Seoul, November 12, 2010
THE PRESIDENT – Ladies and gentlemen, my first words will be for the South Korean Presidency which I would like to thank for its outstanding work over the past six months. It was the first time an emerging country had chaired the G20 and our Korean friends have done it highly professionally.
Our main subject was exchange rates and the global imbalances whose importance France – I think I can say this – was the first to underline. There had been great tension before the summit began. All the G20 members have striven to take the heat out of the situation.
On the basic principles, we agreed to repeat our rejection of competitive devaluations and the importance of flexible exchange rates which must reflect the economic fundamentals.
We also agreed that there can’t be a simplistic solution to absorb the balance of payments imbalances, such as for example having a numerical target for current account balances.
What was important was to agree on the creation of a mechanism to monitor persistent imbalances. The Seoul G20 has entrusted the French presidency with setting up the mechanism. The first stage will be the establishment of indicators to identify the imbalances. This will happen in the first half of 2011. So the first assessment of the G20 States, conducted with the help of the IMF will take place under French presidency and I thank Christine Lagarde for all her work and the efforts to achieve this first agreement. (…)
FRENCH G20 PRESIDENCY PRIORITIES
Finally, the Seoul Summit has paved the way for the priorities we have set ourselves under our presidency.
On the reform of the international monetary system, for the first time, the G20 has said that its objective was to build a more stable and robust international monetary system, has asked the IMF to work on this and given the French presidency a mandate to achieve this objective;
On commodity price volatility, we have got agreement on mandating the relevant international organizations in the energy and agricultural spheres to produce expert appraisals and recommendations with a view to taking decisions under our presidency;
On governance, while we have just reformed the IMF after the World Bank, we have fully supported the Korean presidency’s effort over the past few months to get development included on the G20 agenda. The G20 decided that the finance ministers would work on the innovative financing proposals presented by Prime Minister Meles [Zenawi] in the report he has just submitted to the United Nations Secretary-General.
We shall also pursue what have always been our priorities: to make capitalism more ethical and keep a very strict watch on traders’ remuneration and tax havens.
Several G20 members have in fact asked the French presidency to produce a number of reports on the non-cooperative jurisdictions. We have decided to tackle the problems of the systemic institutions, since we now have a mandate for regulating the non-banking financial system, the well-known shadow banking.
A final word on the French presidency. I’ll have the opportunity to talk to you about it at a press conference at the Elysée Palace in January. Our approach to this presidency is ambitious and realistic.
POST-CRISIS G20/FRENCH G20 PRESIDENCY
What must be the G20’s responsibilities post crisis? The “crisis G20” achieved a huge amount; the “post-crisis G20” must establish the basis of the structural reforms the world needs. If the G20 doesn’t tackle the structural reforms the world needs, it will lose its legitimacy. And the real achievement of the past two years is that the G20 has acquired great legitimacy.
We have proposed to our partners that we share our great ambitions. These are, I fully realize, colossal projects, which can’t be completed in just one year.
We are going to work collectively, since between the end of this year and the beginning of the next I’ll have the opportunity of meeting Mr Obama in the United States and Mr Zuma, very probably in South Africa and the Indian Prime Minister, after all the meetings I’ve had so far to properly prepare for this presidency and try to get a consensus on the absolutely key issues of injecting ethics into capitalism, regulating the commodities market and substantially improving the international monetary order which is really necessary. Let me add that I had a session meeting with Dilma Rousseff, the new president of Brazil and another with Mr Lula, more especially on bilateral matters.
We will take this dialogue beyond our G20 partners since we have to rally a lot of countries in support of the G20’s ambitions. As I did at the EU-Asia summit, the Francophone summit in Montreux, next January I’ll go to Addis Ababa for the African Union summit.
I can confirm to you that our Chinese friends have agreed to host in China, in the spring, the first G20 working seminar on the reform of the international monetary system and I’m very grateful to President Hu for kindly agreeing to this.
We won’t arrive with wrapped-up projects. We’ll try and come up with consensuses, but backed, of course, by strong beliefs because the world can’t wait any longer.
We really must succeed in laying the foundations of the 21st century institutions. A new world lies before us. We must have new ideas to deal with this new world, so as to protect citizens more effectively and ensure a more efficient and better regulated capitalism.
So ladies and gentlemen, I’m ready to answer your questions.
MONETARY ISSUES/ROAD MAP/IMF
Q. – How is the road map for the work on monetary issues going to be organized under the French presidency. So there will be a seminar or meeting in Beijing or somewhere else in China in the first half of the year, but how are you going to work with the International Monetary Fund to try and eliminate or reduce the global imbalances?
THE PRESIDENT – I’m having a meeting with M. Strauss-Kahn in December at the Elysée. A date has already been set. We’re of course going to work hand in hand with the IMF. There are two possible strategies. To my mind there’s only one, but anyway...
The first is for us to criticize each other, the countries running surpluses criticizing those in deficit for being in deficit and the countries in deficit criticizing the countries running surpluses for running them. That strategy leads to certain, absolutely certain failure. Let me add a personal comment: I can’t see how people can criticize a number of countries for acting unilaterally since there’s no multilateral system.
What’s important is to lay the foundations of a genuinely multilateral monetary system. I won’t tire of repeating that in Bretton Woods they toiled for a year at a time when there was only one major economy, the United States, and one major currency. So I’m not saying that in one year of the French presidency we’re going to resolve all the 21st century’s international monetary order problems. But today what can one say?
