The deal settles a dispute that had threatened to delay postwar aid to Iraq, a move the United States had insisted could go ahead without a further U.N. resolution.
But the finance leaders, in a joint statement, endorsed a resolution as part of a reconstruction plan that will involve the International Monetary Fund and the World Bank.
“We recognize the need for a multilateral effort to help Iraq. We support a further U.N. Security Council resolution,” said the finance ministers and central bank presidents from the United States, Japan, Germany, France, Britain, Italy and Canada.
The statement was a concession for U.S. officials, who had argued that IMF-World Bank reconstruction efforts could begin as part of an American-led rebuilding program without a new resolution from the U.N., which did not endorse the U.S.-led war to oust Iraqi President Saddam Hussein.
France and Germany, leading critics of the war, rejected the administration’s approach. They said the lending institutions should not become involved in Iraq until there was a deal on the United Nations’ role in overseeing reconstruction.
The seven countries did endorse a call by the United States to begin discussions on forgiving a portion of Iraq’s massive foreign debt, much of it built up during Saddam’s rule and owed to Russia, France and Germany.
One participant in the G-7 discussions, Wim Duisenberg, the head of the European Central Bank, said the talks were conducted without any hint of the bitterness between the United States and France and Germany over the war.
Duisenberg said all participants agreed “a new Security Council resolution would be welcomed” and that “there should be a joint effort to reconstruct” Iraq.
The G-7 statement also said the IMF and World Bank “should play their normal role in rebuilding and developing Iraq.” It said the global lenders should recognize the need for the Iraqi people to decide their own future.
U.S. Treasury Secretary John Snow and Federal Reserve Chairman Alan Greenspan led the discussions.
After the meeting, Snow said the talks had begun the process of finding a way for the IMF, World Bank and other institutions to “work together to help the Iraqi people recover — not just from 25 days of conflict but from 25 years of economic misrule.”
Snow said the officials agreed the IMF and the World Bank would begin providing technical assistance in Iraq and start preliminary studies on what would need to be done to rebuild the country.
The finance officials also pledged to pursue greater cooperation in efforts to deal with a serious global economic slowdown, exacerbated by uncertainties surrounding the war.
“A strong and lasting recovery is essential for our own countries and for the world,” the joint statement said. “To this end, we each commit to pursue sound macroeconomic policies that support sustained growth.”