Muskoka, June 27, 2010
THE PRESIDENT – It’s the first time the refocused G8 has met, now that the G20 has taken over on economic and financial issues. So we talked very freely about all the issues to which the G8 now intends to give priority.
The reform of global governance, which was something people used not to talk about, an extremely sensitive issue, was the subject of a very long and very detailed discussion yesterday evening. You know what I firmly believe: reforming global governance isn’t an option, it’s a necessity and a matter of urgency. We initiated this reform in the economic sphere with the creation of the G20, which France proposed. This created the conditions for the reform of the international financial institutions: in the case of the World Bank, we have just completed the process of transferring a significant proportion of the voting rights to the emerging and developing countries; and the reform of the IMF should be completed at November’s Seoul G20.
We must go further and we can’t wait any longer before launching the reform of the United Nations system: first and foremost the reform of the Security Council which has been held up for 20 years, and also that of the agencies and specialized institutions in the UN galaxy.
As regards the Security Council, France and the United Kingdom have proposed an interim reform. It’s the best way – in fact probably the only way – of ending the current deadlock. Chancellor Merkel is supporting this interim reform procedure. We have made it a priority of the French G8 and G20 presidencies in 2011 and, before the end of his presidency, Stephen Harper is going to try and narrow the differences on the Security Council’s interim reform. Things have really made good headway, at any rate within the G8.
DRUG TRAFFICKING/ORGANIZED CRIME/TERRORISM
Also, during the discussion with our African partners and the representatives of Latin America, I proposed that the Interior Ministers meet to finalize the practical details of an alliance to combat drug trafficking, organized crime and terrorism. Cocaine is produced in Latin America, principally in Columbia, Bolivia and Peru. This drug is transiting both via the Caribbean and now also, alas, via West Africa. We are going to hold a summit of the relevant interior ministers to take on the fight against the crime mafias.
We also talked at length to our African partners about development. A detailed report was submitted on the progress made in honouring commitments entered into since the Gleneagles 2005 summit, it’s an effort of transparency which I applaud. I asked – and Prime Minister Meles Zenawi will draft it – for a second report for the French G20, but this time not only on action by the donor countries, but also on that by the countries receiving the aid, particularly so that our general publics can see what’s been done.
I’d like to take this opportunity to remind you that France has increased her official development assistance since 2007. In three years, we have gone from 0.38% of GDP to 0.5% of GDP in 2010. With $12 billion of aid, we are today the second-largest G8 contributor in terms of both GDP volume and percentage. Over half this aid, to be precise 52%, goes to Africa, which is a priority for us.
We are fulfilling the commitment made last year in Aquila to devote €1.5 billion to food security over three years. We have already spent €500 million.
But our effort on development goes far beyond these figures: there’s the initiative I announced in Cape Town in February 2008 on devoting €2.5 billion over five years to development of the private sector in Africa.
MUSKOKA MATERNAL AND UNDER-FIVE CHILD HEALTH INITIATIVE
It’s in this spirit that France gave her total support to the Muskoka Initiative on Maternal and Under-Five Child Health. France will contribute €100 million a year over five years, which is 15% of the G8’s total effort. This initiative is absolutely essential to combat maternal and under-five child mortality. Every year, 9 million children in the world die before their fifth birthday. For 4 cases of mother-to-child HIV transmission in France in 2009 – in fact that year the total number of cases of mother-to-child HIV transmission in France was 4 – there were 400,000 cases in Africa, even though we know how to prevent such transmission. This leads me, moreover, to reaffirm France’s commitment to the achievement of the Millennium Development Goals, and I shall, of course, be participating in New York in late September in the UN summit on the issue.
IRAN/NORTH KOREA/MIDDLE EAST
Finally, we had discussions on several major issues. On Iran, I reiterated how committed we were to the resolution passed by the United Nations [Security Council] imposing tougher sanctions, but at the same time how committed France is to pursuit of the dialogue. The sanctions aren’t there to punish a people who bear no responsibility whatsoever, but to get the Iranian leaders to conduct a serious dialogue. France is ready to enter into immediate negotiations with Iran in Vienna at the IAEA on the basis of the Brazilian and Turkish efforts and comments formulated by France, Russia, and of course, the United States.
