FINANCIAL REGULATION:FRANCE AND Germany yesterday laid down their demands for decisions on financial regulation at the G20 as Nicolas Sarkozy identified China and elements in the US administration as obstacles to an ambitious deal.
At a joint press conference with the Mr Sarkozy in London ahead of the summit, Angela Merkel, Germany’s chancellor, insisted it should produce “results that change the world”, echoing her French counterpart’s ultimatum for tighter financial rules.
The French president said the two states’ “red lines” or “non-negotiable objectives” were a clampdown on tax havens, registration and supervision of hedge funds, the retention by banks of part of the securitised products they sell on, tighter control of ratings agencies and curbs on bankers’ pay.
Officials said France was likely to get its way on all of these apart from the question of off-shore financial centres.
But the French and German leaders insisted there was not yet agreement among leaders.
Mr Sarkozy had earlier indicated that Chinese opposition to the blacklisting of unco-operative tax havens was the sticking point for France. Officials said that while the US and UK were prepared to back the publication of a list, either today or later by G20 finance ministers, China was against such a move.
Whereas the French and German leaders arrived in London brandishing ultimatums, US president Barack Obama sounded a more harmonious note, playing down differences between the US and Europe over the need for a further fiscal stimulus as “massively overstated”.
Gordon Brown, British prime minister and G20 chairman, who reiterated his wish for fresh financial rules in a phone call with Mr Sarkozy yesterday, insisted the summit would be ambitious, saying it could not “simply agree to the lowest common denominator”.
Mr Sarkozy said that while he had full confidence in Mr Obama, he wanted the rest of the US administration “to follow its leaders”. This appeared to be a reference to resistance from the US Treasury to a review of “fair value” accounting rules and a dispute with France over how much information hedge funds should be made to disclose.
But Mr Sarkozy and officials made clear that China was the bigger obstacle to a clampdown on tax havens, a totemic issue in France and Germany and one on which Mr Sarkozy and Dr Merkel are keen to see progress.
Mr Sarkozy acknowledged that the US and UK had shifted from their “relative tolerance” towards offshore centres, but he told Europe 1 radio that China now had to “spell out its position”, adding his suspicion that “behind it lie the interests of Hong Kong and Macao”.–(Financial Times service)
