PARIS (Reuters) - French President Nicolas Sarkozy called in a speech laying out his G20 agenda Monday for new rules to curb commodity price volatility, warning that the world risks food riots and weaker growth if leaders fail to act.
Speaking to 300 diplomats and journalists in the Elysee presidential palace, Sarkozy also voiced support for a tax on financial transactions, calling such a move a “moral question” but admitting the idea had many enemies.
“How can you explain that we regulate money markets and not commodities?,” said Sarkozy, who holds the rotating presidency of the Group of 20, a policy forum for the world’s leading rich and developing economies, for 2011.
“If we don’t do anything we run the risk of food riots in the poorest countries and a very unfavorable effect on global economic growth,” he said. “The day there are food riots, what country at the G20 table will say this does not concern them? I don’t see a single one.”
Sarkozy has a three-pronged agenda for France’s G20 presidency, including tackling volatility in commodity prices, exploring changes to the world monetary system and reforming global economic governance.
He has been meeting with fellow G20 leaders, including U.S. President Barack Obama and China’s Hu Jintao, in recent weeks to win support for his plans and assess what France can realistically achieve.
Sarkozy has run into resistance in Washington to his idea to establish a new Bretton Woods system, the monetary order set up on the ashes of World War Two which relies heavily on the U.S. dollar.
On a visit to the White House earlier this month, he was at pains to stress to Obama that his currency plans would not put the dollar’s role at risk — a message he reiterated Monday.
“We want to reassure our American friends that the dollar will remain a pre-eminent currency. But a pre-eminent currency does not mean the sole currency. We have the right to reflect on other approaches.”
Sarkozy also went out of his way to reassure China that he would not join Washington in pressing Beijing to allow its yuan currency to appreciate, saying: “China is a major nation, far be it from me to tell them what to do about their currency.”
The third plank of Sarkozy’s G20 agenda — creating a permanent institutional framework for the G20, parallel to the International Monetary Fund (IMF) and World Bank — also faces robust resistance.
As a result, he has shifted the focus of his G20 presidency to commodities — a theme that is also seen as a potential vote winner in next year’s French presidential election.
Sarkozy’s popularity is hovering near record lows at around 30 percent and he desperately needs G20 successes to convince a skeptical electorate that he deserves another five-year term.
France, the European Union’s biggest grain producer, has blamed financial speculation for contributing to soaring commodity prices, although analysts are divided over whether this has played as significant a role as economic fundamentals in driving price levels.
Wheat prices in Europe nearly doubled in 2010, while a global economic rebound helped push oil prices nearly 30 percent higher in the last four months of 2010 alone.
Policymakers are concerned that rising food prices could stoke inflation, protectionism and the kind of unrest that has been seen in Tunisia and Algeria in recent weeks. High food prices could also hit consumer spending in fast-growing emerging countries that are leading the revival of the global economy.
Washington has already acted to prevent spikes in food prices and Europe is following suit, with proposals that would force traders to disclose their positions, put a cap on large trades and give regulators new powers to intervene to curb speculation.
But there are deep divisions within the broader G20 on how far any new global regulations should go, with major commodities producers pitted against consumer nations.
“It’s going to be difficult to have a global consensus on position limits until the case is better made,” a G20 source told Reuters after Sarkozy spoke.
In his remarks, Sarkozy also touched on Tunisia and Ivory Coast, two former French colonies in political turmoil.
Protests in Tunisia forced out long-time president Zine al-Abidine Ben Ali earlier this month, while Ivory Coast incumbent Laurent Gbagbo has refused to concede defeat following a November election that his leading rival Alassane Ouattara is widely recognized to have won.
Sarkozy said there was only one “legal and legitimate” government in Ivory Coast — one led by Ouattara. And he vowed to ask his Prime Minister Francois Fillon to prepare measures to help the transitional government in Tunisia.
“We will respond to every request made by the legitimate Tunisian authorities,” he said.
Additional reporting by Huw Jones in London; writing by Noah Barkin