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G20 Summit – Press conference

G20 Summit – Press conference

Published on September 26, 2009
G20 Summit

Press conference given by Nicolas Sarkozy, President of the Republic


Pittsburgh, 25 September 2009

THE PRESIDENT – Good morning everyone.
(…) I’d like to explain to you my three grounds for satisfaction after this Pittsburgh G20.


The first is that it’s done: the world has given itself a new instrument for steering the global economy. You know how much France, at any rate since my election, has continually been saying that the G8 isn’t legitimate enough, that it needs to be enlarged. Today, we have decided to make the G20, whose members account for 85% of global GDP, the premier forum for international economic coordination.

The G20 has shown its effectiveness. You know that it was a French and European idea since we presented it at Camp David in President Bush’s time, and we have decided to institutionalize the G20 as a forum for coordinating the global economy.

In 2010, there will be two summits, one in Canada in June, and the other in South Korea in November, and from 2010 the G20 will be chaired by France who will thus be chairing both the G8 and G20. In 2011, the G20 will get into its stride. All the G20 members asked France to take charge of organizing this for 2011 and to take on this chairmanship.


I’m also very satisfied with the fact that we have begun the task of radically reforming global governance, one which, as you know, I attach great importance to. The IMF first of all: we have agreed to transfer 5% of the voting shares – we’ll see how they are distributed – and keep 24 members on the Board. I say this for my European friends, I promised them that.

We are also starting, on the same bases, proportionally, the reform of the World Bank. The IMF will also play a more important role of assessing the different economic policies adopted. As you know, this was a request I made back at the Heiligendamm summit: that the IMF shouldn’t content itself with acting as a gatekeeper vis-à-vis budget orthodoxy in poor countries, but play a genuine role of assessment and regulation in global economic and financial activities.


I take this opportunity to say how satisfied I am that for the first time the ILO Director- General is a member of the G20, and that his participation has been definitively minuted. In the next few weeks, Gordon Brown and I will take initiatives to get the ILO’s eight fundamental standards ratified by all the G20 members so as to affirm the G20’s social dimension.


Second reason for satisfaction: the whole question of regulation. You know that this too is something France has been constantly asking for, and since April we’ve been seeing speculative activities growing again. There’s no point going back over the scandal of the indecent bonuses paid out to a few traders. I have to say that I am very satisfied with what we’ve decided. There was unanimous agreement round the table that the errors of the past mustn’t reoccur. President Obama himself said how committed he felt to the need for regulation.

Three fundamental points were minuted. First of all we’ve harmonized the framework in which the banks will act, since the Basel II rules will be implemented everywhere and as soon as 2011 in the main financial centres. As you know, indeed it was a demand for our banks, since we were ready to adopt Basel II and the Americans weren’t; it’s done. I’m not going to go into the details, but those who follow these things know this perfectly well: there’s the whole matter of the accounting issues, the accounting standards which are extremely complicated and extremely important since this was harming competition. From now on, American banks, European banks, the whole world will implement the Basel II rules. This was something we couldn’t avoid doing, moreover Mrs Merkel and I had made it a strong priority.

We agreed to demand that banks engaging in risky market speculation activities be compelled to increase their capital. So the capital ratio to run the banking business will be tougher, higher when there are risky activities.

We were heeded on bonuses. I remind you that on 25 August in Paris, Christine Lagarde and I said: it doesn’t matter much what the others do, we’re deciding to be ahead of the game in order to arrive in Pittsburgh in a stronger position. It’s very clear: after 25 August in Paris, Mrs Merkel and Mr Brown shared the French decisions to control and monitor bonuses – this is the letter we wrote to Mr Reinfeldt, which was the subject of the Brussels meeting when the whole of Europe joined us. Well, all the decisions have been adopted at G20 level, thus at global level: ban on multi-year guaranteed bonuses, bonuses being paid over three years, with 50% on average or up to two thirds for high bonuses deferred over three years, establishment of a bonus-clawback system, and then there’s also the matter of bonuses being paid in shares.

