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G-8 Puts Stable Supply of Energy on Front Burner

The volatility of oil and gas prices tops the agenda of finance ministers in Moscow.

February 12, 2006|David Holley | Times Staff Writer

MOSCOW — Finance ministers from the Group of 8 industrialized nations, warning that "high and volatile energy prices" pose a threat to global economic growth, called Saturday for stepped-up efforts to ensure a stable worldwide energy supply.

Russian President Vladimir V. Putin was host to the G-8 officials, who issued a communique calling for greater cooperation between oil-producing and -consuming nations and private industry. Maintenance of solid economic growth requires an improved market-oriented approach for providing sufficient oil, gas and other energy resources, the statement says.

The world community must "facilitate necessary investments in exploration, production, transportation and refining capacity, as well as improve energy efficiency," said the ministers, who gathered at a hotel near the Kremlin.

The communique lauds the rapid economic growth in recent years shown by Russia, which holds the G-8 presidency this year, and Russia's commitments to boost aid to poor countries and make early payments on its Soviet-era debt to the group of top lending nations known as the Paris Club.

"We welcome the fact that Russia's good economic performance and improved fiscal position will allow it to join other G-8 countries in the area of development finance by stepping up its efforts in this field," it says.

The statement's praise for Russia's accomplishments and policies appears to mark a triumph for Putin weeks after his turn as G-8 president got off to a rocky start.

On Jan. 1, Russia's state gas monopoly began to cut off supplies of natural gas to Ukraine in a showdown over prices. Although the two sides reached a deal a few days later, the reduced pressure in natural gas lines passing through Ukraine led to a decrease in deliveries to other European countries. That led to fresh doubts in Western Europe over Russia's reliability as an energy supplier just when the issue was at the top of the G-8 agenda.

In a speech to the G-8 ministers Saturday, Putin, expanding on many of the issues later addressed in the communique, acknowledged the importance of reliable supply.

"The welfare of millions of people depends on energy security," Putin said. "We hope that the G-8 will formulate a coordinated strategy in this sphere, which will allow us to reliably supply the global economy and the world's population with energy resources at acceptable prices and with minimum damage to the environment."

Efforts should be made to reduce "political, technological and environmental risks" that threaten the stability of global markets not only for oil and gas but also for electricity and nuclear power, Putin said. "Another crucial task is to raise energy efficiency ... develop alternative energy sources and combat the so-called energy poverty of developing countries," he added.

Putin also noted that Russia's economy grew 6.4% last year, its gold and foreign currency reserves reached $185 billion, and it ran a large trade surplus.

Using its improved financial strength, Russia is prepared to contribute up to $587 million to the World Bank's International Development Assn., which assists the world's poorest countries, Putin said. Russia also wishes to pay off ahead of schedule up to $11.9 billion in debt to the Paris Club, he said.

Putin suggested that the richer countries being repaid should use that money to write off debts of poor countries. "This is easy to do because if Russia pays ahead of schedule, the money is not accounted for in your current national budgets," he said.

The leaders of the G-8 nations -- the U.S., Britain, Canada, France, Germany, Italy, Japan and Russia -- are to hold a summit in St. Petersburg in July. Putin has named energy security, the battle against infectious diseases and education as three priority items for that agenda.

Educational issues have global scope, Putin said, because improvements would encourage "dialogue between civilizations and cultures" and fight "extremist ideology that promotes violence, intolerance and the threat of terror."

The communique also stresses efforts to combat "money laundering and terrorist financing," and the threat of a possible avian flu pandemic.

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