IMF urges coordinated EU approach to crisis

By Tamora Vidaillet

PARIS (Reuters) - Europe must adopt a coordinated approach to the financial crisis, the head of the IMF said on Saturday and warned individual countries against acting purely in their own interests.

Speaking after a meeting with French President Nicolas Sarkozy, the IMF's Dominique Strauss-Kahn acknowledged it was harder for Europe than the United States to come up with a single response because of the structure of the European Union.

He said the Europe Union was facing its first "ordeal by fire" and must show it was able to respond to a crisis.

"What is needed in Europe is coordination, whatever the method. What counts above all is coordination and the will not to act each for himself as we have seen a little bit in some European cases," said Strauss-Kahn, who is managing director of the International Monetary Fund.

The IMF, conceived at Bretton Woods in New Hampshire toward the end of World War Two to improve global economic cooperation, has largely been sidelined in the latest financial crisis.

Strauss-Kahn met Sarkozy before the president and several other European leaders began an emergency summit to seek a common response to the crisis.

Ireland has annoyed some other European countries by promising to guarantee all bank deposits, a move which prompted some depositors in Britain to move their savings to branches of Irish banks.

Strauss-Kahn said Sarkozy was eager to avoid giving the impression that there was no solidarity in Europe.

The leaders of Britain, Germany and Italy were invited to the meeting, angering Finland which said a European response should be discussed by all EU members.

Strauss-Kahn said the complexity of the European Union made it even more important to have a coordinated message.

"I hope that Sarkozy will come out with a message to the Europeans, a message of concerted collective action which is even more necessary in Europe than in the United States because Europe is a more complex construction," he said.

Finance ministers from the 15-nation euro zone are due to meet on Monday in Luxembourg and for the whole 27-nation area on Tuesday.

Strauss-Kahn also said the IMF would be revising down its world economic growth forecasts.

"The world economic situation is very worrying and the IMF is going to publish growth forecasts that are markedly lower than what we have had until now," he said.

The 45 governments who set up the IMF wanted to avoid a repetition of competitive devaluations that had contributed to the Great Depression of the 1930s. It now has 185 members.