Leaders Reject a United Economic Effort Group of 7 Meeting Emphasizes Individual Tactics, Avoids Focusing on Iraq War
By Robert J. McCartney Washington Post Foreign Service Sunday, February 23, 2003; Page A11 PARIS, Feb. 22 -- The world's seven leading industrialized countries pledged today to take steps to spur economic growth but steered clear of joint action on budgets or currencies, saying each nation should adopt whatever policies it saw fit. At a two-day meeting here, finance ministers and central bank chiefs of the Group of Seven nations also chose not to focus on what they might do if the world economy were hurt by a possible war with Iraq. They did not want to assume that a war would break out, officials said, and in any case had some fundamental differences about how to react. A final communiqué noted only that "geopolitical uncertainties have increased," without even mentioning Iraq. The communiqué added, "If the economic outlook weakens, we are prepared to respond as appropriate." Ministers said they were closely watching oil markets and currency exchange rates but saw no need for action on either front at this time. U.S. Treasury Secretary John W. Snow, attending his first international conference in his new post, repeatedly stressed the importance of passing President Bush's tax-cutting plan. In one-on-one meetings with other ministers, as well as at the full session, he emphasized that the proposed tax cuts and other measures would accelerate growth in the American economy, the world's largest, and thus help the world as a whole. Snow had some success in making his case. The final communiqué suggested that the United States was already on the right path, saying America is "implementing action" to create jobs and promote growth. By contrast, the statement called on others to make various economic "reforms." The statement said that Europe needed to accelerate measures to free up labor markets and otherwise achieve a more flexible economy. It said Japan needed to follow through on promised structural reforms of its financial and corporate sectors. Nevertheless, Snow faced implicit criticism of the U.S. tax-cut plan, as several European leaders expressed strong concern about the U.S. budget and trade deficits. The Bush administration's package is projected to add to the budget deficit, at least initially. "It is a cause for concern for Europe and the world that the situation of twin deficits seems to be re-emerging," European Central Bank President Wim Duisenberg said. German Finance Minister Hans Eichel and Greek Finance Minister Nikos Christodoulakis, who was representing the European Union because Greece currently holds the EU's rotating presidency, also spoke out against the U.S. deficits. Snow said the United States was committed to "fiscal discipline" and budget balance in the long run. He also said it wasn't desirable to focus on battling the deficit now, when growth is slower than the administration would like. The communiqué said the seven nations "recognize the imperative for higher growth rates and resolve to take steps to achieve this result." Both Snow and French Finance Minister Francis Mer, who was the host of the meeting, said each country was free to pursue that goal in its own way, rather than through joint action. "There wasn't a one-size-fits-all solution," Snow said. The G-7 countries are the United States, Japan, Germany, France, Britain, Italy and Canada. Russia also takes part in some meetings, though not all, as a member of what is called the G-8. The G-7 acknowledged that the prospect of a U.S.-led war with Iraq was a major burden on the world economy at present. If war occurs and ends quickly, ministers said, oil prices would drop, stock prices would rise, and, above all, corporations would be more willing to invest. Asked whether governments would tap strategic stockpiles of petroleum to avoid shortages, Mer said that was unlikely unless there were "a very long-term break or decline in production." "The stocks are there for a crisis situation. There is not a crisis situation at present," Mer said. He and other ministers went out of their way to play down political and diplomatic differences over the Iraq issue. France and the United States, in particular, are at loggerheads over it, but before the meeting, Mer told French television: "We're not deciding here whether it's war or not. I'm not indifferent about that issue, but it's not our job." Today, at the end of the meeting, Mer noted, "We had no difficulty discussing common values, and I think that is worth underscoring."
