Referring to wars in Afghanistan, Iraq and Africa and violence in other parts of the world, World Bank President James Wolfensohn said governments have become preoccupied with security.

"It is absolutely right that we fight terror. We must," he said. "The danger, however, is that in our preoccupation with immediate threats, we lose sight of the longer term and equally urgent causes of our insecure world: frustration and lack of hope."

He said eradication of poverty was essential to global stability and peace.

Wolfensohn and Rodrigo Rato, head of the International Monetary Fund, spoke on the final day of the annual meetings of the two Washington-based lending institutions.

Rato said the governments still had much to do to boost the global economic recovery, including carefully monitoring effects of higher oil prices on their economies.

Rato said another challenge facing governments was to manage an orderly transition to higher interest rates.

Governor of the People's Bank of China Zhou Xiaochuan told the meeting that the world cannot ignore the risks and challenges to sustained growth of the global economy.

The economic structural problems of the major developed countries are having a potentially negative impact on global economic development, exchange rates and even financial market stability, Zhou said.

He also said that the new round of interest rate increases will not only narrow the long- and short-term interest rate spread and squeeze the profitability of financial institutions, but will also increase the financing costs of developing countries.

In talks on Friday and Saturday the United States and other leading industrial nations failed to resolve differences over debt reduction for poor countries and Iraq. They also expressed unease over the effect rising oil prices might have on world economies.

Tight security was in place outside the meetings, with many downtown Washington streets closed to traffic and large concrete barrier blocks in place. In August the United States reported that the IMF and World Bank were on a terrorist target list of major financial institutions.

About a dozen protesters set up a tent in a small, heavily barricaded park across the street from the World Bank and IMF headquarters, which are a few blocks from the White House.

In a demonstration on the Ellipse, a grassy area between the White House and the Washington Monument, about 300 people protested the Iraq war. US Park Police arrested 28 people who were trying to deliver to the White House a cardboard box with names of people who had died in the conflict.

On Saturday, US Treasury Secretary John Snow outlined a US plan under which the world's poorest nations would not have to pay existing loans. Any new loans, though, would be reduced by the amount of increased debt forgiveness those countries received.

Britain's Treasury chief Gordon Brown presented a competing proposal that would pay for expanded debt relief by revaluing the IMF's gold reserves according to world prices and by getting wealthy nations to contribute more money.

"There is a growing consensus that multilateral debt relief has to be dealt with as soon as possible," said Brown, who heads the IMF's policy-making committee.

But all the ministers could agree on in a communique after their committee meeting were vague promises.

On Iraq, the United States tried to rally support for wiping out up to 90 percent of the Arab nation's US$120 billion in foreign debt. However, France and Germany say they are only willing to provide 50 percent debt relief for Iraq this year.

(Xinhua News Agency October 4, 2004)