WASHINGTON, April 8 - Finance chiefs from the world's richest industrial nations will discuss rebuilding Iraq's shattered economy this week though it is too soon to start pledging specific funds for it, a senior U.S. Treasury official said on Tuesday. Ministers from the G7 -- the United States, Britain, France, Canada, Germany, Italy and Japan -- are set to meet on Friday and Saturday to talk about global economic conditions but aiding Iraq's economic reconstruction will also be a significant topic. "This is an opportunity to assess what the needs are in the future in Iraq so that...talents can be brought to bear to respond to those needs," the U.S. official said. The U.S.-led war still rages within Iraq but the finance ministers will look beyond it to the challenging, and prickly, issue of how to get it back on track once the conflict ends. The finance ministers' meeting comes on the fringes of semi-annual meetings of the International Monetary Fund and World Bank.
The U.S. official noted that President George W. Bush has said the United States will cooperate with all international organizations in aiding Iraq in future and noted the IMF and World Bank have played roles in similar efforts in the past.
QUESTIONS ON AID
While large amounts have been pledged for humanitarian help already to help deliver food and water and other essentials to needy Iraqis, it is early days for deciding how much may be needed for economic rebuilding, and from whom. Iraq's eligibility for loans from international institutions is in question currently because of past dues owing and debts, and even the amount of those debts is uncertain, the U.S. official said. "At this point, I wouldn't expect pledges or amounts on reconstruction," the U.S. official said. In the past, U.S. officials have mused about organizing a donor's conference to seek specific pledges of money as was done in the case of Afghanistan. Iraq was a point of contention at the United Nations between the United States and traditional allies France and Germany, which strongly opposed military intervention. The G7, therefore, is likely to tread gingerly in initiating a reconstruction effort to avoid inflaming past feelings. Fears and uncertainties about the Iraqi war have cast a long shadow across global economic prospects, making corporations reluctant to invest and sapping consumer optimism so that the pace of expansion has been slow.
NEED GROWTH NOW
The U.S. official said each G7 country has an obligation to boost growth now. "It's important that each country participate in this effort to raise economic growth, each country has got to do what's best for itself in raising growth," the official said. U.S. Treasury Secretary John Snow will again outline the Bush administration's proposed $726-billion tax-cut program, intended as the U.S. effort to boost growth in the world's single largest economy. "Other countries might want to emphasize other things (like) flexibility in markets to raise growth, for example, is very important," the U.S. official said, in an apparent reference toward European economies that the United States maintains need reforms to enable workers to move more quickly and easily among jobs. "A second topic that we hope will also be part of a strategy for growth is to make a lot of progress on reducing trade barriers," the U.S. official said, noting the finance ministers could be particularly helpful in pushing for freer cross-border trade in financial services like banking. In response to questions, the U.S. official said Japan, whose economy has been in the doldrums for a decade, still needs to pursue efforts to defeat deflation, or falling prices, and to come to grips with the country's problem with mounting bad bank loans.//