US urges support for global warming fund

OSAKA, Japan Paulson appeared with his counterparts from Japan and Britain, and World Bank Group President Robert Zoellick, to encourage G-8 nations to back the Climate Investment Funds.

"None of us in the world are going to solve this problem unless we deal with it here," Paulson told reporters at the two-day finance ministers' meeting, which opened Friday and will also address soaring oil and food prices.

Paulson said the U.S. will host a pledging event prior to the first meeting of the trust fund committee later this year.

The fund, administered by the World Bank, will go partly for help with developing technology to boost energy efficiency and reduce greenhouse gas emissions, he said.

The G-8 session -- bringing together finance ministers from the U.S., Japan, Russia, Germany, France, Britain, Italy and Canada -- is one of several ministerial meetings leading up to the July 7-9 leaders' summit on the northern island of Hokkaido.

Zoellick said the developing world is being hit by climate change, including droughts, floods, poverty and hunger.

"These funds offer an opportunity to take action on change now," he said. "The Climate Investment Funds are a concrete step forward toward meeting the challenge of global climate change."

G-8 finance ministers are having dinner with their counterparts and other officials from Australia, Brazil, China, South Korea, South Africa and Thailand to weigh the impact of surging oil and food prices on the global economy, the Japanese Ministry of Finance said.

Oil spiked to nearly $140 a barrel last week, and several Asian countries, including India, Indonesia and Malaysia, have cut fuel subsidies, raising retail prices for millions of consumers.

Speaking on the sidelines of the gathering, International Monetary Fund Managing Director Dominique Strauss-Kahn said a slowdown in the global economy over the next few quarters will likely tame the price of oil.

G-8 ministers are expected to push the IMF to study how much speculative money is behind soaring oil prices. At the February gathering of the Group of Seven leading industrialized nations, which excludes Russia, ministers asked the Washington-based organization to check on such speculative flows.

The world is also grappling with an emerging food crisis as prices of corn, wheat, rice, soybeans and other agriculture products have been spiraling higher. The gains are due to a mixture of factors including high oil prices, changing diets, urbanization, expanding populations, extreme weather, growth in biofuel production and speculation.

The food price hikes have set off riots and protests from Africa to Asia and raised fears about a global food crisis that could cause millions more people to suffer malnutrition.

Japanese Finance Minister Fukushiro Nukaga, playing G-8 host, vowed to work closely with the U.S., Japan's most important ally, to tackle the threat of rising oil and food prices and other economic woes.

"We need to coordinate our actions closely because of the many risk factors," he told reporters after a bilateral meeting with Paulson.

But Nukaga declined to comment on what he discussed with Paulson regarding currency rates -- another worrisome topic for the G-8. Nukaga said the issue came up in his talks with Paulson but said it was unclear whether the fuller G-8 will address it.

The dollar has recently staged a modest recovery to about 108 yen. But that came only after Paulson warned this week that he isn't ruling out intervention to stabilize the currency, and U.S. Federal Reserve Chairman Ben Bernanke suggested the Fed is prepared to raise rates to fight inflation.

Dollar weakness has in part pushed up oil prices as some traders invest in oil as a hedge against inflation and a slumping greenback.

Nukaga also expressed concern over the U.S. economy, where a credit crunch has hit since the emergence of the subprime mortgage crisis last year.

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