By Nathaniel Harrison/AFP
Paris: The world’s most powerful finance chiefs begin a two-day meeting on 18 May to consider steps aimed at strengthening financial market stability, supporting sound governance in Africa and regulating the 1.4-trillion-dollar hedge fund industry.
Although the meeting of finance ministers from the Group of Eight, Britain, Canada, France, Germany, Italy, Japan, the United States and Russia, comes ahead of a G8 summit of heads of state and government in the seaside resort of Heiligendamm in early 6-8 June , US Treasury Secretary Henry Paulson has decided to skip the meeting.The United States will be represented by his deputy, Robert Kimmit.
While the reason for Paulson’s absence remains unclear, observers see it as a snub to the meeting’s host, German Finance Minister Peer Steinbrueck.
Steinbrueck preferred to go on vacation with his family to Namibia rather than attend a meeting of G7 finance ministers in Washington last month.
Germany and the United States are already at odds over Berlin’s determination to establish stricter controls over speculative hedge funds.
Steinbrueck, the German finance minister, said in a recent newspaper interview that he would press for a voluntary code of conduct for the hedge fund industry, even if a deal was unlikely by the G8 summit in June.
In response, US Treasury Secretary for International Affairs Clay Lowery said,“There has not been a lot of clarity on exactly what that means.
“We’re not necessarily in favour of that because we think industry best-practice is probably the best way to get to better market discipline. I think there is a lot of consistency among the various positions but obviously if there is more disagreement we’ll find out this week.”
A senior Canadian finance ministry official earlier this week said he was “not sure there is necessarily as big a gap as is sometimes portrayed.”
“Our views is that this process ... has helped improve collective understanding of how global markets function, where some of the risks are and -- very importantly -- where the real benefits there.”
The G8 ministers in a final statement on 19 May can also be expected to comment on world growth prospects and currency markets.
But their past communiques, calling for China to allow its currency to float more freely and appealing in general for exchange rate stability, have been so bland as to have little impact on world markets.
The closed-door meeting had been threatened of being upstaged by the controversy surrounding Paul Wolfowitz, who had planned to attend the meeting before announcing on 17 May he will step down next month as World Bank president over a favouritism scandal.
Wolfowitz, who had been expected to brief the finance ministers on the Bank’s programmes to fight corruption and illegal transfers of capital, would not travel to Germany for the meeting, a source said after his resignation announcement.
European countries had pushed hard for the former deputy defense secretary’s departure.
The G8 ministers were urged to honour their group’s promises to end poverty in an open letter published in the Financial Times on 18 May that was signed by more than 60 luminaries, including five Nobel prize winners.
The signatories called on G8 finance ministers to “implement innovative finance mechanisms as a key source of much needed finance for development,” and said that “the poorest countries in the world need you to honour these aid pledges” if they are to end poverty.
Signatories to the letter, which ended with an emphatic “Keep your promises to end poverty!” message, included Archbishop Desmond Tutu and former German finance minister Hans Eichel.