We unanimously condemned North Korea for her irresponsible behaviour which led to the deaths of South Korean sailors.
We also talked about the situation in the Middle East, we discussed with President Obama initiatives which will have to be taken in the autumn.
FRENCH NICE G8 SUMMIT
Finally, France said that the next G8 summit, since she will have the honour of hosting it, will be held in Nice, probably in the spring, on a date on which we are in the process of getting agreement with our partners.
Ladies and gentlemen, I am ready to answer your questions.
Q. – Barack Obama and Angela Merkel’s difference of views on what had to be the economic priority was a dominant feature of this G8. Ought, as Mrs Merkel has repeated several times, the priority be to reduce the deficits? Or, as Barack Obama advocates, should it be the return and consolidation of growth? Barack Obama has shown how concerned he was about the deficit-cutting policy being conducted in Europe and particularly the German policy. Do you share the American President’s concern that the policy conducted in Europe and particularly by the Germans could prevent any return to growth?
THE PRESIDENT – Since yesterday, I have participated in every G8 meeting and don’t recognize your description of it. (…)
No one around the G8 table disputed the need to reduce the debt and deficits. And, at the same time, do so pragmatically, taking account of the each country’s individual situation. I didn’t hear, for example, Barack Obama complaining about Greece or Spain’s financial recovery plans. Similarly, Mrs Merkel said how important it was for Europe to have more growth.
So you see we have decided to develop a coordinated policy for ending the crisis, everyone agrees on the countries which are the most indebted and have the largest deficits reducing them. David Cameron explained his plan to us: the UK has a deficit of 11% and, given this deficit, no one would even think of criticizing the United Kingdom for taking corrective measures. I am well aware that all the pre-G8 papers were banking on there being a clash. I can tell you straight out that this clash didn’t take place. Now I’ll see what happens at the G20 which hasn’t started yet.
Q. – (…) “Tax havens are a thing of the past”. Are they really?
THE PRESIDENT – All the French banks have taken the responsibility of shutting down all the offices they had in the tax havens. During the G20, I have every intention of asking what’s happened about the application of the various rules and particularly on the tax havens which believed they could get by by signing, as you know, the 12 [Tax] Information Exchange Agreements. Some have been very serious about it and been removed from the black or grey lists. Others have done so in a rather more suspicious way. I shall ask for a number of reports and those who haven’t conducted the operations seriously will find themselves back on the black list. We’re still doing exactly what we had decided and what I got agreement on after a famous battle – you will certainly remember it – in London. There isn’t the slightest weakness and, so that things are clear, including for the Francophone financial centres, no one will escape international control on this issue. (…)
Q. – (…) Is there a chance that the bank levy will be adopted? (…)
THE PRESIDENT – The bank levy – as you can well understand there’s no question of imposing the bank levy on a country not wishing to tax its banks. We’re not in a global government able to impose a tax on a country. But we want a framework, it’s an objective of ours and we’re going to fight to achieve it. (…)
NORTH KOREA/US FINANCIAL LEGISLATION
Q. – On North Korea, was there a discussion on the toughness of the language used in the communiqué and would France have wanted it to be tougher. Secondly, did you discuss the new financial legislation in the United States passed by Congress and does it go as far as France would have wanted?
THE PRESIDENT – On North Korea, there wasn’t any disagreement, quite the contrary. All the G8 members wanted to persuade our Chinese friends to be as tough as us vis-à-vis North Korea and also as supportive as us vis-à-vis South Korea. I want, moreover, to pay tribute to the President who reacted as a statesman when around 40 South Korean sailors died in this tragedy. So there was genuine consensus on condemning North Korea’s irresponsible action.
As regards the financial legislation in the United States, you know how much I have appreciated from the outset President Obama’s determination to regulate a number of financial and banking activities in the United States, but this will actually be the subject of the discussion we’re going to have this evening at the G20, rather than a matter for the G8.
