G20 summit – Press conference given by Nicolas Sarkozy, President of the Republic (excerpts)
Cannes, 4 November 2011
Hello ladies and gentlemen.
In two days of very intense discussions in an atmosphere dominated both by the gravity of the situation and the international community’s need for unity, we’ve worked on both short-term challenges to reduce the impact of the crises and, in the long term, putting the global economy back on the path of growth.
I’d like to share with you, in a few words, the three messages of the summit.
The first one concerns Europe, which has made every effort to provide a credible response to the crisis. It was essential for Europe to arrive at the G20 united. We also have the unanimous support of our partners, and it seems to me we’ve made progress on three essential points in the implementation of the 27 October agreement.
The first point is Europe’s firm stance towards Greece, which led to a crucial collective realization of the challenges for that great country’s future. The conditions are currently being created for consensus in Greece on the 26 October agreement, and we’re really delighted that the atmosphere in Greece today bears no resemblance at the end of this week to what it was at the beginning of last week.
Secondly on the European crisis, I’d like to pay tribute to the effort of Italy, who has taken the necessary measures to restore confidence, balance the budget as early as 2013 and strengthen her growth. Italy is a key Euro Area country, one of the world’s largest economies, and I want to welcome Italy’s decision to call upon the European Commission and IMF to certify the results obtained, on a quarterly basis, with the results being published and these assessments of course being made public.
Finally, we made a commitment to increase the IMF’s resources if it was felt necessary. And we established the conditions for achieving this goal. The IMF must fulfil its role as a firewall against systemic risk; at their next meeting in February the finance ministers have been instructed to deploy several options to achieve an increase in those resources: the allocation of SDRs, bilateral loans to the IMF and specific accounts at the IMF. We didn’t decide between these different methods, but the approach is indeed to boost the IMF’s resources.
The G20’s second message: we decided to use all the room for manoeuvre to support growth. The situation is in fact much more complex than in 2009; there’s no single response. Washington and London were “recovery by every means”. Toronto was “reduction measures of all kinds”. Cannes has distinguished between the countries’ different situations, and the final communiqué says those countries with solid budgetary situations – I’m thinking of China and Germany – will activate the automatic stabilizers and are ready to take new measures to support growth. So we’ve got away from the status quo in Seoul, which gave rise – as you doubtless remember – to differences between the countries on this issue. Moreover, those countries which have large foreign trade surpluses are pledging to increase domestic demand and speed up the flexibility of their exchange regimes in order to reduce currency reserve accumulation in the medium term. You can see very clearly the great country that has made these commitments, and that’s excellent news.
Finally – and it’s a great novelty – the Action Plan for Growth and Jobs fully takes into account the social dimension of globalization. It’s the first time the G20 countries, and particularly the emerging countries, have expressed their determination to establish social protection floors. Furthermore, there’s a commitment from the whole G20 to saying that social protection, the social model, the level of protection favours growth and doesn’t run counter to growth. I think it’s the first time an international summit has so clearly signalled, as a goal, that a high level of social protection favours growth.
Financial regulation/tax havens/Financial Stability Board
Final point: big steps forward, it seems to me, on the French presidency’s priorities on financial regulation. We decided to publish, or rather the Financial Stability Board will today publish a list of the 29 large, international systemic banks, and we decided that they’ll be subject to obligations with regard to transparency and enhanced regulation. Second point: the Global Forum’s publication of 11 countries we regard as tax havens: Antigua and Barbuda, Barbados, Botswana, Brunei, Panama, the Seychelles, Trinidad and Tobago, Uruguay and Vanuatu don’t have legal frameworks adapted to the exchange of tax information. We don’t want any more tax havens. The message is very clear. We don’t want any more of them. And those countries which continue to be tax havens, through opacity in banking, will be deemed pariahs in the international community. Things have made a lot of progress; they must make further progress. Let me add that Switzerland and Liechtenstein didn’t qualify in phase two until they put right certain failings that have been identified. The credibility of all the commitments against tax havens lies in the systematic publication, at each of our summits, of a list of those countries that won’t do what is needed to get away from unacceptable behaviour. We decided not to tolerate that. I’d like to ask you to remember that three years ago in London I had to threaten to leave the room [unless they published] a list of non-cooperative jurisdictions, because at the time people wouldn’t even utter the phrase “tax haven”. So you can see how much progress has been made.
Finally, we decided to reform the FSB to make it a real global finance organization. Legal personality, financial autonomy, the ability to reach agreements with other organizations, and opening up its steering committee to the treasuries of the large financial centres to ensure the G20’s decisions are implemented.
