- The Washington Times - Sunday, April 17, 2005

The world’s most exclusive financial club sought yesterday to project an air of confidence on the heels of unsettling economic developments — a stomach-churning drop on Wall Street and gyrating global energy prices.

Finance officials from the world’s seven richest countries yesterday signaled their resolve to deal with the energy situation and reassure financial markets that they are on top of the matter.

“Higher oil prices are a head wind” the finance officials acknowledged in a joint statement. They urged producers to increase energy supplies and said countries should conserve more.

The Group of Seven countries endorsed more timely and accurate information about the oil market, which officials said could help control price fluctuations and make companies more willing to expand production.

The United States, Japan, Germany, France, Britain, Italy and Canada make up the group.

The private talks a few blocks from the White House followed Wall Street’s worst session in nearly two years. The Dow Jones industrials plunged 191 points Friday as investors worried about high oil prices and the strength of U.S. economic activity.

In addition to the G-7 discussions, the 184-nation International Monetary Fund and World Bank were holding meetings this weekend.

At a press conference wrapping up the IMF’s policy-setting committee, British Chancellor of the Exchequer Gordon Brown said concerns about surging oil prices also figured prominently in its discussions.

The IMF panel concluded that efforts need to be made to boost supplies, including greater use of alternative energy sources.

“We recognize that the volatility of oil prices and particularly the high level in recent months could have a damaging effect on growth,” Mr. Brown said.

U.N. Secretary-General Kofi Annan told international finance officials yesterday evening that developing countries could be encouraged to support efforts to prevent terrorism and nuclear proliferation if they received support from rich nations for more assistance and a greater voice in global affairs.

“Developing countries are more likely to support those vital and human rights objectives if they see that donor countries are willing to make greater effort for development and to give them a stronger voice in global economic governance,” Mr. Annan said.

Under tight security, several hundred protesters voiced opposition to the selection of Paul Wolfowitz, deputy defense secretary and an architect of the Iraq war, to run the World Bank. They also demanded greater debt relief for impoverished countries.

The G-7 statement endorsed the goal of fully canceling debt for such countries. But officials have yet to resolve differences between competing plans from the United States and Britain.

“Once more, the G-7 have chosen delay,” said Jonathan Hepburn, policy adviser for Oxfam International, a supporter of expanded debt relief.

The Bush administration also used the G-7 meeting as an opportunity to pressure China to overhaul its currency system. The finance officials advocated “flexibility in exchange rates” — the phrase they have used before to prod China.

The United States wants China to stop directly linking the yuan to the dollar. Treasury Secretary John W. Snow said it was now time to act. “The next step is to do it,” he said, rejecting claims by Beijing that it is not ready for the switch.

The administration has come under fire from members of Congress and U.S. manufacturers to take a tough line against China. Critics contend China’s currency system hurts U.S. exports and has contributed to the loss of millions of jobs in American factories.

France’s finance minister, Thierry Breton, said that in the G-7 group’s discussion, “It was clear that the yuan is undervalued, and there was a consensus that China has to address this.”

Energy prices were a concern at the last G-7 meeting in February and the one before that, but little action has resulted.

Mr. Snow acknowledged that the G-7 statement itself “won’t do much about the fundamentals for demand and supply of oil.” But he said the statement should signal to the financial community that “the G-7 is monitoring the situation.”

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