From Gary Duncan, Economics Correspondent in Washington
FINANCE ministers from the leading industrial countries welcomed a hard-won deal that they said should clear the way for an international effort to rebuild Iraq.
After three days of public division and private dispute, the ministers from the Group of Seven (G7) economies reached an agreement. The deal opened a path for the International Monetary Fund and World Bank to begin to play a role in reconstruction and humanitarian aid in Iraq.
The talks also agreed that members would call for a new UN resolution on post-conflict action and immediate moves to deal with Iraq’s debt burden, estimated at up to $190 billion (£120 billion).
The G7 deal, and a broader agreement at the IMF’s international monetary and financial committee, chaired by Gordon Brown, headed off a spillover of the prewar row at the United Nations that left Britain and the United States at loggerheads with France, Germany and Russia.
“We recognise the need for a multilateral effort to help Iraq,” the G7’s communiqué said. “We support a further UN Security Council resolution.”
The statement left open what any new resolution might say, but the Chancellor said that it would have to deal with the unfreezing of $1.4 billion of Iraqi assets — $650 million of which are in Britain — as well as the lifting of the existing sanctions regime against Iraq, the debt issue and the role of the IMF and World Bank.
British and other G7 officials said that the negotiations to achieve consensus over the accord had been “quite fraught”.
British officials said that the communiqué marked the first time since UN Security Council Resolution 1441 was passed in the build-up to the war that the international community had been able to achieve a consensus on Iraq.
Mr Brown’s aides said that without the deal the atmosphere over Iraqi reconstruction would have been poisoned and the IMF and World Bank could have been dangerously politicised.
The accord also drew a line under a dispute over whether the World Bank and IMF could play any role in Iraq before passage of a new UN resolution. James Wolfensohn, the World Bank’s president, had said that it could not take any action in the absence of a clear mandate. But officials said that Mr Wolfensohn was now satisfied that a mission could be sent to Iraq as soon as the security situation allowed, although he still insisted on consulting the bank’s board.
Observers predict further tough negotiations at the UN. The US is balking at allowing the UN as large as role in the running of postwar Iraq as Europe and Russia are demanding. John Snow, the US Treasury Secretary, rejected suggestions that the G7 decisions represented any concession by the US towards the European position.
Senior officials in Washington criticised the lack of agreement on more concrete steps to assist pressing and immediate problems in Iraq.
Deep-seated disagreement also remains over how to deal with Iraq’s debts, which are expected to be examined shortly in talks at the Paris Club of creditor countries. The US wants a write-off of substantial parts of the debt. “The Iraqi people cannot bear the burden of current debt levels,” Mr Snow said.
Germany and France believe that the debt should be restructured rather than forgiven. “Any speculation about debt forgiveness is premature,” said Hans Eichel, Finance Minister of Germany, which is owed about $4 billion.
Francis Mer, the French Finance Minister, said: “Iraq needs our attention, but so does Niger. Let’s not forget that there are a lot of other countries.” France is owed about $1.8 billion.
FINANCE ministers from the leading industrial countries welcomed a hard-won deal that they said should clear the way for an international effort to rebuild Iraq.
After three days of public division and private dispute, the ministers from the Group of Seven (G7) economies reached an agreement. The deal opened a path for the International Monetary Fund and World Bank to begin to play a role in reconstruction and humanitarian aid in Iraq.
The talks also agreed that members would call for a new UN resolution on post-conflict action and immediate moves to deal with Iraq’s debt burden, estimated at up to $190 billion (£120 billion).
The G7 deal, and a broader agreement at the IMF’s international monetary and financial committee, chaired by Gordon Brown, headed off a spillover of the prewar row at the United Nations that left Britain and the United States at loggerheads with France, Germany and Russia.
“We recognise the need for a multilateral effort to help Iraq,” the G7’s communiqué said. “We support a further UN Security Council resolution.”
The statement left open what any new resolution might say, but the Chancellor said that it would have to deal with the unfreezing of $1.4 billion of Iraqi assets — $650 million of which are in Britain — as well as the lifting of the existing sanctions regime against Iraq, the debt issue and the role of the IMF and World Bank.
British and other G7 officials said that the negotiations to achieve consensus over the accord had been “quite fraught”.
British officials said that the communiqué marked the first time since UN Security Council Resolution 1441 was passed in the build-up to the war that the international community had been able to achieve a consensus on Iraq.
Mr Brown’s aides said that without the deal the atmosphere over Iraqi reconstruction would have been poisoned and the IMF and World Bank could have been dangerously politicised.
The accord also drew a line under a dispute over whether the World Bank and IMF could play any role in Iraq before passage of a new UN resolution. James Wolfensohn, the World Bank’s president, had said that it could not take any action in the absence of a clear mandate. But officials said that Mr Wolfensohn was now satisfied that a mission could be sent to Iraq as soon as the security situation allowed, although he still insisted on consulting the bank’s board.
Observers predict further tough negotiations at the UN. The US is balking at allowing the UN as large as role in the running of postwar Iraq as Europe and Russia are demanding. John Snow, the US Treasury Secretary, rejected suggestions that the G7 decisions represented any concession by the US towards the European position.
Senior officials in Washington criticised the lack of agreement on more concrete steps to assist pressing and immediate problems in Iraq.
Deep-seated disagreement also remains over how to deal with Iraq’s debts, which are expected to be examined shortly in talks at the Paris Club of creditor countries. The US wants a write-off of substantial parts of the debt. “The Iraqi people cannot bear the burden of current debt levels,” Mr Snow said.
Germany and France believe that the debt should be restructured rather than forgiven. “Any speculation about debt forgiveness is premature,” said Hans Eichel, Finance Minister of Germany, which is owed about $4 billion.
Francis Mer, the French Finance Minister, said: “Iraq needs our attention, but so does Niger. Let’s not forget that there are a lot of other countries.” France is owed about $1.8 billion.
