Pre-election financial plan

Sarkozy imposes ideas on political rival

French President Nicolas Sarkozy, meeting with the national diplomatic corps, outlined his strategy for the presidency of the G8 and G20. The French leader did not act entirely correctly, given that the work of the G20 is still led by South Korea, and the main event of its chairmanship - the meeting of heads of state - is yet to come in November in Seoul. The G8 will take place only next summer in Nice, and the “French” G20 summit will take place in November 2011.

Sarkozy will obviously use the French presidency in the election fight. Presidential elections will be held in 2012, and the main potential rival of the current president is the head of the International Monetary Fund, Dominique Strauss-Kahn.

Having formally interrupted his political activities while working at the IMF, the socialist Strauss-Kahn nevertheless remains one of the most popular politicians in his homeland. Moreover, according to a poll published recently by Le Nouvel Observateur, Strauss-Kahn currently defeats Sarkozy in the elections with a score of 59 to 41%. The head of the IMF, however, has not yet made official statements about his intention to run for president, although he has made extensive hints on this matter. It is noteworthy that Martine Aubry, who heads the Socialist Party, also beats Sarkozy, but with a smaller margin: 53 to 47%. To get off to a good start in the presidential race, Mr Strauss-Kahn will likely have to leave the IMF after the fund's annual meeting in October and the G20 summit in November. But the next, “French” summit will take place right in the midst of the struggle between Mr. Sarkozy and the Socialist candidate.

Meanwhile, Mr. Sarkozy told his diplomats that he would make the topic of stabilizing unpredictable fluctuations in exchange rates and commodity markets one of the main issues on the agenda of G20 and G8 meetings. G20 countries need to take joint action to reform the international monetary order, says Sarkozy: “We must create a new structure for discussing exchange rate fluctuations.” At the same time, he noted that this issue cannot be discussed without the participation of China, which has accumulated huge foreign exchange reserves.

According to the French leader, there is a need to reduce the role of the US dollar as a reserve currency and increase the role of alternative currencies. Better coordination of global economic policies to address global imbalances is key to reducing exchange rate volatility, Sarkozy said. Another way to achieve greater stability in the foreign exchange sphere is to try to prevent G20 countries, especially emerging market countries, from accumulating excess foreign exchange reserves, he noted. South Korea, which currently chairs the G20, has been pushing for a system to prevent capital outflows similar to those experienced by emerging economies during the recent crisis and the Asian crisis of the late 1990s. In addition, Sarkozy said the G20 should consider ways to allow countries that rely heavily on external capital to “temporarily regulate their capital markets” if problems arise. Exchange rate volatility is a “real threat” to global economic growth, Sarkozy stressed. The French President noted that he is not calling for a return to a global monetary system based on fixed rates. However, he hopes to hold a conference, possibly in China, to discuss the future of a taboo-free currency system.

France's significant attention as head of the G20 will also be focused on increasing control over global commodity markets, Sarkozy noted. “Why should we regulate the derivatives market only in the financial sector? Increased control over commodity markets is possible and desirable. In this way we can limit speculation,” he said. In addition, Sarkozy believes that the G20 needs to assess the transparency of agricultural markets and study the policy of creating inventories of agricultural goods, as well as the creation by financial institutions of insurance instruments that allow importers to protect themselves from volatile prices. He also said he would propose measures to improve energy market transparency, including greater dialogue between oil suppliers and consumers, which could limit price fluctuations. Sarkozy expressed similar ideas to his G8 colleagues at a number of recent summits, without arousing much enthusiasm among them.

Andrey DENISOV, using Interfax information