April 1, 2009 / 1:12 AM / 11 years ago

Sarkozy warns G20 over "false compromises"

LONDON (Reuters) - French President Nicolas Sarkozy said on Wednesday neither France nor Germany were satisfied with proposals for the G20 summit, underlining the difficulties in reaching an accord to haul the world out of recession.

France's President Nicolas Sarkozy (R) and French junior minister for employment Laurent Wauquiez (L) meet with employees at a Pole Emploi (Employment Centre) jobseekers office in Chatellerault, western France on March. 31, 2009 . REUTERS/Jacques Brinon/Pool

Sarkozy said he would not associate himself with “false compromises” at a meeting on the global financial crisis where U.S. President Barack Obama is making his first major appearance on the international stage.

As G20 leaders gather in London ahead of Thursday’s summit, Washington is pushing hard for other governments to pump more money into economic stimulus programs. But France and Germany say they do not want this to distract from the need to regulate and rein in financial market excess.

British Prime Minister Gordon Brown, hosting the summit and eager to hail it a success, says “good progress” has been made toward agreements on the goals of boosting global trade and financial regulation, and stimulating economic growth and job creation.

But divisions were evident.

Sarkozy did not explicitly repeat a threat to walk out of the gathering but voiced pessimism.

“I will not associate myself with a summit that would end with a communique made of false compromises that would not tackle the issues that concern us,” he told Europe 1 radio in an interview. “As of today, there is no firm agreement in place.”

“The conversation is going forward, there are projects on the table. As things stand at the moment, these projects do not suit France or Germany.

Japan criticized the German approach, with Prime Minister Taro Aso quoted as saying that Germany did not understand the importance of fiscal stimulus.

OBAMA MEETINGS

Obama, also seeking to thaw relations with Moscow and muster support for a new strategy in Afghanistan, meets Russia’s Dmitry Medvedev and China’s Hu Jintao, among others, before the G20 leaders meet Queen Elizabeth at Buckingham Palace.

Police are on alert to avert any violence from planned protests — one by anti-war groups and another that, according to websites, will head into London’s City district, a symbol of the financial market system that now attracts much public anger.

Sarkozy says leaders, who held a first crisis summit in November, must do more than renew pledges to restore growth and crack down on financial market excess.

In a commentary for publication by newspapers, Sarkozy said governments had made “gigantic efforts” in response to the economic crisis but that much work still needed to be done to prevent other such disasters.

“Failure is not an option, the world would not understand it and history would not forgive us for it,” he said, adding it could take meetings beyond London to get all the way there.

Sarkozy and German Chancellor Angela Merkel are pushing hard for visible results on regulation, such as closer tabs on hedge funds and credit rating agencies, and naming and shaming of tax havens if they fail to bow to pressure and end bank secrecy.

Those are not the only demands.

China and Russia want the West to give them more say over matters of global economic importance and have gone as far as to suggest the dollar should one day be dropped as the world’s main reserve currency, though the latter is not seen as an issue the summit will broach in any depth.

The rest of the developing world is hoping aid flows will not dry up as governments elsewhere pump trillions of dollars of public money into bank rescues and tax breaks or fork out on big building projects to support demand and jobs.

They got a reminder of the gravity of the situation from the Organisation for Economic Co-operation and Development.

Slideshow (8 Images)

The OECD said on Tuesday the economies of its 30 members, most of which are wealthy industrialized ones, would shrink by 4.3 percent in 2009, costing 25 million jobs.

To limit the fallout, the G20 leaders are expected to more than double the $250 billion available to the International Monetary Fund to help countries pushed to the brink.

Writing by Keith Weir, editing by Mark Trevelyan

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