Despite good will at meeting, G-7 faces big differences

Strong yen, weak euro criticized

U.S. focuses on global prosperity

January 23, 2000|By NEW YORK TIMES NEWS SERVICE

TOKYO -- With the exception, perhaps, of Russia, each nation came away from the meeting of the financial leaders of the Group of 7 industrialized countries yesterday with something it wanted.

For the Japanese hosts, there was a statement, albeit a muddled one, of collective concern over the potential negative effect of an excessively strong yen on the global economy.

The Europeans managed to keep their currency, the euro, out of the final communique despite concerns among policy-makers outside Europe that its low value is being used to avoid taking steps for painful economic restructuring.

And for the Americans, there were pledges from their European and Japanese counterparts that they would work hard to increase their role in ensuring global prosperity.

But peeking around the edges of collective good will were reminders that the global economy is nothing more than an uneasy federation of national interests.

In spite of an aggressive campaign by the Germans to promote their deputy finance minister, Caio Koch-Weser, as the next leader of the International Monetary Fund, no signs of consensus had emerged. If anything, it seemed the parties had moved further apart, with the French considering offering a candidate, perhaps Jean-Claude Trichet or a dark-horse candidate whose name has surfaced, Laurent Fabius, a former prime minister.

The Europeans took umbrage at U.S. concerns over the euro, with ministers from the region and the leader of the European Central Bank emphatically dismissing suggestions that a weak euro had created an export-led recovery in Europe.

"The economic potential behind the euro is obviously greater than that of any other currency, including the mark," said Hans Eichel, the German finance minister. "When people see how Europe picks up, the euro-dollar relationship will change."

And Finance Minister Christian Sautter of France drew attention to a reference in the communique to concerns about the rising level of debt among American households.

Sautter said, "Every country has its problems," and he added that he thought it was the first time the United States has countenanced mention of its economic warts in such a document.

Gordon Brown, Britain's chancellor of the exchequer, seized an opportunity to tweak the French when he commended them for taking Britain's lead in forgiving the government-guaranteed debts owed by several of the world's poorest countries that have agreed to adopt reforms recommended by the IMF aimed at increasing efficiency.

The French said yesterday that they would forgive about 7 billion francs worth of debts under the Heavily Indebted Poor Countries initiative mounted by the Group of 7 last year.

In addition to discussing exchange rates, monetary and fiscal policy, the global financial system and other matters, the ministers also questioned the Russian finance minister on his country's progress in reforming its economy. Russia is seeking debt forgiveness and a resumption of a $4.5 billion loan package from the IMF that was put on hold after the country failed to meet some of the terms. The ministers offered a lukewarm assessment of Russia's economic progress.

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