The second solution is, on the contrary, through dialogue to try and bring everyone together to lay the foundations of the 21st century system. When France started talking about a new Bretton Woods, since I think I remember first talking about it at the United Nations, two years ago, I remember us being given very strange looks: “but what’s got into their heads?” Today it’s the unanimous view of the G20, as moreover of the world, that we have to reflect on how to improve our international monetary order. It isn’t just the World Bank President, Mr Zoellick, who made a speech – I’m not going to comment on the substance of what he said, and much could be said about that – but it’s extremely interesting that an American talks about the need, in a speech which caused a stir, to improve the system.
I’ve also seen Mr Greenspan’s statements and it’s extremely interesting to see what he says. He too is saying: “We have to think about a new system”. This is extremely new. President Hu’s agreement to holding a seminar in China, with the participation of the Chinese, is also a considerable step forward. No one today disputes that there’s a problem, no one.
France will put a paper on the table; we’re going to think about it; we’re going to work on it. Here, Mme Lagarde and I can count on the support of Mr Schäuble and Mrs Merkel, whom we shall involve very closely in our discussions. I was very interested to read that emerging countries like Brazil were saying: “Hold fire. We can see an influx of capital flows coming to us which is creating speculative bubbles in our country, that’s got to change!” So things have advanced a great deal in the past two years, a great deal.
It’s very complicated, very difficult, and there will be a lot of major difficulties to overcome. But no one any longer queries the debate’s legitimacy. And, even better, the G20 is giving the French presidency a mandate to move forward on the matter. (…)
FRENCH PRESIDENCY PROJECTS/YARDSTICK FOR SUCCESS
Q. – You talked about colossal projects, your term, which are awaiting the French presidency. You said they won’t be completed in a year. But what yardstick, gauge, will we be able to use to judge the French presidency’s success?
THE PRESIDENT – No sensible person can imagine that we will have resolved all the issues of the new international monetary system. Let me give an example: should, yes or no, the yuan be included in the SDRs? It’s very easy to ask the question, it will take a lot of persuading for it to happen. There have been 42 monetary crises since 1990, should there be a national answer, a regional answer, as Europe has given, or a universal answer? It’s a matter for discussion. (…)
Already the G20, which has existed for two years, is agreeing to give a presidency a mandate to embrace such issues. It was already not that easy – to be absolutely frank – to get the organization of a seminar on the international monetary system in China. Now afterwards, everyone will be able to decide whether they think the glass is half full, half empty or absolutely full, and I’d be surprised if anyone thought it absolutely empty or absolutely full; moreover, to be very honest with you I don’t think that technically we have the answers on all these subjects.
Basically, the world has always been dominated by one currency or a very small number of currencies. I think it’s the first time there’s been a multilateral monetary system. As politically we are in a multilateral world, how do we make them operate? How do you adapt their values to the economic fundamentals?
The simple fact that we are being asked to work on what may be, in the spring, the criteria signalling that a country is running an excessive surplus or is in excessive deficit, may seem to you pretty unimportant. But that alone is important because you can clearly see what it can lead to.
We haven’t got the agreement on the criteria, but we have got agreement on the fact that there will be criteria and that we must define them under the French presidency, preferably before the summer. And this is already very important.
But think about it, in two years we have reformed the World Bank and the IMF. Six months ago who of you would have thought we’d succeed in getting a reform of the IMF? Who of you? It was the story of a failure. And in any case, at any rate, if this isn’t done in the G20, it won’t be done anywhere else. (…)
Q. – You’ve just had a meeting with Mrs Rousseff and Mr Lula, did they tell whether Brazil has decided to buy the Rafale?
THE PRESIDENT – We talked about it. I remain confident, but the decision is for our Brazilian friends and if they want to tell us about it, they will certainly do so when they’ve decided. It isn’t for me to announce their decision. Finally, here too, things take a long time, as you know. And we also talked about the Oyopock Bridge, on which there’s progress. (…)
FRANCE/EU PRESIDENCY/G20 PRESIDENCY
Q. – To be even clearer, compared with the European Union presidency, how do you compare the role you intend to play during this G20 presidency? We get the impression that you see yourself more as someone delivering a consensus between America and China, the giants. Is this the case?
THE PRESIDENT – Delivering? I’m not absolutely cut out to be an obstetrician, but yes we can’t dictate to China or the United States or to a number of others… But, on the other hand, we’ve proposed the agenda; it’s been accepted and we’re going to make proposals, we’re going to move forward.
The European Union Presidency is very complicated and it lasted six months. If you want to make me say that in the scale of difficulties, the G20 is even more difficult, yes it’s undeniable. It’s undeniable because the European Union has 27 member countries. The G20 has 20, actually more with the institutions; but above all the differences of culture, ties, histories and interests are exponentially greater than those between the countries in Europe. Yes, that’s certain.
Let’s say that within Europe, we’ve got two criteria: the countries of the South and the countries of the North; and then let’s say, the small countries and the bigger countries…. We’ve got these two ways of seeing things. In the G20, we’ve really got what are called multiple entries; there aren’t just these two criteria, there are many others: there’s Asian solidarity, African solidarity, emerging country solidarity, solidarity between the countries in the East, developed country solidarity and solidarity between the poorest and the emerging countries…at the end of the day there are, of course, innumerable combinations, but at the same time, it’s enthralling.
And since France has the honour of taking on the G20 presidency, let’s make the utmost of this opportunity and try to set our sights high. But for this we have to talk to everyone, not hold things up. Our whole idea is not to get held up on solutions put on the table too fast. To rally round a shared finding and, subsequently, make proposals. Because once everyone has got involved in the discussion, it’s difficult to come out of it without something substantial. (…)./.