Merkel Eyes Currencies, Hedge Funds During G-8 Chair

Date: Wednesday, January 24, 2007
Author: Andreas Cremer, Bloomberg.com

(Bloomberg) -- German Chancellor Angela Merkel wants to spur the Group of Eight industrialized nations to reduce foreign-exchange rate imbalances and improve hedge-fund transparency, hallmarks of her government's G-8 presidency and its focus on economic growth.

Merkel, addressing the World Economic Forum in Davos, Switzerland, today, said Germany wants to ``strengthen'' the terms for global investments.

``For all countries, economic growth remains the precondition to achieve more employment, a higher standard of living and higher productivity,'' Merkel said in her opening address.

Merkel's comments sought to build on the results of a PricewaterhouseCoopers LLP survey published today at the Davos conference showing that world executives are the most confident in at least a decade. While executives, investors and policy makers arrived at the Alpine retreat amid the strongest period of global economic growth in three decades, Merkel stressed the responsibilities that come with wealth creation.

Growth, Responsibility

Germany's G-8 chair, themed ``growth and responsibility,'' aims to give ``impulses'' on climate protection, she said, with climate change and energy efficiency ``dominant themes'' during her government's yearlong G-8 chair.

U.S. President George W. Bush's pledge during his state of the nation speech yesterday to lower gasoline consumption by 20 percent over the next 10 years ``is an ambitious goal'' yet ``urgently necessary,'' she said.

``I'm hearing signals from the U.S. that are more hopeful than those of past years,'' she told the audience.

Merkel said she opposes proposals to expand the G-8 to include countries such as China, India and Brazil.

``These countries have very different priorities'' on issues such as carbon emissions and development, she said.

Germany, which also assumed the rotating six-month presidency of the 27-nation European Union on Jan. 1, aims to use its joint presidencies to raise energy reliability and minimize ``systemic risks'' in world capital markets, Merkel said.

WTO Talks

Merkel's government will probably raise its own outlook for growth this year in the German economy, Europe's largest, to between 1.5 percent and 2 percent, Economy Minister Michael Glos said on Jan. 15. The German economy grew 2.5 percent in 2006, the fastest rate since 2000.

To foster global growth, Merkel said talks between the World Trade Organization's 150 governments must be successful. The European Union, the U.S. and developing countries ``must all be flexible'' to help conclude the negotiations which collapsed in July, the chancellor said.

``We now have a time slot to make progress in the talks,'' Merkel said. ``The chance for success is undoubtedly there.''

On energy, Merkel said the question of supply ``is very notably a question of reliability on deliveries.'' Merkel noted she agreed with Russian President Vladimir Putin on Jan. 21 that ``communication'' in the event of disruptions ``can be improved.''

Merkel met the Russian leader in the resort of Sochi, where she raised the issue of Russia's reliability as a supplier of gas and oil. Earlier this month, OAO Transneft, Russia's oil pipeline monopoly, ordered a three-day shutdown of the fuel piped to western Europe via Belarus after a row over pricing.

To contact the reporter on this story: Andreas Cremer in Berlin at acremer@bloomberg.net .