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Calls for Global UN Economic Council

Monday, 02 February 2009 09:43 AM

Prime Minister Gordon Brown and German Chancellor Angela Merkel argued Friday for tougher control of the international economy, opening up a potential split with the United States on ending the financial crisis.

Merkel said a UN economic council based on the UN Security Council may have to be created to police the global economy, while Brown said his "shared revolution" would strengthen current international institutions.

Both proposals went counter to US ideas rejecting any global enforcer. At a Group of 20 summit in November, Washington fought for national regulators to take precedence.

Brown and Merkel set out the case for greater international control at the World Economic Forum in Davos, both looking forward to a new G20 summit on the crisis to be held in London in April.

The British prime minister, his concentration broken by his own mobile phone ringing during a press conference, called for "a shared revolution in common action to deal with real problems."

He said leaders had been calling for the past decade for "a global financial institution with proper supervision, with proper accountability and a proper early warning system."

"There is now recognition all around the world that if you have global financial markets ... that national supervision is inadequate."

The priorities of the G20 meeting would be agreeing "an early warning system of risk on any continent in the world economy" and replacing "the patchwork of current regulation," Brown said.

He would push for "international standards of transparency and disclosure" for financial institutions. "And we need to reform and strengthen international institutions giving them power and resources to invest at global level."

The G20 summit in November tasked finance ministers to draw up recommendations by March 31 to used at the London summit.

Brown said any changes had to be ready "as a matter of urgency."

Merkel said the G20 -- which groups the industrialised powers and emerging giants Brazil, China, India and Russia -- could eventually agree a global economic charter to enforce new standards when the world comes out of the financial crisis.

Merkel said governments must take firmer control of markets and used her speech to again criticise US subsidies to ailing American car firms which she called a form of "protectionism".

The German chancellor said international leaders must make a commitment to free market forces while ending the market excesses and "irresponsible deeds" that caused the crisis.

She said Germany's social market economy could reconcile both aims with the state as "the guardian of economic and social order."

"Freedom is a necessary precondition for market forces to operate. But individual freedom needs to be limited if it takes freedom away from others. A completely unfettered market cannot take this structure."

She said the world needs "clear cut rules quite in contrast to an unfettered capitalism that runs enormous financial risks."

The rules "need an integrated financial system with the necessary institutions to take necessary international responsibilities."

"All these principles need to be enshrined in the form of a global economic order charter" which could be agreed by the G20.

The charter "could lead to the establishment of a UN economic council, just as the Security Council was created after World War II", she said highlighting the importance of the UN body in dealing with the wartime crimes of the German Nazis.

With more bad news coming from every corner of the world, the crisis gloom has deepened each day at the forum. Bankers have been thrown on the defensive by US President Barack Obama's condemnation of "shameful" bonuses paid to Wall Street bankers last year.

The chairman of banking giant HSBC, Stephen Green, said salaries will have to change but banks must not be "demonized" over the financial crisis.

Green acknowledged the excesses of what he called "the go-go years". "Banks have clearly done things wrong" and the income discrepancy between highly paid bank executives and average workers had created a "lack of trust".

He said the new "market" would inevitably change salaries but he defended the paying of bonuses.

Copyright AFP


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Prime Minister Gordon Brown and German Chancellor Angela Merkel argued Friday for tougher control of the international economy, opening up a potential split with the United States on ending the financial crisis.Merkel said a UN economic council based on the UN Security...
Monday, 02 February 2009 09:43 AM
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