Capital control/Special Drawing Rights/IMF surveillance
On the international monetary system, it’s a long-term project; when France put it on the agenda it sparked a whole load of sceptical comments. Today everyone believes it’s the project of the coming years. So we set a framework for managing capital flows; using capital control – and this is very important – is now accepted as a stabilization measure. There was a mistake that consisted in seeing, drawing a parallel between free trade and the free movement of capital; capital control may prove necessary and is recognized as a stabilization measure.
There’s also the review of the SDR basket in 2015, which will be able to take in new currencies. The yuan is a clear candidate, given China’s commitment – which I noted with satisfaction – to gradual convertibility.
The reform of the IMF’s surveillance to broaden it out to new areas: exchange rates, capital flows, the contagion effect: we’re making big changes to the IMF’s missions. Finally, new IMF facilities: a short-term liquidity line to tackle systemic shocks.
Agriculture/development/innovative financing/financial transaction tax
On agriculture, it’s the first time agriculture has been on the G20’s agenda. It really was a question we didn’t talk about. An increase in production is essential in order to feed the world’s population. Transparency on agricultural markets. We secured the regulation of commodity derivatives markets. There’s an agreement to regulate those markets and players in those markets in order to combat market abuses and above all give regulators the power to set position limits, to prevent a single player from being able to manipulate rates, through disproportionate purchases or sales. When Bruno Le Maire, François Baroin and I began, we didn’t think we’d be able to achieve such a result at a summit of this kind. Finally, emergency community stocks and a ban on export restrictions for purchases by food programmes.
As regards development: innovative financing and infrastructure. Innovative financing features in the final communiqué, with explicit reference to the financial transaction tax. A number of countries want to get innovative financing removed and the reference to the financial transaction tax removed from the communiqué; they’re still in there.
What stage are we at on this? There are now a number of countries which have joined France’s battle. Let me remind you that when France began this battle she was absolutely alone. Today, besides France, the European Commission, Germany, Spain, Argentina, the African Union, Ethiopia, South Africa, the United Nations Secretary-General – and Brazil, who has told us of her interest in the demarche – are in favour of the principle of a financial transaction tax. The text of the declaration states that the G20 acknowledges the initiatives in certain member countries to tax the financial sector for various purposes, including a financial transaction tax to support development. You can’t imagine what a battle such a tax represents.
Let me be very clear: France believes that, in order to be meet the development challenges, there has to be innovative financing, given the deficit in every country. And we said in the communiqué that, in Bill Gates’ report, there are a number of innovative financing mechanisms and that every country pledges at least to adopt one of these.
Second point: from a moral point of view we believe it’s absolutely essential for people throughout the world to know that the financial players who led the world into the mistakes we’re aware of will be made to contribute financially to repairing the damage. That’s the purpose of the financial transaction tax.
So, the European Commission project – which is the only concrete project on the table and which shows the technical possibility of a financial transaction tax – will be discussed by the Council of Ministers and heads of state and government at the beginning of next year. France will fight for this tax to become a reality, and she believes that waiting for the rest of the world to adopt such a tax isn’t a good enough argument for refusing to implement it. Clearly, to get this result we’re going to do everything to draw on public opinion in every country.
I might add that I was pleased that Barack Obama was receptive to the principle of the financial sector helping resolve the crisis. This doesn’t go as far as a financial transaction tax, but he was receptive to the idea of financial players making a financial contribution to find a way out of the crisis.
Let me remind you that we started from a situation of absolute deadlock and that the financial transaction tax is now up for debate, and I hope it will actually be implemented in 2012.
There are still a lot of things to resolve, particularly on allocating the product of the future tax, but it’s very interesting because when you discuss allocating the product of the future tax it’s because you believe the principle of the tax has made so much progress that it’s appropriate to discuss allocating the product of it.
France believes a large share, yet to be defined – a majority of the total – should go to development.
Finally, we had a debate on global governance, with a very good report by David Cameron.
There you are, ladies and gentlemen; I apologize for no doubt talking for too long. I’ll now take your questions.
Euro Area crisis/G20/IMF
Q. – How many G20 countries to date have pledged to provide financial support to help the Euro Area countries get out of the crisis? And is it true that you are considering pooling the SDRs of the Euro Area countries to supplement the EFSF? My second question on a different subject is: did you make any progress on a permanent secretariat for the G20? Do you think that Mexico, who will assume the presidency, will move forward in that direction?
THE PRESIDENT – All the G20 members have agreed that, at the February meeting, they will strive to increase the IMF’s resources. It’s a general agreement. Everyone: the developed countries, the emerging countries – a general agreement. And a second agreement: to consider and work on ways the IMF and the European fund can cooperate to expand the European fund’s capacities. And SDRs are clearly identified as being one of the paths the finance ministers will work on.
Does that mean it will be this path we choose in February? I wouldn’t venture to tell you that, but here’s the timetable: by February, [we’re supposed to have] a method and a general agreement by all parties, from the United States to the emerging countries. With regard to the G20, we decided to formalize the troika – that is, the current presidency, incoming presidency and outgoing presidency – which means that next year, France will be part of the Mexican presidency’s troika.
