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Obama, Sarkozy to Discuss Monetary System Friday

  • Lisa Bryant

With upcoming talks with U.S.President Barack Obama just a few days away, French President Nicolas Sarkozy is expected to push his idea of reordering the world monetary system.

France holds the G8 and G20 presidencies this year.

Mr. Sarkozy has made no secret of his ambitions to start a dialogue on reshaping the world monetary system. He laid them out broadly a year ago during the World Economic Forum - an annual event attended by the rich and powerful in Switzerland.

The general idea is to broaden the monetary system so the US dollar is no longer the primary reserve currency. That would reflect, the argument goes, the new reality of a more multi-polar world and the rise of new powers -- like China. Mr. Sarkozy is expected to include this idea in a speech later this month that should lay out his specific goals during France's leadership of the G8 and G20 clubs of nations.

Economic analyst Paola Subbacchi, of the London-based think-tank Chatham House, applauds Sarkozy for starting the dialogue.

"It's definitely necessary to rethink the structure and the international organization of the monetary system," said Subbacchi. "It's definitely the case that if we're moving toward a multipolar world in economic terms, there are simply more economies dominating the system we need to think to have another - or other - currencies."

Eventually, Subbacchi believes the world will move to adopt regional currencies - like the dollar for the Americas, for example, the euro for Europe or the Chinese renminbi for Asia. But she believes this change will take years.

The last time the US and French leaders met was at NATO's November summit in Lisbon. There, President Obama spoke about the close relationship between the US and Europe. But a subsequent report by the European Union's foreign policy chief Catherine Ashton warned Europe was not foremost on Washington's radar screen - and the U.S. was eyeing new partners.

American history expert Pierre Gervais, who teaches at Paris 8 University, is not surprised.

"Europe could still play a role, and a fairly important role, in U.S. strategy and thinking if Europe was able to develop its own foreign policy with any kind of coherence and impact," said Gervais.

But Gervais says this hasn't yet happened. And he doubts Mr. Sarkozy's visit to Washington will make much of a difference.