MercoPress. South Atlantic News Agency

Europe needs a “monetary shield”

French Prime Minister Dominique de Villepin yesterday called for euro-zone countries to devise a foreign exchange policy to promote growth and jobs and protect industry.
??Europe needs a monetary shield,'' Villepin said.

Citing the difficulties at European commercial jet maker Airbus as one example of the consequences of a strong euro, Villepin said ??the euro permitted the creation of a stable environment between all European partners, but its current level penalizes some of our exports.''

European aerospace companies are hurting because their costs are in euros, while they get paid in dollars for the products they make and the services they provide.

??All the great trading powers have a foreign exchange policy, sometimes even an aggressive one,'' Villepin said. ??We must not let the euro be used as an adjustable variable for global monetary equilibrium.'' ??Let's create a real foreign exchange strategy that integrates the targets of growth, protection of our industry and, of course, employment,'' Villepin said. ??It's a major subject that we must address at the European level.''

In a wide-ranging speech on the need to foster innovation in industry and thereby contribute to job creation, Villepin said the United States is dominating innovation because of ??massive'' financing from public and private sources, as well as a lowering of the barriers among researchers, entrepreneurs and financiers.

Villepin said there is a need for Europe to make a clear choice in favour of defending its interests, ??rather than remaining the only trading power in the world that doesn't have effective rules against the excesses of globalization.''

The foreign minister said European industry needs large industrial groups with a global reach, citing Airbus parent company EADS as one example and the future Franco-Belgian group Gaz de France-Suez as another.

It is ??imperative'' that European rules go in the right direction, especially as regards competition regulations, he said.

??There must be a better balance between the objectives of consolidating industry and defending consumers,'' he said.

Villepin reaffirmed his proposal to create a special European representative for energy to act as an energy diplomat with non-EU countries. He also has proposed a coordination of strategic energy reserves among EU countries.

Noting that the United States and China both have systems for defending strategic interests in trade, he called for a more systematic effort by the European Commission to apply a principle of reciprocity when it identifies imbalances in either trade, capital or investment flows, as well as in accounting norms.

Villepin said France must aim to get its economy growing at an annual rate of three percent, and should target an unemployment rate of five percent. The unemployment rate has been hovering around nine percent.

The government has forecast 2006 GDP growth of as much as 2.5 percent, but after a flat performance in the third quarter, most private economists have scaled back their forecasts to around 2.3 percent.