Finance Minister Naoto Kan will make his international debut this weekend when he attends a meeting of the Group of Seven developed nations in Canada’s far north, at a time when the global economy is slowly emerging from a serious recession.
Kan, who became finance chief in early January, will for the first time jointly meet with his counterparts from Britain, Canada, France, Germany, Italy and the United States.
Analysts say the two-day meeting starting Friday in Iqaluit will be a good opportunity to find out whether Kan, also deputy prime minister, has the ability to debate major economic issues in the international arena.
Major topics of the regular meeting will not be out of the ordinary.
G7 finance ministers and central bank governors will exchange views over the state of the global economy, financial regulatory reform, and global trade and savings imbalances, which have all been at the heart of major international meetings since the 2008 economic meltdown.
Rather than the items on the agenda, the environment in which they will engage in discussions may be more noteworthy this time.
With the aim of returning the regular meeting to its roots — the holding of candid and substantive discussions — the G7 countries are not planning to release a joint communique for the first time in more than a decade, according to officials preparing for the meeting.
Canadian Finance Minister Jim Flaherty, chair of the meeting, has said the G7 will focus “not on communiques and accords, but on constructive dialogue on actions to strengthen the global economy.”
In an apparent attempt to break with tradition, the venue picked by Canada for the forthcoming event is also an extraordinary one in the history of the gathering, which dates back to 1986.
Leaving big cities, the top G7 finance officials will meet in the remote capital of Canada’s huge Arctic territory of Nunavut, with a population of only about 7,000.
“I understand that this meeting is intended to be like everyone living under the same roof and having fireplace chats. But we may freeze to death before getting down to intimate conversations,” quipped one of the officials, who declined to be named.
In February, the temperature often drops below minus 30 in Iqaluit.
The idea of gathering in an informal setting reflects the group’s changing role in today’s world, where global growth hinges on the performances of emerging heavyweights, including Brazil, China and India.
After the Group of 20, consisting of the G7 plus emerging countries, established itself as the world’s premier policy forum last year, the finance leaders will probably reconsider their smaller group’s identity in Iqaluit and opt to focus on those areas they think they know best.
Reform of the financial sector is one of them, and U.S. President Barack Obama’s recent proposals to limit the size of big banks and their financial risk-taking will most likely occupy the attention of the participants.
As at past G7 meetings, currency issues are also expected to be among the top agenda items, according to the officials.
But experts said it is uncertain to what extent the G7 countries will devote their time, if any, to pushing China to increase the value of the yuan, given that the fast-growing country is not part of the group and is not represented at the meeting.
“They will, of course, discuss how they view foreign exchange rates. But I don’t think they will single out China’s yuan,” said Eiji Hirano, a former Bank of Japan executive director for international affairs.
Hirano, now executive vice president of Toyota Financial Services Corp., said currency issues must be seen in the larger picture.
“It won’t be fruitful” for the G7 to discuss currency with the purpose of strengthening pressure on China to raise the value of the yuan, Hirano said.
Kan, who will be there with BOJ Gov. Masaaki Shirakawa, is ready to explain Japan’s latest efforts to nurture its nascent recovery, such as ¥7.2 trillion in stimulus spending approved last week in the Diet.
Kan is set to agree with other G7 representatives that policies of support should remain in place until there are clear signs that a sustainable recovery has taken hold in private demand, according to Japanese officials.
But Kan is at the same time expected to say Japan is keenly aware of the need to get its ballooning deficits — the worst among industrialized countries — under control.
He is expected to say that Japan is committed to unveiling credible midterm plans in the first half of this year to rein in debt and boost growth.
Kan, though having a long political career, had almost no experience in macroeconomic policies until he replaced Hirohisa Fujii, who resigned for health reasons, on Jan. 7.
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