Concerns Over Terror, Oil Prices Dominate Meetings

Finance ministers from the world's seven richest industrialized countries -- the U.S., Japan, Germany, France, Britain, Italy and Canada -- began talks on Friday in Washington by focusing on combating terrorist financing. The meeting was held in advance of the spring conferences of the International Monetary Fund and its sister institution, the World Bank.

Meeting with representatives from the European Union as well as 12 nations including Saudi Arabia, Russia, India and Pakistan, the G-7 countries agreed on a raft of measures to strengthen the fight against terrorism.

They included stepping up border controls, intensifying cooperation between law and police authorities between the countries and redoubling efforts to combat money-laundering and tracing terrorism funds.

"The recent tragedies in Madrid and Riyadh show clearly that we cannot relax our vigilance and must not slacken our resolve our efforts to combat this scourge," the group said in a statement.

On Saturday, the G-7 will thrash out prospects for the global economy amid worries of a sharp increase in oil prices, a soaring U.S. budget deficit and escalating violence in Iraq.

Concerns over rising oil prices

Earlier this week the IMF raised its forecast for global growth this year to 4.6 percent and 4.4 percent for 2005. But at the same time it warned that growth is threatened by factors such as rising oil prices, which could shave 0.3 percentage point off growth for every $5 per barrel price increase as well as geopolitical risks in Iraq.

Several G-7 finance ministers expressed concerns over high oil prices. German Finance Minister Hans Eichel (photo) told business daily Handelsblatt that if crude oil prices remained this high for a long time, it could affect Europe's nascent economic recovery. "It (rise in oil prices) would be poison for Europe's recovery," he said.

Jean-Claude Trichet, head of the European Central Bank, took a similar view. Both urged the Organization of the Petroleum Exporting Countries (OPEC) indirectly of boosting its oil output. In an interview with Financial Times Deutschland, Trichet, referring to the OPEC said, "every partner in the present global economy should completely fulfill his responsibility."

U.S. budget deficit a further worry

In addition to Europe's weak economic growth and the sharp rise in oil prices, a further topic that is expected to dominate the G-7, IMF and World Bank meetings is the growing U.S. budget deficit.

However U.S. Treasury Secretary, John Snow hit an optimistic note prior to hosting a meeting of the G-7 on Saturday and said that the U.S. economy is in far better shape than it was last spring.

"We're on very solid footing, our upward trend is strong," Snow said, listing a number of upbeat economic signs, from growth in the gross domestic product to rising exports and the creation of 300,000 payroll jobs in March, the biggest one-month gain in four years.

"I anticipate that this economy will be creating a lot more jobs in the coming months," Snow said in a speech to the Bond Market Association in New York.

Protests against the IMF and World Bank

World Bank President James Wolfensohn (photo), who said he was concerned that the global war on terrorism was diverting attention from the pressing need to eliminate global poverty, announced that the World Bank did have some good news to report on the war on global poverty.

Wolfensohn said the bank's first annual review of the progress being made in cutting poverty in half by 2015 showed that the goal can be reached.

He said this was primarily because of strong economic growth in China and India. However, he said the World Bank's review showed that many other regions of the world, including Africa, were falling behind.

The high-level meetings over the weekend have attracted hundreds of demonstrators and anti-globalization activists, who are using the theme of "Unhappy Birthday" in recognition of the IMF and World Bank's 6oth anniversary.

Demonstrators have been distributing leaflets and flyers with messages such as "Stop exploiting developing countries!", "IMF is worsening poverty" and "Leave the developing countries in peace!" in Washington.

Salih Booker, the head of Africa Action, an advocacy group told Reuters that the IMF and the World Bank were "insufferable birthday boys, loan sharks who enforce a system of global apartheid on the world's poor under the veil of multilateralism. They are hazards to global economic health and their loans should carry warnings."