VZCZCXYZ0001
RR RUEHWEB

DE RUEHLO #0116/01 0111754
ZNR UUUUU ZZH
R 111754Z JAN 08
FM AMEMBASSY LONDON
TO RUEHC/SECSTATE WASHDC 6978
INFO RUEHXQ/ALL EUROPEAN UNION POST COLLECTIVE
RUEATRS/DEPT OF TREASURY WASH DC

UNCLAS LONDON 000116 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
TREASURY FOR A/S CLAY LOWERY 
 
E.O. 12958: N/A 
TAGS: ECON EFIN UK
SUBJECT: EUROPEAN SUMMIT ON FINANCIAL INSTABILITY SET 
FOR JAN 29 IN LONDON 
 
 
SUMMARY: 
 
¶1. (SBU) Last October, France, Germany, and the UK 
agreed to a Summit to discuss current financial market 
problems.  Italy and the EU will join that meeting, in 
London on January 29.  In advance of that summit, the 
respective finance ministers will meet on January 17. 
A Cabinet Office source told us PM Brown wants to 
signal that leaders are prepared to take tough long 
term decisions to stabilize the economy, but in ways 
consistent with the G7 and the Financial Stability 
Forum.  Brown also wants to discuss transformation of 
the IMF, so that it takes on an additional role of 
early warning system of financial turbulence.  END 
SUMMARY 
 
¶2. (SBU) At the Lisbon EU Summit last October 19, PM 
Brown, Chancellor Merkel, and President Sarkozy signed 
an ad hoc trilateral statement regarding financial 
market developments.  They committed to implement 
recommendations of the Financial Stability Forum and 
suggested that the EU Council of Economic and Finance 
Ministers (QEcoFinQ) should examine whether regulatory 
or other action is necessary in the EU.  They agreed 
to meet to discuss how they might steer the work of 
the EU regarding long term decisions to ensure 
economic stability.  HM Treasury official told Econoff 
the three were originally expected to meet on January 
3, 2008; the meeting is now scheduled for January 29 
and will also include Italian Prime Minister Prodi and 
the European Commission President Jose Manuel Barroso. 
 
¶3. (SBU) Chancellor Darling told reporters at PM 
Brown's January 8 press conference that he would meet 
shortly with the finance ministers of France, Germany, 
and Italy.  HM Treasury sources told Econoff that this 
quadrilateral meeting is now scheduled for Thursday, 
January 17. 
 
¶4. (SBU)  The HM Treasury official referred Econoff to 
a Cabinet office source who provided the following 
background on the objectives of the summit via email. 
 
¶5. (SBU) Begin text of Cabinet officialQs email: 
 
The Prime Minister wants to use the meeting to discuss 
recent turbulence in the financial markets and follow 
up to the trilateral statement on financial markets 
made at the Lisbon informal summit.  Publicly he will 
very much want to send the message that it is 
important to take the tough long term decisions 
necessary to ensure the stability of the economy and 
that the leaders of Europe's major economies stand 
ready to do so. 
 
The meeting will also be an opportunity to give added 
emphasis to the follow up work to the trilateral 
statement in the G7 and the EU. Here he will want to 
emphasize that any action taken at a global level is 
done in a measured way. It is also important to ensure 
that the work going on in the EU draws upon the work 
in the FSF and does not try to replicate it. 
 
More broadly an important issue that will also need to 
be addressed is whether the global institutional 
framework is well placed to respond to current 
challenges. Here the PM has already called for the IMF 
to be transformed with a renewed mandate that goes far 
beyond crisis management to crisis prevention - not 
only responsible in the manner of an independent 
central bank for the independent surveillance of the 
world economy but becoming its early warning system 
(for further details please see his Guildhall speech 
of last year). 
 
Unquote 
 
¶6.  (U) Note:  Full text of PM's Guildhall speech 
(Address to the Lord Mayor's Banquet November 12, 
2007) can be found at 
(http://www.pm.gov.uk/output/Page13736.asp). 
Relevant excerpts below: 
 
Begin Quote of PM Brown speech: 
 
The renewal of the international institutions 
 
To build not just security but environmental 
stewardship and prosperity free of global poverty, I 
want a G8 for the 21st century, a UN for the 21st 
century, and an IMF and World Bank fit for the 21st 
century. 
 
And to achieve this I want to play my part in helping 
the European Union move away from its past 
preoccupation with inward looking institutional reform 
and I will work with others to propose a comprehensive 
agenda for a Global Europe - a Europe that is outward 
looking, open, internationalist, able to effectively 
respond both through internal reform and external 
action to the economic, security and environmental 
imperatives of globalisation. 
 
I said my approach was hard headed because I am 
conscious of weaknesses in international institutions 
that need to be addressed, aware that while 
resolutions matter results matter even more, 
determined to judge success not by the number of 
initiatives in conference halls but by practical 
action for change, and resolute in my determination 
that we need fewer rather than more international 
bureaucracies.  Indeed, we need a new network of 
change-makers - often non-governmental organisations - 
which deliver concrete action on the ground. 
 
The G8 has to increasingly broaden to encompass the 
influential emerging economies now outside but that 
account for more than a third of the world's economic 
output. 
 
Financial disruption in one country can now affect all 
countries. The IMF should be transformed with a 
renewed mandate that goes far beyond crisis management 
to crisis prevention - not only responsible in the 
manner of an independent central bank for the 
independent surveillance of the world economy but 
becoming its early warning system. 
 
END Quote 
 
LEBARON