* Canadians seen as "crazy" for choice of G7 venue
* Logistics problems frustrate senior officials
* Absence of emerging economies limits talks
* Some see Iqaluit as a farewell for G7
Louise Egan
OTTAWA, Feb 2 (Reuters) - Canada is rolling out the welcome mat in the Arctic for the world's top finance officials this weekend, but its unusual choice of venue has fueled debate on whether the Group of Seven rich nations is relevant today.
At a time when extra clout for emerging powers like China has put the G7's future in question, Ottawa's decision to host finance ministers and central bank governors in Iqaluit, a frostbitten outpost some 300 km (200 miles) south of the Arctic Circle, is not helping matters.
"With all due respect, the Canadians are crazy to organize it in a place like that," said one European official who declined to be named.
Canadian Finance Minister Jim Flaherty has said his peers approved of the "pristine and gorgeous" location.
But Washington, a key proponent of replacing the G7 with the Group of 20 countries of developing and industrialized nations, is seen as unenthusiastic about the meeting and has said nothing so far about what it wants on the agenda.
Participants say talks will mark a return to the old G7 of informal "fireside chats" and there will be no written communique.
Bank regulations and exit strategies from recession will dominate, but without emerging economies like China, India and Brazil at the table, the scope of discussion will be limited.
Sources say senior Canadian officials are frustrated at the logistic nightmare that Iqaluit has become, and some tried to persuade Flaherty to switch to a location with easier access, better infrastructure and a more reliable phone and Internet service, like perhaps Ottawa or Toronto.
Flaherty held firm, and is reportedly planning a dog-sledding adventure -- or at least a photo shoot -- for his colleagues, along with a meal featuring seal meat and gifts of sealskin mittens.
That's a useful nod to temperatures that often fall to -40 degrees Celsius (-40 degrees Fahrenheit) in winter, but a potential red flag to Europeans seeking to ban sealskin imports because of protests about the hunt.
Iqaluit, which means "place with many fish" in the native Inuktitut language," is a town of about 6,000 that's accessible only by air or sea. Bad weather can leave travelers stranded for days.
While the region's landscape is stunning, the town is hardly a showcase for foreign dignitaries, said Jim Bell, a 30-year resident and editor of the weekly Nunatsiaq News.
"This is not the time of year when the community is looking its best generally, and if it's overcast ... all they're going to see is a bunch of ugly buildings and a lot of uncomfortable looking people shuffling around, hoods over their faces."
Some speculate this will be the last G7 meeting of its kind and that the group, which comprises Britain, Canada, France, Germany, Italy, Japan and the United States, will be buried under an Iqaluit snowdrift.
But Canada says the G7 is the only group that has can react quickly and in unison to solve a global financial crisis.
As testament to that, officials say, every single finance minister and central bank governor is making the trek north. (Editing by Janet Guttsman)