World leaders at U.N. call for new rules for markets

World leaders heard assurances from President Bush on Tuesday that he is acting swiftly to contain America’s financial upheaval, but allies and critics alike called for a collective effort to rewrite the rules governing global capital markets.

In a speech to the United Nations General Assembly, Bush acknowledged that the turmoil could wreck other nations’ economies. He said his administration was working with Congress on a $700-billion bailout while taking other “bold steps” to stabilize markets and credit flows.

“I am confident we will act in the urgent time frame required,” Bush said.

Although he did not ask for action by other countries, several speakers at the General Assembly’s annual fall debate insisted that a new multilateral forum overhaul the global financial system.

French President Nicolas Sarkozy proposed that the Group of 8, which includes the United States and many of its wealthy allies, take up the task at a special summit in November, with the added presence of China and other developing nations.

“No country, however powerful it may be, can bring an effective answer to the financial crisis on its own,” Sarkozy said.

A summit of the kind he proposed would have no authority but could strive for consensus on standards for governments and international financial institutions.

Neither the French president nor other speakers offered a detailed plan for reform. But Sarkozy, who is leading the European Union, said the problem began with hedge funds and could be addressed, for starters, with a closer regulation of credit ratings agencies.

“Let us build together a regular, regulated capitalism, where entire sections of financial activity are subject not solely to the assessment of market operators . . . where credit agencies are controlled and punished when necessary, where transparency . . . replaces opaqueness.”

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Final appearance

Bush was making his final U.N. appearance in a presidency marked by testy relations with the world body, notably over his decision to go to war in Iraq without a Security Council resolution. His low-key speech Tuesday repeated old themes, including an appeal for firmer action against terrorism, which he called “the fundamental challenge of our time.”

The words terror, terrorist or terrorism came up 32 times in his 22-minute address, which drew a few seconds of polite applause in the giant hall.

Alarm over the financial meltdown dominated the 28 other speeches Tuesday, making Bush sound out of sync.

“He opted to talk again about terrorism,” Brazilian President Luiz Inacio Lula da Silva told reporters. “The economic crisis . . . is the most important thing at this moment.”

Lula and other leaders from developing nations demanded a stronger voice in decisions that shape the world economy. They described the pain of food and fuel price increases.

“Economic uncertainty has moved like a terrible tsunami around the globe, wiping away gains, erasing progress,” Philippine President Gloria Macapagal Arroyo said. “Just when we thought the worst had passed, the light at the end of the tunnel became an oncoming train, hurtling forward with new shocks to the global financial system.”

Other speakers mocked the Bush administration’s decision to bail out titans of American capitalism as hypocritical in light of the painful free-market prescriptions the U.S., World Bank and International Monetary Fund generally advocate in poorer countries.

President Cristina Fernandez de Kirchner of Argentina noted that fallout from Brazil’s financial crisis of 1999 was dubbed “the caipirinha effect,” after that country’s cane liquor cocktail, just as the shocks of Mexico’s 1994 currency collapse had been called the “tequila effect.”

“Now we can talk about the ‘jazz effect,’ which comes from the center of the world economy and spreads outward,” Fernandez said.

U.N. Secretary-General Ban Ki-moon opened the gathering with a grim portrayal of a world facing multiple economic shocks as well as outbreaks of armed conflict and a “new rhetoric of confrontation.”

“I see a danger of nations looking more inward, rather than toward a shared future,” he said. “If ever there were a call to collective action, a call for global leadership, it is now.”

Ban had planned to use this year’s diplomatic meeting to draw attention to the plight of the world’s poorest and to ask wealthy countries to increase assistance, a goal now jeopardized by financial gloom.

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Political theater

Tuesday’s debate, the opening day of speeches by 192 national leaders that will last until Oct. 1, strayed at times into political theater.

As Bush denounced Iran as a sponsor of terrorism, Iranian President Mahmoud Ahmadinejad waved to people in the galleries. At one point he turned to an aide, raised a fist and flashed a thumbs down.

Later, with only a low-level note-taker sitting in the U.S. delegation’s seats, Ahmadinejad declared that the “American empire in the world is reaching the end of its road” and Israel “is on a definite slope to collapse.”

President Boris Tadic of Serbia protested Kosovo’s unilateral declaration of independence from his country. His Georgian counterpart, Mikheil Saakashvili, fumed over Russia’s military campaign in support of two breakaway regions.

Bush claimed some advances against terrorism, saying the number of governments that sponsor it “are growing fewer.” But he added: “Some may be tempted to assume that the threat has receded. This would be comforting. It would be wrong.”

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boudreaux@latimes.com