June 10, 2006
JS-4314

Statement of Secretary Snow at the G8

Good afternoon.  We had a very good meeting with G-8 Finance Ministers today, hosted by Minister Kudrin.  The primary purpose of the meeting was to finalize the financial agenda for the G-8 Leaders Summit.  With the extensive efforts of Minister Kudrin and his staff, I think the leaders of  the G-8 countries should have a very productive meeting in July.

As I reflect on the last 3 ½ years I've represented the United States in the G-8, the global economy has enjoyed remarkable success – with high levels of global growth, historically low levels of inflation and interest rates and no major financial crises or recessions.  It is especially significant that we are seeing more rapid levels of growth in the developing economies.  There is no better time for our economies to put in place policies that will sustain growth and improve living standards for all people.

The U.S. economy is a major driver of the global economy, posting 3.6 percent growth over the last four quarters, with continued solid growth forecast through this year and into next.  I was able to report that the U.S. unemployment rate fell to 4.6 percent – lower than the averages of the decades from the 1960's through the 1990's.  Inflation remains contained despite continued pressure from high energy prices, and the U.S. budget deficit has improved substantially, buoyed by sharply improved receipts, and it is clear we will meet the President's fiscal target ahead of schedule.

Global economic growth remains impressively strong overall.  Although  relative performance continues to be uneven, we are pleased to see that recoveries are strengthening in Japan and in Europe.  More progress is needed to implement reform policies that will raise growth potential so these improvements can be sustained.  I continue to emphasize to my  colleagues the importance of the shared responsibility for assuring that global adjustment takes place in a way that sustains healthy global growth. All countries, including the United States, the countries of Europe, Japan, China and the rest of emerging Asia, as well as oil exporters, bear their part of this responsibility.

We also discussed other risks to global growth, particularly the rise of protectionist sentiment and high energy prices.  I explained that the United States remains committed to keeping our markets open to foreign investment and to pursuing an ambitious outcome for the Doha Development Round by the end of 2006.  As the G-8 has said consistently, substantial liberalization in financial services as well as product markets will provide more opportunities to entrepreneurs, businessmen, and farmers throughout the world.  Over the past few years, the global economy – supported by sound policies – has been able to expand in spite of higher energy prices but it is important that oil producers increase production and consumers intensify their efforts to economize on the use of oil.

A number of issues were on the agenda involving low income countries, including promoting initiatives that can assist poor people in achieving greater access to energy services, continuing work on Advanced Market Commitments for vaccines, and strengthening best practice guidelines on public finance.  I also had a chance to emphasize that the G-8 should raise the profile of encouraging broader financial service access in low income countries.  We believe that working together to help countries improve their regulatory environments could increase competition and have a positive effect on economic growth and poverty reduction.

We were also joined by China, India, Brazil, and Korea to discuss the role of emerging lenders to low income countries.  After last year's historic debt reduction agreement, it is essential that we all work on making sure that low income countries do not take on unsustainable debt and therefore recreate the lend and forgive cycle we have worked so hard to end.  While much more work needs to be done, we outlined several steps that we could take – including working together on the IMF/World Bank's debt sustainability framework and collaborating in a more effective way in such areas as data provision and the establishment of disciplines on export credit lending.

I was grateful that Minister Kudrin asked me to be the lead speaker on anti-money laundering and terrorist finance.  The United States has been at the forefront of a concerted effort to track and disrupt the financial activities of terrorists and money launderers in cooperation with our G-8 partners.  We have made enormous progress over the last three years.  We worked with the Financial Action Task Force to revise and strengthen the Standards on money laundering and terrorist finance.  Largely as a result of our leadership, the IMF and World Bank Executive Boards adopted a consistent framework for assessing countries' compliance with FATF Recommendations and comprehensive AML/CFT assessments are a regular part of all financial sector assessments and on-going surveillance.  We issued an Action Plan and have taken steps to strengthen our asset freezing systems and actions, enhance information sharing, and develop multilateral financial tools to disrupt criminal and illicit activity.

To be sure, there is unfinished business and continued terrorist attacks remind us of the need to meet these challenges.  Our Ministries must continue with the development of financial information relevant to counter-terrorism investigations and to develop and apply targeted financial sanctions against terrorist networks.  Countries must develop strong AML/CFT programs and apply new tools to disrupt illicit financial networks.  As called upon by our leaders at Gleneagles, we must take decisive multilateral action against WMD proliferation networks and supporters.  But the record of progress is unmistakable and the international financial system is a safer place because of it.