By Stuart Grudgings
RIO DE JANEIRO, Dec 22 (Reuters) - French President Nicolas Sarkozy backed Brazil's claim to a permanent seat on the U.N. Security Council on Monday, 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," Sarkozy, the current president of the European Union Council, said in a speech on the first day of a two-day summit between the EU and Brazil in Rio de Janeiro.
"I think we need Brazil as a permanent member of the Security Council," he said.
Brazil, Latin America's biggest economy, has been pressing its case 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.
Brazilian President Luiz Inacio Lula da Silva 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.
Sarkozy, who is expected to sign a major defense cooperation deal with Lula on Tuesday, said France and Brazil should bring a joint proposal to the next G20 meeting in London in April stressing the importance of stricter controls on speculation in financial markets.
"Europe will work hand in hand with Brazil. It's important that France and Brazil arrive with a proposal that shows we don't want a world of speculators but of business people," he said.
Lula joined Sarkozy in calling for governments to take a greater role in their economies, 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."
Sarkozy is expected to sign an arms deal with Brazil that 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.
The plan foresees tax cuts and financing mechanisms to help build up a domestic arms industry and ensure weapons acquisitions.
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.
Brazil's Estado de Sao Paulo newspaper said on Monday the deal would also include an $1.1 billion agreement for Brazil to build 51 of France's Cougar helicopters. (Editing by Raymond Colitt and David Wiessler)