Crises involving finance, food and fuel — the three Fs — are buffeting Asia and Europe, French Finance Minister Christine Lagarde said yesterday.
“Of course, we would all prefer to be triple A economies, but indeed we are facing triple F challenges,” Lagarde said in a speech to a conference on regional integration.
Lagarde was referring to the credit crunch that emerged last summer in the US that rocked financial institutions beyond its shores, sharp rises in prices for foodstuffs and skyrocketing costs for fuel in the form of oil and gasoline.
“Adverse shocks have affected our economies,” said Lagarde, who emphasized they can be confronted better as regional blocs than on a national basis.
“The common policy challenges that we have are clearly a need for [a] political and economic answer to the rise in both the fuel and food prices and their social and economic impact,” she said.
Lagarde, who was speaking after attending the G8 finance ministers’ meeting, said the main concern by all participants at that gathering on Friday and Saturday in Japan was “clearly about the price of food, the price of fuel and the social unrest that results from such movements.”
She also said the G8 ministers concluded that integration in Europe and moves for more closeness under way in Asia lessened the negative impact on the two regions from the fallout of a slowing US economy resulting from the credit crisis.
Lagarde’s remarks came on the eve of a meeting of finance ministers from the 43-member Asia-Europe Meeting (ASEM) held on the South Korean resort island of Jeju.
ASEM brings together the 27-member EU and 16 Asian countries, including economic powerhouses Japan, China, India and South Korea.
Lagarde also urged Europe and Asia to work together to ease the effects of soaring fuel and food prices.
She told ASEM that there are clear concerns “about prices of food and prices of fuel and social unrest that result from such movements.”
“This is indeed amplified and far more dramatic in emerging economies and in the developing world, but clearly this is the issue we share,” she said.
Surging food and fuel prices have triggered protests in many nations and even riots in some. A strike by 10,000 South Korean truckers now in its third day has crippled major ports.
“We certainly want to develop further growth and improve the resilience of the Euro area,” Lagarde told the meeting in reference to the US subprime crisis.
“That has been made particularly urgent because of the financial crisis that we have gone through. We want to improve the coordination of regulators,” she said.
Lagarde said low interest rates have helped Europe cushion external shocks but she was “anxious and worried” because of inflation.
“We want better supervision and better surveillance generally. We believe that will certainly reinforce the strength of the Eurozone in the face of financial challenges,” she said.
The ASEM forum has been the main channel for economic and financial cooperation between the two continents since its inception in 1997.
In addition to world economic challenges, the three main agenda topics will be regional economic integration and how Asia can learn from Europe’s experience, market-based approaches to climate change and cooperation on infrastructure finance and microfinance.
Europe’s huge and growing trade shortfall with China is also expected to be among key topics at the meeting attended by some 400 delegates.
The deficit last year was 159.16 billion euros (US$246 billion), EU figures showed, up from 131.07 billion euros in 2006.
Analysts say Europe is expected to demand China address this issue and allow its yuan currency to rise.
The US and Europe accuse Beijing of keeping the yuan undervalued to support its booming exports.
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