EU FINANCE ministers struggled to agree a way forward on how to reform the world's financial order yesterday ahead of a summit next week in Washington.
Ministers from several EU states refused to sign off on a comprehensive plan proposed by France, which envisages stricter financial supervision. They also ruled out presenting a joint EU stimulus package to help the economy ride out the downturn.
"It could be interpreted that we are aiming for a co-ordinated, overarching economic policy" at EU level, said German finance minister Peer Steinbrück, who objected to one of 11 points in a paper prepared by France, holder of the EU presidency.
"Our goal as Europeans is to be as united as we can," said French finance minister Christine Lagarde, who chaired the meeting of finance ministers in Brussels. "We are dealing with the crisis at the moment. I wish it was over, but I don't think it is."
EU states agree that the International Monetary Fund (IMF) should be strengthened and want more co-ordination between financial supervisors around the world. France and Britain have called for groups of regulators to monitor multi-national financial groups. But ministers said they needed more time to discuss how this should be achieved.
EU leaders meet in Brussels on Friday to prepare a joint position for Washington, which it was hoped would provide the stimulus to agree a second Bretton Woods agreement to reform the global financial order. The Bretton Woods institutions are the World Bank and the International Monetary Fund. Both were set up after the second World War.
In Berlin, German chancellor Angela Merkel said she hoped the Washington meeting would secure support from leaders to negotiate "a new financial constitution in which we demand more transparency" in coming months. However, US officials have been more circumspect than the EU about how they see the reforms progressing.
The EU is pushing for reform of the IMF to give developing countries more of a role in guaranteeing the world's financial system.
"Any new architecture that comes out of the Washington meeting, we need to have proper representatives including emerging countries on the one hand and of course Europe on the other," said economics commissioner Joaquin Almunia.
Ms Lagarde said the IMF should be given a key platform role. "They should be doing the analytical work, they should be sounding the alarm," she added.
British prime minister Gordon Brown, on a visit to Gulf states, called on Saudi Arabia, China and other relatively wealthy countries to help raise hundreds of billions of dollars for a new IMF facility to stabilise struggling economies.
The G20 summit in Washington will include the G7 group of industrialised countries and emerging economic powers such as Brazil, India, Russia and China.
