G7 pledges co-operation not global salvation

by Philip Pank

BONN, Feb 20

(AFP)

The world�s financial leaders on Saturday promised increased co-operation to deflect further economic meltdown and restore balanced growth to the troubled global economy.

But delegates at a meeting of Group of Seven (G7) finance ministers and central bank governors acknowledged that wholesale reform was out of reach.

Ministers agreed to launch a Financial Stability Forum aimed at providing shelter from renewed economic crisis, in line with suggestions tabled by Bundesbank president Hans Tietmeyer.

They also pledged �intensified cooperation� to secure balanced growth and exchange rate stability around the globe.

There was no agreement on specific measures to keep exchange rates of the world�s reserve currencies stable, German proposals for target values having been rejected out of hand by other G7 members.

Any trade protectionism was also rejected by the group.

Before the fine print of the G7 promises had even been drafted, Tietmeyer himself conceded that steps endorsed at the one-day meeting would not secure an economic turnaround.

�This will not not change the world, but it can make an important contribution� he told journalists on the sidelines of the meeting.

Tietmeyer said that he had refused to lead the Stability Forum.

The final G7 statement said: �We re-affirmed our view on the importance of pursuing policies to help avoid excess volatility and significant misalignments of exchange rates of major currencies.�

The words were seized on by US Treasury Secretary Robert Rubin, who outlined currency stability as a �useful objective�.

He warned that successive economic crises around the world could dent US growth this year if Europe and Japan fail to suck in more Asian exports.

The United States �could well have growth that was not as robust as last year� he said.

�It is crucially important that Japan and Europe also move forward with domestic demand-led growth in their economies, to achieve more balanced growth among our countries, reduce the large external imbalances and support recovery in emerging economies,� said Rubin.

The United States has complained that strong US demand alone for Asian goods will not be enough to invigorate the world economy. The US trade deficit hit a record 168.59 billion dollars last year.

Rubin praised attempts in Japan and �in many Asian countries� to inflate the region�s recession-hit economy.

�Very important steps have been taken and real progress has been made,� he said. The G7 expressed concern over the outlook for the Russian economy after last year�s devaluation of the ruble.

Before the meeting, ministers had flagged measures aimed at easing the crippling debt burden of the world�s poorest countries, but little progress was reported on this issue.

Ministers said they hoped that concrete measures could be adopted at a G7 summit in the German city of Cologne in June.

They unanimously endorsed Tietmeyer�s proposals to create a new forum that will meet twice a year from the outset later this year.

The body will seek to encourage greater transparency on the part of the mighty hedge funds, which have been blamed by some for unleashing unstable currency movements around the world.

The economic backdrop to this latest G7 conference has driven home the need for action.

Hot on the heels of monetary meltdown in Brazil, itself the latest victim of financial crisis after Russia and Asia, the talks came amid signs that trouble is brewing in Europe.

The European powerhouse economy in Germany contracted at its fastest rate for six years late in 1998.

Japanese officials, meanwhile, insisted that Tokyo is taking measures to stimulate the economy, pointing to Tokyo�s record fiscal budget and a sharp reduction in overnight lending rates.

Demand-led policies would ensure an annual growth rate of 0.5 percent this year, they said.

Indian, Pakistan PMs seek substance from symbolic summit

by Giles Hewitt

LAHORE, Pakistan, Feb 21

(AFP)

The prime ministers of India and Pakistan were to hold the second day of a landmark weekend summit here Sunday, hoping to lend substance to calls for a new era in bilateral ties.

Indian Prime Minister Atal Behari Vajpayee was scheduled to spend the early morning seeing the sites of Lahore before starting the main round of talks with his Pakistani counterpart Nawaz Sharif.

Vajpayee arrived here Saturday for the first visit by an Indian premier to Pakistan in 10 years for what he hailed as a �defining moment in South Asian history.�

At a banquet held in his honour, Vajpayee called for an end to the 50 years of hostility and mutual mistrust that have dogged bilateral relations since the partition of the sub-continent.

�To those that preach, practise or foment violence, I have only one message: understand the simple truth of the path of peace and amity,� he said.

�My regret is that we have spent so much time in mutual bitterness. It is unworthy of two nations the size of India and Pakistan to have wasted so much time in mutual ill-will.�

His remarks were echoed by Sharif, who said mutual animosity had held both countries back, politically, economically and socially.

�Why must South Asia bleed from its self-inflicted wounds? What is it that holds us back from the healing process? Why is it that we turn a blind eye from the cause of our anguish?� Sharif said in his speech.

�It is our reponsibility, the elected representatives of the people, to step back from the brink of disaster. The flames of war must be extinguished forever.�

The premiers� appeals came amid violent protests in Lahore by thousands of Islamic fundamentalists opposed to the summit that left one policeman dead and led to hundreds of arrests.

