CANADA SUPPORTS INTERNATIONAL FINANCIAL SUMMIT

C O N F I D E N T I A L OTTAWA 001362 SIPDIS NSC FOR BROWN STATE FOR EBB/IFD/OMA AND WHA/EPSC E.O. 12958: DECL: 10/22/2018 TAGS: CA ECON EFIN PREL SUBJECT: CANADA SUPPORTS INTERNATIONAL FINANCIAL SUMMIT Classified By: ECONOMIC MINISTER-COUNSELOR ERIC BENJAMINSON. REASON 1. 5 (B) AND (D). ¶1. (sbu) Summary: CANADA fully supports the November 15 Financial Markets and World Economy Summit, and is committed to market-based financial systems and liberalized trading markets, according to senior Canadian financial officials. Canada will work closely with the United States and the G-7 countries to identify and implement solutions to the world financial crisis. End Summary. ¶2. (c) CANADA supports President Bush's call for a Summit on Financial Markets and World Economy, and expects to back continued U.S. and G-7 support for market-based financial systems and liberalized trading markets, Deputy Finance Minister Robert Wright and senior Finance officials told EMIN and Econcouns on October 22. Wright emphasized that whatever direction and shape the international crisis response might take, CANADA shares common interests with the United States and our two countries would also together find a sensible way forward. ¶3. (c) Associate Deputy Minister (ADM) of Finance and G-7 Sous-Sherpa Tiff Macklem stated that while the international community appears headed toward "a very large global rethink" on financial matters, it was important to protect market-based approaches. He said there is a lot of anger toward the United States in Europe and there is the potential for a backlash against open financial markets. ADM for International Finance and Trade Graham Flack said Mexican Financial Minister Carstens has called G-7 stewardship of the international financial system into question by claiming that Mexico did all the "right things" regarding its own financial system -- including opening up its banking sector -- and says that Mexico is now suffering through no fault of its own. ¶4. (c) Macklem said the United States had done a good job in acknowledging that mistakes have been made and in telling everyone that finding solutions to the crisis would take time. He said President Bush's call for an early summit followed by a series of meetings is the right strategy. Macklem stated that reaching a common understanding of the issues and agreeing on a longer-term process is more important than trying to force through "deliverables" in, say, four weeks. ¶5. (c) CANADA would have preferred a smaller group of countries and entities at the Summit, Macklem said, but understands (and is "comfortable with") inviting the G-20, IMF, UNSYG, World Bank, and the Financial Stability Forum. Macklem stated that CANADA wants to ensure, however, that the G-7 countries remain central to global financial efforts given their like-minded views on market-based solutions. Flack commented that while the G-20 could give the international response more legitimacy, it might be less efficient than a smaller group. He said the G-20 has a Qefficient than a smaller group. He said the G-20 has a tradition of study groups and looking at best practices, rather than decision making. Flack expressed his hope that the G-20 members and the other entities would come to see problems and solutions in a similar way. Visit Canada,s Economy and Environment Forum at http://www.intelink.gov/communities/state/can ada BREESE