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Military

19 November 2001

Text: Treasury's O'Neill on Terrorism Financing, IMF Reform

(Calls terrorism a threat to world financial system) (1020)
Terrorism constitutes a threat to the world financial system, Treasury
Secretary Paul O'Neill says.
He told the International Monetary and Financial Committee (IMFC)
meeting in Ottawa, Canada, November 17 that cutting off terrorist
financial links is the highest priority.
The IMFC is a policy-setting body of the International Monetary Fund.
"Every nation needs to act so there is no safe harbor, anywhere, for
terrorist funds," O'Neill said.
O'Neill has urged the International Monetary Fund (IMF) to expand its
role in the fight against terrorism financing by boosting efforts to
assess countries' adherence to international anti-money laundering
standards, emphasizing issues related to terrorism financing in its
financial sector assessment and analyzing alternative non-regulated
payments and remittances systems.
But he said these efforts and actions to revive the world economy
should not divert member countries' attention from the goal of
reforming the organization.
He suggested the IMF should improve its ability to monitor financial
developments around the world and detect potential troubles. He also
said that the organization needs to show willingness to warn countries
about their potentially dangerous policies, to take appropriate action
when necessary and to develop better mechanism to deal with financial
crises that occur after it has launched its programs.
But "countries should expect to be held to their commitments," added
O'Neill.
Following is the text of the O'Neill remarks as prepared for delivery:
(begin text)
TREASURY NEWS
FROM THE OFFICE OF PUBLIC AFFAIRS
November 17, 2001
Statement by U.S. Treasury Secretary Paul O'Neill to the International
Monetary and Financial Committee Ottawa, Canada
I am glad that the IMFC is meeting today. I thank the people of Canada
for generously hosting this meeting. The international community must
take strong steps to stop terrorist financing. We also must take
concrete actions to strengthen the world economy.
Combating Terrorist Financing
The tragic events of September 11th have made clear the pressing need
to eliminate the flow of funds that finance global terror. Severing
the links that allow terrorists to finance their lethal acts is of the
highest priority.
Cooperation in this effort is crucial. Many countries have taken on
this challenge, and taken steps to freeze terrorist assets. But this
is an area where every nation needs to act so there is no safe harbor,
anywhere, for terrorist funds. We need to work together to implement
United Nations resolutions to block the financing of terrorist
networks, freeze terrorist assets, and criminalize the collection of
funds for terrorism.
It is clear that terrorism poses a threat to the world financial
system, and the IMF must take on an expanded role in the global effort
to combat the financing of terrorism, as well as in the efforts to
fight money laundering. The IMF should immediately step up its efforts
to assess countries' adherence to the anti-money laundering standard
developed by the Financial Action Task Force. It should put greater
emphasis on terrorist financing in its financial sector assessments
and it should enhance its analytical work on alternative payments and
remittances systems, including hawala and non-regulated financial
systems more generally.
World Economy
The world is now confronting a marked slowdown in the global economy.
The terrorist attacks exacerbated a downturn already taking place in a
number of economies. It is important that each of us commit ourselves
to take measures, consistent with our own circumstances, to restore
strong and vibrant global growth.
The United States is doing its part. The U.S. economy began slowing in
the summer of 2000 and this weakness extended through the first half
of this year. Prior to September 11, the economy was moving forward at
a slow, positive rate. Prospects for the resumption of strong growth
were good, reflecting in large measure the tax rate cuts and rebates
enacted this spring as well as the aggressive lowering of interest
rates by the Federal Reserve.
The terrorist attacks set off disruptions that quickly swept through
our economy. These will delay recovery. Nonetheless, the consensus
forecast now anticipates that economic recovery will be visible early
next year. The Federal Reserve has taken timely action, and the
Congress and the Administration are working together on an economic
growth package. The fundamental strengths of the U.S. economy -- our
strong macroeconomic foundations and our dynamic and flexible labor
and capital markets -- remain intact. The enactment of Trade Promotion
Authority will help greatly by restoring confidence and by opening
export opportunities.
Promoting a strong global economy should be one of the IMFC's
paramount objectives. Countries' policies must be adapted to the
particular situation of each country. But the basic direction of all
our policies should be to support growth.
IMF Reform
This weekend we are rightly concentrating on strengthening the world
economy and combating terrorist financing. But this should not detract
us from concerted efforts to reform the IMF so that it becomes an
organization more consistently associated with success. The IMF should
focus on its core areas of monetary policy, fiscal policy, exchange
rate policy, and financial markets.
Improving the IMF's ability to monitor financial developments must
continue to be a central focus. The IMF needs to sharpen its capacity
to detect potential trouble on the horizon, be willing to warn
countries that are heading down a dangerous path, and take appropriate
action. The IMF also needs to develop better mechanisms to resolve
financial crises that occur when IMF programs are already in place.
When the IMF lends, it must be selective and make sure that the
preconditions for success are there. Countries should expect to be
held to their commitments.
Finally, the IMF has a critical role to play. Meeting in the current
circumstances, as the world seeks to confront the challenge of global
terrorism, is itself a strong signal. I am confident that we will
emerge with a common commitment for each of us to do what we need to
do to support the resumption of growth, and to cut off the financing
of terrorism. Thank you.
(end text)
(Distributed by the Office of International Information Programs, U.S.
Department of State. Web site: http//usinfo.state.gov)



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