Members of Pakistan�s main Islamic party, the Jamaat-i-Islami, took to the streets of Lahore, blocking roads, attacking vehicles and stoning shop windows.

One policeman, wounded in a brief exchange of gunfire with militants Saturday morning, later died in hospital.

The violence escalated in the evening, with police using tear gas to disperse demonstrators trying to block access to Lahore�s Red Fort where the official banquet was held.

While nobody expects any major breakthrough at the summit, there are hopes that the talks will lend political weight and momentum to the Indo-Pakistan dialogue that resumed in October after a one-year break.

As well as the key question of Kashmir, over which India and Pakistan have fought two of their three wars, the prime ministers are also discussing confidence-building measures to ease tensions created by the tit-for-tit nuclear tests the rivals conducted in May.

Sharif said the tests meant that �one billion people now confront the danger of a nuclear holocaust,� and stressed the need for both countries to work toward �restraint and stabilization� in the nuclear sphere.

On Kashmir, Sharif reiterated the Kashmiri Moslems� right to self-determination and warned that the root causes of the territorial dispute could not be �wished away.�

�It is the disease and not the symptom we have to address,� he added.

Vajpayee�s historic visit has been almost overloaded with symbolism, causing many to query the likelihood of any substantive outcome.

No details have yet emerged of the talks the two premiers held Saturday, although the hard negotiating was expected to be handled by their respective high-level delegations.

Vajpayee and Sharif were scheduled to address a joint press conference at 6:00 p.m. Sunday (1300 GMT).

Vajpayee arrived in Pakistan Saturday aboard a special bus making its inaugural cross-border run from New Delhi to Lahore.

Stepping off the bus at the Wagah border post, the Indian premier quickly set the tone of his visit.

�I am conscious that this is a defining moment in South Asian history and I hope we can rise to the challenge,� Vajpayee said.

Several dead as riots spread across southern Iraq

DUBAI, Feb 20 (AFP)

Riots erupted across southern Iraq on Saturday after the assassination of a leading Shiite cleric, leaving several dead and injured, witnesses and opposition leaders said.

�Clashes between angry Iraqi citizens and Saddam�s repressive forces took place in Baghdad, Najaf, Kerbala and all governorates in the south� of the country, the Damascus-based Iraqi opposition group Al-Dawa said.

The deadly violence followed the murder of Ayatollah Mohammad Mohammad Sadek al-Sadr and his two sons, who were slain overnight Friday according to an Iraqi government spokesman.

�Several were killed and wounded but we still don�t know how many,� said a witness to the Najaf riots who telephoned AFP in Jordan.

He said the murdered ayatollah�s followers and religious leaders from Najaf were �confronting the Iraqi regime.�

�They consider themselves to be fighting a holy struggle,� he said, adding that Iraqi President Saddam Hussein had sent reinforcement troops to southern Iraq a few days ago.

He also reported that �bloody riots� had broken out in Saddam City, a mainly Shiite suburb of Baghdad.

Opposition leader Sheikh Mohammad Bahr al-Ulum backed up the reports and suggested the dissent could spread.

�I have heard from inside Iraq that demonstrations have erupted in Saddam City and in Najaf, where the souks are closed,� the London-based

cleric told AFP in Dubai.

�I do not rule out that this reaction to the assassination of Ayatollah Mohammad Mohammad Sadek al-Sadr will grow,� he said.

CNN reported on Saturday that several people were killed and wounded in riots when demonstrators clashed with heavily armed government forces in Saddam City following the cleric�s assassination.

For two years Ayatollah Sadr, aged in his 60s, had been imam in Kufa, a town near the southern holy city Najaf, some 160 kilometers (100 miles) south of Baghdad.

Iraqi officials said they had arrested some of Sadr�s murderers and were looking for others but a string of Iraqi opposition groups rallied to accuse Saddam Hussein�s forces of orchestrating the assassination.

Al-Dawa, the oldest Iraqi Shiite opposition party, called on the Iraqi people to �punish the criminals and smash Saddam�s repressive institutions to avenge the martyrdom� of the ayatollah.

Sheikh Mohammed accused the �criminal� Baghdad regime of looking to silence the Iraqi opposition with a �series� of assassinations and assassination attempts.

An Iran-based Iraqi opposition group said Sadr�s assassination was part of a �vast plan� by Saddam to wipe out religious Shiite dignitaries �because it fears a growth in the Shiite intifada (uprising).�

�In his sermons, Ayatollah Sadr sometimes attacked the regime,� said Hamed Bayati, a representative of the Supreme Council for Islamic Revolution in Iraq (SCIRI), adding that �the regime killed Ayatollah Sadr to end his criticism.�

Ayatollah Sadr was appointed grand ayatollah by the Iraqi government in 1992 but his ties with the government soured after he starting calling six months ago for Shiites to attend weekly prayers in mosques, while the authorities disapprove of large gatherings.