Asian, European ministers tackle rising fuel, food prices

Asian, European ministers tackle rising fuel, food prices

Mon, 16 Jun 2008 15:55 HKT

JEJU ISLAND, South Korea (AFP) -- Asian and European finance ministers on Monday focused on how to tackle rising oil and food prices, with South Korea's leader likening their effect to the oil shocks of the 1970s. Inflation resulting partially from high global oil and food prices is a key problem for both continents, France's Christine Lagarde said at the Asia-Europe Meeting (ASEM) of finance ministers. She called on oil producers to expand output and pressed for more investment in exploration to drive the price down. "In the short and longer terms there are global proposals that need to be endorsed -- number one, an increase of production, and number two, additional exploration and production of oil," Lagarde said. The French minister also urged a change in energy mix patterns and consumption and a "better understanding of how the market functions." Lagarde last weekend attended a Group of Eight meeting of finance chiefs, where some delegates expressed suspicion that speculators were driving up oil prices. The ASEM meeting in the South Korean resort island of Jeju is being attended by finance ministers or their deputies from 27 EU countries and 16 Asian nations, plus officials from six international organisations. Together, they represent 60 percent of the world's population and about half its output. Apart from fuel and food, the ministers also discussed recent global financial turmoil sparked by the US subprime mortgage crisis. Lagarde said ministers, meeting in closed session Monday, concluded that Asia and Europe had coped well with the crisis, all things considered. "The economies in the two regions have been more resilient than expected, but both need to continue to work to fight rising prices as well as support economic growth." Lagarde said the financial sector "is slightly improving, but still undergoing the consequences of the turmoil of the summer. We need to deleverage but not eliminate risk." Another issue raised Monday was climate change, with the use of biofuels discussed as an option, she said. Earlier, South Korean President Lee Myung-Bak warned that soaring oil prices were threatening global economic growth, and called for better international cooperation. "Instability in the global financial market has spread to the real economy, thus putting a damper on world economic growth," Lee said. "Coupled with a steep hike in the price of oil, food and raw materials, it is now no exaggeration to say that the global economy is faced with the most serious crisis since the oil shocks of the 1970s." Lee's own government is grappling with a truckers' strike over high fuel prices, the latest in a series of sometimes violent protests worldwide. Ministers were also discussing regional economic integration, and cooperation on infrastructure finance and microfinance. South Korea is ready to expand its contribution to the international community and increase "development finance so that we will actively cooperate to solve common global issues," Lee said. He described climate change as an issue needing restraint and collaboration from the international community. Overall, Lee said, a much higher level of regional economic and financial collaboration is needed than ever before. "Having experienced the 1997 Asian financial crisis, countries in this part of the globe comprehend the significance of regional cooperation better than most other countries."