US President to hold crisis talks with EU

Other News Materials 18 October 2008 10:38 (UTC +04:00)

US President George W Bush is to hold talks on the financial crisis with his French counterpart, Nicolas Sarkozy, and EC President Jose Manuel Barroso, reproted BBC.

They will discuss at Camp David the framework for a summit of G8 leaders planned for November that may include China, India and other major economies.

The Europeans want the summit to pave the way for talks on an overhaul of the world's financial regulatory systems.

Earlier, Mr Sarkozy said that without regulation there could be no freedom.

Addressing a meeting of French-speaking countries in Quebec City, Canada, he said the crisis was "an opportunity to change our bad habits... to reflect differently on economic growth".

"The world is confronted by the worst economic and financial crisis since the 1930s. We need to reflect on the stakes, how we arrived here, who is responsible, and what happened," Mr Sarkozy told delegates of the Francophonie. "And we must draw lessons from it."

The BBC's Jane O'Brien in Washington says European leaders have in the past blamed the US for the global financial crisis, which started when high-risk borrowers began defaulting on their mortgages.

But President Sarkozy, whose country currently holds the EU presidency, has made it clear he wants to move away from finger-pointing and towards a partnership with the US to overhaul the world financial system, our correspondent says.

The centrepiece of the French leader's plan is a summit of the Group of Eight richest nations that may also include China and India.

Our correspondent says such a meeting would echo the Bretton Woods conference of 44 nations after World War II, which established many of the institutions and monetary systems that are now under threat.

At Bretton Woods, the leaders agreed to establish the International Monetary Fund and the International Bank for Reconstruction and Development, the original institution of the World Bank Group, in an effort to prevent a repeat of the depression of the 1930s.

In an interview with French Canadian newspaper on Saturday, Mr Sarkozy warned that that the world could not "continue to run the economy of the 21st Century with instruments of the economy of the 20th Century".

"The present crisis must push us to rebuild the foundation of capitalism. That implies especially leaving the myth of the omnipotence of the markets... We have to find a new equilibrium between the state and the market," he told La Presse.

On Friday, President Bush defended his government $700bn bail-out plan of US financial institutions, which includes a $250bn scheme to buy stakes in leading banks similar to those earlier announced by European states, and stressed that intervention in the free markets was necessary to preserve them.

"I would oppose such measures under ordinary circumstances," he said, "but these are not ordinary circumstances."

He said that the American people could "be confident" that the measures were "big enough and bold enough to work".

The president also spoke of the co-ordinated effort with Europe in tackling the global economic crisis, saying: "Our European partners are taking bold steps. They show the world that we're determined to overcome this challenge together."