Associated Press Writer
ABU DHABI, United Arab Emirates (AP) — French President Nicolas Sarkozy urged both oil-rich nations and industrial powers Tuesday to work to stabilize world oil prices, noting that the global economy cannot afford major price swings while it works to recover from the economic downturn.
Sarkozy did not give a target price range in a speech to diplomats and French military personnel in the United Arab Emirates' capital Abu Dhabi, but he said stability in oil markets is essential.
The French president said high prices undermine growth, but low prices "sow the seeds" of future shocks by discouraging investment in other investment technologies, including nuclear power.
He said he wanted to work with OPEC member Emirates and others to lower volatility in oil markets. Fuel prices and efforts for alternative energy sources are expected to be high on the agenda for the Group of Eight meeting of industrialized countries in Italy next month.
Oil prices have rebounded significantly from lows near $30 a barrel earlier this year, but remain about 60 percent below the record $147 level they hit last summer. Crude now sells at about $60 a barrel — above the level the UAE needs to balance its budget but below what some fellow OPEC members consider to be a fair price.
Sarkozy's comments came during a visit to formally open his nation's first military base in the Gulf. Earlier, he watched the French and UAE flags being raised over the naval base outside the capital as forces from both nations stood at attention.
The ceremony is part of a two-day trip that includes a visit to the future site of a branch of the Louvre. The arm of the French art museum will be part of a cultural and residential district being built in Abu Dhabi. The city also hosts a branch of France's Sorbonne University, and is set to receive outposts of New York University and the Guggenheim Museum.
In light of all these new projects, Sarkozy called the oil-rich UAE "a laboratory for globalization." He is pushing a deal for the UAE to purchase twin-engined Rafale fighter jets and supports the Emirates' push to develop civilian nuclear power plants.
"Nuclear power is not the sole prerogative of Western states," Sarkozy said.
President Barack Obama approved plans for the U.S. to help the UAE become the first Arab nation with a nuclear power industry last week, though Congress could still try to block the deal. U.S. companies are expected to compete against ones from France, Japan and Russia for a share of the $41 billion project.
The new naval base is France's first major foreign military installation since the 1960s and its first outside Africa. It is expected help safeguard vital Persian Gulf shipping lanes.
Some of the most pressing missions, however, may come off the coast of Somalia, as pirates expanded their assaults on ships from attacks in the Gulf of Aden further into the Indian Ocean. Pirates have attacked more than 80 ships this year alone in the Gulf of Aden, and successfully hijacked about 30 of them.
The United States remains the major foreign military presence in the Gulf with key air bases, logistics operations and the headquarters of the 5th Fleet in Bahrain.
Sarkozy's visit also sought to forge strategic commercial alliances between one of Abu Dhabi's government-backed investment vehicles and France's newly created strategic investment fund. The Mubadala Development Co. and France's Fonds Stratégique d'Investissement signed a memorandum of understanding Tuesday but details about the joint venture were not spelled out.
Mubadala has increasingly directed its funds toward technology-oriented companies such as General Electric Co. and chipmaker Advanced Micro Devices Inc. that it hopes can help diversify the emirate's economy beyond the energy sector.
Potential areas for investment in public or private French companies include technology, health sciences and biotechnology, and renewable energy.
Sarkozy called for the creation of a 20 billion euro ($28 billion) strategic investment fund late last year to aid core industries struggling because of the financial crisis.
Copyright 2009 The Associated Press.