Bid to tighten controls on world economy

Date: 01/10/1998

By Tim Jones

FRENCH and Italian leaders will coordinate plans to strengthen the hand of international monetary agencies against 'rampant' capital flows at a summit in Florence next week.

The two governments, which have taken the lead in pressing for a big capital boost and greater powers for the International Monetary Fund, are seeking to challenge what they consider to be blind faith in the market.

In a speech last week to the United Nations, Italian Foreign Minister Lamberto Dini warned that “the market's supporters should not turn into the standard-bearers for a new fundamentalism”.

Officials say that when they meet next Monday (5 October), French President Jacques Chirac, his Prime Minister Lionel Jospin and Italian Premier Romano Prodi will flesh out plans for “some measure of global government”.

This will build on a similar agreement reached between Chirac and incoming German Chancellor Gerhard Schröder at a meeting between the two men yesterday (30 September).

Detailed proposals put forward by the French government at last weekend's informal meeting of EU finance ministers in Vienna included a call for decisions in the IMF's interim committee to be taken by a majority vote.

The Italians have suggested that the model of constant 'multilateral surveillance' conducted by EU monetary experts should be extended to the IMF when it is monitoring the accumulation of debt by developing countries.

In separate meetings, Dini and French Foreign Minister Hubert Védrine will focus on the European response to the crises in Albania and Kosovo, as well as the growing likelihood of a land deal between Israel and the Palestinian Authority.

The failure of the US administration to broker a deal in the Middle East has frustrated Italian foreign policy-makers, who believe it is holding back diplomatic progress in the rest of the region and North Africa.

Both governments want to keep EU governments' attention on developing a close foreign policy and aid relationship with the countries facing southern Europe across the Mediterranean. “There is rightly a lot of attention given to central and eastern Europe, but it is our task to remind people of the Euro-Med process,” said an Italian official.

Each delegation will also include the interior, defence, transport, science, environment and industry ministers.