FRENCH SEEK FUNDAMENTAL REFORM OF INTERNATIONAL FINANCIAL

C O N F I D E N T I A L PARIS 001895


NOFORN

DEPT FOR E AND EUR

E.O. 12958: DECL: 10/15/2010
TAGS: EFIN PREL EUN FR
SUBJECT: FRENCH SEEK FUNDAMENTAL REFORM OF INTERNATIONAL FINANCIAL
SYSTEM

CLASSIFED BY EMIN SETH WINNICK FOR REASONS 1.5 B AND D.


1. (C) The French Government's objective for the summit proposed in
President Sarkozy's speech to the UN General Assembly is to set an
agenda for rethinking the international financial system with a view
to assuring stable global growth over the long term, according to a
working-level GOF contact. Seizing the opportunity presented by
widespread political support for reconsidering the status quo, the
summit would generate a roadmap and kick off a process of reflection
of how to restructure international financial institutions and the
values and principles that should underpin that restructuring. This
would be much broader than the G7 Finance Ministers action plan,
focused on the current crisis, and much higher level than, for
instance the catalog of Financial Stability Forum recommendations,
but should give them and the work of the IMF-C, the Development
Committee etc. a coherent, forward-looking framework. Most
importantly, this should be initiated prior to the Doha Conference on
Financing for Development in order to fend off far less acceptable
currents that might emerge from the conference.


2. (C) On October 15, Embassy met with Ministry of Economy's Office
responsible for International Financial System and G8 Affairs (fully
protect) to get the French perspective on the summit on reform of the
international financial system proposed by President Sarkozy in his
September speech to the United Nations General Assembly. Although
the process is being run out of the Elysee, the Ministries of
Economics and Foreign Affairs are participating in the working groups
making preparations for such a summit which the French believe should
take place prior to the Doha conference. The Economics Ministry
contact also told us to refer to President Sarkozy's speech to the
European Council meeting in Brussels today, details of which he had
not yet seen. The main point in the speech were:

-- Europeans are finally acting in concert to confront the challenges
generated by the international financial crisis,

-- But the crisis is bigger than Europe and we must all contribute to
both resolving this crisis and ensuring that the mistakes leading to
this and previous crises are not repeated.

-- This is one crisis too many. We need to rethink the system on a
global basis and found a new capitalism based on values that put
finance at the service of business and individuals....

-- States are sovereign, but the economy is global and everyone is
affected, so as we reflect on how to proceed we need to confer also
with emerging economic powers and not forget the poorest countries.

-- Global economic governance is too fragmented. We need a new
approach involving international organizations, regulators and
standard-setting bodies.

-- We need a new Bretton Woods, a new system with all the political
legitimacy needed to cope with global challenges.

-- The EU leaders should unanimously support the proposed
international summit to be held before the end of the year,
preferably in New York, where the crisis started.

-- The summit will be a point of departure which will set the agenda,
the objectives and the values underlying this thoroughgoing, global
reform.

STAPLETON