G-7 OKs Plan To Rebuild Iraq

United States Treasury Secretary John Snow, left, speaks with German Finance Minister Hans Eichel, second left; Russian Finance Minister Alexei Kudrin, second from right, and Italy's Economy Minister Guilio Tremonti, following a working meeting of the G-7 Saturday, April 12, 2003, in Washington.
Finance officials from the seven richest industrial countries agreed Saturday to support a new U.N. Security Council resolution as part of a global effort to rebuild Iraq.

The deal settles a dispute that had threatened to delay postwar help. The United States had insisted could go ahead without a further U.N. resolution; others wante dU.N. action.

The finance leaders, in a joint statement, endorsed a resolution as part of a reconstruction plan that will involve the International Monetary Fund and the World Bank.

"We recognize the need for a multilateral effort to help Iraq. We support a further U.N. Security Council resolution," said the finance ministers and central bank presidents from the United States, Japan, Germany, France, Britain, Italy and Canada.

That was a concession by the Bush administration. U.S. officials had argued that IMF-World Bank reconstruction efforts could begin as part of an American-led rebuilding program without a further U.N. resolution. The world body had failed to endorse the U.S.-led military campaign to oust Iraqi President Saddam Hussein.

France and Germany, leading critics of the war, rejected the administration's approach. They said the lending institutions should not become involved in Iraq until there was a deal on the United Nations' role in overseeing reconstruction.

"The IMF and the World Bank should play their normal role in rebuilding and developing Iraq, recognizing that the Iraqi people have the ultimate responsibility to implement the right policies and build their own future," the Group of Seven countries said in the statement.

The discussions were led by Treasury Secretary John Snow and Federal Reserve Chairman Alan Greenspan.

The countries did endorse a call by the United States to begin discussions on forgiving a portion of Iraq's massive foreign debt burden, much of it owed to Russia, France and Germany and built up during Saddam's rule.

One participant in the G-7 discussions, Wim Duisenberg, the head of the European Central Bank, said the talks were conducted without any hint of the bitterness between the United States and France and Germany over the war.

Duisenberg said all participants agreed "a new Security Council resolution would be welcomed" and that "there should be a joint effort to reconstruct" Iraq.

The finance officials also pledged to pursue greater cooperation in efforts to deal with a serious global economic slowdown, exacerbated by uncertainties surrounding the war.

"Growth in most of our economies has been subdued, though uncertainties have diminished," the G-7 officials said.

"A strong and lasting recovery is essential for our own countries and for the world," the joint statement said. "To this end, we each commit to pursue sound macroeconomic policies that support sustained growth."

As part of the effort to bolster growth, the officials also released a plan that discussed the steps over the past year to increase growth and improve the ability of the IMF and other institutions to handle financial crises.

"We reiterate our commitment to strengthen crisis prevention and resolution measures," the statement said.

The statement was silent on specific measures needed to stimulate growth.

The administration has made President Bush's proposed $723 billion in new tax cuts the centerpiece of its economic revitalization program. But several European countries have questioned the advisability of pursuing further tax cuts in the United States at a time that Washington's budget deficit is soaring.

Security was tight for the weekend finance meetings, which in addition to the G-7 talks will include discussions of the policy-setting committees of the IMF and the World Bank.

Police extended the security perimeter around Blair House and the IMF and World Bank headquarters, a few blocks from the White House.