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French assertiveness on credit crisis jars Europe

A spirit of cooperation is tested ahead of a crucial series of meetings to prepare for a Nov. 15 US summit.

By Staff writer / October 30, 2008

Talking: India's Prime Minister Singh (l.) met with French President Nicolas Sarkozy (c.) and European Commission chief José Manuel Barroso Oct. 25.

Minoru Iwasaki/Reuters



As European leaders gather next week in a crescendo of meetings ahead of a Nov. 15 global financial summit – a "Bretton Woods II" in Washington – they face an old problem: unity.

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That summit, described variously as "visionary" and "bold" under the leadership of British Prime Minister Gordon Brown and French President Nicolas Sarkozy, is designed to build on the spirit of cooperation in the rescue of world banks in the credit crisis.

Yet just as quickly as Mr. Sarkozy got credit for bringing Europe together in a moment of crisis, he's roused the ire of a crucial ally, Germany, and several other European nations.

As president of the European Union, and with little consultation, Sarkozy pushed economic reforms opposed by Berlin, and even hinted that France should step into key posts that govern the eurozone, and possibly even prolong its six-month EU presidency, due to end on Jan. 1.

The reaction was harsh – and prompted squabbles ahead of the Washington global summit.

With the US in a lame-duck political season, and with China unable yet to muster broad leadership, the new Bretton Woods idea, which Sarkozy urged strongly on the White House, is an opening for Europe to foster a new global model. The summit will address new standards, greater transparency, new regulation, an enhanced role for the International Monetary Fund (IMF), and even the question of climate change in a time of crisis – a veritable fireworks of reform to prevent a repeat of waves of toxic assets and undisciplined markets as well as to help emerging nations.

It is a huge agenda under the best of times, economists say. But it will require a major push from a Europe now bickering over a common script.

"The challenge is to give reality to the abstract idea of a world going multi-polar," offers Jacques Mistral, director of economic studies at the French Institute for International Relations in Paris, about the Nov. 15 summit. "For the US, China, Europe, globalization has produced some good things," he says. "It would be unfortunate to have this derailed. We need to come together. And we need to have France and Germany together to do it."

Next week, the EU has plenty of opportunity to address squabbles. On Nov. 3, the 15 finance ministers of countries in the eurozone meet in Brussels; on Nov. 4, economic heads of all the EU's 27 members will convene.

On Nov. 7, an extraordinary EU summit will hammer out positions ahead of a G-20 meeting of industrialized and emerging countries in São Paulo, Brazil, Nov. 8 – itself a stage-setter for Washington. The Nov. 15 summit includes Britain, France, Italy, and Germany for the EU, along with India, Brazil, China, Russia, Mexico, Turkey, and Saudi Arabia.