WASHINGTON, Oct. 5 (UPI) -- Choking the financial source of terrorists will be on the top of the agenda when finance ministers and central bank governors from the world's richest nations gather Friday and Saturday, united solidly in their resolve to stifle terrorist funds worldwide.
But the Group of Seven industrialized countries is unlikely to be able to find such unity in seeking a solution to the sagging global economy, which has headed rapidly further south following the terrorist strikes on Sept. 11.
"The assault on the financial underpinnings of terrorism is a central element of the Bush administration's determined effort to fight terrorists with every conceivable weapon," said Treasury Secretary Paul O'Neill Friday, adding that there is "complete cooperation" from other G7 countries.
The weekend meeting will mark the first time leading financial officials gather since the terrorist attacks on New York and Washington, having postponed their initial plans to meet late September. Yet, though U.S.-led efforts to combat money laundering and halting money transfers among terror group members could greatly benefit from solid international cooperation, finding a solution to stemming the downside risks of the global economy will prove far more difficult.
"I want to hear from each finance minister, what he sees are issues in the economy," O'Neill replied when asked what solutions he might propose to his European and Japanese counterparts as a means to bolster the global economy. "I want to listen."
O'Neill did not, however, prescribe any specific suggestions on policy measures to be taken.
In some respects, the upcoming finance ministers' meeting will be quite unlike others. It is often the case that there is one member state that is particularly facing economic difficulties back home at any given time, and other members would focus on seeking measures to lift that country's financial health, often with a wagging finger.
There will, however, be less preaching and more solidarity this time around as the United States, France, Britain, Germany, Japan, Italy, and Canada all face severe economic difficulties following the Sept. 11 attacks and continued anxiety about the anticipated U.S. military response.
But Wall Street investors are not expecting any concrete solutions to emerge from the finance ministers' meeting to stem a further slide, and indeed, O'Neill warned that even with the suggested stimulus package, the U.S. economy is likely to deteriorate further in coming months.
"Is the stimulus package going to keep the unemployment rate from going higher? Absolutely not," O'Neill said, adding that the jobless rate is likely to rise further in October, having reached 4.9 percent in September. "But we need to think about how much worse it would be without the stimulus, and what the stimulus has prevented."
Earlier this week, the Bush administration called on Congress to pass an economic stimulus package in the range of $60 billion to $75 billion, and some fear that the move would prove to be a big burden on the nation's coffers.
Nevertheless, some analysts said the United States could push for other countries to take similar steps as a means to keep their economies being trapped in a downward spiral, even if such moves do not actually generate growth.
The United States "may call for a statement indicating that it is appropriate for budgets to deteriorate, at least in the near-term, and that a deficit is acceptable," said Dana Johnson, Banc One Capital Markets' head of market analysis. "They could try to reduce inhibitions (to increase government spending)."
Moreover, there is not much else the industrialized nations can do jointly to encourage global growth. The central banks of the G7 nations followed in the U.S. Federal Reserve Board's footsteps and eased monetary policy a week after the terrorist attacks in order to ensure adequate liquidity in the global financial system. But with interest rates close to their lowest levels for most central banks, there is not much further scope for coordinate rate cuts.
"And if one thing's clear, it's that easing (rates) isn't going to have much positive effect, at least not in the near-term," said Nesbitt Burns senior economist Russell Sheldon.
