Energy concerns to take centre stage at G8 finance meeting
Afp, Paris
The fragile fate of the world's energy supply and distribution chain is likely to take center stage at an upcoming meeting in Moscow of G8 finance ministers, overshadowing their traditional debate on economic growth and currency fluctuations. Ministers from Britain, Canada, France, Germany, Italy, Japan, Russia and the United States, who convene four to five times a year, are to meet February 10 and 11 at a moment of mounting concern about the vulnerability of global oil flows. Political crises in several key energy players -- Ukraine, Iran, Nigeria and Venezuela -- have helped drive crude oil prices to near record levels in recent weeks. Russia, the world's second largest oil producer, is likewise a critical participant in the global energy network. Its recent price-related feud with Ukraine disrupted gas deliveries to Europe and has forced European governments to step up energy diversification initiatives. Oil-related preoccupations, as well as the absence this time around of G8 central bankers, should mean there will be less pressure on China to ease its currency regime and allow the yuan to appreciate. Beijing's G8 trading partners, notably the United States, have long argued that the yuan is undervalued, thereby giving Chinese goods an unfair advantage in global markets. But in Moscow, currency questions along with global economic growth imbalances, another issue that usually concentrates G8 ministerial minds, are likely to take a backseat to energy supply worries. Economists and political leaders agree that the global economy has in fact held up well in the face of rising crude prices, which have more than tripled since early 2002 and last week came close to their record 70.85 dollars a barrel in New York trade. World growth, solid these last two years, should remain healthy in 2006, with a gain of four percent forecast in response to dynamic performances in Asia and the United States as well as subdued inflation. But the robust pace has not been sufficient to overcome energy-related anxieties. German Economy Minister Michael Glos has warned that the burgeoning row over Iran's nuclear program, now before the UN Security Council, "constitutes a new risk to energy prices in Germany," the largest of the 12 eurozone economies. Iran is the second largest oil producer in the powerful Organization of Petroleum Exporting Countries. "Since the prices of oil and gas are linked," Glos said, "there is actually a double risk -- and that worries me."
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