PARIS (Reuters) - French President Nicolas Sarkozy takes his campaign for greater global food price and currency stability to Washington next week when he seeks Barack Obama’s support for France’s goals as head of the Group of 20 powers.
Soaring food prices and riots in places like Algeria offer Sarkozy ammunition to press for more coordination between G20 governments to combat wild swings in vital commodity prices as well as exchange rates versus the long-dominant U.S. dollar.
The French president wants to use his run at the G20 helm in 2011 to start, if not finish, reforms of the monetary system at a time when many countries are tempted to let their currency drop to promote exports and growth after the worst downturn since World War Two, even if that can be at each others’ expense.
Paris is also pressing for international efforts to impose greater transparency in commodity markets trading and pricing, and for tougher regulation of trading in commodity derivatives along the lines pursued for other investment derivatives in the wake of the financial markets crisis that preceded the economic downturn of 2008-2009, and the government debt crisis now.
“As we sense it, more multilateralism is the best answer to the increased instability in the world,” a Sarkozy adviser said of a meeting happening on Monday in Washington, where Sarkozy will be accompanied by wife and ex-model Carla Bruni-Sarkozy as well as his finance and defense ministers.
“We want to broach this thinking with the Americans and see if they are willing to join in such an approach, whereafter we can produce more precise proposals,” said the advisor, who spoke to reporters on condition of anonymity.
South Korea, which has just handed the rotating presidency of the G20 to France, said on Friday working-level meetings had already begun on food price rises that have revived fears of a repeat of the 2008 food crisis.
The problem is moving up the political agenda in Asia, where China has recently sold corn, sugar, rice and other commodities out of state reserves to cool prices.
In North Africa, hundreds of youths clashed with police over food prices and chronic unemployment in several cities this week, including in the capital.
Some of the concrete ideas being considered for G20 talks include: obliging commodity investors to trade through exchanges rather than less transparent over-the-counter transactions and pressing for better sharing of data and crop forecasting.
French Prime Minister Francois Fillon underlined the point this week when he told a conference in Paris one of France’s top G20 priorities was to find a collective response to “excessive volatility” in commodity prices, notably for food and energy.
The French president who played a key role in cooordinating a European response in the earlier stages of the financial crisis in his own part of the world, is also keen to make some headway as G20 presidency on his long-held view that the time has come to wean the world off decades of dollar-dependence.
“For us this is not about reducing the dollar’s role. We want the dollar to continue to play a major role but exchange rate forces are inexorably set to change, which brings with it phases of major financial tension and great instability,” said the Sarkozy adviser.
With the rise of the likes of G20 members China and Brazil, Sarkozy is seeking to rally the group as a whole to the idea of a more diversified monetary system after decades where the U.S. dollar has served as the world’s reserve currency and a major unit of international trade settlement.
“We want to encourage the international development of other currencies, such as the yuan,” said the adviser.
Brazil has been blazing a trail to curb speculation and a rise in its own currency. Its central bank announced further measures this week that increases banks’ reserve requirements when betting that the real will strengthen against the dollar.
Obama is expected to visit France in May for a meeting of the G8, which includes the wealthy Western countries of the G20 economic forum plus Russia, but is shifting toward a focus more centered on foreign policy discussion since the G20 became the forum of preference for fighting the global economic crisis.
White House National Security Council spokesman Mike Hammer said Sarkozy and Obama would also confer on that front during their Monday meeting in Washington.