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Germany

Merkel Calls for Action on Food, Oil Crisis

German Chancellor Merkel has called for steps to ensure more oil production and supply stability and said she will push at this year's G8 summit for a common approach to combat rising global food prices.

An oil field in Iraq

The crude oil price shock has sparked growing anger and strikes across Europe

Speaking after meeting with Japanese Prime Minister Yasuo Fukuda in Berlin on Sunday, June 1, Chancellor Angela Merkel said she was worried by runaway oil prices, which have sparked growing anger and a wave of strikes at European ports and refineries, and called for greater transparency in the oil market.

Japanese prime minister Fukuda with German chancellor angela merkel

Fukuda with Merkel in Berlin

"I will support anything that moves in the direction of more transparency in terms of the trade and supply of oil," Merkel said.

Oil prices have shot to more than $130 (83.70 euros) per barrel in recent months, raising pressure on European governments facing irate port workers in France, banner-wielding truckers in Britain and disgruntled Italian and Spanish fisherman who grounded their fleets in protest last week.

OPEC, which pumps 40 percent of the world's oil, is reluctant to bend to demands that it produce more to dampen the red-hot market.

Fukuda's trip is part of Japan's preparations to host the G8 summit of leading industrialized nations on July 7-9 at Toyako, a lakeside resort on the northern island of Hokkaido. Japan succeeded Germany as president of the G8 at the start of the year.

A "sustainable" solution

Fukuda said the rapid rise in oil prices had to be taken seriously and that market signals had to be heeded.

"We cannot ignore the market and just decide something," Fukuda said. "The problem is that the oil price is rising faster and this does not only have a negative impact on the economy, but on our people," he said. "We should take this rapid rise in the oil price very seriously. What is important is that more oil should be produced and we should invest in this. We need a stable supply."

Signs with gas prices at a gas station

European motorists have been reeling from heftly gas prices

Fukuda said there was a need for more investment in exploiting crude reserves and increased efforts to save energy.

Merkel called for greater transparency in the oil sector, from crude recovery to trade in petroleum products, but she remained cool about a recent proposal by French President Nicholas Sarkozy to cap value-added tax on oil across the European Union to help countries deal with the soaring oil price.

"I support the proposal that we act together," she said. "But it of course depends on the exact measures being mooted. We should see whether we can agree on something that is addresses our goal and is also sustainable in the long term."

No biofuels at the expense of food production

Spiraling global food prices were a major topic during talks between Merkel and Fukuda, as the Japanese leader called for urgent measures to provide food security to poor nations amid surging prices that have sparked riots around the world.

"We need short, middle and long term solutions to the crisis," he said.

Fukuda said world leaders needed to work together to tackle soaring prices and shortages and vowed to put it at the top of the agenda of the Group of Eight summit in Japan next month.

"Food producing countries no longer have sufficient stocks and are therefore trying to export less. This has become the case with more and more countries in recent months," he said.

A market in Haiti

Soaring food prices have hit the poor the hardest

Fukuda said in the longer term richer nations must help poorer ones, particularly in Africa, to be in a position to produce more food and become self sufficient.

"We need to export seed and know-how to those countries [which] need it."

Both Fukuda and Merkel warned that the production of biofuels as an alternative energy source must not be allowed to interfere with crop cultivation and aggravate food shortages.

"We must make sure that biofuel production does not compete with crop cultivation, that it does not interfere with the need to produce food," Merkel said.

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