08 February 2002

Treasury's O'Neill on G-7 Ministerial

Preventing terrorists from using global financial systems to their benefit and bolstering global economic growth are two issues that U.S. Treasury Secretary Paul O'Neill wants to top the agenda of the G-7 ministerial meeting in Canada.

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.

In February 7 prepared remarks to reporters, O'Neill said that while the G-7 countries have made significant progress in fighting terrorist financing, they can still do more. His goal, he said, is to develop a mechanism for blocking terrorists' assets simultaneously in all countries involved in the antiterrorist coalition.

Concerning global economic performance, O'Neill said the G-7 countries need to contribute to "strong and vibrant growth" not only for their own good but also for the benefit of emerging economies and the poorest countries.

In Ottawa, he said, he wants also to discuss the president's proposal to change the structure of official development aid and a process for resolving financial crises.

The Bush administration has proposed that the World Bank offers 50 percent of development assistance to the poorest countries in the form of grants instead of loans.

O'Neill said he wants to persuade other G-7 countries that grants are more appropriate than loans for educational, sanitation and other projects that bring societal rather than financial return.

On crisis resolution, he said he is committed to working on the creation of an international bankruptcy mechanism that would help countries to cope better with a financial distress.

Following is the text of O'Neill's prepared remarks:

Good afternoon. Tomorrow I will be traveling to Ottawa to attend a meeting of G-7 Finance Ministers. I will emphasize two points in particular to my colleagues. First, we must continue our efforts to ensure that our financial systems are not used for terrorists' benefit. Second, we must continue to work together to bolster economic growth in our economies.

With our G-7 partners we have made a lot of progress in combating the financing of terrorism. I want to thank them for their support. To date, 149 countries and jurisdictions, including the G-7, have issued orders to freeze terrorist assets, and we have blocked over $104 million since September 11. But we can do more. My goal is for the United States to work with the G-7 and our allies to develop a mechanism to block the assets of terrorists simultaneously in all our countries. This will require even closer cooperation and commitment. We will also develop key principles regarding information to be shared, the procedures for sharing it, and the protection of sensitive information. We should spare no effort in ridding the world's financial system of terrorist fundraising activities.

I want to hear from my G-7 colleagues about their efforts to implement the rigorous G-7 Action Plan that we agreed upon back in October. I will also discuss with the heads of the IMF [International Monetary Fund] and World Bank their institutions' efforts to assess all countries' compliance with international standards on terrorist financing.

Improving living standards around the world is also paramount, and the G-7 countries all need to contribute to strong and vibrant growth in order to help make this possible. The resumption of strong growth in our economies will benefit both emerging economies and the poorest countries.

I expect to discuss the steps that each G-7 country is taking to reinvigorate global economic growth. For our part, the United States has put the worst part of the economic slowdown behind us. We see more signs every day indicating that the seeds for a recovery are there, and they only need nourishing to speed the process of putting Americans back to work. I believe we will return to prosperous real economic growth rates of 3 to 3.5 percent, as soon as the fourth quarter of this year.

Two other priorities for our discussions tomorrow are to discuss the important challenges the world faces in aiding the poorest nations and the efforts underway to involve the private sector in resolving financial crises. On development issues, I plan to emphasize the importance of the President's grants proposal and the need to improve the effectiveness of development assistance. Rather than adding to the debt burden many developing countries cannot service, we should openly admit that some countries need grants, and that grants are more appropriate than loans for education, sanitation projects, and other projects that offer great societal return but do not necessarily create a direct financial return that can finance the repayment of a loan.

On crisis resolution, a serious discussion has been started by the recent call for the creation of a bankruptcy process. I will stress my commitment to work on a sovereign debt restructuring mechanism that is market-based, gives responsibility and ownership to debtors and creditors, and minimizes any potential conflict of interest. We should press ahead on this topic and address the many questions that need answering so that we can put a workable process in place. Search Email Treasury Home Page Sitemap