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by Shingo Ito
FUKUOKA, Japan, July 8 (AFP) - The Group of Seven (G7) major powers outlined far-reaching changes Saturday, which they said would make the world better placed to prevent a recurrence of devastating financial crises. Also threatening sanctions against money-laundering havens if they did not mend their ways, the G7 said that the group was turning a page on abuses that had distorted the global economy. An agreement by G7 finance ministers to reform the International Monetary Fund's lending practices would lead to a radically changed IMF, US Treasury Secretary Lawrence Summers told a news conference. "These changes, along with the streamlining of facilities that has already taken place, will provide a very different IMF from the one we have had," he said after the G7 meeting in this southern Japanese city. The group issued a major declaration entitled "Strengthening the International Financial Architecture" to sum up thinking since the 1997 Asian financial crisis, when the IMF shot to prominence for millions of poverty-stricken people in the region. "To be effective, the IMF and its activities must be transparent to the public, accountable to its members and responsive to the lessons of experience and external and independent evaluation," the G7 said. The question of making the IMF's lending practices clearer went to the heart of the debate over reforming the Washington-based lender, they added in their document. It had to make public its targets for recipients to lead them out of crisis faster and make it harder for them to regress, said the G7, which groups Britain, Canada, France, Germany, Italy, Japan and the United States. In the future, the IMF would be better able to cope with capital account crises, such as the Asian crisis that broke just over three years ago, rather than the traditional problems of overspending by states, they said. "When all this is in place it will be an institution that is configured to prevent and respond to what will be a major or dominant pattern of financial problems in the 21st century and it will have made the necessary adjustment in its general lending policies," Summers said. The financial system reforms and threatened punishment of havens for ill-gotten gains would go forward to the July 21-23 Group of Eight (G8) in Okinawa, southern Japan, the major economic powers said. Russia, one of 15 territories identified as such a haven in an international report last month, will join the G7 at the higher-profile G8 gathering. The G7 nations said they would work with the territories to help them improve. But punishment could follow, they warned, with French Finance Minister Laurent Fabius describing the G7's tactics as "name, shame and fight." "In due course, with regard to jurisdictions that fail to fully join the international fight against money-laundering, the ministers will also begin to consider additional counter-measures," the G7 document said. These would include "the possibility to condition or restrict financial transactions with those jurisdictions and to condition or restrict support from international financial institutions to them," it said, referring to bodies including the IMF and World Bank. Russia itself had to entrench reforms and improve its investment climate instead of seeking debt rescheduling, said the G7, which also issued a declaration on the challenge of harnessing the information-technology revolution. The Okinawa summit would pursue debt relief for the world's poorest countries, they added. But that commitment failed to impress the "Jubilee 2000" debt-relief campaign, which organized a march on the G7 venue bearing aloft coffins and flowers in a mock funeral for the victims of global poverty. "We're very angry and very disappointed," said Tomoo Machiba, a coordinator for the campaign in Japan. "We expected something a lot more far-reaching out of today, but there was nothing positive to tackle what is a catastrophe for poor nations," he told AFP. | |||||||||||||||||||||||||||||
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