Finance ministers to increase anti-terror measures

Finance officials from the world’s seven top industrial powers agreed today on the need to intensify their efforts to combat terrorist financing but sharp differences remained over how to improve foreign aid programmes.

Treasury Secretary Paul O’Neill and Federal Reserve Chairman Alan Greenspan were the hosts for today’s discussions at the Treasury with their counterparts from the other Group of Seven industrial countries the US, Japan, France, Germany, Britain, Italy and Canada.

The finance ministers made their way to the meetings through a security perimeter that had been expanded during the night around the meeting site, an area of downtown Washington that includes the White House, the Treasury and the headquarters of the International Monetary Fund and World Bank. Scores of officers stood behind waist-high metal barricades, near large black bags containing their riot gear.

Protesters headed to various permitted demonstration sites around the city. The largest crowds were expected at rallies to protest against the fighting in the Middle East and America’s war on terrorism. Two years ago, 1,300 demonstrators were arrested trying to shut down the IMF and World Bank meetings.

The finance talks focused on Argentina’s deepening economic crisis and the recent surge in oil prices, which threatens the fledging global economic rebound. Argentina was forced to declare a bank holiday yesterday, indefinitely shutting all financial institutions.

Argentine Economy Minister Jorge Remes Lenicov spent yesterday in meetings with O’Neill and officials of other G-7 countries and the IMF in an urgent bid to obtain billions of dollars in IMF loans to get his country out of a deep recession.

Spanish Finance Minister Rodrigo Rato, leading a delegation from the European Union to the talks, said today that he believed the IMF and Argentina were close to a deal.

‘‘I think that a package is possible. Right now the responsible people of the IMF and the Argentine authorities are closing the last details,’’ he said. ‘‘But of course, we all have to understand that these are very complicated issues.’’

Other issues on the agenda included improvements in the delivery of foreign aid and reforms at the IMF and the World Bank.

On Friday night, the G-7 officials reviewed the US-led campaign to choke off the flow of money to terrorist organisations.

The G-7 group invited officials from India, Dubai, the United Arab Emirates, Saudi Arabia and Switzerland to disrist money. French Finance Minister Laurent Fabius said he sensed ‘‘a real eagerness’’ to promote greater openness in tracking money flows.

‘‘It must not stick to some particular items, but it must be an effort toward greater transparency in the field of finance,’’ he said.

Yet to be resolved was the standoff between the United States and the other G-7 countries over the American effort to increase the amount of aid provided by the World Bank as grants rather than loans that must be repaid.

Treasury Undersecretary John Taylor did not dispute reports that the exchange over the issue had grown heated Friday night. He said it was important for all sides in the debate to state their beliefs.

‘‘The good thing is that there is a real good discussion and a sense of immediacy and moving ahead,’’ Taylor said.

O’Neill said opposition to the U.S. proposal was coming from those too wedded to the status quo. European countries, however, say the grant proposal could drain World Bank resources unless donor countries increase their support.

The global money talks were being held against a backdrop of the US war on terrorism in Afghanistan, hostilities in the Middle East and political turmoil in Venezuela that have raised oil prices.

The G-7 discussions were being followed by the spring meetings this weekend of the 183-nation IMF and its sister lending agency, the World Bank.

In an economic forecast prepared for the discussions, the IMF insisted that the global economy is pulling out of last year’s slump, the worst in a decade. Unforeseen shocks could derail the recovery.

Foreign aid has received new attention in the wake of the September 11 attacks as the US and other wealthy countries try to intensify efforts to combat global poverty, which is seen as breeding terrorism.