- The Washington Times - Saturday, February 11, 2006

MOSCOW — Finance ministers from the world’s wealthiest nations yesterday singled out soaring energy costs as the greatest threat to global economic growth this year.

“Overall global growth remains solid, and this is expected to continue in 2006,” ministers from the Group of Eight (G-8) industrialized countries said after closed-door talks in a hotel near Red Square.

“Risks remain, including high and volatile energy prices,” the group said in its final communique.

Oil prices have risen 30 percent in the past year to more than $60 a barrel, stoking inflation, increasing business costs and cutting into consumers’ pocketbooks.

The ministers said more work needs to be done to “improve the smooth functioning and stability of [energy] markets,” promote investment in production, diversify consumption and develop alternative sources of energy.

Highlighting solid economic growth in the United States — and a drop in the unemployment rate to 4.7 percent — Treasury Secretary John W. Snow also raised worries over the effects of growing energy costs.

“We are all concerned about the risks of rising energy prices and what they do to global growth,” Mr. Snow said after the talks.

The meeting in frigid Moscow marked Russia’s first as president of the G-8, which also includes Britain, Canada, France, Germany, Italy, Japan and the United States.

President Bush and other leaders of G-8 countries are to meet for a summit in St. Petersburg in July.

While oil and energy security dominated the meeting, the ministers also touched on a range of other topics.

They called for aid to developing nations fighting the deadly H5N1 strain of bird flu, outbreaks of which were reported in Africa for the first time last week and in the Western European nations of Italy and Greece yesterday. “We call on the donor community to provide financial support to poor countries fighting the epidemic,” the ministers said.

The ministers also urged more action in the World Trade Organization (WTO) to open global markets in agriculture, industrial products, financial services and intellectual-property rights.

The meeting was a diplomatic success for Russia, which joined the G-8 in 1998 and took over as president for the first time this year.

The boom in energy prices has delivered a windfall to Russia, the world’s second-biggest oil exporter, and has given it greater economic clout than in the past.

But the Russian presidency has been dogged by questions about Russia’s reliability as an energy supplier after it temporarily cut off gas supplies to Ukraine in January, leading to disruptions in exports to Europe.

Western officials, including Secretary of State Condoleezza Rice, have also raised concerns over Russia presiding over the G-8 at the same time as critics accuse President Vladimir Putin of backtracking on democracy by increasing Kremlin controls over parliament, the press and private charitable organizations.

G-8 ministers did not raise these concerns publicly after yesterday’s meeting and instead praised Russia’s “improved fiscal position.” Mr. Snow said the dispute with Ukraine was discussed at the meeting, but declined to comment on the details of the disagreement that sparked Russia’s gas cutoff.

Mr. Snow also said that the United States and Russia are “in the homestretch” in discussions over Russia’s bid to join the WTO.

The United States is one of the few countries that has not yet reached an agreement with Russia on WTO membership, and talks have stuck on the issue of opening financial markets, in particular Moscow’s insistence that foreign banks not be allowed to operate branches in Russia.

“I think we are narrowing the differences and should be very close to a resolution,” Mr. Snow said.

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