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France and Germany challenge G20 leaders to push for stronger regulation

Article published on the 2009-04-01 Latest update 2009-04-01 14:17 TU

Germany's Chancellor Angela Merkel and French President Nicolas Sarkozy (R) at an EU leaders summit in Brussels on 20 March 2009.(Photo: Reuters)

Germany's Chancellor Angela Merkel and French President Nicolas Sarkozy (R) at an EU leaders summit in Brussels on 20 March 2009.
(Photo: Reuters)

French President Nicolas Sarkozy challenged other G20 leaders on Wednesday to use the London summit to crack down on tax havens, adding that Paris and Berlin are not content with current drafts for an accord. He threatened to walk out unless there is a commitment to tough regulation of global finance and curbing offshore tax havens.

Sarkozy said he spoke to German Chancellor Angela Merkel late Tuesday that they agreed that details to the latest deal "didn't add up".

"Neither France nor Germany are satisfied with the proposals as they currently stand," he told Europe 1 radio, hours before leaving for the G20 summit in London.

"But now is the time for action," he said. "It would be perfectly unacceptable for there to be no concrete action within days [of the summit]."

"We have said very clearly that we want a clear definition of a tax haven, lists of financial centres that do no co-operate with OECD criteria, and to draw consequences of that."

Sarkozy also reiterated his threat to walk out unless the summit heeded his advice for stronger regulation.

Jurgen Michaels, a senior Citibank economist, told RFI that the summit might not lead to the result Sarkozy is hoping for.

Analysis: Jurgen Michaels, a senior Citibank economist

01/04/2009 by Daniel Finnan

"There are existing differences, especially in the question of financial regulation, where Germany and France want to go for much more strict criteria for hedge funds and other financial institutions and that seems not to be backed by the US and the UK," he says.

"It will be hard to have a full-fledged plan after this summit to come up with future regulation but they can at least give some sort of guidelines what they want to implement but the details will be at a later stage."

US President Barack Obama responded to France's challenge by urging leaders to co-operate.

"We have a responsibility to coordinate our actions and foucse on common ground, not our occasional differences," he said. "I came here to put forward ideas but also came here to list and not to lecture."

British Prime Minister Gordon Brown said he was confident Sarkozy would not walk out, saying Sarkozy "will be at the first course of the dinner and that he will complete the dinner".

Sarkozy and Merkel were scheduled to hold a press conference later on Wednesday to press their demands on other leaders.