The G20 countries adopted all this regulation which you can also find in the excellent Financial Stability Board report.

In actual fact, things happened like this: on 25 August, France decided for herself, then there was the letter with Mr Brown and Mrs Merkel, then there was the European decision before the Financial Stability Board decision, and all this is in the document we are issuing following Pittsburgh.

We have even decided to go further, since the central banks which monitor the banks will now have the power to limit the total amount of the bonuses. If a bank makes profits, it mustn’t distribute the whole amount to traders and shareholders, but must retain a substantial proportion so that it can then make more loans to firms and households. This is the first time that supervisors are being given power in this way to cap the amount of bonuses in line with a bank’s performance. We didn’t agree on a percentage, we didn’t agree on an amount, but it’s the first time that the principle of capping bonuses in line with a bank’s performance has been affirmed and recognized. This is now legitimate for any supervisor who wants to do it. So it’s a great cause for satisfaction.


Let me add, regarding the satisfaction on the regulation, the issue of tax havens. The figures speak for themselves and I’d like to give you three: since the London summit 150 [tax information] exchange agreements have been signed by tax havens. 12 countries have moved from the grey list to the white list and 4 countries from the black list to the grey list. 15 countries have decided to end bank secrecy on tax matters. Tax havens, bank secrecy are no more.

In the Pittsburgh document, we have envisaged sanctions starting as soon as March 2010 against countries which haven’t come into compliance. In the next few days I will announce in France measures to toughen the tax regulation on tax havens.

I might add, in the decisions taken, the obligation now to retain a certain proportion of securitized lending on banks’ balance sheets. This too has become a global decision.

In Europe, we have decided on 5%, this hasn’t been decided on for the United States, but the United States has accepted the idea that from now on a bank which engages in securitized lending, i.e. a bank which resells loans it has itself granted, has to keep a proportion of these on its balance sheet.


Finally, third reason for satisfaction: the common economic strategy. As regards Dominique Strauss-Kahn’s report, there was consensus for saying that the first signs of the recovery are coming, but we are all committed to maintain our stimulus plans so long as the recovery isn’t fully secured, i.e. so long as unemployment has not started falling again.

Finally, I want to say that the G20 also made a point of referring to the work of the Stiglitz Commission, so that from now on we can take account of all the social and environmental dimensions in the growth criteria and indicators.



Q. – A question on actual bonuses. I gathered that capping was possible if they have too great an impact on banks’ solvency. BNP Paribas had caused a scandal in France – would the rules which have been adopted prevent any future decision to pay out €1 million in bonuses?

THE PRESIDENT – The adopted rules are clear. They would prevent it being done in one go, they would require it to be done in three stages, since from now on it’s prohibited to grant guaranteed bonuses. Secondly, they would also prohibit it because they would provide for a clawback in the event of the bank suffering losses. Thirdly, some of the bonus would have to be in shares and not just cash, since this is what we’ve decided. And then there would, of course, be an analysis to see if it’s compatible with the bank’s stability. Of course, it wouldn’t be I or even Mme Lagarde who would do this. It’s the regulator who, at that point, would work.

I draw your attention to something: the door is open; this means that when a world region brings in these rules, traders in other parts of the world will say: watch out. It will be a criterion of the bank’s solidity. By that I mean that it’s Gresham’s law in reverse. You must be aware of this law? You know, Mr Gresham theorized a rule whereby, curiously, bad money drove out good. At the time there was silver and gold and only the bad was seen because people hoarded the gold. I think that, here, good practice will immediately become widespread, otherwise there will be a competitiveness deficit. (…)


