Call For New Global Economic Rules

Asian and European leaders agreed Friday that the rules guiding the global economy should be rewritten and the International Monetary Fund should be given a lead role in aiding countries hit hardest by the financial crisis.

Speaking Beijing on a day when stock markets plunged across Asia, leaders from nations including China, France, Germany and Japan said they were moving toward consensus ahead of next month's meeting of the 20 largest economics in Washington.

"Europe would like Asia to support our efforts and would like to make sure that on the 15th of November we can face the world together and say that the causes of this unprecedented crisis will never be able to happen again," French President Nicolas Sarkozy said in remarks to the opening ceremony of the Asia-Europe Meeting.

A draft of a meeting statement on the crisis seen by The Associated Press called on the IMF and similar institutions to act immediately to help stabilize struggling banks and staunch the flood of red ink on regional stock exchanges.

"Leaders agreed that the IMF should play a critical role in assisting countries seriously affected by the crisis, upon their request," the draft said.

If adopted, the statement would be among the strongest calls yet for a leading role in the crisis for the Washington-based fund, long known as the international lender of last resort.

Countries as disparate as Hungary, Ukraine, Iceland and Pakistan have already turned to the IMF for help bridging their liquidity crunches. It was announced Friday that Iceland will receive a two-year, $2 billion loan.

The draft statement also states that leaders agreed to "undertake effective and comprehensive reform of the international monetary and financial systems."

Among the first to publicly endorse the proposal was Japanese Prime Minister Taro Aso, head of the world's second-largest economy. Aso "strongly supports" a critical role for the IMF, Japanese Foreign Ministry spokesman Kazuo Kodama said.

The biennial gathering, known as ASEM, has no mandate to issue decisions and participants differ widely on their views toward international cooperation and intervention by global bodies. Free-trading Singapore and economic powerhouse Germany are attending, along with isolated, impoverished Myanmar and landlocked, authoritarian Laos.

Responses to the crises have varied widely so far. Europe has already approved a plan under which the 15 euro countries and Britain put up a total of $2.3 trillion in guarantees and emergency aid to help banks.

Asian financial systems are less shaky, having had less direct exposure to the toxic sub-prime mortgages that are wreaking havoc on U.S. and European markets. Showing a notable lack of urgency, South Korea, China, Japan and the 10-country Association of Southeast Asian Nations recommitted themselves to an $80 billion emergency fund to help those facing liquidity problems - to be established by next June.

China and other Asian economies are, however, expected to take a major hit from a drop in exports and foreign investment. Even before the crisis hit last month, China's juggernaut economy was beginning to slow.

Growth in the third quarter slowed to 9 percent, which, although the fastest among the largest economies, was down from 11.9 percent for all of 2007. China is also a leading purchaser of U.S. government debt, holding hundreds of billions of dollars in Treasury bonds.

"The global financial crisis has noticeably increased the uncertainties and factors for instability in China's economic development," Chinese President Hu Jintao said in remarks at the meeting's opening ceremony.

China has made "active efforts to the best of its ability" to mitigate the crisis and will expand domestic demand and maintain healthy financial markets while working with the international community to revive stability, Hu said.

The crisis has again raised the threat of economic nationalism, and in remarks to the assembly, EU Commission President Jose Barroso warned countries against resorting to protectionism and isolation.

"Just as we should strive for open societies, governed by the rule of law, so we must work to have open markets, but markets with rules," Barroso said.