The G20 is not enthusiastic about the establishment of a secretariat-general. That’s because it must remain a forum for very free, informal dialogue, and we want the presidencies to be deeply involved – not under the control of a secretariat-general.
There you are, I think that more or less sums up the spirit of the discussions, and it’s the only point of David Cameron’s report – excellent, by the way – on which there wasn’t a complete consensus.
Q. – In a 2008 speech before the Greek parliament, you said you felt Greek. So what does it mean for the future of the Greek people if there were to be a change of government during the night?
Second question: you have conveyed a message of credibility for the euro and Europe. Did you also try to convey a message of confidence to potential investors, particularly emerging countries such as China, whom you have asked to place part of their reserves in euros?
THE PRESIDENT – Regarding Greece, I’ve said everything there is to say. I’m happy about the complete change in the political atmosphere in Greece. Because basically, what was shocking wasn’t the principle of a referendum. Appealing to the people is never shocking – you could even say it’s an essential thing for Europe. What was shocking was that none of Greece’s partners was informed. Second, you can’t have a referendum on one plan, because if you hold a referendum on the 27 October plan, you have to be prepared to hold a referendum on all subsequent plans, and why haven’t you done so for previous plans? The only important issue, if you want to hold a referendum, is Greece’s membership of the euro, and I think this message came across loud and clear.
It’s a message of friendship towards the Greek people, a message we wanted to send to both the opposition and the majority. After that, it’s up to the Greek people to choose their leaders and the policy they want to see carried out. It’s not up to us, but we laid down a red line and I don’t regret it. As for the message of confidence for investors, when you invest in a currency you want to see it rise in value, not fall. I don’t want to be unpleasant, but if you compare the euro to other world currencies, is it going up or is it going down? It’s going up. So those who put their money in the euro made a pretty good investment, which proves they were right to be confident.
In any case, there is one resolution that is very simple, reiterated by Chancellor Merkel: we’ll fight to defend Europe and the euro. Neither speculation nor anything else will have the last word. Europe is the most inspiring project ever imagined by man in the service of peace, and we have no intention of allowing it to unravel under external pressures. If it comes apart, it will be because the people have made that decision, and certainly not because it was imposed on them. That message is very clear, and both Germany and France are in full solidarity with that objective. (…)
Q. – Obviously for you and Mrs Merkel, the most powerful governments in Europe have tried to change the governments in Italy and Greece. How can that be fair, and once started where will it end?
THE PRESIDENT – (…) We didn’t want to change the governments in Greece or in Italy. That’s not our role and it’s not my idea of democracy, but obviously in Europe – and perhaps the fact that you belong to an island, in an insular sense, means that you don’t quite understand the intricacies of the European enterprise, and I tell you this from the heart – there are rules, it’s not a free-for-all, and if we exempt ourselves from these rules then we leave Europe ourselves. It’s that simple.
Now, with respect to our Greek friends, whatever government they establish, we will work with it. Since I’ve been President I’ve worked with Mr Karamanlis and with Mr Papandreou under excellent conditions. The same is true for Britain; I’ve worked with Mr Brown and with Mr Cameron under excellent conditions. We don’t have to choose governments. And Italy has a Prime Minister, Silvio Berlusconi, who has presented a plan, and this is a democratic reality we face, and Silvio Berlusconi – conscious of the doubt in the markets with respect about the reality of implementing the plan – asked the Commission and the IMF for what we call “monitoring”. Why would you think we want to create the conditions for political changeover in one country or another? That would be madness.
The crux of the matter is Europe’s reconciliation with the people; but this reconciliation cannot be achieved through the systematic violation of all the rules. In order to achieve solidarity we have to tell our compatriots “Okay, we will lend money to a particular country.” But this country cannot exempt itself from the rules that we impose on our own citizens. No, I really believe and I assure you that this is a hollow debate. The real debate involves bringing Europe closer to the people. That’s the key issue, but ensuring compliance with the rules doesn’t mean increasing the distance between Europe and the people. Rather, when they’ve been exempted from these rules, we’ve increased the distance between Europe and the people. (…)
Q. – Three years ago, in your Toulon speech, you called for a reform of financial capitalism. Three years and six G20s later, what progress do you think has been made on this great ambition?
THE PRESIDENT – Frankly, we’re no longer in the same world. There are 11 tax havens. When we began in London there were several dozen; the phrase wasn’t mentioned. National and regional supervisory bodies have seen a significant increase in their powers. Banks have been recapitalized in circumstances never seen before. A distinction has been made between non-systemic banks and systemic banks, which have had stricter rules imposed on them. I can’t recall things ever progressing as fast in three years, even if there’s still a lot of work to do. A lot. But pretty staggering progress has been made. One example: at the G20 we can talk calmly and include the words “financial transaction tax” in a communiqué. Yet last year people wouldn’t have believed me if I’d said this were possible. The NGOs I spoke to about this were perfectly aware that the Robin Hood tax, the Tobin tax was something which was discussed between NGOs but never round a table with heads of state and government. Absolutely never.
