G8 to discuss about oil, food crisis talks

13th June 2008, Comments 0 comments

French minister says better insight into soaring oil price is needed to stem soaring prices worldwide.

13 June 2008

OSAKA - Finance ministers from the world's leading industrialised powers began talks Friday seeking a way to stem soaring food and oil prices that are endangering world economic growth.

Ministers from the Group of Eight (G8) club of rich nations are expected to discuss how to limit the damage sparked by a doubling of food costs in three years and a series of record oil price highs.

The rise has stoked inflation in many countries, raising more fears for the world economy, and comes as the United States battles a sharp slowdown after a default crisis in its mortgage market triggered a global credit crunch.

But experts say oil and food prices have likely become the key problem for the G8 amid hopes that the credit crisis caused by the defaults on risky "subprime" US loans is unlikely to get worse.

International Monetary Fund head Dominique Strauss-Kahn said on the sidelines of the meeting in the western Japanese city of Osaka that the worst of the financial crisis appeared to be over.

"We have good reason to think that the financial crisis is mostly behind us but it's too soon to say" for sure, he told reporters Friday, adding the IMF thought a proper economic recovery was unlikely until 2009.

Officials have also warned that curbing oil prices is no easy task, with the G8 powers possessing few obvious options to cool the commodity boom quickly.

French Finance Minister Christine Lagarde said ahead of the talks that the G8 needed harder information about the cause of recent wild swings in crude prices.

"I find it hard to understand the erratic volatility in oil prices" in recent days, she told reporters Friday before the ministers began a series of bilateral talks ahead of the meeting's formal opening.

Producers insist there is no shortage of oil on global markets, blaming speculators and the weak US dollar. But analysts say they could still do more to take some of the speculative froth out of the market.

The meeting Friday and Saturday in Osaka gathers the top finance officials from Britain, Canada, France, Germany, Italy, Japan, Russia and the United States.

The G8 meeting is also expected to focus on the food crisis and efforts to tackle climate change, including a proposed fund for technology to combat global warming.

G8 environment ministers called in May for more effort to halve by 2050 the greenhouse gas emissions blamed for global warming, but to the dismay of some did not signal a direction on more immediate targets.

Aid agency Oxfam said Friday the credibility of the finance ministers was on the line as both food prices and climate change threaten to worsen global poverty.

A UN summit last week vowed to take "urgent" action over the global food crisis, pledging 6.5 billion dollars in aid, but Oxfam said the money should come on top of, rather than include, existing commitments.

US Treasury Undersecretary David McCormick said ahead of the talks that the
G8 ministers were also set to focus on progress in the delivery of emergency humanitarian assistance to those threatened by hunger.

They would also likely discuss efforts to help developing country farmers boost their next harvest and plans to improve agricultural productivity, he said.

Surging food prices have triggered protests in many nations amid fears the problem could set back gains made in recent years in the battle against poverty.

Central bank chiefs will be absent from this G8 gathering, but financial markets will be looking for any signs of increased concern about the weak US dollar, particularly in Washington.

[AFP / Expatica]

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