EU LEADERS PRAISE G20 SUMMIT OUTCOMES,

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SUBJECT: EU LEADERS PRAISE G20 SUMMIT OUTCOMES,
OUTLINE EU NEXT STEPS


1. (SBU) SUMMARY. EU leaders expressed public and
private approval over the G20 Financial Summit
discussion and adoption of a detailed action plan.
French President Sarkozy, British PM Brown, European
Commission President Barroso and Economic and
Monetary Affairs Commissioner Almunia, all of whom
attended the Summit, praised the event as an
important step forward in coordinating global
responses to the financial crisis. President
Sarkozy announced he will hold a follow-on
conference in January in parallel with the G20
process. Commission sources indicated the Summit
was helpful in getting major emerging market country
buy-in to key regulatory and fiscal responses to the
crisis, but said that individual G20 participant
participation varied dramatically. The EU is now
focused on internal crisis responses, including
passing existing legislative proposals on capital
requirements and credit rating agency regulation,
and presenting new proposals to stimulate demand and
regulate hedge funds and private equity. END
SUMMARY.

EUROPEAN LEADERS REACT FAVORABLY TO SUMMIT
--------------


2. (U) European leaders welcomed the G20 Summit
statement as a significant step in coordinating
joint global action to counter the financial crisis.
French President Sarkozy described the U.S. attitude
to financial regulation as representing a Qhistoric
shift because of the declarationQs promise that Qall
financial markets, products and participants are
regulated or subject to oversight.


3. (U) British Prime Minister Gordon Brown welcomed
the SummitQs rejection of protectionist tendencies
and said that Qit is the first time that a meeting
of world leaders has instructed ministers to come to
an agreement [on global trade], and I think that we
will see an agreement in the next few weeks.


4. (SBU) President SarkozyQs office announced
November 18 that France will host a January
conference of world leaders and experts, to
QcomplementQ the G20 Summit process, entitled QNew
World: Values, Development and Regulation.Q The
stated goal of the meeting is to seek ways out of
the financial crisis. The announcement said British
ex-PM Tony Blair would co-host, and that Qnotable
economists and political thinkersQ including Joseph
Stiglitz, Amartya Sen and Francis Fukuyama would
attend. SarkozyQs office said the meeting is meant
to be a more informal forum than the G20 process and
will take no decisions. (Comment: the conference
announcement indicates a QsocialQ European bent to
the discussion, likely to veer far from our market-
focused crisis response efforts. End Comment.)


5. (U) European Central Bank President Jean-Claude
Trichet said that there is a need to Qintroduce a
framework to dampen the inherent tendency for

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financial systems to cause periods of booms, by
building up imbalances, and then to go through
busts.

BARROSO EFFUSIVE ON SUMMIT RESULTS
--------------


6. (U) In remarks to the European Parliament
November 18, European Commission President Jose
Manuel Barroso had high praise for the G20 Summit
results: "In my personal opinion, this first G-20
meeting definitely marks a new era in the collective
steering of the global economy" and "last weekend, I
saw an open-mindedness, even among developing
countries, that wouldn't have been there a few
months ago. It is time now for Europe to make its
mark."


7. (U) Barroso said the Washington Summit paved the
way for a new global governance model based on the
free market but also on the principles of the social
market economy the EU values so much. Barroso
emphasized the EU's resolve to address the global
financial and economic crisis in parallel with other
global issues such as the Millennium development
goals, climate change, food security, poverty and
disease. "It would be obscene to discuss the
financial system without thinking of the people that
do not have access to food or clean drinking water,"
he said.


8. (U) The Commission President told MEPs that the
Commission would present an economic recovery
program on November 26. He said such support
measures would need to be "timely, targeted and
temporary," and Qaimed above all at limiting the
crisis on citizens.Q Barroso said the economic
tools chosen should Quse all levers available;
fiscal, structural and regulatory at European and
national levels in a coordinated manner.Q He
believed the current crisis was an "excellent
opportunity" to show that investment in clean
technology/energy to fight climate change was not
detrimental to economic growth.


9. (U) Barroso, in presenting the CommissionQs 2009
work program, said the EU needs a budgetary policy
to promote demand, make use of synergies of member
states and avoid negative spill-over from the
financial crisis. He asked the Parliament to
approve rapidly the CommissionQs legislative
proposals on bank recapitalization, deposit
guarantees and credit rating agency regulation. He
added that Internal Market Commissioner McCreevy
will put forward legislative proposals on hedge
funds and private equity as early as December 3.
(Note: Parliament had asked for these proposals in
reports issued earlier this year).


10. (U) Barroso speculated that the next U.S.
Administration could bring the U.S. closer to the
European model of regulated markets with wide social

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safety nets by saying that Qit is not Europe that is
following the American model, it is America that is
considering a more European model.

COMMISSIONER ALMUNIA PLEASED WITH SUMMIT OUTCOMES
-------------- --------------


11. (SBU) Elisabetta Capannelli of Economic and
Monetary Affairs Commissioner AlmuniaQs cabinet
(protect) told USEU November 18 that the
Commissioner, who attended the Summit with Barroso,
is very happy with the Summit outcomes. She
explained that Almunia was pleased by the detail in
the Summit declaration and action plan, and credited
the G8 sherpas (particularly from the U.S.) and the
Treasury Deartment for crafting a strong plan. She
noted that the Commissiner expressed dismay at
press accounts suggesing the Summit accomplished
little. She calle press coverage of the Summit
Qunfair and inaccurate,Q and thought personally that
the action plan commitments fit well with EuropeQs
own efforts at financial crisis recovery.


12. (SBU) Capannelli said that Commission G8 Sherpa
Joao Vale de Almeida (BarrosoQs Chief of Cabiet)
and ECFIN Director General Marco Buti worked with
other sherpas until the morning of the Sumit to
finalize the declaration and action plan.

VARIED ROLE OF G20 PARTICIPANTS
--------------


13. (SBU) Capanelli had heard that Australia was
extremely helpful during the Summit discussion, with
Brazil playing a good role on Doha and governance
issues. She added that China expressed Qvocal
oppositionQ to heavy emphasis on redressing global
imbalances, resulting in this being watered down in
the final text. India, she said, was silent for
much of the discussion, Argentina was fairly quiet,
and Saudi Arabia offered no real input.


14. (SBU) She noted that Brazil, India, China and
South Korea all pushed for the G20 to continue as
the key forum for financial crisis summitry going
forward. She said the Commission continues to have
concerns over whether the G20 configuration is
appropriate for this work over the longer term.

EU INSTITUTIONS WORKING ON INTERNAL CRISIS RESPONSES
-------------- --------------


15. (SBU) Capannelli said that the EU institutions
are concentrating now on implementing internal
measures to address the crisis, and managing high
market/public expectations for action. She
reaffirmed that the Commission will issue a
Communication November 26 proposing a package of EU
and member state measures, including additional
stimulus measures, designed to address the crisis;
these will need to be approved by the December
ECOFIN and December 11-12 European Council meetings.

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16. (SBU) USEU will report additional EU feedback on
the Summit, including after Ambassador meets with
Commissioner McCreevy November 20.

SILVERBERG