Q. – On the timetable, do absolutely all of you agree on the date of 1 December for an ultimatum to the Iranians?

THE PRESIDENT – On the timetable, we all agree on the October meeting between the Six and the Iranians: are they or aren’t they putting everything on the table? And we all agree on saying that if they put everything on the table, there will be dialogue; we want peace. And if they go on hedging or do as they did in 2002, preventing the IAEA from carrying out the inspections, then at that point there will be a meeting and this meeting will be at the end of the year. We all absolutely agree on that. Let me add that Mrs Merkel expressed the wish to put her name to the statement and I can even tell you, since I talked to Mr Medvedev – but he himself will explain his view –, that the spirit of our statement didn’t shock him. That’s all I can say because I don’t want to put words in his mouth; it’s for him to speak, but I can tell you that we spoke about it and he didn’t signal any disagreement. (…)


Q. – Did you talk about commodity prices and particularly about oil prices and, second question, did you have another discussion on the climate particularly in order, among other things, to get all your partners to agree to have a summit a month before Copenhagen to try and end the deadlock?

THE PRESIDENT – Yes, we talked about commodity prices and, in the communiqué, you will see that we ask for an end to fossil fuel subsidies. I believe it’s the first time a commitment of this nature has been made.

(…) Secondly, we’re making headway on the idea Gordon Brown and I had presented on regulating commodity prices.

(…) And on Copenhagen, I can tell you, first of all, that everyone agrees on there being a summit before Copenhagen. I have proposed it take place in New York, but will it take place in New York or will it be held by videoconference? That isn’t yet decided, but there will be a meeting, that’s clear.

Secondly, the principle of a single World Environment Organization has today been virtually adopted.

Thirdly, Mrs Merkel, Mr Brown and Mr Lula and I may take initiatives to get things moving. I’m thinking of the financing, because we’re going to have to find the financing – hence my comments on taxing speculative movements. It’s clear where we can find it: there’s the carbon market, there’s the tax or taxes on speculation and then there are State appropriations and we’re fully aware of what’s ahead of us and what the coming weeks’ discussions are going to be about.

We also, at G20 level, took the decision that in Copenhagen, the heads of State or Government had to take responsibility for the choices and come to try and find compromises. (…)


Q. – On the accounting standards, I haven’t quite understood: have you got a commitment from the Americans to harmonize by a specific date? Is that a consequence of Basel II?

THE PRESIDENT – Yes, all the G20 signatory countries have pledged to implement Basel II everywhere from 2011. So why from 2011? Because there are a whole lot of technical compatibility issues to sort out; it isn’t that simple, but it’s very clear, it’s a commitment by everyone. (…)


Q. – On Iran, given what you, the Americans and British have discovered, is it still possible to trust the present Iranian leaders? And what tangible signs do they have to give you for you to be able to do so?

THE PRESIDENT – There’s a very simple sign: that the IAEA, which is the international watchdog, can go to this Qom plant to carry out the investigations and analyses we are requesting. And that way, there won’t be any argument. Good faith is very simple to prove: that the watchdog can go on site. You can see the difference with another dossier: it’s that visual evidence has to be provided for the whole world, there’s no possibility of prevaricating. It’s very simple: either the international inspections can take place or they can’t. If there’s nothing to hide, why prevent Mr ElBaradei and his team from having access? I imagine that the Iranian leaders will want to open this site so that the international community can judge the good faith of everyone involved. It’s very simple and very specific. (…)

Q. – Does this mean that the G20 is destined to take on a diplomatic role as well and not just an economic one?

THE PRESIDENT – This isn’t the G20, it’s three members of the G20, joined by a fourth, Germany, but we of course informed our Chinese friends and our Russian friends about what we were doing. You see, we’ve been together for five days, I saw President Hu Jintao on Monday afternoon, and I left him half an hour ago, so the G20 isn’t destined to supplant the United Nations. It so happens that we were together, so it was handy for the three of us to make a statement, but the statement on Iran isn’t in the G20’s name; it’s in that of the three allies, joined by Germany, after we had conferred with China and Russia. It was important for us to do it like that. (…)./.

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