necessary measures to restore confidence, balance the budget as early as 2013 and strengthen her growth. Italy is a key Euro Area country, one of the world’s largest economies, and I want to welcome Italy’s decision to call upon the European Commission and IMF to certify the results obtained, on a quarterly basis, with the results being published and these assessments of course being made public.
Finally, we made a commitment to increase the IMF’s resources if it was felt necessary. And we established the conditions for achieving this goal. The IMF must fulfil its role as a firewall against systemic risk; at their next meeting in February the finance ministers have been instructed to deploy several options to achieve an increase in those resources: the allocation of SDRs, bilateral loans to the IMF and specific accounts at the IMF. We didn’t decide between these different methods, but the approach is indeed to boost the IMF’s resources.
The G20’s second message: we decided to use all the room for manoeuvre to support growth. The situation is in fact much more complex than in 2009; there’s no single response. Washington and London were «recovery by every means». Toronto was «reduction measures of all kinds». Cannes has distinguished between the countries’ different situations, and the final communiqué says those countries with solid budgetary situations – I’m thinking of China and Germany – will activate the automatic stabilizers and are ready to take new measures to support growth. So we’ve got away from the status quo in Seoul, which gave rise – as you doubtless remember – to differences between the countries on this issue. Moreover, those countries which have large foreign trade surpluses are pledging to increase domestic demand and speed up the flexibility of their exchange regimes in order to reduce currency reserve accumulation in the medium term. You can see very clearly the great country that has made these commitments, and that’s excellent news.
Finally – and it’s a great novelty – the Action Plan for Growth and Jobs fully takes into account the social dimension of globalization. It’s the first time the G20 countries, and particularly the emerging countries, have expressed their determination to establish social protection floors. Furthermore, there’s a commitment from the whole G20 to saying that social protection, the social model, the level of protection favours growth and doesn’t run counter to growth. I think it’s the first time an international summit has so clearly signalled, as a goal, that a high level of social protection favours growth.
FINANCIAL REGULATION/TAX HAVENS/FINANCIAL STABILITY BOARD
Final point: big steps forward, it seems to me, on the French presidency’s priorities on financial regulation. We decided to publish, or rather the Financial Stability Board will today publish a list of the 29 large, international systemic banks, and we decided that they’ll be subject to obligations with regard to transparency and enhanced regulation. Second point: the Global Forum’s publication of 11 countries we regard as tax havens: Antigua and Barbuda, Barbados, Botswana, Brunei, Panama, the Seychelles, Trinidad and Tobago, Uruguay and Vanuatu don’t have legal frameworks adapted to the exchange of tax information. We don’t want any more tax havens. The message is very clear. We don’t want any more of them. And those countries which continue to be tax havens, through opacity in banking, will be deemed pariahs in the international community. Things have made a lot of progress; they must make further progress. Let me add that Switzerland and Liechtenstein didn’t qualify in phase two until they put right certain failings that have been identified. The credibility of all the commitments against tax havens lies in the systematic publication, at each of our summits, of a list of those countries that won’t do what is needed to get away from unacceptable behaviour. We decided not to tolerate that. I’d like to ask you to remember that three years ago in London I had to threaten to leave the room [unless they published] a list of non-cooperative jurisdictions, because at the time people wouldn’t even utter the phrase «tax haven». So you can see how much progress has been made.
Finally, we decided to reform the FSB to make it a real global finance organization. Legal personality, financial autonomy, the ability to reach agreements with other organizations, and opening up its steering committee to the treasuries of the large financial centres to ensure the G20’s decisions are implemented.
CAPITAL CONTROL/SPECIAL DRAWING RIGHTS/IMF SURVEILLANCE
On the international monetary system, it’s a long-term project; when France put it on the agenda it sparked a whole load of sceptical comments. Today everyone believes it’s the project of the coming years. So we set a framework for managing capital flows; using capital control – and this is very important – is now accepted as a stabilization measure. There was a mistake that consisted in seeing, drawing a parallel between free trade and the free movement of capital; capital control may prove necessary and is recognized as a stabilization measure.
There’s also the review of the SDR basket in 2015, which will be able to take in new currencies. The yuan is a clear candidate, given China’s commitment – which I noted with satisfaction – to gradual convertibility.
The reform of the IMF’s surveillance to broaden it out to new areas: exchange rates, capital flows, the contagion effect: we’re making big changes to the IMF’s missions. Finally, new IMF facilities: a short-term liquidity line to tackle systemic shocks.
AGRICULTURE/DEVELOPMENT/INNOVATIVE FINANCING/FINANCIAL TRANSACTION TAX
On agriculture, it’s the first time agriculture has been on the G20’s agenda. It really was a question we didn’t talk about. An increase in production is essential in order to feed the world’s population. Transparency on agricultural markets. We secured the regulation of commodity derivatives markets. There’s an agreement to regulate those markets and players in those markets in order to combat market abuses and above all give regulators the power to set position limits, to prevent a single player from being able to manipulate rates, through disproportionate purchases or sales. When Bruno Le Maire, François Baroin and I began, we didn’t think we’d be able to achieve such a result at a summit of this kind. Finally, emergency community stocks and a ban on export restrictions for purchases by food programmes.
As regards development: innovative financing and infrastructure. Innovative financing features in the final communiqué, with explicit reference to the financial transaction tax. A number of countries want to get innovative financing removed and the reference to the financial transaction tax removed from the communiqué; they’re still in there.
What stage are we at on this? There are now a number of countries which have joined France’s battle. Let me remind you that when France began this battle she was absolutely alone. Today, besides France, the European Commission, Germany, Spain, Argentina, the African Union, Ethiopia, South Africa, the United Nations Secretary-General – and Brazil, who has told us of her interest in the demarche – are in favour of the principle of a financial transaction tax. The text of the declaration states that the G20 acknowledges the initiatives in certain member countries to tax the financial sector for various purposes, including a financial transaction tax to support development. You can’t imagine what a battle such a tax represents.
Let me be very clear: France believes that, in order to be meet the development challenges, there has to be innovative financing, given the deficit in every country. And we said in the communiqué that, in Bill Gates’ report, there are a number of innovative financing mechanisms and that every country pledges at least to adopt one of these.
Second point: from a moral point of view we believe it’s absolutely essential for people throughout the world to know that the financial players who led the world into the mistakes we’re aware of will be made to contribute financially to repairing the damage. That’s the purpose of the financial transaction tax.
So, the European Commission project – which is the only concrete project on the table and which shows the technical possibility of a financial transaction tax – will be discussed by the Council of Ministers and heads of state and government at the beginning of next year. France will fight for this tax to become a reality, and she believes that waiting for the rest of the world to adopt such a tax isn’t a good enough argument for refusing to implement it. Clearly, to get this result we’re going to do everything to draw on public opinion in every country.
I might add that I was pleased that Barack Obama was receptive to the principle of the financial sector helping resolve the crisis. This doesn’t go as far as a financial transaction tax, but he was receptive to the idea of financial players making a financial contribution to find a way out of the crisis.
Let me remind you that we started from a situation of absolute deadlock and that the financial transaction tax is now up for debate, and I hope it will actually be implemented in 2012.
There are still a lot of things to resolve, particularly on allocating the product of the future tax, but it’s very interesting because when you discuss allocating the product of the future tax it’s because you believe the principle of the tax has made so much progress that it’s appropriate to discuss allocating the product of it.
France believes a large share, yet to be defined – a majority of the total – should go to development.
Finally, we had a debate on global governance, with a very good report by David Cameron. (…)./.