Fri, Feb 23, 2001 EST
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U.S. Treasury Secretary Looking for
Changes in Global Management

By Martin Crutsinger   Associated Press
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PALERMO, Sicily — Treasury Secretary Paul O'Neill, highly regarded for his success in reviving aluminum giant Alcoa, is now focused on an even bigger goal — overhauling the international financial system.

O'Neill, who has stirred up a fair amount of anxiety about the new administration's plans in this area, made his debut on the international stage this weekend at a meeting of finance ministers and central bank presidents of the world's seven wealthiest countries.

The Group of Seven gatherings are considered the equivalent of a board of directors' meeting for the global economy with the U.S. treasury secretary serving as the titular head of the group given that he represents the world's biggest economy.

Before coming to the meetings, O'Neill had made a number of critical comments about how the G-7 and the International Monetary Fund had responded to previous financial crises. He also had expressed skepticism about whether the G-7 sessions, which occur three times a year, were worth the travel time to distant cites.

But O'Neill told reporters at a closing news conference that he had been impressed with the quality of the closed-door discussions.

"It was at the right level of detail," he said. "It was not just what you could learn from reading the newspapers."

O'Neill also said he was pleased that the group had been receptive to his suggestions that they explore ways to make agencies such as the IMF more accountable for how they handle future financial crises.

Conservative critics have charged that the IMF, which assembled more than $100 billion in bailout packages during the 1997-98 global financial crisis, saw much of that money wasted because it failed to stop financial panic from toppling a number of countries.

O'Neill, who made $59 million in salary and stock options at Alcoa last year, has striven during his first month in the Bush Cabinet to bring a no-nonesense business style to government work.

He said the G-7 officials "talked about the really important subjects ... questions of accountability and responsibility."

The new administration has not yet laid out its reform proposals for the 183-nation IMF, and its sister lending agency the World Bank, but in a series of interviews with reporters O'Neill has discussed such ideas as requiring the IMF to blow the whistle sooner on countries not following sound practices, to scale back the size of its bailout packages and to identify one person who would be held accountable if the rescue efforts did not succeed.

O'Neill has also been skeptical about the use of government intervention in currency markets to stabilize currencies such as the dollar and in general has focused on a view that President Bush will pursue a less-interventionist policy when it comes to international economics than the Bush administration.

While U.S. allies may still have concerns about the direction the new administration is taking, O'Neill's colleagues were complementary of O'Neill after their get-acquainted session this weekend.

Wim Duisenberg, the head of the European Central Bank, said that "O'Neill came here in a very modest spirit of trying to learn more than teach ... I have the impression we can continue doing business in the same cooperative state we have experienced in past years."

German Deputy Finance Minister Caio Koch-Weiser said that O'Neill was a good listener who "directly engages in the discussions."

One of the top agenda items on the table was the sudden slowdown in U.S. economic growth, which has raised recession fears.

The group's final statement called on the United States to use both interest rate reductions and fiscal policy such as tax cuts to combat the downturn, which the Bush administration is sure to use as another endorsement of the need to win congressional approval for his $1.6 trillion 10-year tax cut.

O'Neill said he believed the United States was likely to begin a strong recovery later this year and he said he was "comforted" by a pickup in auto sales in January although he cautioned against reading too much into one month's data.

As he had promised before the meeting, O'Neill sought to change the tone in America's relationship with Japan. He called his discussions with Japanese Finance Minister Kiichi Miyazawa "good and clear" and said he wanted to avoid "haranguing" Japan about the need to do more to boost growth in a country that has suffered a decade of sub-par activity.

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