Treasury's O'Neill Hails G-7 Cooperation Against Terrorism

(Also applauds action on sovereign debt restructuring) (1060)

U.S. Treasury Secretary Paul O'Neill is hailing a decision by the
Group of Seven (G-7) major industrialized countries to jointly
designate groups and individuals as financiers of terrorism.

The move marks "an important step in our international efforts to
increase information sharing and coordinate our counter-terrorist
financing efforts," O'Neill said in a statement following the April
19-20 meetings in Washington of G-7 finance ministers and central bank
governors.

O'Neill said the United States was committed to providing technical
assistance to advance the goal of cutting off all terrorist financing
sources, as well as to ensure that non-governmental organizations
(NGOs), charities and informal "hawala" banking systems not be misused
by terrorists and their supporters.

The G-7 countries -- the United States, France, Italy, Germany,
Britain, Japan and Canada -- also agreed to an action plan for a new
debt restructuring process for over-indebted countries.

The plan, which largely tracks a U.S. proposal for sovereign debt
restructuring, aims to "increase predictability and reduce uncertainty
about official policy actions in the emerging markets -- thereby
creating the conditions for a sustained recovery of private investment
in emerging markets," O'Neill said.

"We will work together with emerging market countries and their
creditors to incorporate new contingency clauses into debt contracts,
while also continuing to explore with the IMF [International Monetary
Fund] more sweeping, statutory steps to sovereign debt restructuring,"
he said.

The issue of sovereign debt became increasingly important after
Argentina defaulted on its debt payments in December 2001.

O'Neill said that despite clear signs of global economic recovery
following the slowdown of 2001, Argentina remains "a key concern." The
Argentine authorities should "work closely with the IMF to put a
comprehensive reform plan into place," he said in his statement.

Speaking to reporters after the ministers' meeting, O'Neill said he
and his G-7 counterparts agreed on the severity of the crisis in
Argentina and agreed that the real question is whether "the political
leadership in Argentina is ready to do the things it needs to do."

With respect to development, O'Neill said the G-7 ministers had
reaffirmed their commitment to increasing the effectiveness of
development assistance, and to continuously monitoring its results.

The group also discussed a U.S. proposal to provide more aid in the
form of grants rather than loans, and "the need to come to a sensible
resolution that supports effective development as soon as possible,"
he said.

At issue in the debate over grants and loans is funding for the
International Development Association (IDA), the arm of the World Bank
that provides long-term loans at no interest to the poorest of the
developing countries.

In his remarks to reporters, O'Neill said he inserted the grants issue
into the G-7 agenda, and "hard-charged" his colleagues on the topic.
He acknowledged that no final agreement had been reached, but reported
some movement in favor of using grants for certain programs, such as
those that fight HIV-AIDS and support education in poor countries.

"There are still issues that must be attended ... but ultimately we
will do the right thing," O'Neill told reporters.

Following is the text of his written statement at the conclusion of
the G-7 finance ministers meeting:

(begin text)

U.S. Department of the Treasury
Office of Public Affairs
April 20, 2002

Statement by Secretary O'Neill following the spring meeting of the G-7
Finance Ministers

It was a pleasure to host my G-7 colleagues here in Washington last
night and this morning. I enjoyed our candid and productive
discussions.

I am pleased to announce that yesterday, the G-7 nations for the first
time jointly designated a list of individuals and an entity as
financiers of terrorists, terrorist organizations and those who
support them and blocked their assets. I want to thank my G-7
colleagues for their close collaboration on these efforts. This marks
an important step in our international efforts to increase information
sharing and coordinate our counter terrorist financing efforts.

The unity with which the international community has tackled that goal
is a message to the terrorists that our resolve is strong. The United
States is extremely pleased to work with other nations to help ensure
effective enforcement of U.N. Security Council resolutions. The United
States is committed to providing needed technical assistance to
continue our worldwide progress in severing links that terrorists use
to finance their activities. There is still much to be done and we
agreed this weekend to continue working to ensure that legitimate
institutions, such as charities, NGOs, and hawala systems, are not
misused by terrorists and their supporters.

We were all pleased to observe the economic recovery now taking hold
in our economies. At the same time, we are mindful of downside risks
that remain and remain committed to pursuing polices aimed at
sustaining recovery and strengthening productivity growth. We also
noted clear signs of recovery in emerging market economies. Argentina
is still a key concern, however, and we urge the Argentine authorities
to work closely with the IMF to put a comprehensive reform plan into
place.

We also discussed the key priorities of crisis prevention and crisis
resolution. First and most important, we all want to move from
reacting to crises with repair efforts to a world in which all nations
have investment grade sovereign debt. Even in that world, we would
have occasional problems, and we need a predictable process for
responding. We are releasing today an action plan to increase
predictability and reduce uncertainty about official policy actions in
the emerging markets -- thereby creating the conditions for a
sustained recovery of private investment in emerging markets. We will
work together with emerging market countries and their creditors to
incorporate new contingency clauses into debt contracts, while also
continuing to explore with the IMF more sweeping, statutory steps to
sovereign debt restructuring.

We are all dedicated to advancing development and combating poverty in
the poorest nations. We reiterated our commitment to increasing the
effectiveness of bilateral and multilateral development assistance,
and to continuously monitoring and measuring its results. We also
discussed the important issue of IDA grants and the need to come to a
sensible resolution that supports effective development as soon as
possible.

(end text)

(Distributed by the Office of International Information Programs, U.S.
Department of State. Web site: http://usinfo.state.gov)