Time has passed for exclusive clubs like G7: U.N.

By Louis Charbonneau

UNITED NATIONS (Reuters) - The current financial crisis has shown it is time for clubs of rich nations like the Group of Seven to open their doors to key developing countries, a top U.N. development official said on Wednesday.

"Exclusive clubs of rich countries only really don't make much sense anymore," Kemal Dervis, head of the U.N. Development Program, told reporters. "Clearly an opening of these clubs to the big players, strong players coming from the developing countries is highly desirable."

Dervis was speaking about the financial crisis that began in the United States but has spread across the globe. He said the crisis would be a key topic at a meeting in New York on Friday of the heads of all U.N. agencies chaired by Secretary-General Ban Ki-moon.

Top officials from the International Monetary Fund and the World Bank are also expected to attend Friday's meeting at U.N. headquarters. Dervis said it was unclear whether the meeting would result in an agreement on specific proposals.

It was up to the international community to figure out how to expand clubs like the G7 to integrate top developing nations but it was crucial that it be done, Dervis said.

"Emerging market developing countries such as Brazil, China, India have such a hugely important role to play now in the world economy and some of them have huge resources to play with," he said.

The White House announced on Wednesday that President George W. Bush would host world leaders on November 15 to discuss the crisis. Invited will be leaders of the G20, which includes the G7 and key emerging economies like China, Brazil, Saudi Arabia and India.

The UNDP chief said he was concerned that the economic crisis could prompt rich countries to cut back on development aid, which would threaten the ability of the world to meet the U.N. Millennium Goals aimed at halving poverty by 2015.

"We haven't really seen any immediate signs of resources being cut back for official development assistance or programs being delayed," Dervis said. "But of course this is still early times and we are worried about that."

He said the impact on development assistance would become clearer once countries approve their 2009 and 2010 budgets. He said the coordinated effort to prop up financial markets worldwide was important but would have budgetary fallout.

"Deficits in major rich, developed and industrialized countries are going up," Dervis said. "So there will be fiscal pressure."

(Editing by John O'Callaghan)