10 April 2003
Snow Urges G-7 to Discuss Iraq Reconstruction
(Suggests finance ministers review issue of Iraqi foreign debt) (1180) Treasury Secretary John Snow says the finance ministers of the Group of Seven (G-7) industrialized economies should use their upcoming meetings in Washington to discuss ways to help revitalize the Iraqi economy and begin a review of Iraq's foreign debt problem. In an April 10 statement to reporters on the eve of the start of G-7 talks and the annual spring meetings of the World Bank and International Monetary Fund (IMF) in Washington, Snow said he expected finance ministers of the G-7 countries to seek ways to help Iraq recover "not just from 25 days of conflict, but from 25 years of misrule." Their discussions "should also include beginning to review the issue of Iraqi debt," Snow said. The G-7 countries are the United States, Britain, Canada, France, Germany, Italy and Japan. Also high on the agenda will be international cooperation to combat terrorist financing, Snow said. He said that cooperation among G-7 countries to stop the flow of money to terrorist group has been "notable" and that international financial institutions such as the World Bank and IMF are making vital contributions to the effort. "I intend to encourage all nations to identify, marshal and eventually return to the Iraqi people assets associated with the corrupt regime of Saddam Hussein," Snow said. "These assets should be put to work to help the Iraqi people." Other topics to be discussed by G-7 ministers include crisis prevention in the global economy, trade liberalization, promoting growth in developing countries, and the ongoing talks in the IMF over the problem of poor countries that find themselves staggering under unsustainable debt burdens. Snow said the United States opposes a plan to create a Sovereign Debt Restructuring Mechanism (SDRM) in the IMF and instead favors special clauses that could be inserted into a country's bonds to help simplify debt restructuring. "It is neither necessary nor feasible to continue working on SDRM," Snow said. Following is the text of his statement previewing the G-7, IMF and World Bank meetings: (Note: In the text "billion" means 1,000 million.) (begin text) U.S. Department of the Treasury Office of Public Affairs April 10, 2002 Statement by Treasury Secretary John Snow in advance of meetings of the G-7, IMF and World Bank Good afternoon. I look forward to hosting Central American Ministers tomorrow, and G-7 Finance Ministers and Central Bank Governors tomorrow evening and Saturday morning. Economic growth is always at the top of our agenda. It is particularly important at this time when the world economy is falling far short of its potential. To bring about a strong recovery, each of our countries must act decisively to implement strong policies to spur economic growth. The United States has done its part by moving quickly and aggressively to ease both monetary and fiscal policy. The President's Jobs and Growth program will accelerate the U.S. economic recovery and raise economic growth. I will reiterate to my colleagues tomorrow the importance of implementing strong policies, including structural reforms, suitable to their economic situation in order to contribute to global growth. We must also reduce barriers to trade through implementation of the Doha Development Agenda as trade liberalization will also significantly add to global economic growth -- in the industrial economies, in emerging market economies and -- most importantly -- in developing economies. Combating terrorist financing will be another focus of our discussions. The cooperation and leadership among G-7 nations in this area is notable and continues. We will review achievements and determine how to maximize further progress. Hard work remains ahead to keep our financial institutions and systems safe from abuse by terrorists. The ongoing programs of the IMF [International Monetary Fund], World Bank, Financial Action Task Force, and other international bodies to address our common challenge are vital. The United States has taken aggressive action to ensure that Iraqi assets are being put to use for the Iraqi people. This weekend I intend to encourage all nations to identify, marshal and eventually return to the Iraqi people assets associated with the corrupt regime of Saddam Hussein. These assets should be put to work to help the Iraqi people. Crisis prevention and resolution remain priorities for us. We will review progress made over the last year in strengthening our crisis prevention strategy and establishing a more orderly and predictable process for the restructuring of sovereign debt. We welcome the strong leadership that Mexico has shown by demonstrating that emerging market countries can successfully issue debt with new clauses that would help promote a more orderly restructuring process. We encourage others to follow Mexico's lead. The IMF's work on a centralized sovereign debt restructuring mechanism has raised important issues. It has advanced this important issue but clearly, given the reactions of markets and emerging market countries, it is time to move forward with collective action clauses. These clauses, and not the Fund's sovereign debt restructuring mechanism, are the vehicle to resolve these issues connected with sovereign debt restructuring. Therefore, it is neither necessary nor feasible to continue working on SDRM [sovereign debt restructuring mechanism]. We will also discuss ongoing work to promote growth and reduce poverty in developing countries. Sound policies and measurable results are the first steps toward these goals. We continue to stress the importance of measuring results as part of our International Development Association contribution. President Bush's Millennium Challenge Account will provide substantial additional assistance to reward strong policies and performance. The President has requested $1.3 billion for this account this year, and has proposed to increase this to $5 billion by year three and thereafter. I also expect to have a substantive conversation with my G-7 counterparts about how our nations and international institutions can work together to help the Iraqi people recover -- not just from 25 days of conflict, but from 25 years of economic misrule. As President Bush has emphasized, the international institutions will have a vital role to play in the reconstruction of Iraq. The World Bank, the IMF and other institutions should be prepared to offer their expertise and technical assistance as soon as possible. Our discussion should also include beginning to review the issue of Iraqi debt. As Finance Ministers we are in a unique position to offer our talents, our ideas and our leadership as we look forward to a historic effort to help the Iraqi people take control of their nation. Finally, I also look forward to starting off the weekend with a special meeting with ministers from the Central America region. We will discuss the specific challenges of that region -- in particular, emphasizing efforts to promote economic growth through the implementation of strong fiscal policies, the development of small and medium-sized enterprises and attracting foreign investment, the importance of strengthening governance and fighting corruption, and our joint efforts to combat terrorist financing. Trade liberalization also remains an important priority for the region. (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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