In talks to repair battered economy, global financial officials stress coordinated efforts

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Finance officials work to stress economic unity

IQALUIT, Nunavut — Top international finance officials renewed their commitments to keep spending to support a global rebound while playing down differences over new U.S. approaches on bank reform.

Finance ministers and central bank presidents of the Group of Seven major industrial economies normally seek to strike a united front at their meetings to avoid upsetting financial markets.

But that imperative seemed even more urgent at their two days of talks Friday and Saturday given the bad week experienced by global markets, which were thrown into a tailspin by new worries over rising debt levels in Greece, Portugal and Spain.

The G-7 officials struck a united front at their closing news conference, announcing an agreement to push the international lending agencies to grant new debt relief for earthquake-ravaged Haiti and expressing broad consensus on the need to continue spending to support a tentative economic rebound.

“The world economy is coming back. We’ve been through together a very difficult time, a very uncertain time and now we see signs of recovery,” Canadian Finance Minister Jim Flaherty told reporters.

The G-7 countries are the United States, Japan, Germany, France, Britain, Italy and Canada.

Iqaluit, population 7,000 and only 200 miles from the Arctic Circle, was the most unusual site ever chosen for a G-7 meeting. Flaherty said he wanted to spotlight Canada’s Arctic region and force his colleagues into more informal discussions. Neck ties were banned and Flaherty kicked things off with dogsledding for the finance officials on frozen Frobisher Bay.

While U.S. Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke turned down the dogsledding, Flaherty insisted his effort at informality had been a resounding success.

The European debt crisis did force its way onto the G-7 agenda after financial markets from Wall Street to Tokyo went into a tailspin over worries that Greece might require some type of emergency bailout.

The debt concerns in Greece, Spain and Portugal highlighted the problems many countries face because expensive stimulus programs to recover from the severe downturn are sending government debt burdens soaring.

Geithner succeeded in getting agreement from other G-7 countries on the need to keep pushing ahead with stimulus spending this year to make sure the recovery gains strength.

In the United States, President Barack Obama this past week unveiled a new jobs program with billions of dollars in new spending.

Geithner said that once the recovery gains strength, the administration will “turn to starting to unwind and walk back the exceptional measures we took in this crisis.”

British Treasury chief Alistair Darling is also pushing stimulus spending to fight high unemployment even as Britain’s budget deficit surges. Darling’s government is facing a tough election campaign this spring.

Darling said “the key challenge is to ensure that we get our borrowing down, get our deficits down, but at the same time we do that in a way that doesn’t damage the recovery.”

Several G-7 nations had complained heading into the meetings about Obama’s surprise announcement last month that he would ask Congress to impose tougher rules to prevent big banks from threatening the financial system with risky trading ventures.

But after their talks, the G-7 officials insisted they were now on the same page and would push ahead to get consensus on global bank reform guidelines by the end of this year.

“We were very clear that we needed to continue to work together on this,” Darling told reporters. “Of course, different countries have different systems and to some extent the recent U.S. proposals have reflected that.”

French Finance Minister Christine Lagarde told reporters “there was a very, very strong consensus to keep the momentum, to work comprehensively” to complete work on the banking reform effort.

Associated Press writers Jane Wardell and Rob Gillies contributed to this report.

On the Net:

Meeting site: g8.gc.ca/home/