WASHINGTON – Global finance leaders sought to project an air of confidence on Friday that the world economy can continue rebounding from last year's slump even though stocks are sagging, crises persist in Latin American and the threat of a U.S. war with Iraq looms.
Treasury Secretary Paul O'Neill, opening a meeting of finance ministers from Western Hemisphere nations, acknowledged that many countries had experienced economic troubles over the past year, but he said he believed the United States had "weathered the storms" by following sound policies to restore growth.
"I believe that every country in our hemisphere, by following good policies, can create the conditions to weather the storms, keep productivity strong and raise economic growth to higher, sustainable levels," O'Neill told the group, gathered at the U.S. Treasury.
In addition to a recession last year in the United States, a number of Latin American countries have been experiencing further economic turmoil this year with Argentina struggling to escape from the worst recession in its history and fears growing that Brazil, South America's largest economy, might be forced to default on its debts.
The finance ministers of both Brazil and Argentina attended the early morning session at Treasury but neither spoke to reporters as the meeting was beginning. Argentine Finance Minister Roberto Lavagna has been particularly critical of the demands that the International Monetary Fund is making as a condition for extending critically needed new loans for his country.
Sitting in front of bank of flags from the 34 democratic nations in the hemisphere, all but Cuba, O'Neill told reporters that the group had a "busy agenda" that would include a discussion of boosting productivity growth as a way of raising living standards throughout the hemisphere, the crackdown on terrorist financing and ways to promote greater financial stability, a topic of concern given the financial market turmoil that has hit a number of other Latin American countries.
Mexican Finance Minister Francisco Gil Diaz said he expected the discussions would produce "solid agreements to fight money laundering and enter in a path of a more effective coordination about our banking system."
O'Neill's meeting with finance ministers from this hemisphere was a prelude to discussions later Friday among the world's seven richest industrial countries and then the opening on Saturday of the annual meetings of the IMF and World Bank.
Protesters, who have vowed to disrupt those meetings, began early Friday with various demonstrations throughout the city in an effort to shut the nation's capital down by tying up morning rush-hour traffic.
Fire trucks were called to put out tire fires on the outskirts of the city and protesters broke windows at a Citibank branch office in scattered demonstrations that resulted in roughly 300 arrests by late morning.
District of Colombia Police Chief Charles Ramsey told reporters that Friday "is going to be a traffic nightmare between the rain and the protesters." Many offices told employees to take the subway or work at home.
Iron crowd-control barriers were placed in a perimeter around the headquarters of the IMF and World Bank, two blocks from the White House. Local authorities have assembled a force of 3,200 police, including 1,700 out-of-town officers, to help with security.
This year's meetings of the 184-nation lending institutions have been scaled back from the normal week of activities and social events to two days -- Saturday and Sunday -- to hold down security costs.
The global economy has been trying to recover from last year's economic problems, including the first recession in the United States in a decade, the repercussions of the Sept. 11 attacks and sharp stock market declines in a number of countries.
IMF Managing Director Horst Koehler said he still believes economic recovery is on track even though his organization has scaled back its forecast for global economic growth.
"Since the spring meetings, prospects for the global economy have clearly weakened amid considerable financial market volatility," Koehler said. "But it would not be productive now to dwell on undue pessimism. ... There are still good reasons to expect the recovery to continue in the period ahead."
Asked if a U.S. war with Iraq could further destabilize the world economy, Koehler said, "We don't think this has an immediate impact on the recovery."
Among issues to be covered at the IMF-World Bank meetings is a proposal that, in effect, would allow countries unable to pay their creditors to declare bankruptcy and negotiate easier repayment terms.
The discussion on defaults gained new impetus when Argentina halted payment last December on the bulk of its $141 billion in foreign debt, the biggest government default in history. The troubles in Argentina spread to financial markets in a number of other Latin American countries, including Brazil, the region's largest economy.