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G20 targets terrorist financing

US Secretary of Treasury Paul O'Neill, left, and US Ambassador to India Robert Blackwill, right, on a visit to the Humayun's Tomb monument in New Delhi, India, yesterday. O'Neill was in India to take part in the G20 Finance Ministers meeting that took place in New Delhi on Saturday and yesterday. PHOTO: AP

An unlikely collection of rich and poor nations on Saturday vowed to starve financing for groups they consider to be terrorists, but failed to agree on how their vastly different economies could do so.

Disagreements also emerged among the group of 20 -- from the super-rich US to poverty-racked India -- over the pace of economic liberalization, cutting trade barriers and coping with global financial crises.

The G20 said the world faced tough economic challenges -- with a slower-than-expected global recovery -- but believed member economies were sound and could achieve higher growth.

The G20 comprises Argentina, Australia, Brazil, Canada, China, India, Indonesia, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the US, Britain, France, Germany, Italy and the EU.

Indian Finance Minister Jaswant Singh said efforts to cut financing for groups that have been labelled terrorists by some G20 nations have been frustrated because of economic disparities between members and that some of the groups have been funnelling money using tradeable goods.

Closing the loopholes * Indian Finance Minister Jaswant Singh said terrorists are using easily tradable goods to finance efforts. * Gold and diamonds are now being used by terrorists instead of currency. * Poor nations lack the skills and funding to track the financial sources of terrorists.

"There have been examples of terrorists moving away from currency to goods, easily tradeable goods -- and the two examples that come to mind are gold and diamonds," Singh told a news conference at the end of the meeting.

In its final communique, the G20 said globalization had failed to deliver on cutting poverty and agreed that slashing obstacles to global capital flows must take into account each country's stage of economic development.

Developing nations wanted more focus on preventing international financial crises, while rich countries sought to minimise their impact, sources said.

"The process of globalization ... has not yet delivered its potential in reducing poverty in some of the world's poorest countries," the four-page Delhi Communique said.

India also resisted US pressure to legalize the informal financial networks, known as "hawala," which leave no paper trail. Washington fears outlawing hawala drives those transactions underground where they cannot be monitored.

"I think they generally appreciated that India's stand on hawala is correct ...," Indian central bank chief Bimal Jalan told a news conference.

"It continues to be illegal and will continue to be illegal while we encourage more customers [into] friendly channels which are institutionalized, subject to inspection, regulation and which can make the transfer less costly."

Although some ministers from key members of the G7 richest nations were absent, US Treasury Secretary Paul O'Neill did attend as part of a regional swing through Afghanistan, Pakistan and India.

But he angered top Indian officials by calling India one of the most restrictive economies in the world and saying widespread corruption and bribery scared off honest investors.

"How come he comes and lectures us on corruption when there is so much corporate corruption in the United States?" a senior Indian official said.

Representing three quarters of the world's people and the global economy, the G20 was established in 1999 in the wake of the emerging markets financial crises of the late 1990s.
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