Sarkozy targets commodities in G20 agenda

By Catherine Bremer and Daniel Flynn

PARIS | Mon Jan 24, 2011 9:04pm GMT

PARIS (Reuters) – French President Nicolas Sarkozy called on Monday for new rules to curb commodity price volatility, warning as he laid out his G20 agenda that the world risks food riots and weaker growth if leaders fail to act.

Addressing 300 diplomats and journalists at his Elysee palace to kick off his stewardship of the G20, Sarkozy seemed to row back on other stated goals of exploring changes to the global monetary system and the dollar’s role as reserve currency and reforming global economic governance.

Focussing on better transparency and regulation of commodities markets may allow Sarkozy to achieve real progress, after recent meetings with world leaders such as U.S. President Barack Obama and China’s Hu Jintao indicated he would struggle to win unanimous support for broader issues.

“How can you explain that we regulate money markets and not commodities?” Sarkozy said, speaking in an ornate ballroom in only the third major Paris-based news conference of his presidency.

“If we don’t do anything we run the risk of food riots in the poorest countries and a very unfavourable effect on global economic growth,” he said. “The day there are food riots, what country at the G20 table will say this does not concern them?”

Asked about France’s idea of looking at ways to wean the world off the dollar as sole reserve currency, such as broadening the IMF’s Special Drawing Right currency basket, and what support it had from G20 partners, Sarkozy was more coy.

“The dollar is, and will remain, the predominant currency,” he said, adding: “A predominant currency doesn’t mean a sole currency, we are allowed to reflect on things.”

Sarkozy also brought up an old idea of taxing financial transactions to fund a proposed $100 billion a year in aid for poor countries, which France would back as it would be a tax on speculators. He admitted, though, that some would oppose it.

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