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Finance ministers urge vigilance

Finance ministers from the Group of Seven industrialized nations after their meeting in Washington.
International Monetary Fund (IMF)
Economic Organizations
George W. Bush
Jean-Claude Trichet

WASHINGTON (Reuters) -- Finance officials from all over the globe gathered under heavy guard to push for a stepped-up fight against terror financing while warning the poor must not be forgotten.

Security has never been tighter at the International Monetary Fund and World Bank meetings, where finance ministers and central bankers from about 180 countries meet twice a year to discuss the the global economy and any threats it faces.

Fences, concrete barricades and massive trucks ringed the IMF and World Bank buildings on Sunday, which teemed with police and bomb-sniffing dogs. Roads around the buildings, only blocks from the White House, were sealed off to traffic.

Security officers staffed x-ray scanners and checked the identification of every visitor to the building -- from finance ministers to reporters. But the weekend went off without incident.

"Terror has reached our door," James Wolfensohn, president of the World Bank, declared to shareholder governments on the last day of the meetings.

"One need only look at the cement barriers surrounding these buildings to understand the big difference of the past year."

Some finance officials suggested the meetings be held outside the United States, which has been on heightened alert since the September 11, 2001 attacks.

The U.S. government raised the threat level on August 1 this year, saying it had found evidence that financial targets, including the World Bank and IMF, could be at risk of attacks.

Wolfensohn, whose bank is at the forefront of the poverty fight, said his concern was that heavy spending on security may eat into aid for the poor.

"The danger is that ... we lose sight of the longer-term and equally urgent causes of our insecure world: poverty, frustration, and lack of hope," he said.

Targeting terror

In their remarks to the meeting, the finance officials repeatedly called for tougher steps to choke off terror financing, pointing to the link between global security and economic prosperity.

Luis Morais Leitao, Portugal's secretary of state for treasury and finance, said promoting peace and security had to be a priority that required a coordinated action.

"Defending the integrity of the world's financial system and avoiding its mismanagement for irregular purposes are crucial features to peace," he said.

Japanese Finance Minister Sadakazu Tanigaki said threats remained three years after the September 11 attacks and urged other nations to implement global standards to combat money-laundering and terror funding.

Safdar Hosseini, Iran's economy minister, said conflicts in the Middle East had hurt international capital flows and damaged infrastructure in the region.

The weekend meeting and the parallel gathering on Friday of Group of Seven finance officials was dominated by concerns over the impact of oil prices, which surged past $50 a barrel Friday, debt relief for poor nations and China's yuan.

However, despite the myriad worries, the gathering yielded few solutions.

Ministers failed to close divisions over debt relief for poor nations, promising to devise a new plan that would ease the debt burden stifling growth in mainly African countries.

The officials agreed to keep studying the possibility of revaluing IMF gold reserves to raise money for debt-relief programs, which would not involve actual sales of bullion.

Meanwhile, in the face of urging from the election-bound Bush administration trying to address politically sensitive trade gaps, China held fast to its gradual approach toward loosening its tight yuan currency peg.

Some hoped the meetings would be a prelude to an eventual invitation for Beijing to join the Group of Seven, but China evinced little interest in being part of the elite club.

The meetings were the first for Rodrigo Rato as IMF managing director. Spain's former finance minister used his turn in the international spotlight to deliver a cautiously upbeat message to shareholders, saying the global recovery was gaining pace but still faced dangers like costly oil.

Rato said the transition to higher interest rates had gone smoothly so far but was not finished and urged central bankers to communicate their rate plans to markets to let them adjust.

He said while the IMF was increasing its surveillance of economies, it could not forestall every crisis that arose.

Nor should the fund always be prepared to help.

"We also need a fund that can say 'no'," Rato said.

"The prospect of the fund declining to provide financial support would strengthen the incentives to implement sound policies, thus avoiding the need for fund support in the first place."

Reuters contributed to this report.

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