Rush Job

Tuesday, November 11, 2008

PRESIDENT NICOLAS Sarkozy of France is in a hurry. With the global economy in crisis, and his own tenure as temporary head of the European Union expiring at year's end, he wants multilateral action to fix the financial system, and he wants it now -- or at least not later than Nov. 15, when leaders of 20 major nations assemble in Washington for an economic summit. "We demand to be heard, and quickly," Mr. Sarkozy said Friday. "I am not going to be participating in a summit of polite conversation." The French leader clearly feels empowered not only by the actual urgency of the situation but by a sense -- widely shared among his constituents and the voting publics of many other European countries -- that, as the crisis was made on Wall Street, the solution should be made in Brussels. "The crisis is worldwide, but we know where it started," Mr. Sarkozy opined.

It seems like only yesterday that the European Union was bemoaning President Bush's my-way-or-the-highway approach to international affairs. But compared with Mr. Sarkozy's response to the economic crisis, Mr. Bush has been a model of diplomatic reticence. Mr. Sarkozy believes either that publicly excoriating the host nation will lay the groundwork for a useful summit or that, even after Barack Obama's election, there is political mileage to be gotten from exploiting anti-U.S. sentiment in Europe. But Europe's comfortable belief in unique American guilt for the economic crisis is not altogether accurate. European banks are in trouble not just because the subprime mortgage contagion spread from Wall Street but also because of their own mistakes and Europe's homemade structural economic flaws. Or has Mr. Sarkozy never heard of Iceland?

Rather than issuing demands and pointing fingers, Mr. Sarkozy -- like other G-20 leaders -- should be soberly assessing what can be achieved at a meeting hosted by a U.S. president who will be leaving office in two months. Mr. Sarkozy's preferred option -- re-regulation of the global economy along French state-directed "dirigiste" lines -- fortunately may not be feasible. But the summit could set up working groups to study practical methods of coordinating liquidity and capital requirements for banks, making derivatives trading more transparent and the like. Now that even China has opted for economic stimulus, the summit might also be a good occasion for participating countries to agree on common principles for fiscal policy, so they do not wind up playing the old game of beggar-thy-neighbor. The International Monetary Fund needs shoring up. So does global free trade, but since Mr. Sarkozy did his bit to scuttle the Doha round of trade liberalization talks, someone else will probably have to demand progress in that area. Whatever happens this weekend will necessarily be tentative; a new American president will arrive Jan. 20, and he will want to put his stamp on any policy changes. Working in genuine cooperation with Europe, Japan and emerging countries, he will have a good chance to achieve reform.

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