UPDATE 1-Brazil, EU to prepare joint crisis position for G20

(Recasts with new Sarkozy quotes, background)

RIO DE JANEIRO, Dec 22 (Reuters) - French President Nicolas Sarkozy and his Brazilian counterpart, Luiz Inacio Lula da Silva, agreed on Monday to take a common EU-Brazil position to the next G20 summit dealing with the global financial crisis.

“We decided with President Lula that things must change and change profoundly,” Sarkozy, the current president of the European Union, said in a speech at a two-day EU-Brazil summit in Rio de Janeiro.

“We decided to narrow our positions and arrive in London with a common vision, on the future role of the IMF, the system of management of financial institutions,” he said. “We cannot allow a single financial institution to be uncontrolled or unsupervised.”

Brazil, Latin America’s biggest economy and diplomatic power, has been pressing for a bigger say in world affairs since the start of the financial crisis, saying the world needs a new system of decision-making that includes more countries.

France is eager for Europe to make its voice heard on the international stage, believing the financial crisis, which began in U.S. markets, has weakened the United States and provided the EU with an opportunity to boost its influence.

Sarkozy and Lula gave no details on proposals they would take to the London summit on April 2 and they did not take questions from reporters after their meeting, which was also attended by European Commission President Jose Manuel Barroso.

Sarkozy, who is expected to sign a major defense cooperation deal with Lula on Tuesday, earlier backed Brazil’s claim to a permanent seat on the U.N. Security Council, saying the country had a vital role to play in global decision-making during the financial crisis.

“I’m being honest when I say we need Brazil in world governance,” he said. “I think we need Brazil as a permanent member of the Security Council.”

Lula has made obtaining a permanent council seat for Brazil one his major foreign policy goals.


Lula hailed last month’s G20 summit of leading economies in Washington as a decisive step toward increasing the clout of developing countries. Among other steps, the summit opened the door for more countries to have seats at the IMF and the World Bank.

Lula joined Sarkozy in calling for governments to take a greater role in regulating financial markets and in creating jobs, including the United States, which he said bore the brunt of blame for the crisis.

“President Obama has a responsibility on his back that few presidents in the world have,” Lula said in a speech, referring to U.S. President-elect Barack Obama.

“He will take office with a crisis that the United States has more than 60 percent of the responsibility for.”

The arms deal that Sarkozy is expected to sign with Brazil will include the transfer of technology from France to help Brazil build up to four conventional submarines. The deal is also expected to set Brazil on course to build its first nuclear-powered submarine as it seeks to revamp its military.

Brazil set out a new strategic defense plan last week which shifts the focus of its military toward protecting the Amazon and its newly found massive, off-shore oil reserves.

Brazilian officials deny that the overhaul and increased military spending are aimed at keeping pace with active arms-buying by Venezuela and other countries in the region, saying the purpose of its military is entirely defensive.

The deal is also expected to include an agreement for Brazil to buy 50 Super Cougar transport helicopters to be built by Helibras, Eurocopter's subsidiary in Brazil. Eurocopter is the helicopter subsidiary of European aerospace group EADS EAD.PA. (Editing by David Wiessler)