Members of the G20 must construct a global growth framework that will help avert the risk of trade wars, currency wars and recession, and collaboration between France and India can further this aim
On 24 January in Paris, and again on 27 January in Davos, the President of the French Republic, Mr Nicolas Sarkozy, presented the ambition of the French presidency of the G20 before the diplomatic corps and the press: “We live in a new world, we need new ideas.”
The first G20 Summit, whose members account for 85 per cent of the global GDP and make up two-thirds of the world’s population, received a strong Indo-French as also an Indo-European impetus: it was during the India-EU Summit on 30 September 2008, in Marseille, that the very first international appeal for the creation of this forum was made, at the earliest stages of the international financial crisis.
When the financial crisis was rattling the world, it was necessary for the Heads of State and Government present there to take urgent and necessary measures together — which they were able to do — to counter the risk of serial bankruptcy, regulate financial markets, revive global growth and resist the temptation of protectionism. The results are here for all to see: predictions for 2010 were extremely pessimistic, but global growth is hovering at 5 per cent, against a global average of 3.5 per cent for the past ten years.
If the G20 is to continue being a legitimate forum, it must remain effective and produce concrete results. The French presidency of the G20 stems from the simple yet fundamental idea that it is up to the States to construct a sustainable global growth framework if one wishes to avert the risk of trade wars, currency wars and recession.
As President Sarkozy affirmed in Mumbai on 7 December 2010, France would especially like to work with India on all these issues. India is an emerging and dynamic giant, which shares our values and wishes to be engaged in these matters. We share the common resolution of making a spirit of responsibility and cooperation prevail, so as to meet the global challenges facing us.
The first necessity is to pursue the efforts undertaken for stabilisation. To this end, we must implement the decisions of the five preceding G20 summit decisions: efforts towards better regulating financial flows and the fight against tax havens — long considered sacrosanct — will continue.
To ensure strong and inclusive international growth, the G20 must resolutely look into the issue of development. India had particularly insisted that this issue be included in the G20 agenda; France shares this belief and has made development one of its top priorities. France’s constant concern for developing countries, especially Africa, has been unfailing over the past few decades. Infrastructure will be a special focus, the aim being to launch a series of selected programmes, financing for which will be identified, at the Cannes Summit in November 2011.
But how is development to be financed? In Copenhagen, the great countries of the world committed themselves to contributing $120 billion per annum to the poorest countries from 2020 onwards. How is this commitment to be honoured when our public finances are more constrained than ever by the burden of sovereign debts? France is in favour of levying a tax on international financial transactions. Given that $4,000 billion exchanges hands daily, France considers that a small deduction, infinitesimal in comparison with these sums, will be useful in discouraging speculation and effective in finding new resources for development. This does not exhaust possible avenues and we are open to any other suggestion.
Corollaries of the challenge of development, employment and social issues will be on the G20 agenda. We are organising a social summit for the first time, at the same time as a summit of company heads. The French presidency would like, by engaging all the G20 members, to ratify the eight ILO conventions on the fundamental right to work, to promote the setting up of a “universal social protection floor”.
The second necessity is to respond to two pressing threats: currency wars and food security, and ways of dealing with these. The will to find solutions for “the currency war” is an important chapter of the G20 work for 2011. It is a sensitive subject that will be treated in small steps in a concerted manner. We must first agree on the indicators that will help analyse persistent imbalances. Thereafter, we must agree on who will calculate them, who will monitor them, who will ensure that they are adhered to. For France, there is but one organisation capable of monitoring global imbalances and coordinating the policies for reducing imbalances: the International Monetary Fund (IMF).
Next, we must begin deliberations on a more multi-polar international monetary system, reflecting the world as it is today. Last year, we raised the issue of expanding SDR to include new currencies. To counter the need to accumulate foreign exchange reserves and thereby create imbalances, France will champion the creation of new IMF facilities. With regard to capital inflows, particularly volatile capital inflows, France will propose the adoption of a code of conduct.
As agricultural production is expected to rise by 70 per cent by 2050 to feed the nine billion inhabitants who will people the Earth, price stability of raw materials and agricultural products has become an urgent necessity. India, faced with an ever-increasing energy bill and the challenge of food security, is as aware as France of the losses that price volatility induces. France was the first to raise this issue at the G20. As we have done in the financial sector, we have to regulate derivatives from raw materials.
Market transparency must be enhanced. Exempting food aid from import restrictions in place almost all over the world, creating emergency stocks, significantly increasing agricultural supply, placing new financial insurance instruments at the service of the poorest countries to protect them from price fluctuations or climatic phenomena affecting harvests — these are some of the solutions that we are supporting.
All these measures are aimed at achieving better global governance. It is also towards this end that France is in favour of amending IMF statutes, has been, for many years, in favour of founding a global organisation for the environment and aspires to greater consistency between the indispensable work of all the agricultural organisations and that of financial and commercial institutions that are multilateral or report to the United Nations.
The French presidency of the G20 is clearly banking on “collective presidency”. India’s and France’s avowed wish to act together within the G20, as expressed by Prime Minister Manmohan Singh and President Nicolas Sarkozy in December 2010, is a harbinger of concrete progress at the Cannes Summit scheduled on 3-4 November 2011. The Summit’s success would be yet another step towards stability and equity, indispensable elements to which our two countries are attached, for ensuring progress towards a world of justice, mutual aid and liberty.
The author is the French Ambassador to India
