By KUNA,
London : British Prime Minister Gordon Brown was using an EU summit Wednesday to continue the drive to restore business and consumer confidence in financial markets, officials said.
The Prime Minister has already achieved unlikely hero status in EU capitals by setting the benchmark for multi-billion bank bailouts across Europe. Now, he will tell his counterparts at talks in Brussels that long-term reforms are also needed to bring in tougher standards of supervision and regulation of financial markets, including an end to “telephone-number” (extremely high) executive bonuses without results to justify them.
Brown came to the rescue last Sunday, urging the EU’s 15 “euro-zone” countries to adopt the UK’s three-pronged liquidity-recapitalisation-deposit guarantee formula to prop up banks.
Three days later, Germany, France the Netherlands, Italy, Austria and Spain have mimicked the UK measures in a two-thousand-billion-euro bailout which has seen markets respond.
The so-called “Brown plan” has transformed the political fortunes of the British Prime Minister at home and abroad, commentators said.
“This summit looked like it was going to be difficult for Brown,” said one senior EU official. “The financial crisis was seen as an Anglo-Saxon problem, but when it started hitting other European countries it was Gordon Brown who produced the magic formula for supporting banks and restoring consumer and business confidence.” This morning, Brown was holding pre-summit talks with Commission President Jose Manuel Barroso on possible next steps to keep up EU financial coordination and cooperation, while leaving national authorities free to tailor rules to domestic needs.
The Commission already has proposals in the pipeline on future bank solvency laws, group supervision of banks, EU-wide minimum deposit guarantees and tighter controls on credit rating agencies.
Barroso wants supervision to include hedge funds and private equity, and he called yesterday for action against “short-termism” and “perverse incentives” at the top in the financial sector.
Brown particularly wants an international conference on the future financial order, a rethink as fundamental as the “Bretton Woods” accord in 1944 which established the template for the industrialised world economy and launched the International Monetary Fund.
With Brown dubbed the “magician” by some continental newspapers, other EU leaders are in a mood to follow wherever the British Prime Minister leads if it can stave off meltdown and keep recession at bay, the commentators added.
That may be a tall order and the Brown magic may not last long in Europe: Barroso himself tempered praise for Brown’s efforts so far by questioning whether such close UK cooperation and leadership in Europe could be maintained when the financial dust settles.
The problem is that some in the British Government and the financial circles will resist some details of forthcoming EU-level banking regulation moves.
“Sometimes in Britain you appear to be the most forthcoming regarding global solutions, but how can you be open to the world and closed to Europe? It’s impossible,” said Barroso.
“Even after this crisis there are some governments opposing a more coordinated European approach. I hope that now the spirits are more open to the need for that more coordinated approach,” he added.
Europe’s finance ministers were joining EU leaders and foreign ministers for the summit, which runs until tomorrow afternoon.
Meanwhile, thanks to the financial crisis, the original summit “crisis”, the Lisbon Treaty, will barely get a mention.
Irish Prime Minister Brian Cowen was due to take centre stage with a detailed report on Ireland’s referendum “no” vote to the Lisbon Treaty.
He will still address the summit, but will be asked to come back at the next summit in December with a comprehensive plan for getting the Treaty back on track with a second Irish vote if possible.
The only other major summit talks will be on climate change, now closely linked with the financial fall-out, because some member states say EU “green” policies are too expensive to implement in the face of possible recession, the officials concluded.