Pay restraint, conditions laid down for bonuses, the existence of bonuses and “maluses” and the payment of bonuses over three years, not one – this is a totally different world even from the one you’ve known. Does this mean the world is perfect? Certainly not. Does this mean there’s more work? Certainly not. But let’s all acknowledge – and you follow these things – that staggering progress has been made on this. It’s become a normal topic of conversation between finance ministers; these subjects never used to be discussed – not even in Europe. Even in Europe, Andorra, Monaco and other countries it was taboo. Today they’ve signed tax agreements, which have removed them from the blacklist. Would you have believed this possible in the space of three years?
Q. – While we’re on the subject, NGOs are slightly disappointed and feel that the time spent on sorting out the Euro Area’s problems has rather prevented the G20 from making progress on the priorities you set. Do you share this point of view?
Second question on an unrelated subject: the possibility of a pre-emptive strike on Iran is new on the agenda. Did you speak to President Obama about this, and is it a worrying prospect for you?
THE PRESIDENT – I understand the NGOs’ disappointment: they’re disappointed because the media talked so much about the crisis that people talked less about poverty in the world, hunger in the world and the need for development. That’s true; it’s indisputable. I share that disappointment with them. For all that, fundamentally there’s been progress on this, and they’ve told me so, too: much more than they imagined. Do you think there was a single union in the world that imagined that the B20 and L20 – the employers and unions – would meet? That with countries like China and India around the table, we’d be talking in the communiqué about a minimum social [protection] floor? Nobody imagined it could have progressed to this point. Moreover, you yourself say in your question, “slightly disappointed”. For a start, that’s a great thing, because the role of an NGO is to be intransigent, to demand that things move forward, to find there’s never enough [progress]. It’s completely natural; it’s enthusiasm for the good causes they defend.
Anyway, everyone can nevertheless see clearly that in terms of the French presidency’s goals, you can’t say there hasn’t been spectacular progress vis-à-vis what was stated. The Ministre d’Etat, Minister of Foreign Affairs, will correct me if I’m wrong: when we announced the French presidency’s goals [people said]: “They won’t make it”, “It’s much too ambitious”, “It won’t produce results”. I would rather have told the NGOs: “There you are, it’s been decided: the whole world is convinced about the financial transaction tax.” But who believed in that? Who believed in that? Who thought it was possible? No one: not a single NGO. You know, the NGOs are serious, passionate people – intransigent but serious. They knew perfectly well it wasn’t possible, but the fact that it’s still on the table and in the communiqué represents considerable progress. The fact that I can give you the names of about 10 countries that are sympathetic to the tax – we were alone at the beginning of the year – plus Germany’s determined commitment, and that of the Commission, represents progress. Now, you may find me optimistic, but you know, it’s better for me to be that way in my job, because there’s not much chance of you being that way for me. Besides, it’s not your role; I gladly recognize that.
A pre-emptive strike: I don’t even know what that means. Iran’s behaviour and this obsessive determination to acquire a military nuclear capability is a violation of all the international rules. And France condemns – strongly condemns – Iran’s failure to comply with the international rules. A pre-emptive strike: you’re getting there quickly! It doesn’t happen that way! There’s dialogue; when dialogue doesn’t succeed, there are sanctions; when sanctions aren’t enough, we impose more sanctions. The international community can’t resolve everything through weapons. You’ll tell me we did so this year, whether it was in Côte d’Ivoire or Libya; but we did it under a United Nations mandate, not pre-emptively for Benghazi, very fortunately: we didn’t wait for disaster. But in the end, these are very serious ideas and they’re not things heads of state talk about in that way: “Ah, suppose we were to carry out a pre-emptive strike…”! No, the only thing we’ve said is that if Israel’s existence were threatened France wouldn’t sit back, because we believe the existence of Israel – after what happened during the Second World War – is a major political fact of the 20th century, and we’re not prepared to compromise. But in the end, there is a path, after all, [between] the pre-emptive strike you mentioned and the effectiveness of sanctions. (…)
And finally, to conclude, if there’s something to be learnt from this crisis G20 summit – yet another one – it’s that it is possible to act, you must never give up, people are watching us, people have suffered as a result of the crisis, and that we must provide them with responses and the responses don’t lie in easy answers, populism and abandonment. I draw a link between the financial transaction tax, the reduction of our deficits and the referendum in Greece: namely that we don’t want abandonment, we don’t want populism, we want action with results, in order to get the world out of the crisis it’s in. (…)./.