The European Union (EU) leaders are set to gather in Brussels on Friday for an informal summit, during which they are expected to coordinate for a joint EU position and speak out its demands at the forthcoming Washington international summit on the global financial crisis, whose adverse impacts have been widely spreading.
French proposal will be buleprint for EU joint position
Analysts say the blueprint for the EU's coordinated position will be a 10-page proposal put forward by the bloc's French presidency, and agreed upon by the EU finance ministers on Tuesday.
The core of the plan will be to tighten global financial supervision, and reform the international financial institutions including the International Monetary Fund (IMF).
Under the plan, EU ministers agreed to give more power to the international financial institutions, notably the IMF and the World Bank, where emerging economies like China and India should play a greater role. They also called for "an information network and an early warning system" that would detect risks to the global financial system.
The plan recommends increased transparency in financial markets, compulsory registration and monitoring of credit rating agencies, new codes of conduct to prevent bank managers from taking excessive risks and harmonization of international accounting and bank capitalization rules.
The EU member states hold that the root for the ongoing financial crisis lies in the loose financial monitoring. While they call for tightening the EU-wide financial supervision, they have also expressed their hope for global joint actions in this regard so as to avoid a repeat of the current crisis, because unilateral EU moves could only lead the 27-member bloc to an unfavorable situation.
French Economy Minister Christine Lagarde said Tuesday that the French proposal is clearly aimed at "pushing at the global level" and had "massive support" within the EU.
But differences still exist over the details of the plan among EU member states.
Members differ on details of French plan
Some EU members have been complaining that the plan was too detailed and ambitious and might lead to over-supervision of the financial market.
Swedish Finance Minister Anders Borg pointed out that the most pressing task for the moment is to find quick answers to overcome the financial crisis, which is not over yet, but not regulations and rules.
The Czech Republic, which is to hold the rotating EU presidency in the first half of 2009, also criticized the French for being too hasty because reforms of the international financial system could not be realized in one day. Prague hopes that the EU would put forward a set of principles at the Washington summit of the world's 20 largest economies, while the details for such principles should be discussed at a later stage.
According to analysts, as compared with some "radical" ideas proposed by French President Nicolas Sarkozy and British Prime Minister Gordon Brown shortly after the financial crisis hit Europe, the French proposal this time has been watered down.
Both Sarkozy and Brown had called for thoroughly reforming the global financial system, which should be replaced by a brand-new Bretton Woods system. They had also suggested the establishment of a "supervisory college" that would monitor large financial firms that operate across borders, but it was dropped. Brown's idea to make the IMF a powerful international regulator and financier was also watered down.
Germany was concerned the wording in the French plan may imply the need for a super-national economic governance, either at the global or at the EU level.
"It could be interpreted that we are aiming for a coordinated, overarching economic policy" at EU level, said German Finance Minister Peer Steinbruck. "We would be very skeptical about that. We do not need a European economic government."
Berlin has been strongly opposed to a renewed call by Sarkozy for economic governance in the euro zone, fearing it could undermine the independence of the European Central Bank.
Analysts say that differences clearly exist among EU nations on how to push forward global financial reforms, and could erect barriers for the EU to speak with one voice at Washington.
(Xinhua News Agency November 7, 2008)