Merkel, Rousseff clash over 'monetary tsunami'

The leaders of Brazil and Germany on Tuesday clashed over Europe's moves to recover from its debt crisis but agreed that developing countries should play a bigger role at the IMF. Speaking at the CeBIT high-tech fair in Germany, Brazilian President Dilma Rousseff said she was "concerned about the monetary expansion in Europe and the United States" which she said resulted in an "artificial currency devaluation." This was harming Brazilian exports, she insisted. On Thursday, Rousseff complained that rich nations were responding to the global financial crisis with easy credit and low interest rates -- and that cheap money was making its way to Brazil, which has high interest rates and a strong currency. "We are concerned about this monetary tsunami" caused by the "developed countries," Rousseff said in a speech to business and labour leaders. Since the beginning of the debt crisis, the European Central Bank has offered eurozone banks unlimited cash at low interest rates to avert a credit squeeze. This has pushed down the value of the euro. For her part, German Chancellor Angela Merkel stressed these measures were "temporary" and that while she understood the concerns, warned that countries should not respond with "protectionist" measures, a veiled reference to Brazil. Brazil, which in December overtook Britain as the world's sixth-biggest economy, has come under fire over what some have presented as protectionist measures. Causing particular ire is a decision in September to slap a 30-percent tariff on all vehicles which are not at least 65-percent Brazilian made, or made in Mercosur, the local South American trade bloc. However, the two leaders did see eye-to-eye on boosting the resources of the International Monetary Fund and giving developing nations more say at the lending institution. "Since the Cannes G20 summit (in November 2011), we have said that we have agreed to take part in boosting the resources of the International Monetary Fund," said Rousseff. However, this must go in hand with "a reinforcement of the participation of emerging countries" in the top echelons of the IMF, she emphasised. Merkel said it was "very natural" that emerging countries should see their influence boosted at the IMF and said that on this point, Brazil and Germany were "of one mind." Rousseff and Merkel were speaking after the traditional first-day tour of the CeBIT, the world's biggest high-tech fair in the northern German city of Hanover, that this year has drawn some 4,200 exhibitors from 70 countries.