Paris (France) (AFP) – France said Wednesday it is planning to host a meeting of G7 finance ministers on the Middle East crisis early next week as the war fuels fears for the global economy.
“I have spoken with various counterparts, in particular Scott Bessent, who is the US treasury secretary,” French Economy and Finance Minister Roland Lescure told Franceinfo radio. “And we agreed to hold a meeting which will take place at the beginning of next week,” he added. “We want to let a week go by to see how the conflict develops, how the markets evolve. We’ll have the finance ministers and the central bank governors there as well.”
France holds the rotating presidency of the Group of Seven advanced economies, which also includes Canada, Germany, Italy, Japan, the United Kingdom, and the United States. A first meeting of finance ministers under the French presidency was held on January 27. Lescure said next week’s meeting was expected to be an exchange of views. “We’re going to listen to what is coming up from the ground, from businesses, from economists in these different parts of the world,” he added. “The idea is to be able to discuss the state of the situation, so that we can assess any responses that might be needed, if we have to act. In a conflict which is currently a local conflict in one region but has global repercussions, it is obviously essential that we coordinate.”
– Fuel price increases –
The war sparked by the US-Israeli bombing of Iran launched on Saturday triggered a spike in crude oil and natural gas prices and a sharp fall in stock markets, particularly in Europe and Asia. However, the panic in markets appeared to ease Wednesday, with European and US stocks steadying while energy prices dipped. “We’re not in a stock market crash,” said Lescure, urging people to “keep their cool”.
Investors are concerned about a sharp rise in oil and gas prices caused by disruptions to supplies through the Strait of Hormuz, which handles around 20 percent of the world’s seaborne oil and a considerable amount of liquefied natural gas shipments. They fear a resurgence of inflation, similar to the rise in prices triggered by Russia’s full-scale invasion of Ukraine in 2022. Iran’s Revolutionary Guards claim they have “complete control” of the strategic waterway and warned that any vessels seeking to use it risk damage from missiles or stray drones. But US President Donald Trump said the US Navy was ready to escort tankers through the key shipping route, which limited losses on Wall Street on Tuesday.
The governor of the Bank of France, Francois Villeroy de Galhau, warned Wednesday against reacting too quickly, saying the increase in energy prices “could be temporary”. Frederik Ducrozet, chief economist at asset manager Pictet, said the G7 finance ministers and central bankers would likely issue a statement after the meeting to calm markets. “We can imagine that central banks and the G7 will issue a fairly general statement, as is done in any kind of geopolitical or financial crisis, in which these authorities declare themselves ready to intervene to stabilise markets in the event of a more lasting or more severe shock,” he said.
The meeting will also be an opportunity for G7 nations to find common ground in the face of diverging interests. “One reading of what is currently ongoing is that the United States wants to increase its dominance in global fossil fuel markets,” said Guntram Wolff, an economist at the Bruegel think tank. “And so that’s a certain division between Europe and the United States,” he added.
© 2024 AFP
