he G20 summit in Cannes will be acrucial moment with respect tosignalling new progress on the economicand financial co-operation betweenpartners, who account for 85 per cent of global GDP,said Nicolas Sarkozy, President of France, at theNineteenth Ambassadors' Conference in Paris.In the face of sovereign debt crises, fears relating toworld growth, market instability and volatility incommodity prices, international co-operation withinthe G20 is even more necessary now than it was in2008. Our main objective is to consolidate the globaleconomic recovery. Growth is essential to creatingjobs, to lifting billions of human beings out ofpoverty, to reducing deficits and debt. The marketshave lost their bearings: they demand both thereduction of deficits and debt, but in the short term they are worried about the impact of deficitreduction on growth.Austerity measures at the global level would be worsethan the problem itself. They would threaten therecovery and could plunge us back into recession.Deficit and debt reduction, which is essential, mustbe gradual and above all credible. Rather thanreducing immediate expenditure which would have anegative impact on growth, we must introduce thereforms necessary to strengthen the sustainability ofour public finances over the medium term. That isthe whole point of the pension reform that we haveundertaken in France. Above all, our strategies must be credible: they mustbe part of a medium-term framework such as theGolden Rule, which has, according to IMF figures,already been adopted by 80 countries around theworld. This strategy will work only if it is combinedwith the re-balancing of global demand and growth.In this context, the emerging countries have a veryimportant role to play. Consider that in China privateconsumption represents only 35 per cent of GDPcompared with 60 per cent in the Euro Area and 70per cent in the United States.In order to reduce global imbalances, these countriesmust shift the balance of their development modeltowards domestic demand. This is an issue that Ibrought up in a positive atmosphere with PresidentHu last week during my visit to Beijing. In Cannes,we want the G20 to agree on an action plan forgrowth, including specific and concretecommitments by the leading economies. The issueof macroeconomic imbalances cannot be separatedfrom the reform of the international monetarysystem. This issue was central to the debates of thepast year; some people even spoke of a currency war.Everyone now feels that the lack of a balanced andrepresentative international monetary system isdetrimental to the global economy. Since theconference in Nanjing we have made a great deal ofprogress. We now have a precise and concreteagenda defined by the French presidency.IMF REFORMThe international monetary system must first andforemost be more representative of the current globaleconomy. The SDR (Special Drawing Rights) must beable to include new currencies. We must thenimprove our instruments to combat financial crises.IMF oversight must be improved and we mustprovide it with the necessary means to deal withsystemic crises. Is it not time to consider allowingthose countries with a surplus to invest part of theirSETTING AN AGENDA FORGROWTH114G20 MEMBER COUNTRIESNICOLAS SARKOZY, PRESIDENT, THE FRENCH REPUBLICT

reserves in the IMF in order to strengthen itscapacity? Lastly, we must agree on commonrecommendations regarding the management ofcapital flows. I hope that on all these issues, thefinance ministers will be able to agree on concreteproposals in preparation for the Cannes summit.COMMODITY MARKET REGULATION I also spoke to you last year about the regulation ofcommodity markets. The action plan adopted in Juneby the G20 agriculture ministers takes up the mainchallenge: that of production. The famine in theHorn of Africa, which required emergency actionwith the FAO, and the suffering of almost a billionhumans as a result of constant malnutrition areoutrageous; but these outrages will cease only whenthe world reinvests in agricultural production on amassive scale. An ambitious agenda with respect tomarket transparency and derivatives regulation isalso required. We need to define rules for theagricultural derivatives markets that are comparableto those in effect for the financial markets, withsanctions for the abuse of a dominant marketposition.DEVELOPMENT/CANNES SUMMITThe French presidency wanted to make developmenta top priority for the G20. It is a prerequisite for itslegitimacy. But it is also, above all, in everyone'sinterest to reduce poverty and development gapsbetween nations. The Cannes summit will focus onfood security and concrete infrastructure projects. But I wanted the G20 to discuss developmentfinancing as well. Given how difficult it is for thedeveloped countries to increase public assistance,and given the scope of the challenges to be met inthe most vulnerable countries, everyone knows thatinnovative financing is a necessity. I have longchampioned the creation of a tax on financialtransactions. During my meeting with ChancellorMerkel on 16 August, we decided that France andGermany would present a proposal to their Europeanpartners in September. Our objective is for Europe toset an example of what can be done, so that theothers rally to this initiative in Cannes. During thenext two months, I want you to very activelychampion this idea in the countries where you areposted. France is and will remain in the vanguard ofthe fight on behalf of the poorest of the poor.INTERNATIONAL INSTITUTIONALREFORM In Cannes, it is also the new world order that willmove forward. The G20's legitimacy derives from itseffectiveness; its ability to decide. But theimplementation of decisions must come aboutthrough the organisations that bring together theentire community of nations.Reforms of the international financial institutions to be completed must be complemented by those ofthe other organisations that are responsible forimplementing the G20's decisions: the WTO, the ILOand the FAO, to mention just three examples. Thus,one after another, the entire multilateral system that came into being in 1945 will adapt to thedemands of the 21st century by better integratingsocial progress and environmental protection intoglobal governance. nThe above remarks are extracted from a speech by NicolasSarkozy, President of the French Republic, at theNineteenth Ambassadors' Conference on 31 August 2011. Source: The French Ministry of European andForeign Affairs." "IN CANNES, WE WANT THEG20 TO AGREE ONAN ACTION PLANFOR GROWTH, INCLUDING SPECIFIC ANDCONCRETE COMMITMENTS BY THE LEADINGECONOMIESG20 MEMBER COUNTRIES115Below: Nicolas SarkozyPhoto: © European Union, 2011