France called Thursday for an urgent meeting of the finance ministers of the seven leading industrial democracies to keep the dollar from sliding further.
In a speech to the French Economic and Social Council, Finance Minister Edouard Balladur said a meeting of the so-called Group of Seven--the United States, Japan, West Germany, Italy, Britain, Canada and France--is needed “very soon” to reinforce the accords of last February that had kept the dollar stable until this week.
Reagan Administration officials, however, said a meeting was unlikely until budget negotiations with Congress were completed in Washington.
Balladur made his plea after a plunge in the dollar that was blamed in part on a statement by Jacques Delors, president of the Commission of the European Communities, that the United States was prepared to let the dollar slip beneath the level set by the accords.
Faced with mounting criticism, Delors, a finance minister in France’s Socialist governments of 1981-85, insisted that the press and financial world had exaggerated the remarks he had made Wednesday to the European Parliament in Strasbourg. But his insistence did not quiet the furor.
The West German Finance Ministry, in a sharp and personal attack, said that people like Delors who do not participate in the financial consultations of the industrialized nations should “refrain from improvised public statements that give the wrong signals.”
In his speech, Balladur said that the time has come for a new step in international cooperation and that the Group of Seven should create a secretariat to monitor the accords that were signed in February in Paris--the so-called Louvre Accords.
Balladur said the accords had been based on an understanding that there would be changes in the economic policies of the United States, West Germany and Japan that have still not been implemented. He complained that the United States needs to reduce its budget deficit substantially and that Japan and West Germany must lower their interest rates and stimulate internal demand to reduce their trade surpluses with the United States.
“The reduction of these imbalances is the best solution,” Balladur said. ". . . It is necessary to have frequent and preliminary meetings before making decisions. Monetary officials must convince themselves that they are not alone in the world.”
Balladur warned that a substantial decline in the value of the dollar “at a time of full employment in the United States would provoke new inflation there and the stagnation of growth in Europe and Japan.”
Delors’ statement to the European Parliament has been blamed for helping to precipitate a fall in the dollar’s value on world currency exchanges. Delors told the Parliament that “the Americans are ready to come down to 1.60 (West German) marks to the dollar.”
That would be far below the 1.80 marks set by the finance ministers of the industrialized nations at their meeting in February. Although the U.S. Treasury Department issued a statement denying that Delors’ remarks “reflect the policies of the United States government,” the dollar dropped Wednesday to below 1.74 marks and even lower Thursday.
Speaking Thursday on Radio Monte Carlo, Delors said his remarks had been exaggerated and taken out of context. But he did not succeed in making it clear just how. Delors said he believed that a rate of 1.80 marks to the dollar--the level set in the Louvre Accords--was “acceptable and tolerable.”
“If the U.S. doesn’t make a credible gesture toward the markets by reducing its budget deficit,” he said, “if West Germany doesn’t lower its interest rates, and if Europe as a whole doesn’t decide on a bit more growth because the U.S. will be obliged to have less, then things won’t work.”
The controversy over Delors intensified when the Associated Press reported from Strasbourg that his office had tried to have his controversial remarks deleted from the official transcript of his speech. Parliamentary reporters agreed to delete the words, but the AP said that Lord Plumb of Britain, president of the European Parliament, ordered them restored.
European governments insisted that they did not share the views of Delors about American policy toward the fall of the dollar. In Bonn, Karlheinz von den Driesch, spokesman for the West German Finance Ministry, said that Delors had “painted a completely false picture of the cooperation of finance ministers and central bank governors of the big industrial nations.”
“In reality,” Von den Driesch went on, “there exists agreement between the big industrial nations to continue cooperation to stabilize exchange rates and to contribute to strengthening the situation through other decisions.”
He said the German government expects that “persons who do not participate in these consultations refrain from improvised public statements that give the wrong signals.”
The French Finance Ministry said in a statement that Delors’ remarks “in no way reflect the position of the French monetary authorities or those of the other participants in the Louvre Accord.”
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