The last few months have seen a flurry of summit meetings of world leaders in an impressive variety of groupings (G’s), including, notably, the G8 (+5+…) and the G20, which was elevated to a summit level gathering by US President George Bush in November 2008, following the global financial crisis. The G8+ met in July 2009 in Italy for their annual meeting, while the G20 reconvened in London in April 2009 and is due to meet again in Pittsburgh next month. This is, of course, quite apart from a plethora of bilateral and regional summits, not to mention ASEAN, NAM and so forth. It’s a wonder that heads of governments have time for anything else! Are these meetings of G8+ and G20 worthwhile? Does it make any sense to have two different groups of leaders of “important countries” meeting more than once each year? If not, what is the sensible way forward?
Before exploring these questions, let’s briefly review the history of these two groupings. The G8 held its maiden meeting in France in 1975 as G6, consisting of the major industrial (and western, if you count Japan as “honorary western”) democracies: the US, the UK, France, Germany, Italy and Japan. The proximate stimulus for establishing this group was the international economic turmoil precipitated by the four-fold increase in oil prices announced by OPEC in late 1973. The G6 met to coordinate the (largely oil-importing) west’s responses to this major upheaval in world economy. The following year Canada was added to the group. Thus the G7 was born and became a major force in international relations for the next two decades, especially on economic and financial issues. While the group met at summit level once a year, the G7 finance and trade ministers coordinated their stances through separate meetings. For example, biannual ministerial level meetings of the governing bodies of the IMF and World Bank were typically preceded by G7 finance ministers’ meetings, which effectively controlled the agenda and outcomes of the more formal meetings of the international financial institutions.
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China
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The G7’s dominant role in world economic and financial affairs was matched by its weight in the global economy: between 1975 and 2004 the G7 economies accounted for about 65 per cent of world output, with annual variations in the ratio limited to plus/minus 3 per cent. At the summit level, the G7 was a cosy club of mainly western industrial democracies, which dominated world economic affairs and (less effectively) sought to coordinate foreign and security policies. The cosiness of this club of allies was lost when Yeltsin’s striving-to-be-democratic Russia was included in the group, now G8, in 1997. (It was hard to feel entirely cosy when the new member’s several thousand thermonuclear warheads continued to be targeted on the other G7 nations.) Matters did not improve with the advent of Putin and the subsequent backtracking on the path to democracy.
A longer-term challenge to the preeminence of G8 in world affairs was posed by the spectacular rise of China and the impressive growth of India in the present decade. Thus, by 2008, the share of the G7 economies in world output had dropped significantly to 53 per cent, signalling the onset of a major structural change in relative roles in the world economy. So, today, the G8 is neither a cosy club of industrial-democratic-western allies nor as predominant in the world economy as it had been. In response to the second weakness, the G8(+5) structure was initiated in 2005, which allowed partial participation of five important emerging countries (China, India, Brazil, Mexico and South Africa) in the G8 summits.
This two-tier structure of G8(+5) summits has its obvious pluses and minuses. It strives for greater inclusiveness and participation but within an unequal framework. Perhaps, over time, the system may have evolved to “graduate” the second tier into full members. Meanwhile, the global financial and economic crisis reared its ugly head in 2007-8 and catalysed the convening of the first G20 summit in November 2008, with member countries accounting for about 85 per cent of global GDP, four-fifths of world trade and two-thirds of global population. The G20 had been established as a finance ministers’ grouping in 1999 in response, mainly, to the Asian financial crisis of 1997-98. After an initial burst of enthusiasm it had subsided into a routine talk shop after that crisis abated. The new global crisis has resurrected the grouping into a summit meeting and breathed new life into its deliberations. In particular, the G20 London summit of April 2009 is widely viewed as a success in terms of concrete agreements, including the expansion of IMF resources, a $250 billion fresh allocation of SDRs (after decades of inactivity) and the inclusion of G20 countries in the freshly mandated Financial Stability Board (earlier Forum). Perhaps equally important, developing country leaders found the London summit meetings much more participatory and equal than G8+ conclaves.
Where do we go from here? My working hypothesis is that indefinite continuation of both summit tracks, G8+ and G20, is unlikely. World leaders surely don’t have so much time? So, what’s likely? There are two broad possibilities. One would be the continuation of the G20 summits, with smaller groupings (such as G7, G2, BRICs, GX) meeting informally on its sidelines. In this scenario the G8+ meetings would gradually become less frequent and eventually wither on the vine. The alternative possibility also exists: the global crisis abates, the G20 meetings are seen to be too cumbersome and divisive (between developed and developing nations) and the big boys retreat into their familiar G8 tent as the primary grouping for informal global governance. However, for the latter scenario to prevail, G8+ has to evolve to include the current +5 as full members. Any informal “working committee” of global governance that excludes China, India and Brazil will surely lack minimum credibility.
The two scenarios suffer from a significant common weakness. Both G20 and G(8+5=13) are probably too big for an effective meeting of global leaders, each assisted by one or two “sherpas”. One obvious but radical solution, already mooted by senior American scholar-officials, is to merge the several European seat-holders, into a single European voice at the top table. If that big step proves feasible, then it becomes easy to conceive a new G8 for the 21st century, composed of the US, Europe, China, Japan, India, Brazil, Russia and Mexico. But don’t hold your breath; logic and elegance have rarely been hallmarks of international relations.
The author is Honorary Professor at ICRIER and former Chief Economic Adviser to the Government of India. Views expressed are personal.
