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Blair, Wolfowitz says G-8 must expand, disagrees with Merkel

UK Prime Minister Tony Blair said the Group of Eight industrialized nations should eventually expand to include countries such as China and India, putting him at odds with current G-8 head Angela Merkel.

„The G-8 is already well on its way to metamorphosis into G-8 plus five,” said Blair in a speech in Davos, Switzerland. „At G-8 plus five it can be a forum for agreement between the most powerful nations with a true modern global reach. Sooner or later, the metamorphosis should be complete.” Politicians from the G-8 are debating whether to allow some of the world's fastest growing economies into their club and grant them a top table presence on talks ranging from foreign exchange policy to development aid.
While Blair argued for expansion, Merkel rejected the idea in her opening address on January 24. „These countries have very different priorities” on issues such as carbon emissions and development, she said. Blair, who said his speech on Saturday will be his last in Davos as prime minister, is running out of time to build a foreign policy legacy beyond the war in Iraq before he steps down later this year. He repeated a call made last May to fuse the International Monetary Fund and the World Bank to strengthen the influence of emerging economies.

„There is a powerful case for merging the IMF and the World Bank and for increasing the influence of the developing countries within them,” he said. „A strong transatlantic push” to reform organizations such as the IMF and the World Bank is „overdue.” Blair also said G-8 countries may be „on the verge of a breakthrough” on climate change. „The German G-8 Presidency gives us an opportunity to agree at least the principles of a new binding international agreement to come into effect when the Kyoto Protocol expires in 2001,” according to Blair. US President George W. Bush's State of the Union speech on January 23, in which he pledged to lower gasoline consumption by 20% over the next decade, shows the „mood in the US is in the process of a quantum shift,” said Blair.

World Bank President Paul Wolfowitz said on Sunday he supports expanding the G-8 to boost the influence of emerging economies like China, but opposes a merger of the World Bank and International Monetary Fund. Blair proposed the expansion of the G-8 at the World Economic Forum in Davos, the previous day and repeated a call made last May for a merger of the World Bank and IMF.
Both ideas are to bolster the role of developing nations. G-8 members are debating whether to allow growing economies to join their club for a say on issues ranging from foreign exchange to development aid. „The G-8 has expanded progressively since it started,” Wolfowitz told reporters in Istanbul after meeting Turkish Economy Minister Ali Babacan. „The world is more complicated, thanks to the success of so many countries in following the path of modernization, and institutions must adapt.”
Uniting the IMF and World Bank would be unwieldy for the institutions, however, and could damage their independence, Wolfowitz said. The IMF and World Bank „work very closely together, but I do think there are distinctive perspectives and competencies that are important to preserve,” he said. „Close collaboration between our two institutions is very important.” Blair has argued that merging the IMF and World Bank would strengthen the role of developing nations that are members of the institutions, both of which are based in Washington, D.C. (Bloomberg)