By Paul Taylor

BRUSSELS, Sept 24 (Reuters) - The next U.S. president should coordinate carefully with Europe on economic policies over the long term in response to the crisis sweeping global financial markets, the head of the European Commission said on Wednesday.

In a speech at Harvard University, Jose Manuel Barroso also urged the United States to work with Europe to bring new emerging powers into the world's top institutions to tackle challenges such as climate change, terrorism and trade.

He called on the United States to eschew protectionism, isolation and economic nationalism, and to join the European Union in pursuing an Atlantic Agenda for Globalisation.

In response to the current financial crisis, "the degree of interdependence of our economies requires careful coordination, not just in the coming weeks but, crucially, in the longer term," he said.

To maintain open and dynamic financial markets on both sides of the Atlantic "we need clear and effective rules -- maybe commonly agreed rules, where appropriate -- to ensure transparency and confidence in the market", Barroso added.

"We have to make room at the top table for others, because that is the only way we can consolidate and strengthen a stable, multilateral world, governed by internationally agreed rules," Barroso said, according to an advance text issued by his office.

Without spelling out which emerging powers should be brought into which institutions, he appeared to advocate opening up both the Group of Eight leading industrialised nations and the United Nations Security Council to rising powers.

Neither China nor India is a member of the G8, which groups the United States, Japan, Russia, Germany, France, Britain, Italy and Canada.

Economic powerhouses Japan, India and Brazil are not permanent members of the U.N. Security Council, which also has no permanent members from Africa and Latin America.

COOL HEADS NOT COLD WAR

In an apparent rejection of calls in the United States to isolate Russia over last month's war in Georgia, Barroso said: "This is a time for cool heads, not Cold War."

He urged the successor to President George W. Bush to join the 27-nation EU in taking a global lead in the fight against global warming, saying they must engage China and India in dialogue to curb greenhouse gas emissions.

Barroso said the strategic effect of the U.S.-European partnership would "start to evaporate" unless they were able to reach out to the world in search of new partnerships and effective multilateral strategies.

EU officials are optimistic that both Republican John McCain and Democrat Barack Obama would do much more than Bush to help international efforts to fight climate change.

But they are concerned both at McCain's tough rhetoric against Russia and advocacy of an alliance of democracies that would exclude major countries such as China and Russia, and at Obama's declared reservations about global free trade. (Editing by Dale Hudson and Tim Pearce)

AlertNet news is provided by