Paris, December 13, 2010
For 50 years, the capital of France has been home to the OECD headquarters. It was therefore perfectly fitting, given the close ties between our country and your organization, for us to commemorate the OECD’s 50th anniversary in the Élysée Palace today.
I would like to pay tribute to the men and women who work together in Paris, at the Château de la Muette, the historic headquarters recently enhanced with a magnificent conference centre. I would like to pay tribute to you because you represent an unparalleled wealth of expertise.
For our country, for France, it has been an honour and privilege to witness the creation, development and expansion of the OCDE over the past 50 years.
50 years ago, almost to the day, the OECD superseded the OEEC, which was created in 1948 to accelerate and strengthen economic reconstruction in Western Europe as part of the Marshall Plan.
Over the past 50 years, the OECD has undergone profound changes in order to cope with the emergence of new powers and, above all, new challenges.
In 1989, with the fall of the Berlin Wall and the dissolution of the Soviet Union, the OECD forged new ties with countries freshly freed from the oppression of communism.
Even before the concept of emerging countries became popular, through your guidance you supported the emergence of new powers.
In 1975, OECD member countries represented 65% of global GDP. Now let’s look at the current situation: in 2015, OECD members will represent only 50% of global GDP. During this period, new economic powers have appeared, including Brazil, Russia, India, Indonesia, China and South Africa. These countries already account for more than 25% of global GDP. We can’t ignore these important actors. How could the standards the OECD promotes, or the rules it defines in terms of investment or anti-corruption, be fully applied in a globalized economy that pays no heed to emerging countries?
In this perspective, France therefore encourages the OECD’s policy of openness regarding emerging countries, while ensuring this policy is pragmatically refocused on gradually involving these countries in the OECD’s thematic work and research.
Beyond this expansion, the OECD’s purpose in the 21st century should be to constitute a “club of exemplary practices”.
Several times throughout the course of its history, the OECD has been the crucible of new organizations, certain of which tended toward universality. By analyzing the new issues facing the world, you established rules, standards and best practices that you shared with an increasingly wide community of nations.
Indeed, you were the incubator of the International Energy Agency, the Financial Action Task Force, and the Global Forum on Taxation.
You have been a creator of standards. You inspired structural reform in a number of areas. For three and a half years in our own country, we have been striving to implement the reforms that you inspired.
The OECD helped us improve our economic and social system and rethink its foundations.
I don’t believe that we can continue to measure economic growth today on the sole basis of gross domestic product. How can we assess wealth solely by means of an average individual, when this individual doesn’t really exist? How can we convey the diversity of individual situations? How can we account for what we produce as wealth when we don’t simultaneously account for what we destroy? In today’s world, how can we believe that unmarketable things have no value?
These beliefs led me to ask Professors Stiglitz, Sen and Fitoussi, along with the world’s finest experts, to reflect on these questions and come up with new indicators of human progress and well-being. When we formed this commission, there was much scepticism, a vast army of sceptics. Today, the commission’s recommendations have been adopted by a number of statistical institutions across the globe, including France’s INSEE.
I would like to thank the OECD and its Secretary-General Angel Gurria for supporting the commission’s work. I know that the OECD is actively engaged in the dissemination of these new indicators. I would like a group to follow up on the Stiglitz-Sen-Fitoussi Report and meet once a year during the annual meetings of national statistical institutions, to provide guidance on improving statistics on social progress and individual well-being.
In the new world that we must build, I firmly believe that the OECD can offer new ideas and significantly contribute to building a new global governance, which will be central to the French G20 presidency.
The creation of the G20 made it possible to confront, in an effective and coordinated manner, the worst crisis the world had undergone since the Second World War.
We had to act urgently to save the global financial system.
Today, recovery is under way.
But have we truly changed the world? Have we really set down the new regulations needed for the 21st century? Did we honestly tackle the structural questions that have arisen and that currently threaten global stability?
In all honestly, I do not believe that the efforts made in terms of structural reform are a sufficient response to the crisis we just went through. That is why France has decided to address challenging topics during her G20 presidency, including: international monetary system reform – who would dare to say this is not necessary? –; the fight against raw material price volatility – who would dare to claim that the issue doesn’t exist? –; raising the moral standard of capitalism; funding for development. I see very large figures, but I do not see the corresponding financial means.
Everybody is telling me, “that will be very hard, you won’t succeed.” Perhaps. But what role would France play be if she didn’t encourage G20 member countries to assume their responsibilities in the face of the 21st century’s global challenges? 2011 is just around the corner. The 21st century started eleven years ago, yet 20th century governance is still with us. Concerning all of the topics I just mentioned, France has no preconceived ideas or ready-made solutions. France wants to engage the debate, put the topics on the table and use the entire year of her presidency to provide answers to these questions.
In this perspective, the OECD has a major role to play. Major. You pioneered regulation, development aid, export funding and the fight against corruption. It is up to you to disseminate these standards universally, and we are going to work together on the agenda of the French G20 presidency.