I remind you that the G8 talks about all the problems and the G20 is a forum we have set up to talk about economic questions in the broad sense of the term, and sustainable growth, the environment, currency and of course energy.
Q. – As regards Iran, did you talk to your partners about the possibility of going further than the sanctions the United Nations Security Council imposed recently in order to force Iraq to give in, which she doesn’t seem to want to do, or will we have to get used to the idea of having an Iranian nuclear power?
THE PRESIDENT – Yes, we talked about it in detail, firstly, asking all the G8 members to ensure that their companies no longer work in Iran – we know there’s still a problem here. The Security Council has adopted the sanctions, they must be applied. France also is keen for these sanctions to be tougher when it comes to bank transactions and we’re thinking about the possibility of reducing our purchases of Iranian crude. Europe will adopt tougher sanctions against Iran. President Obama told us how closely he was going to follow the actual operational imposition of the sanctions; at the same time, France led the request for tougher sanctions against the Iranian regime and we’re sticking to the idea that we have to continue talking to prevent the tragedy of Iran’s refusal to cooperate or acquisition of nuclear weapons.
Q. – Without prejudging the conclusion of the G20 which isn’t starting until a bit later, you seemed, from what you said, to explain that the consolidation, budgetary or deficit reduction aspect had slightly overridden the other dimension of the debate, i.e. maintaining the stimulus. All that is very subtle and I understand the concern not to give the impression of there being winners and losers in the debate. That’s my first question and the second: could you help us fully clarify the share-out of roles between the G8 and G20 today and also next year in France and what share-out would you like there to be?
THE PRESIDENT – You know the question isn’t so much about whether there are winners or losers, which would be a bit pointless. It’s about ensuring we are conducting a good economic policy. Admittedly in Washington the only subject was the economic stimulus plan.
Admittedly in London – I myself was attacked on the plan to support French growth which was deemed inadequate. Today, there’s no longer anyone – there was a call, you remember, even to cut VAT by 2% in France, as Gordon Brown’s British government had done. So you are absolutely right, but that isn’t what we discussed. Today, the issue no longer concerns the reduction of the deficits and the debt, which no one disputes. No one disputes the need for it. The question is more: to what extent, how deep should the cuts go and how big should they be?
If you look at the text the IMF put out, it’s exactly the economic policy followed in France. What does the IMF say? We need to address the sustainability of our budgets and our debt. We need to cut deficits not by creating taxes but by cutting spending. We have to pursue the reform process, the IMF says, and especially the pension reform since the pension reform reduces the deficits and potential debt without impacting on growth. So we are exactly in line with the IMF’s recommendations and I believe we really have a consensus on this.
The G8 is a bit like a family, the family of eight major democracies talking informally to each other about every political, economic, diplomatic issue. It’s the heads of State and government on their own. The G20 is a forum which is far more representative of the world in its current diversity and whose responsibilities are essentially economic, financial, monetary and energy, including matters to do with sustainable growth. As for the United Nations Security Council, its job is to talk more about peace, borders, policy and stability in the world.
Q. – I’ve clearly understood that the aim of this G20 is to report and discuss progress, but you who initiated the format for the G20 with the remit to recast the world economy, aren’t you all the same a bit sorry that the original impetus has somewhat run out of steam to the extent that we’re no longer on the edge of the precipice?
THE PRESIDENT – (…) I’m going to be very frank with you: the G20 would never have been born had there not been the crisis and the world not been on the edge of the precipice. We were able to make good progress, very fast, because of the risk of a systemic crisis. I’m not saying that this risk is totally behind us, but since times are relatively calmer, it’s normal for us to have less dramatic G20s.
Nevertheless, France is determined to ensure the completion of the process of reforming global governance and establishing the necessary regulation. We can’t go on having global markets and solely national rules. The whole objective is to have international rules corresponding to international markets. So you see that’s what we are in the process of putting in place, and the French delegation is distributing a very clearly written paper taking stock of all the advances on regulation. (…)./.