Obama-Sarkozy convergence? The fact that Barack Obama and Nicolas Sarkozy have expressed views that largely corroborate each other with regard to new rules for finance is a positive development. The firm condemnation of financial abuse and the demand for greater discipline were expressed with equal measure from a US president considered (according to American criteria) to be on the left and a French president from the centre-right. The division between the centre-right/left in this case seems to have been overcome, which is important and creates hope that the US, EU countries, China, Brazil, India and other G20 members will be able to define harsher rules that go in the same direction or are identical by the end of the year.
The position of the US president was outlined in this column last week (EUROPE 10064). The speech by the French president in Davos obviously had fewer echoes outside the French media but a few quotations would suffice for evaluating the thrust of it. Sarkozy condemned “a world in which the entrepreneur is less important than the speculator … and in which it has become normal to play with the money of others and to quickly and effortlessly make money without creating any jobs or wealth”. “Exorbitant demands of return” are killing the future. It is necessary to “make a break with this civilisation of experts who only discuss amongst themselves and where each of them has their own speciality. We will not overcome starvation or poverty in the world if we do not succeed in stabilising the prices of raw materials. This does not only concern the experts - it concerns us all.” He also affirmed that they needed to change “banking regulation, cautionary rules, and accounting rules … capitalism that is purely financial is capitalism adrift”.
Clear orientations but contents remain vague. Sarkozy's orientations are clear but it is obvious that the contents of the reforms are barely an outline: excessive profits that do not create wealth or jobs will no longer be accepted; incomes must be in proportion to their social usefulness; a carbon import tax for fighting environmental dumping has to be considered (this project is controversial even within the EU), as well as the tax on financial transactions; the role of the banks in the economy must be clarified because “a lot of banks are no longer doing their job”. France is also presiding over the G8 and G20 next year and will include reform of the international monetary system on its agenda. It should be clear that France is speaking on behalf of the EU as a whole, even if, for the moment, the presidencies of the bodies quoted have a national character - a situation that it is difficult to change.
In the hands of the European Parliament. The orientations are explicit, but they are just words: Obama's orientations are tough and sometimes spectacular, they are more precise and operational than those of Sarkozy, but they are simply intentions. What counts is putting the operational texts into practice.
In Europe, the work in this connection is currently in the hands of the European Parliament and constitutes an essential phase because Parliament is now a co-legislator on an equal footing with the Council. The European Commission largely supported the suggestions put forward in the de Larosière report. The Council, in an effort to reach a unanimous consensus, partly watered down the Commission's orientations. In an effort to simplify to a maximum, we might say that the work carried out by MEPs is orientated in the direction of a return to the Commission's projects. The situation is actually more complex because Parliament is not subject, unlike the Commission and Council, to a requirement to reach unanimous positions, but must achieve majority voting. All the political tendencies can express themselves. By once again simplifying to a maximum, we could point out that: a) a fairly good majority aims to re-establish, with sometimes clear modifications, the projects of the European Commission; b) the Greens and the far left would like, except for a few exceptions, to toughen up the rules and controls; c) the far right (mainly Eurosceptic) would like to scrap the envisaged legislation in an attempt to provide a maximum safeguard of national autonomy.
The Spanish Presidency explained to MEPs that the position of the Council had been defined by unanimity (it in fact represents a compromise between the partly diverging positions of the member states) and that it will not be easy to modify it. The Commission obviously supports the original positions and is counting on the Parliament to keep them and not water them down. This column will try to examine the main guidelines and work in progress tomorrow.
(F.R./transl.fl)