Tags: Davos Forum

Sarkozy: We Will 'Never Turn Our Backs on the Euro'

Thursday, 27 Jan 2011 06:49 AM

French President Nicolas Sarkozy vowed Thursday that he and European partners will "never turn our backs on the euro," calling it a linchpin of peace and prosperity despite the government debt crises worrying investors and leaders worldwide.

Hours before he spoke at the World Economic Forum in Davos, the Alpine winter calm was briefly disrupted by a small explosion at a hotel — unusual for this Swiss resort, blanketed in security during the annual forum. Windows were broken but there were no injuries, Swiss police said. Forum organizers said a firework was to blame.

Sarkozy also expressed concerns about currency imbalances and rising commodity prices, priorities as he presides over the Group of 20 leading world economies this year. But his most vigorous words concerned the euro, shared by 17 countries across the European Union.

"The disappearance of the euro would be so cataclysmic that we can't even possibly entertain the idea," he said.

He acknowledged months of worries about the euro's survival since the European Union and International Monetary Fund had to bail out debt-laden Greece and then Ireland last year.

But despite those concerns, he said, "the euro is still there."

"Europe has had 60 years of peace and therefore we will never let the euro go or be destroyed. ... I speak as much for my German friends as I do for the French," he said.

He warned that euro countries cannot continue to "mount up staggering debts without thinking about the imbalances."

JPMorgan chief executive James Dimon said governments were right to act by rescuing Ireland and Greece from default rather than risk a run on the continent's banks.

Europe "did the only good choice, which is to get through this crisis, because if you don't fix it here, you're going to fix it there, which is in the banking system," he said.

Bankers — who came under fire at Davos the last two years amid global financial crisis — seem to be asserting themselves more at this year's forum. No longer are they on the defensive about taking government bailouts or resisting new regulations, or keeping a low profile.

After an opening day at Davos focused more on China, India and Russia, the euro and Europe captured the attention Thursday.

Not only are participants frantically trying to make up for failing last year to predict Europe's sovereign debt crisis by holding back-to-back panels on the common currency and the future of the European project as a whole.

They're also feeling the currency shock in their pockets, as hotels, restaurants and bars in the Swiss ski resort of Davos do business in francs, whose value has surged against the euro in recent months.

Sarkozy said that global currency imbalances — notably China's low-valued currency and the dominance of the U.S. dollar in world trade — "one of these days will bring down the whole pack of cards unless we attend to this very swiftly and very strongly." He said that other G-20 members should "understand that if these imbalances continue it will be to the detriment of one and all."

Fear of a currency war has also crept into the debate over global trade recently, with Chinese Commerce Minister Chen Deming, World Trade Organization head Pascal Lamy and the World Bank's Robert Zoellick taking up the issue at Davos on Thursday.

Greek Prime Minister George Papandreou is to join European Central Bank President Jean-Claude Trichet and Nick Clegg, Britain's deputy prime minister, for a panel about the future of Europe on Thursday that is sure to focus much of its attention on the continent's economic woes.

Official figures released Thursday showed that business and consumer sentiment in the 17 countries that use the euro dipped slightly during January, but remains high. Concerns are growing, however, about inflationary pressures in the eurozone economy.

There will be some relief at Davos for those who want to talk about more than just the economy.

A panel on climate change hosted by The Associated Press brings together U.N. climate negotiator Christiana Figueres, Mexico's President Felipe Calderon and South Africa's President Jacob Zuma, whose country will host the next climate conference this year after last year's successful summit in Cancun.

The hotel explosion occured in a storage room of the Posthotel Morosani, just over a mile (around 2 kilometers) from the main venue of the forum. Left-wing groups plan to hold an anti-capitalism protest this weekend against the annual meeting.

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French President Nicolas Sarkozy vowed Thursday that he and European partners will never turn our backs on the euro, calling it a linchpin of peace and prosperity despite the government debt crises worrying investors and leaders worldwide. Hours before he spoke at the...
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Thursday, 27 Jan 2011 06:49 AM
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