French President Francois Mitterrand today called for a special meeting of the International Monetary Fund "at the highest level" to restore stability to the world financial system by establishing "a new Bretton Woods" arrangement.
The Bretton Woods conference in 1944 established the postwar international monetary system and the institutions supporting it, including the International Monetary Fund and the World Bank.
In an address to foreign, trade, and finance ministers from 24 industrialized countries, Mitterrand also suggested obliquely that France might reconsider its participation in economic summits organized by the United States and its allies unless French interests were taken more closely into account. His comments were clearly timed to coincide with preparations for the seven-nation summit in Williamsburg, at the end of this month.
The French leader used the ministerial meeting of the Organization for Economic Cooperation and Development to outline what his position will be at the Williamsburg summit. In a touch of Gallic showmanship reminiscent of Gen. Charles de Gaulle, he effectively upstaged the OECD session by inviting the ministers to the Elysee presidential palace to hear his call for a conference to establish a new monetary system.
Among the changes Mitterrand apparently would like to see discussed is the possibility of going backed to a system of fixed currency exchange rates. The system decided at Bretton Woods collapsed in 1974, and currencies have been permitted to float in relation to one another. The French government has said for some time that it would like to see the creation of a new monetary order resting on three pillars: the dollar, the Japanese yen and the joint European currency unit (ECU).
Observers said that the tone and content of Mitterrand's speech appeared designed to emphasize the differences between the French and American approaches to international economic problems, and raise the stakes at the forthcoming summit. France's Socialist government has blamed the United States for some of its domestic economic difficulties, criticizing high U.S. interest rates and the rise of the dollar on European money markets.
Mitterrand said that without "a new Bretton Woods," there is "no salvation."
Calling for "a coherent economic system . . . adapted to the economic conditions of the end of the century," Mitterrand said: "In order to facilitate these reforms, I would like a meeting of an international monetary conference at the highest level to be organized within the framework of the IMF."
There was no immediate reaction to Mitterrand's proposal from other ministers attending the OECD session, but it seems unlikely to be acceptable to the United States. At a breakfast this morning for journalists, U.S. Treasury Secretary Donald T. Regan said it was "premature" to start thinking about linking the dollar, the yen and the European currency.
Regan said that any sort of mechanism linking the currencies would have to wait until industrialized economies were more in line with each other.
The French government has a particular interest in currency stability. Since last March, the dollar has risen by 8 percent against the French franc, a development that jeopardizes the chances of success of a package of austerity measures designed to restore this country's economic health. The dollar's rise means that the price of essential imports such as oil will go up.
Mitterrand recalled the experience of the last western economic summit in Versailles last year when the Europeans thought they had secured an American promise to intervene more in the money markets. He asked what purpose was served by the multiplication of such summits if, as he implied, agreements were not kept.
Referring to Williamsburg, he added: "We shall see if we are on a good road. From this, each person will draw the consequences as to the usefulness of this type of meeting."
This was interpreted as a clear signal of French intent to review its participation in future Williamsburg-type summits unless it is satisfied with the results. It was not clear, however, whether Mitterrand really intends to carry out his threat or is merely attempting to strengthen his negotiating hand.
In an obvious reference to U.S. economic policies, Mitterrand said that nobody contested the need for a massive reduction in excessive budget deficits that led to "exaggerated rates of interest" and reduced "the funds available for investment."
In an apparent dig at Reaganomics and the insistence of the U.S. administration on relying on the laws of the marketplace, Mitterrand said: "Neither market forces nor the game of the institutions has succeeded in dominating the crisis up until now."
The French leader put a great deal of emphasis on western solidarity with developing countries, calling for "an emergency plan for Africa."