EU leaders press Obama on bonuses, climate change

BRUSSELS — EU leaders issued a joint plea to U.S. President Barack Obama on Thursday to back their call for rich and developing nations to cap bankers’ pay and to impose deeper cuts on emissions for a new global climate change pact.

All 27 EU nations are in “total unity” that the world cannot repeat the “scandal” of bonuses for executives and traders that triggered banks to take huge risks, French President Nicolas Sarkozy said.

“The bonus bubble burst tonight,” said Swedish Prime Minister Fredrik Reinfeldt, whose country holds the EU presidency. “We have agreed to say that enough is enough and we need to move away from the current culture of compensation based on short-term performance.”

The plea came during a meeting to decide what European nations will push for at talks between rich and developing nations at the Group of 20 summit in Pittsburgh, Pennsylvania, on Sept. 24-25.

Neither Sarkozy or Reinfeldt gave details of the kind of bonus cap the EU is seeking. An earlier draft of a joint statement to be issued called for G-20 nations to ensure bankers’ pay is linked to how well their business is performing.

Sarkozy has threatened to walk out of the meeting if the United States and others won’t strike a deal to curb banking bonuses.

On climate change, Reinfeldt said that while EU leaders welcomed draft climate change legislation by the U.S. Congress, “it needs … more done to reach the levels we have in Europe.”

The EU is urging other rich countries to match its pledge to cut emissions by 20 percent by 2020. In a joint statement the European leaders called on the U.S. and others to “urgently make ambitious commitments” to deeper cuts.

Japan pledged to cut emissions by 25 percent from 1990 levels. The U.S. is considering a far lower cut — 17 percent from 2005 levels or about 3.5 percent from 1990.

A panel of U.N. scientists has recommended that developed countries make cuts of between 25 percent and 40 percent by 2020 to avoid a catastrophic rise in sea levels, harsher storms and droughts and climate disruptions.

The leaders are stepping up pressure on the U.S. and China, the world’s two biggest polluters, to tackle global warming and commit to cuts in global greenhouse gas emissions at climate change talks later this year in Copenhagen.

The EU says poor countries need €100 billion a year to restrict their own emissions and to adapt to a warming climate that could endanger the homes and food supply of billions of people.

Britain’s Gordon Brown said European leaders must be forceful enough to convince Obama to agree to cap bankers’ bonuses, and must also make a bigger effort on an ambitious climate change pact.

EU Commission President Jose Manuel Barroso has warned the United States that “the issue of bonuses is critically important” to Europe.

“It is a question of ethics,” he said. “Our taxpayers are horrified with the idea that their money is being used for exorbitant bonuses.”

EU nations want G-20 countries to threaten sanctions on banks that pay excessive bonuses to executives and traders as part of a sweeping overhaul of the global financial system. They say they need to end payment systems that can trigger reckless risk-taking.

Huge payoffs to bankers have become a hot-button issue on both sides of the Atlantic as governments stepped in with massive bailouts to prevent banks from collapsing late last year.

New York-based Citigroup Inc., which is now one-third owned by the U.S. government as a result of its bailout, gave 738 of its employees bonuses of at least $1 million each, even after it lost $18.7 billion during the year.

Associated Press writers Constant Brand, Robert Wielaard and Raf Casert contributed to this story.