WASHINGTON — The Bush administration and its major allies claimed significant progress in the effort to choke off the flow of money to terror organizations but admitted that recent attacks in Spain and Saudi Arabia demonstrate that more needs to be done.
"The recent tragedies in Madrid and Riyadh show clearly that we cannot relax our vigilance and must not slacken our resolve or our efforts to combat this scourge," the group declared in a joint statement.
The communique was issued after a special meeting Friday that the Group of Seven major industrial countries — the United States, Japan, Germany, France, Britain, Italy and Canada — held with representatives from the European Union, Russia, China, India and nine other nations.
Terror's financial networks, the threat that rising oil prices pose to the global economy and deteriorating security in Iraq were the main agenda topics for finance ministers as they held a series of preparatory meetings Friday and Saturday before the start of broader discussions at the 184-nation International Monetary Fund and the World Bank.
Treasury Secretary John Snow and Federal Reserve Chairman Alan Greenspan were hosts for the G-7 meetings, being held at the Anderson House, a stately mansion on Washington's embassy row. The Saturday talks focused on a review of the global economy and what countries could do to promote a more sustainable recovery.
The global economy, after being battered by recession, terrorism and war, appears headed for stronger growth this year. The IMF announced this week an increase in its forecasts for global growth to 4.6 percent this year and 4.4 percent in 2005.
At the same time, the fund warned of threats such as rising oil prices and geopolitical risks in Iraq. Oil alone could shave 0.3 percentage point off growth for every $5 per barrel price increase,
Iraq's two finance officials assured the United States on Friday that efforts to revive the country's shattered economy remain on track despite the increased violence, Bush administration officials said.
"The Iraqi delegation underline that their reforms are already bearing fruit, will continue and will last beyond the transition," Snow said.
He and Greenspan were briefed by Iraqi Finance Minister Kamil Mubdir al-Gailani and Central Bank President Sanan al-Shabibi, who gave an optimistic assessment of progress Iraq is making after the war and two decades of rule under President Saddam Hussein's rule.
Even though Iraq is experiencing the bloodiest month since the U.S. occupation began, the Americans and the Iraqis want to show the rebuilding effort is making progress. The administration is looking to both the IMF and the World Bank to provide major financing toward the reconstruction of Iraq.
Small protests have been mounted over the past three days in front of the police-protected buildings of the two lending institutions two blocks from the White House, and demonstrators promised larger crowds during the weekend.
Snow and Treasury Undersecretary John Taylor said that the G-7 joint statement would reflect no change in the group's position on currencies from the statement issued by the G-7 in February. That statement urged flexibility in exchange rates, wording aimed at pushing China to allow its currency, currently tightly linked to the dollar, to float freely.
Taylor said the G-7 agenda would focus on cutting the cost of remittance flows to developing countries, economic development in the Middle East and a "strategic review" of the IMF and World Bank to be presented to the G-7 summit in Sea Island, Georgia in June.
The United States and its major economic allies agree on the need to pursue policies to promote stronger global growth, but differences of opinion over how to achieve that persist.
The Bush administration rejected accusations that America's soaring budget and trade deficits were a threat to the global economy.
Also, Europe's top central bankers were giving no hints that they planned to heed calls for further reductions in European interest rates, and European policy-makers were not inclined to move any faster on economic reforms, given the strong political opposition to the reforms that have already been proposed.
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