Fund manager Marc Renaud for years paid heed to the G7 industrialized nations' pronouncements. This Friday, when G7 finance ministers meet in Paris for two days of talks, he'll be skiing in the French Alps.
"I used to think their statements might change the world, but not anymore," says Renaud, who helps manage 1 billion euros (US$1.1 billion) in stocks for CCR Actions, a unit of Germany's Commerzbank AG. "Instead of providing leadership, these guys are just fighting with each other."
The G7 member countries today are divided on everything from interest rates and fiscal policy to waging war on Iraq. So, instead of seeking to coordinate government efforts to spur economic recovery, the ministers will probably stick to less controversial subjects, French officials said.
"This meeting will be held in particularly delicate economic circumstances," said Francis Mer, France's finance minister and host of the meeting.
"The power of the G7 lies in passing a message to the world so that the world economy works a little less badly."
The G7 countries -- the US, Japan, Germany, France, the UK, Italy, Canada -- account for two-thirds of the world economy. Now, amid political differences, the largest economies are taking divergent paths as they try to recover from recession.
The rift over whether to take military action to disarm Iraq and oust President Saddam Hussein intensified over the weekend as antiwar marches drew millions, in the US as well as Europe.
British Prime Minister Tony Blair has backed the US government in pushing for swift action against Iraq, a policy that French and German leaders oppose.
"The risk is that the Iraq virus will also infect this meeting and block action," said Adolf Rosenstock, economist at Nomura International Plc. "It would be bad news if the transatlantic hurricane devastated economic relations as well."
The economic differences already exist. President George W.
Bush plans to cut taxes, Germany and Britain are raising them. And the European Central Bank has reduced borrowing costs at less than half the pace of the US Federal Reserve.
The G7's three largest economies are struggling: Germany's GDP gained 0.2 percent last year, its smallest increase since 1993. The US economy, the world's largest, grew at a 0.7 percent annual pace in the fourth quarter, down from 4 percent in the July-September period. Japan's economy, aided by a surge in fourth-quarter exports, grew only 0.3 percent last year.
"Nobody can be sanguine about the state of the world economy right now," said John Manley, Canada's finance minister.
With economies sputtering, the reluctance of finance ministers to develop a strategy for growth has disappointed executives as well as investors.
"We need something like a Marshall Plan," said Gilles Granier, chief executive of the French subsidiary of Intel Corp, the world's biggest computer chipmaker. "The G7 needs to act."
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