NeoCon French President calls for 'economic government'

FRENCH President Nicolas Sarkozy called today for an "economic government" to oversee the 15-nation eurozone and urged EU countries to take stakes in strategic companies as the financial crisis bites.

"It is not possible for the eurozone to continue without clearly identified economic government," Mr Sarkozy told the European Parliament in Strasbourg during a speech focussed mainly on the global financial crisis.

The European Central Bank (ECB), which fixes interest rates for the eurozone, "must be independent" but the Frankfurt-based monetary body "should be able to discuss with an economic government" made up of national leaders, he said.

When there is a crisis of such huge proportions "a meeting of finance ministers is not enough," said Mr Sarkozy, referring to the regular eurogroup meetings of ministers from the countries sharing the common currency.

Only heads of state and government carry the necessary "democratic legitimacy," said the French president, whose country currently holds the EU's rotating presidency.

The battle against inflation is the ECB's main reason for adjusting eurozone interest rates. It has faced accusations that it has kept those rates too high amid the threat, and in some countries the reality, of recession in Europe.

France created a precedent earlier this month when it organised and hosted a meeting of eurozone leaders to agree on coordinated efforts to save the ailing European banks.

The leaders in Paris agreed to guarantee new bank debt issuance until the end of 2009 and allow governments to shore up banks by buying preferred shares and vowed to recapitalise any key banks in distress - following broadly a British initiative.

That plan was swiftly adopted by the 27-nation EU as a whole and imitated by Washington.

Mr Sarkozy hopes to repeat the experience. More