Brown and Sarkozy unite on finance

BRITISH Prime Minister Gordon Brown said the "first priority" of Paris and London was to stop contagion from the financial crisis spreading to eastern Europe's emerging economies.

He met with President Sarkozy at the latter's woodland retreat in a sign that Franco-British relations are improving even as Paris and Berlin drift apart.

Brown and Sarkozy held talks on the financial crisis ahead of a European Union summit in Brussels on November 7 and a key meeting of the Group of 20 (G20) current and emerging powers in Washington on November 15.

France currently holds the rotating presidency of the EU, which is battling to hammer out a united strategy on how to deal with the global credit crunch, as European nations enter into recession.

Long known as an arch sceptic towards the EU, Brown was thrust centre stage this month as the 15 nations in the euro single currency used Britain as the model for a united bank rescue plan.

Despite Britain’s self-exlusion from the euro, Sarkozy invited Brown to Paris to brief eurozone members on his plan, and championed its Europe-wide adoption.

On wider reform of the international financial sector, Brown and Sarkozy have also led calls for far greater global regulation and a new role for the International Monetary Fund (IMF) to avert future crises.

In contrast, France has clashed repeatedly with its traditional European ally Berlin over the response to the crisis, with Chancellor Angela Merkel repeatedly slapping down French suggestions.

In the latest round of the tug-of-war between the European powerhouses, Merkel has led resistance to Sarkozy's proposal to create a so-called "economic government" for the 15-nation eurozone.

Sarkozy would also like to see Europe set up national sovereign wealth funds to shelter strategic parts of their economies from global turmoil – an anathema to Merkel's more laissez-faire approach.

The deputy director of the Institute for International and Strategic Research (IRIS), Jean-Pierre Maulny, said the ad-hoc cooperation between Sarkozy and Brown on the finance crisis could mark the start of a longer-term shift in Europe.

"Given the importance of the issues involved, it could have consequences for the balance of power in Europe. That could weaken and alarm the Germans," he added.

Senior research fellow at the Centre for European Reform Philip Whyte warned not to "read too much" into the thawing of ties.

"Franco-British relations are clearly a lot better than during the end of the (Jacques) Chirac years," when Sarkozy's predecessor split with Tony Blair over his decision to follow the US in invading Iraq.

He added: "But this idea that France and Britain are going to become some sort of subsitute, or are going to supplant the Franco-German relationship is nonsense.

"When it comes down to long-term considerations of France's interest, Germany remains the primordial relationship."

Photo: Sarkozy - Afp/Gerard Cerles
Brown - World Economic Forum swiss image.ch Remy Steinegger