07 February 2002

Treasury's O'Neill Says G-7 to Focus on Counterterrorism, Growth

Washington -- The United States will work with its allies to block the assets of terrorists simultaneously in all countries, Treasury Secretary Paul O'Neill says.

Speaking to reporters February 7 on the eve of the G-7 ministerial meeting in Ottawa, O'Neill said that while the United States and its partners have made "a lot of progress" in fighting terrorist financing, they still can do more. Orders to freeze terrorist assets have been issued in 149 countries and jurisdictions, and over $104 million of terrorist money has been blocked since September 11, he said. What G-7 and other countries need to do in the near future, O'Neill said, is to develop key information-sharing principles and procedures. The ministers and central bank chiefs from the Group of Seven industrialized countries -- Canada, France, Germany, Italy, Japan, the United Kingdom and the United States -- are meeting February 8-9 in Ottawa, Canada.

O'Neill said that he would also emphasize to his colleagues the importance of reinvigorating global economic growth. He said the United States has put the worst of the economic slowdown behind it and is likely to grow at an annual rate of 3 to 3.5 percent in the fourth quarter of 2002. He added that the restoration of strong growth in the United States and other developed economies will benefit both emerging economies and the poorest countries.

O'Neill said that in Ottawa he also plans to emphasize the importance of President Bush's grants proposal to improve the effectiveness of development assistance.

The Bush administration has proposed moving the World Bank partially away from loans as its only form of development assistance to the poorest countries. Instead the administration wants the Bank to offer 50 percent of such assistance in the form of grants.

O'Neill said that it makes no sense to heap more debt on these countries and further reduce their borrowing ability. Grants are more appropriate than loans for educational, sanitation and other projects that bring more societal than financial return, he said.

But European countries have objected to Bush's proposal, arguing that grants are more likely to be squandered.

"There is still way to go in getting people to move beyond emotional questions to examine facts together about what makes most sense," O'Neill said.

Nevertheless, he expressed hope that the G-7 countries can reach agreement on this issue before the March Financing for Development Conference in Monterrey, Mexico.

O'Neil said that in Ottawa he wants to continue discussion about creating some sort of bankruptcy mechanisms to give countries in serious financial distress a chance to restore their financial standing. He said he is committed to working on a mechanism that is "market-based, gives responsibility and ownership to debtors and creditors, and minimizes any potential conflict on interest."

On a related issue, O'Neill said the United States has done everything "we could think of" to help Argentina emerge from its current financial crisis by supporting International Monetary Fund efforts and offering advice and technical expertise.

What we did not do, he added, was advertise our efforts.