At global economic talks, agreement that Sept. 11 shows 'it's an integrated world'

Monday, November 19th 2001, 12:00 am
By: News On 6

OTTAWA (AP) _ A weekend of talks on cutting terrorist financing and confronting a global economic slowdown had one consistent theme _ the developed and developing nations of the world must work together.

``It's a different world after Sept. 11,'' World Bank president James Wolfensohn said Sunday after the final meeting of finance ministers, central bank governors and officials of the International Monetary Fund and his organization. ``It's an integrated world.''

The three days of discussions covered a wealth of issues confronting governments and international bodies in the wake of the attacks. A sluggish world economy has slowed further, eliminating jobs in powerful Western nations and exacerbating poverty in poorer developing countries. The U.S.-led campaign to destroy Osama bin Laden's al-Qaida network blamed for the attacks and other terrorist organizations puts further demands on cooperating governments already facing budget constraints.

It all illustrates the interdependence underlying the global economy, according to officials who attended the talks moved to Ottawa from India and Washington due to security concerns.

``There is, I think, an almost uniform recognition that poverty and distress in one part of the world is poverty and distress in another,'' Wolfensohn said after Sunday's meeting of IMF and World Bank policymakers. ``The notion of two worlds _ the rich and poor, or the developed and developing world _ collapsed with the World Trade Center.''

While officials called the final meeting of the weekend a success, it produced no new steps to specifically address problems caused by economic stagnation worsened by the attacks. With Argentina facing a possible debt default and Mexico considering an IMF line of credit designed to prevent an economic emergency, the IMF and World Bank policymakers said they would review existing programs to try to meet the challenges of a changed world.

The day before, the finance ministers and central bank governors of the Group of 20 _ the European Union and 19 countries responsible for most of the world's economic production _ agreed on steps to halt terrorist funding. Then IMF officials called for rich nations to help developing countries cope with the economic slowdown and join in the measures against terrorist financing.

A few dozen anti-globalization protesters stood along police barricades to demonstrate peacefully Sunday after 50 people were arrested over the weekend. The majority were detained Saturday when hundreds marched through downtown streets and scuffled with police, who responded with rubber bullets, tear gas and pepper spray.

The protesters want world leaders to forgive the debt of poor nations and stop the financing of projects they claim harm the environment or hurt the poor. They also demand that the IMF and World Bank create rules for international lending to avoid costly bailouts.

Anne Krueger, first deputy managing director at the IMF, criticized the protesters, saying the money spent on securing the meeting site could be spent on the poor. Wolfensohn said he would rather have a debate than ``people in the streets because I don't think that serves a purpose.''

Argentina was a main topic of discussion as it tries to negotiate an agreement with local creditors to reduce its 2002 payments by at least dlrs 4 billion.

While some warn the debt restructuring amounts to default, Canadian Finance Minister Paul Martin and U.S. Treasury Secretary Paul O'Neill expressed support for Argentine Finance Minister Domingo Cavallo's plans.

Claudio Loser, the IMF's director of Western Hemisphere affairs, said Sunday that Cavallo met with IMF managing director Horst Koehler to discuss the debt restructuring. Argentina made no request for additional financial assistance such as an acceleration of payouts under an existing IMF aid package.

``It's a very difficult situation, we all know that,'' Loser said.

O'Neill called for World Bank and IMF officials to be ``more selective'' in lending and providing support to countries, saying there should be proof the aid will be put to good use. He also said the bank needs to be more ``rigorous in measuring the results'' of its lending, which Wolfensohn described as a ``fair challenge.''