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Chirac, Making Rounds on Economic Policy,
Pitches to U.S.

By Marie-Benedicte Allaire  Reuters
WASHINGTON — Calling global economic turmoil painful, French President Jacques Chirac said on Thursday that rapid reform of the international financial system is essential if world growth is to continue.

Photo
Kevin Lamarque/Reuters
French President Jacques Chirac says the United States needs to step up cooperation in order to stabilize relations between the dollar, the yen and the euro

Chirac said the international community must strengthen its ability to deal with crisis prevention to avoid the economic shocks that have swept through Asia, Russia and Brazil in the past 20 months.

He also said if world financial stability was the objective then constantly fluctuating currency exchange rates could not be accepted.

"Awareness of our vulnerability (to crises) came late, " Chirac said in a speech at the International Monetary Fund. "It is painful. Let us accept the consequences and rapidly build the new financial architecture we so need. We know which reforms must be achieved."

Speaking at the start of a two-day working visit during which he will see President Clinton, Chirac said governments and international financial institutions must become more open in disclosing economic information.

"We must adopt a veritable 'highway code' for capital flows, a code that applies to all, including hedge funds and offshore establishments," Chirac said.

He also proposed that the private sector become more involved in solving countries' financial crises rather than waiting for the IMF to ride in with billion-dollar rescue packages for countries in trouble.

Chirac said France wants to host a summit in Paris of the major IMF members in the fall to officially adopt reforms the major wealthy nations may agree on at their G-7 summit in Cologne, Germany, in June.

The purpose of the Paris meeting, Chirac said, "would be to officially adopt the reforms and give them international legitimacy."

Turning to currency exchange rate policy, Chirac said shifts between the dollar, Europe's six-week-old euro and the Japanese yen will dominate the international scene.

"One cannot hope for world financial stability while at the same time accepting unstable exchange rates," Chirac said. "We must aim for more stable relations between currencies. This is a daunting task."

France is anxious to convince Treasury Secretary Robert Rubin and Federal Reserve Chairman Alan Greenspan that the 11 European nations that have adopted the euro want closer monitoring of currency fluctuations but are not pressing to establish formal target zones to ensure exchange rate stability.

Rubin said Wednesday night there were enormous problems with setting up such zones, adding it was not the right way to go. Treasury officials also are skeptical about holding a monetary summit in the fall.

Chirac is expected to address the same themes Friday when he meets with Clinton. The two leaders planned a joint mid-afternoon news conference, Clinton's first since he was acquitted of impeachment charges.

In an interview with The Associated Press before leaving Paris, Chirac said Clinton's acquittal was good for America and good for the world, which needs strong leadership from Washington.

"May I say I am very glad about it ... personally because I have great esteem for President Clinton," he said, adding that he did not think the scandal would damage Clinton's effectiveness as a world leader.

Besides global financial reform, Chirac and Clinton will review military issues, including Kosovo, Iraq and NATO's 50th anniversary summit in Washington in April.

France is ready to send 4,000 to 5,000 troops to the Serbian province to police an international agreement. Clinton has said he's prepared to commit up to 4,000 American troops.

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