Finance

Finance

G7 finance chiefs come together in Rome

13 February 2009 16:25 (UTC +04:00)

Bakuâ€“ APA-Economics. Group of Seven finance leaders prepared on Friday for a high-stakes summit in Rome on the global financial crisis as warnings of protectionism and evidence of bitter recession piled up, AFP reports.
Ahead of Friday’s opening dinner of finance ministers and central bank heads from seven top industrialised nations, several delegates voiced alarm over protectionism which they fear may undermine efforts to ease the downturn.

International Monetary Fund head Dominique Strauss-Kahn warned of a "really big" risk that the financial sector could be hit by a wave of protectionism -- countries propping up their own economies in ways that harm others.

"In no way in a global crisis (should there) be a domestic or national solution," he said. "We have to find a global response."

The G7 officials were to kick off their meetings on Saturday, comparing notes on stimulus packages and trying to forge a consensus on the next steps, including possible new rules for global finance.

The new US Treasury Secretary Timothy Geithner was set to discuss his vast US financial stabilization plan, which received a sceptical reaction in the United States.

Russia’s Finance Minister Alexei Kudrin was also to attend.

More measures of the crisis facing them emerged on Friday, with data showing the eurozone economy slumping further and the European Union as a whole joining it and several individual EU countries in recession.

"Never has a G7 summit been held in such a sombre climate," said Italian daily La Stampa.

Japanese Finance Minister Shoichi Nakagawa earlier warned that his G7 delegation would take a "resolute stance" against the "absolute evil" of protectionism at the meeting.

Nakagawa said on Tuesday that the G7 nations -- Britain, Canada, France, Germany, Italy, Japan, and the United States -- were expected to discuss the "Buy American" clause in a US economic stimulus package.

Japan, the European Union and Canada have fiercely attacked the clause, warning it could start a global round of tit-for-tat trade reprisals.

Strauss-Khan said: "You may have in different stimulus packages some comment or amendment saying that this money also should be used to buy national products... So this kind of protectionism may come back."

Meanwhile, France has fiercely defended its plan to pump billions of euros (dollars) into its struggling auto sector against EU charges of protectionism.

The Italian finance ministry said ahead of the meeting: "Fostering a common framework for policy action and fighting protectionist pressures, which tend to gain strength in difficult economic conditions, will be the centrepiece of our work."

It also said that Italy, as president of the talks, would push for "a minimum basic set of rules" on world financial regulation and would discuss reform of international financial institutions and "food security issues."

The World Bank warned on Thursday that the global economic crisis is driving tens of millions into poverty in developing countries.