Mexico set to dominate G7

The argument over whether the US should have kept its allies better informed on the progress of the support package for Mexico last week threatens to cast a cloud over the meeting of the Group of Seven in Toronto this weekend, writes Clifford Germ an.

The German government confirmed that it and several other European countries had abstained from voting on the support package because they were not consulted in time.

The Mexican crisis has forced its way to the top of the agenda for the meeting, with the new US Treasury Secretary, Robert Rubin, insisting that more needs to be done to prepare for shocks that could threaten integration of emerging capital markets into the world financial system. Mexico was down to its last $2bn of reserves by the time the package was agreed and was on the point of reimposing exchange controls that would have put pressure on other emerging economies to do the same.

The US is thought to want the role of the International Monetary Fund reviewed so that it can respond more quickly in future. The Fund has committed a record $17.8bn to Mexico, more than half of which will have to be called from members if Mexico needs to draw the full amount. Germany is anxious to keep aid for continuing reforms in Russia on the agenda.