G7 discuss oil and the Euro in Prague
The decline of the Euro and spiralling oil prices. Not surprisingly these were top of the agenda when finance ministers and national bank governors from the G7 group of the world's most developed economies gathered in Prague over the weekend. As David Vaughan reports, they tried to deliver an optimistic message on both topics, and at the same time were able to breathe a sigh of relief at keeping well out of the line of fire of globalisation protestors currently flocking to Prague.
It was no coincidence that the G7 ministers chose to meet in the quiet discretion of the elegant Baroque palace that houses the German Embassy. The embassy is an oasis of quiet, and above all it stands at the opposite end of town from the hub of the IMF/World Bank meeting, the vast Congress Centre. The strategy paid off. In the balmy autumn sunshine there wasn't a protestor to be seen and the only placards in sight were held by well-dressed young women, inviting journalists to a press reception.
But two issues of global importance--and of interest both to financiers and protestors--were under discussion. On the fate of the Euro, European ministers breathed a visible sigh of relief that against expectations, the United States had decided to take part in a coordinated intervention to bolster the beleaguered European currency. And as the president of Germany's Federal Bank, Ernst Welteke, said, the US, Japan, Britain and Canada are willing to support the European Central Bank with further intervention if necessary:
"In light of recent developments we will continue to monitor the market closely and to cooperate in exchange markets as appropriate".
For the Czech Republic the news on the Euro was also good. The German finance minister, Hans Eichel, went out of his way to scotch speculation that the fate of the Euro could have a serious impact on the European Union's plans for expansion, insisting that there was no link between the two issues.
As far as oil prices were concerned bankers and ministers welcomed the United States' initiative to release oil reserves, but on the question of oil, it was not all harmony. Germany and Britain made it clear that they were still furious at France and Italy for cutting consumer tax on petrol in the face of public pressure. Perhaps it was not a deliberate snub, but at just the same time as the official G7 press conference at the German embassy was under way, the French finance minister, Laurent Fabius, was meeting journalists separately amid the Art Nouveau splendour of another historic Prague landmark, the Municipal House, or Obecni dum, just across the river.