To regulate globalization, so it can enhance prosperity, is to reform international monetary relations. Let’s call a spade a spade. Since 1971, we have been living in what I call an international monetary non-system. The system established in 1945 was based on fixed exchange rates and the convertibility of all currencies into dollars. Since 1971, we have been living in a system characterized by flexible exchange rates alongside administered regimes. New currencies have emerged, capital flows have significantly increased; certain countries have accumulated reserves. As a result, our international monetary non-system is increasingly unstable. Since 1990, the world has seen 42 financial crises, meaning that 42 times, countries have been drained of all their capital. In 2009, emerging countries experienced the massive withdrawal of international capital by investors seeking risk-free assets. Since the beginning of the year, capital movements towards emerging countries have resumed massively, destabilizing their monetary and exchange rate policies. Are we to let monetary speculation determine development in the world’s countries? I am absolutely opposed to this.
I want us to work on creating financial safety nets to reinforce financial stability. I want us to reflect on capital movements. I believe that we were living under the illusion that the deregulation of capital movements is by definition favourable to development. Like all theories, this one deserves to be proven. It has not been. Experience has shown that unchecked liberalization can expose our countries to extremely systemic financial crises. In this realm, we need international rules, and institutions to enforce these rules. France will submit proposals in this area. I hope that the OECD will provide its input and experience.
At the same time, we must reflect on the appropriateness of a model based on the accumulation of reserves in dollars. I ask you this: doesn’t this system render a portion of the world dependent on US monetary policy? Shouldn’t we think about the role of SDR [Special Drawing Rights] and the internationalization of other currencies?
Let me be clear. I do not wish in any way to discredit the role of the dollar, which in any event will be prominent. But prominent does not mean exclusive, and, like the American government, we hope the dollar will remain strong. I am simply saying that our monetary organization can’t sustainably continue to reflect yesterday’s world, in which neither India nor China nor Brazil were the economic powers they have become today.
The Seoul Summit showed the long road that remains to be travelled in order to achieve a cooperation culture. We will make proposals in this area.
Our second priority will be price stability for raw materials and agricultural products. All countries, all businesses are aware of the costs generated by excessive volatility of raw material prices. No one, absolutely no one has anything to gain from this volatility, be it producers or consumers. I am not suggesting we rethink current market mechanisms, but that we establish a framework and rules that will discourage speculation and offer visibility to all parties with regard to changes in supply and demand.
As we did for the financial sector, we must regulate products derived from raw materials. We must increase transparency in physical markets, and encourage dialogue between producers and consumers.
The OECD has already largely contributed to this reflective process. I am counting on you to continue these efforts.
Raising the moral standard of capitalism is one of the major expectations of global public opinion. We can no longer accept the excessive behaviour that led to the economic crisis. France will be making proposals, but I would like to thank my friend Angel Gurria, OECD Secretary-General, for his fight against non-cooperative jurisdictions since the London Summit. In this regard, the Global Forum on Taxation has been a success: 500 information exchange agreements have been signed since the London Summit. In 2011, the Forum will publish the first assessments concerning the implementation of OECD rules on transparency and exchange of information for tax purposes. These initial evaluations will constitute an important step in the monitoring of G20 commitments. Our credibility is at stake. If countries have cheated, Secretary-General, they must be denounced. When a country is removed from a blacklist, it can return to that list. It is removed because it makes commitments, but it can return when those commitments are not honoured.
In terms of the fight against corruption, we have adopted an extremely ambitious plan. We will pursue this plan during the French presidency, but why not consider the creation of a global forum for the business environment modelled on the Global Forum on Taxation?
Lastly, the crisis will not truly be overcome until unemployment has significantly decreased. In this area, France has high expectations regarding the mandate given by the G20 to the OECD to develop a training strategy, which could be extended to the issue of the integration of young workers in the job market.
Development issues will also be fully incorporated into the G20 agenda. With the OECD’s expertise in the areas of taxation, the environment and development, you must provide ideas. We must have new resources if we are to achieve the Millennium Development Goals and fulfil commitments made in Copenhagen and Cancún.
Here again, without innovative funding, none of the promises made in Copenhagen will be kept. We therefore need innovative funding.
Throughout our presidency, our permanent representation will play a vital role in disseminating information to the OECD member countries. I am counting on Roger Karoutchi, who will provide regular updates to keep all member countries informed. This will be a critical responsibility, as the G20 was not meant to work alone. Moreover, in the forums we organize during the run-up to the G20 Summit in November 2011 in France, non-G20 member countries are perfectly welcome to participate.
Because France is home to OECD headquarters, our country has a special responsibility toward this organization. We will strive to ensure that the various events scheduled throughout 2011 as part of 50th anniversary commemorations will provide opportunities to offer it the highest possible visibility, and to reinforce its current position with regard to global economic governance. I know that France can count on your organization, as well as all your employees and your Secretary-General, to contribute to the success of her presidency. Without a shadow of a doubt, 2011 is going to be a very big year for the OECD.