PARIS (AFP) — The leaders of Europe's four main economic powers held crisis talks on the global financial meltdown on Saturday, brushing aside a dispute that killed off talk of a joint bailout package.
After US President George W. Bush signed off on a 700-billion-dollar handout to Wall Street, the financial world's eyes turned to Europe in the hope of more measures to free up capital and reassure jumpy markets.
French President Nicolas Sarkozy, British Prime Minister Gordon Brown, German Chancellor Angela Merkel and Italian Prime Minister Silvio Berlusconi were to seek a coordinated response to the credit crunch, which has drained liquidity from banks and stock markets and undermined flagging growth rates.
"I want the message to go out from this meeting today: No sound and solvent banks should be allowed to fall because of a lack of liquidity," Brown told reporters ahead of the closed door meeting.
"We must take the action that is necessary to sort out the failings that exist in the system," he added.
Before the talks there was sharp disagreement between Germany and France on how to proceed, with Berlin shooting down a French bid to promote a joint European bailout fund similar to the US package.
But when Sarkozy welcomed the German chancellor to the summit, the pair were careful to appear in agreement on the broader issues.
"We believe that in this difficult period European countries should shoulder their responsibilities, but that those who did the damage should also play their role," Merkel said.
"We are going to dicuss putting in place mechanisms of prevention. There is a high level of agreement and understanding among us about what to do to make sure this doesn't happen again," she added.
Sarkozy agreed: "You can translate everything Madame Merkel just said. I'm completely in agreement. A global problem needs a global solution.
"In today's world, Europe needs to demonstrate its will to find an answer. That will reassure the world, taxpayers, markets and savers."
But the European leaders were unlikely to agree a US style fund to underwrite institutions exposed to bad credit.
France privately floated the idea this week, European officials said, and the Dutch government talked in terms of more than 300 billion euros (416 billion dollars) being set aside by European governments.
Germany and Britain shot this down quickly, however, and the Paris talks were expected to concentrate on improving coordination between governments on financial bailouts and on reform to accountancy rules.
Before leaving London, Brown said he would call for the early release of a previously announced 15-billion-euro (21-billion-dollar) European fund to help provide small business loans.
France still sees the summit as an opportunity to push for more state regulation in place of the free market approach of recent years that many blame for allowing the crisis to develop.
Ahead of the summit, Sarkozy met with the French head of the International Monetary Fund, Dominique Strauss-Kahn.
"President Sarkozy wants the Europeans to be coordinated. He wants a collective response. He wants to avoid a lack of solidarity between Europeans. This is the right response," Strauss-Kahn told journalists after his meeting.
"In the eurozone we haven't yet undergone trial by fire. This is a trial by fire. Europe, and in particular the eurozone, needs to show it is capable of responding in a crisis," he said.
Last week, when the financial storm hit European banks, Sarkozy urged the Group of Eight industrialised powers "to establish the basis of a new international financial system."
The four leaders were to hold two hours of talks at the Elysee Palace followed by a working dinner. A press conference was planned for later in the evening.
Britain, France, Germany and Italy are Europe's representatives on the G8.
They were joined at the summit by European Commission president Jose Manuel Barroso, Jean-Claude Juncker, who chairs the eurozone single-currency group and Jean-Claude Trichet, president of the European Central Bank (ECB).
Copyright © 2009 AFP. All rights reserved. More »
