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By Craig Whitlock
Washington Post Foreign Service
Monday, February 23, 2009; Page A13 BERLIN, Feb. 22 -- European leaders on Sunday pledged to establish
global oversight of hedge funds, crack down on tax havens and beef up
other rules as part of a reformation of the international monetary system.
Leaders from eight European countries, meeting in Berlin, said they had
agreed on broad principles for bolstering the regulation of global
finance in advance of a summit of the world's leading powers April 2 in
London. "A clear message and concrete action are necessary to engender new
confidence in the markets and to put the world back on a path toward
more growth and employment," said German Chancellor Angela Merkel, who
hosted the meeting. The officials were seeking to adopt a common European negotiating
strategy for the summit, which will be attended by the United States,
China, Japan, India, Brazil and other large economies that make up the
Group of 20. Prompted by the recession and credit crunch, each of the countries has
said it supports changes in the way international banks and investments
are regulated. But deep differences remain on the best approach, and it
is unclear whether the summit will produce a new set of globally
enforceable rules. In Berlin, leaders from Germany, Britain, France, Italy, Spain, the
Netherlands, the Czech Republic and Luxembourg said they had agreed on
seven points, including restrictions on hedge funds and other private
pools of capital that have gone largely unregulated around the world. They also said they support tougher measures against countries and
offshore jurisdictions that serve as tax havens, blaming them for an
assortment of problems. "As far as uncooperative players, tax havens or areas where
nontransparent business is carried out, we need to develop sanction
mechanisms," Merkel said. "These must be made very concrete." French President Nicolas Sarkozy said European countries would compile a
blacklist of suspected tax havens and would impose unspecified penalties
to pressure them to change. "A new system of regulation without
sanctions would not have any meaning," he said. The European Union and the United States have recently taken a tougher
line against some countries, most notably Switzerland and Liechtenstein,
for their banking secrecy laws, which are often used by investors to
hide taxable income. British Prime Minister Gordon Brown said global financial agencies such
as the International Monetary Fund needed an extra $500 billion to
improve their ability to bail out ailing economies. The IMF has recently
provided rescue funds for countries in Eastern Europe, including
Hungary, Latvia and Ukraine. "There is a need for a global New Deal so that the world economy can
recover," Brown said.
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