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Business news, 22.06.2010 14:13

France, Russia vow to promote global role of G-20

French President Nicolas Sarkozy French President Nicolas Sarkozy said Saturday that he wanted to work with Russia to give developing nations a larger say in how to regulate the global economy.

Global financial institutions such as the World Bank and International Monetary Fund  created at the Bretton Woods conference in New Hampshire 1944  are outdated and must be replaced, Sarkozy told an economic forum in St. Petersburg hosted by Russian President Dmitry Medvedev.

"We all need to think about the foundations for a new international financial system. We've been based on the Bretton Woods institutions of 1945, when our American friends were the only superpower," Sarkozy said.

"My question is: Are we still in 1945? The answer here is, 'no,'" he said.

While the Bretton Woods conference took place in 1944, the International Monetary Fund was officially established a year later, when the 29 countries that had participated signed its Articles of Agreement.

Sarkozy said the United Nations has too many members to reach consensus on how to reform the global financial system, while the G8, which includes the world's eight wealthiest nations, pays too little attention to developing countries.

"Who can seriously address the big problems of the world without asking the opinions of China, India, Brazil, Mexico?" Sarkozy asked. He said the most effective platform is the G-20, a group of 20 wealthy and developing nations.

The French president pledged to work with Russia during next week's session of the G-20 in Canada to address some of the most urgent issues that have emerged from the global financial crisis, such as restricting offshore financial zones and abolishing the "law of the jungle" that he says governs the global economy.

Sarkozy also said the G-20 "should think together about a new international currency system," but he did not elaborate.

Medvedev went further, stressing the need for more reserve currencies besides just the euro and the dollar.

"We are making plans for the future. We are talking about creating other reserve currencies, and we are counting on other countries to understand this. Even the use of two currencies as strong as the euro and dollar will not insure the world against problems," Medvedev said.

John Lipsky, the deputy managing director of the International Monetary Fund, supported broadening the list of reserve currencies.

"Making, for example, the ruble an international reserve currency implies lots of strengthening of the institutions, deepening of the markets. It's a very good and plausible goal," Lipsky told The Associated Press.

France, Germany and Italy have been positioning themselves as Russia's main partners in Europe, winning preferential energy deals in the process.

Russia and France signed nearly a dozen deals on the sidelines of the forum, on issues ranging from natural gas to space. Among them was a deal for France's GdF Suez to join Russia's Nord Stream gas pipeline project, of which the French company will now own 9 percent.

But the increased cooperation has worried some of France's NATO allies, such as Poland and the Baltic states. France wants to sign a deal with Russia that calls for building four French Mistral-class warships  designed for amphibious assault  in Russian shipyards.

Sarkozy said the Cold War was over and the European Union and Russia should work closer together. He pledged to hold more regular meetings with the German and Russian leaders to "to coordinate our positions."

News source: Google Com

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