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Europe

Global Call to Fight Financial Crisis at German Summit

Germany and five major international financial and economic organizations pledged Thursday to undertake "determined and coordinated action" to fight the global economic downturn.

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The crisis in the financial sector is spreading to other areas and rescue plans are needed

"This is a global crisis and it needs global solutions," said a statement issued after talks between Chancellor Angela Merkel and the heads of the International Monetary Fund (IMF), World Bank, World Trade Organization (WTO), International Labour Organization (ILO) and the Organization for Economic Cooperation and Development (OECD).

The meeting painted a gloomy picture of the world economy and urged countries to "resist protectionist tendencies" and "work towards tangible further opening of world trade."

Participants also called for an overarching framework supported by states and international organisations that prevents excesses in the markets and works to counter future crises.

The meeting was hosted by Merkel as part of regular consultations initiated during her country's presidency of the Group of 8 (G8) club of rich industrial nations in 2007.

She used the opportunity to discuss ways to improve cooperation in the face of the economic downturn and drum up support for a new charter of sustainable economic governance that looks beyond the current crisis.

Taking part were Pascal Lamy, director general of the WTO, World Bank president Robert Zoellick, IMF managing director Dominique Strauss-Kahn, Angel Gurria, secretary general of the ILO, and OECD director general Juan Somavia.

Doom and gloom as crises mount

International Monetary Fund Managing Director Dominique Strauss-Kahn

The IMF's Strauss-Kahn talked of a dark future

"The world economic situation is very bad, even worse," said Strauss-Kahn, warning of serious social consequences, especially on the global labour market.

"We've gone from a financial crisis to an economic crisis and now in 2009 it's becoming an unemployment crisis," said Zoellick. "In some countries around the world, particularly developing countries, it will become a human crisis."

Against this background, "it is more important than ever that the international community remain committed to its goals of fighting poverty and promoting economic development in poor countries," the conference said.

The talks came as the Bank of England slashed interest rates to a historic low of 1 per cent and the European Central Bank signalled a possible cut in borrowing costs next month amid slumping economic growth and dwindling inflation.

Strauss-Kahn also expressed concern that banks were still reluctant to lend money to businesses, saying there "is no way for companies to develop if there is no more credit."

He said an improvement in the global outlook was possible in 2010 provided lines of credit are restored.

Merkel welcomes toned down US protectionism

Merkel and the financial experts

Merkel and the financial leaders welcomed US moves

The German chancellor also welcomed the decision by the US Senate to water down a "buy American" clause in its stimulus package that enraged Washington's allies.

But she said she still remained worried about financial support given by President Barack Obama's administration to the ailing US car industry.

Merkel's discussions in Berlin form part of the buildup to a summit of Group of 20 (G20) leading industrial nations and emerging economies set to take place in London on April 2.

Hosted by British Prime Minister Gordon Brown, the G20 summit is expected to review progress towards forging a new global financial architecture aimed at better regulation, greater transparency and improved cooperation among authorities.

Merkel is scheduled to host a preparatory summit of European G20 members in Berlin on February 22.

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