- The Washington Times - Saturday, February 22, 2003

PARIS U.S. Treasury Secretary John W. Snow was the only finance minister to present a plan for combating recession at meetings here of the Group of Seven industrialized nations yesterday, making a case for President Bush's $690 billion tax-cut package as the best way to help the world economy.
"By strengthening our recovery, it will boost the world economy," said Treasury spokesman Rob Nichols, adding that Mr. Snow met little resistance to the plan and encountered no opposition to the administration's Iraq policies, despite much discussion about the effect they are having on the world economy and oil prices.
Mr. Snow told his counterparts from France, Germany, Italy and Russia that if Congress endorsed the package of tax cuts by the middle of the year, the U.S. economy would expand 3.3 percent in 2003, boosting stocks, creating 500,000 jobs and helping to promote growth around the world, aides present at the private meetings told reporters.
After falling into recession in 2000, the U.S. economy, which has been the locomotive of world growth for years, expanded 2.4 percent last year, growing at an annual rate of 0.7 percent in the fourth quarter.
The Treasury chief also reaffirmed U.S. support for a strong dollar and predicted stable oil prices while acknowledging that the threat of war with Iraq is undermining growth and stock markets, the officials said.
Earlier in Mr. Snow's trip, his first representing the United States at the G-7 meetings, the United States with Britain as its ally appeared headed toward a confrontation with France and Germany over Iraq.
European ministers publicly have laid blame for faltering economies worldwide on the uncertainty caused by the prospect of a war between the United States and Iraq and the effect that is having on rising world oil prices.
"Geopolitical tensions" over Iraq and "further turbulence in the oil market could have a negative impact on economic activity throughout the world," European Central Bank President Wim Duisenberg said before the European Parliament on Monday.
Crude oil has been trading at two-year highs since December, closing up 84 cents to $35.58 a barrel on the New York Mercantile Exchange yesterday.
But privately, the focus was mostly on the U.S. economy and whether it will recover from its recent bout of weakness.
Mr. Snow also appeared to do his part to avoid a confrontation by not insisting that countries such as France, Germany and Japan take measures of their own to stimulate growth.
He said after meeting with British Chancellor of the Exchequer Gordon Brown on Thursday that he would draw attention to the need for stronger growth, especially on the European continent, where the two leading economies France and Germany have been growing at meager rates, around 0.2 percent a year.
Mr. Snow said his prescription for the continent's sluggish growth is a reduction in high tax rates, more liberalized trade and deregulation all measures that have helped the United States and Britain grow at higher rates than Europe's biggest economies.
The G-7, which includes the United States, Japan, Germany, France, Britain, Italy and Canada, account for two-thirds of the global economy. Russia also is participating in the meetings.
The International Monetary Fund yesterday lowered its 2003 growth forecast for the dozen nations sharing the euro to 1.3 percent, citing the threat of war with Iraq, according to an Italian treasury official.
The Organization for Economic Cooperation and Development foresees global growth of a little more than 2 percent in 2003, and the IMF cut its world growth forecast for 2003 to 3.3 percent from 3.7 percent.
Stock markets around the world have fallen for three consecutive years, a tumble of a scale unseen since the years just after World War II. A repeat fall on a significant scale this year would make it the worst market slide since the Great Depression.


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