G7 discuss revamp at European Bank

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The Independent Online
FINANCE ministers of the Group of Seven industrialised nations are considering changes in the leadership and operations of the European Bank for Reconstruction and Development, Lloyd Bentsen, the US Treasury Secretary, said yesterday.

Confirming a cut-off in US funding for the bank, Mr Bentsen said Washington, having made its stand, was now leaving the question of whether Jacques Attali, the EBRD president, would remain in office to European finance ministers. The G7 holds more than 60 per cent of EBRD shares.

European finance ministers had hoped to avert a dispute over Mr Attali's future and allow Washington to take the lead in removing him, following revelations that the bank spent pounds 55.5m on the lavish refurbishment of its London headquarters. Those disclosures prompted the G7 to review the EBRD.

But speaking during the annual meeting of the Organisation for Economic Co-operation and Development, Mr Bentsen confirmed the US Treasury would not seek Congressional approval for dollars 70m ( pounds 45m) of new funding for the bank now that Congress had objected. 'Because of the extravagance of that bank, they didn't think it was proper to spend our taxpayers' money.'

The refusal suggests future US financing for the bank is unlikely without significant changes, possibly including a new president. For now, the US is relying on the IMF and the World Bank to channel Western finance to Russia.

Also at the OECD meeting, finance and trade ministers expressed their 'steely determination' to complete the Uruguay Round of world trade talks by the end of the year. An accord would act as a 'very powerful contributor to bolstering confidence, growth and employment' in the industrial world and elsewhere, said a communique.

Ministers voiced concern at the OECD's forecast that nearly 36 million people in the industrial world will be out of work by the end of this year. In a thinly veiled message to the German Bundesbank, they said: 'Monetary policy can and must exploit possibilities for lowering short-term interest rates.'

The EBRD has granted a dollars 40m loan to a US-Russian joint venture to develop oil and gas fields in Russia.