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Europe ups pressure on Obama over bonuses, climate
2009-09-17
BRUSSELS (AFP) - Europe's leaders gather at a Brussels summit on Thursday bidding to spur Barack Obama into concrete action on bankers' bonuses and the fight against global warming. While a top US presidential aide has ruled out fixed caps on bonuses, the European Union wants G20 leaders to levy "sanctions" on guilty banks when the world's major economies and developing nations meet next week in Pittsburgh, Pennsylvania. The EU also wants the United States to pump extra money into the battle to tame climate change ahead of United Nations talks in Copenhagen in December, which will try to drag global coordination on the issue out of a stifling quicksand. After Obama lashed out at top Wall Street executives this week, a summit declaration in Brussels will seek to put the onus firmly on the White House to match the US president's words with action. However, G20 talks will not deliver a hard cap on bonuses, according to Mike Froman, US deputy national security advisor for international economic affairs. "The president has been pretty clear that he supports a robust approach to executive compensation but has been reluctant to sort of set individual compensation levels," he said. In response, the head of the group of 16 countries using the euro currency, Jean-Claude Juncker, said Europe should act on the bonus issue "whether the Americans are with us or not." He told Germany's Deutschlandfunk radio that a Europe-only charge "will take on such force over time that the Americans will not be able to sit on the sidelines." A draft EU statement seeking "binding rules" calls for handouts to be tied to "long-term performance" and an end to guaranteed bonuses. It says financial police should be given powers to slash payments where investments prove to have failed and to force boardrooms to control levels of high-risk speculation. Europe also wants to block the exercising of stock options for set periods and expose top directors to penalties, following huge payouts to failed bank chiefs. Politicians fear a backlash from taxpayers angry at what some see as fat cats lining already deep pockets with ongoing massive injections of public money given in a bid to avert total meltdown in the world's financial order. British Prime Minister Gordon Brown says lavish bonuses have "appalled everyone across the world," with many blaming excessive handouts in part for the credit crisis and subsequent mushrooming unemployment. Three US banks, Goldman Sachs, Morgan Stanley and JP Morgan, each paid out billions of dollars more than they even earned in 2008 bonuses, having received some 45 billion dollars of bailout funding. But while the EU draft also calls for "exit strategies to be designed now," to turn off the taps of state financial support, Britain wants "to make sure we are out of the woods" first, according to one EU diplomat said. Despite a threat by French President Nicolas Sarkozy to walk out of the Pittsburgh summit if he does not achieve his caps goal, his finance minister Christine Lagarde revealed a subtle shift in the Paris position in an interview on Thursday. "We're not so narrow-minded to the point that we want a number," Lagarde told the Wall Street Journal. "But we want something that can be nailed down to solid parameters ... something that effectively limits and frames compensation." Pressure is also mounting for a breakthrough on the climate issue as representatives of the world's 17 biggest carbon polluters start a week of high-level and high-stakes talks in Washington. However, Europe's message may end up diluted there with diplomatic sources saying some EU members, including the Czech Republic, Hungary and Italy, are unhappy at fixing target aid figures for the developing world before the bloc has even decided on how to share the load internally.
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