World Bank chief says G7 should be replaced

By Lesley Wroughton

WASHINGTON (Reuters) - The Group of Seven rich nations is no longer effective and should be replaced by a steering group that includes emerging economic powers like China, India and Brazil, World Bank President Robert Zoellick said on Monday.

In a speech ahead of meetings of G7 finance leaders in Washington this weekend, Zoellick said the global financial crisis was a "wake-up call" that required broader cooperation across more countries.

"The G7 is not working," Zoellick said, referring to the group of rich countries including the United States, Canada, Britain, Germany, France, Italy and Japan. "We need a better group for a different time."

"The new multilateralism, suiting our times, will need to be a flexible network, not a fixed nor unitary system," Zoellick said. "It needs to maximize the strengths of interconnecting and overlapping actors and institutions, public and private," he said.

He said the steering group should include finance ministers from China, India, Brazil, South Africa, Saudi Arabia and Russia. It should not, however, be limited to any set number of countries but should be flexible and evolve with the times.

Zoellick's comments on reforming the G7 echoed comments he has made about adapting the World Bank to address changing times in which emerging market countries have a greater stake in the global economy.

Zoellick has announced he will form a commission led by former Mexican President Ernesto Zedillo to help modernize the World Bank's governance structure, long dominated by the United States and Europeans.

For the reforms Zoellick envisions to replace the G7, the group would bring together over 70 percent of the world's gross domestic product, 56 percent of the world population, 62 percent of global energy production, the world's major carbon emitters, big donor countries, and the main players in global capital, commodity, and exchange rate markets.