France Urges EU Unity On Finance Reforms

The call followed signs of disagreement between Paris and Berlin on the degree of cooperation needed.

French President Nicolas Sarkozy urged European leaders on Friday to back a common line on reforms to the global financial system ahead of world summit next week.

The call followed signs of disagreement between Paris and Berlin on the degree of cooperation needed.

EU leaders meeting in Brussels were due to insist that the Washington summit launch rapid reforms to prevent a fresh outbreak of the credit crisis that has rocked the world economy.

Paris has broad backing from the 27-member bloc for its proposals including a strengthening of the role of the International Monetary Fund, but Germany has resisted French calls for tighter coordination of economic policy.

"Europe must count. And for it to count it must be united in its ambition and vision," Sarkozy said ahead of the summit.

"Faced with the coming economic crisis, the coordination of our economic policies is a vital obligation," he added.

British Prime Minister Gordon Brown, who like Sarkozy has urged an overhaul of the world financial bodies established after World War Two, called for governments around the world to follow rate cuts with measures to bolster the economy.

"Coordinated action on interest rates should be complemented by action on fiscal policy," Brown told reporters on Friday.

German Chancellor Angela Merkel said she was optimistic EU leaders would agree a common line at the Brussels talks.

But in a sign of lingering national differences, France's European affairs minister Jean-Pierre Jouyet criticised Germany for having vetoed earlier this week a French call for an internationally coordinated response to economic challenges.

"I think public opinion around Europe expects coordination and unity ... National and disorderly attitudes are not a good solution," Jouyet told French radio.

GLOBAL AMBITIONS

Germany did not want a reference to anything that could be interpreted as a permanent European economic government called for by Sarkozy, seeing it as a threat to the independence of the European Central Bank (ECB). The ECB is charged with ensuring price stability in the 15-country euro zone.

France is eager for Europe to make its voice heard on the international stage, believing the financial crisis, which started in U.S. markets, has weakened the United States and provided the 27-nation EU bloc with an opportunity to bolster its influence.

EU leaders will go to Washington buoyed by the belief that it was their 2.2 trillion euro ($2.8 trillion) round of bank rescues last month that helped avert a financial meltdown sparked by a credit crunch coming from the United States.

They are set to boil down their reform agenda to five key points after an earlier shopping list drawn up by France was deemed too extensive as a negotiating base.

According to an EU paper obtained by Reuters, they are:

-- to entrust the IMF with "primary responsibility" for recommending measures to restore economic confidence and for rescuing countries in trouble

-- to submit credit rating agencies, criticised by some analysts for their failure to highlight the growing risk of a credit crunch, to tighter surveillance

-- to harmonise accounting standards around the world and review the use of the "fair value" rule, which requires institutions to value their assets at market value, even when the market for a given security is malfunctioning

-- to "take steps to ensure that no market segment, territory, or financial institution, including hedge funds, is beyond regulation or surveillance"

-- to implement codes of conduct to avoid excessive risk in the financial industry, including scrutinising executive pay.

"The summit should ... formulate a precise work programme to allow the presentation within 100 days of concrete and operational proposals on those subjects identified as priorities," said the discussion paper, written by France.