Problems with Current U.S. Policy.

In the past quarter of a century, other groupings of nations have come and gone, but the G8/G7 has endured. From its origins as an informal meeting of the heads of state of the wealthiest nations, the G8/G7 leaders' summit has become an international forum full of pomp and ceremony. The declarations of its leaders and ministers reflect the consensus of the world's most powerful nations about an expanding array of international issues.

By its own standards, the G8/G7 can point to a history of success. The consultations of the early years succeeded in stabilizing the international monetary system after it abruptly shifted from the limited gold standard. President Reagan credited the peaceful conclusion of the cold war in favor of capitalism to the "hanging together" of the G7 powers. The G7 played a key role in the conclusion of the Uruguay Round and the creation of the WTO with the dispute-settlement function as its centerpiece. As it enters a new century, the G8/G7 can rightfully claim to have played a key role in maintaining mutual trust among the industrialized nations and in expanding the realm of free-market democracies.

But the failure of the G8/G7 to advance solutions to the array of economic, political/security, and transnational issues it now addresses is just as evident. On the economic front, its call for a new round of trade/investment negotiations fell flat at the WTO meeting in Seattle, when developing countries insisted that the impact of earlier liberalization measures needed to be assessed and complained that the industrialized countries had failed to meet their market access and economic aid commitments. The G7's 1998 promise to advance "reform of the global financial architecture" has devolved into a focus on promoting national financial reforms among emerging market countries. While acknowledging the urgent need to "ensure increasing, widely shared prosperity" and to "put a human face" on globalization, it has not moved beyond this now-tired rhetoric. Britain and Canada played a key role in having the G8/G7 declare its commitment to debt relief for the poorest nations at the 1999 Cologne Summit, but the U.S. congressional failure to back this initiative has made this another empty promise. Increasingly, the G8/G7 declarations are largely a laundry list of transnational problems and a compendium of promises--many of which are subsequently broken.

As it moves forward, the G8/G7 is beset with problems of representation and legitimacy. Having evolved from its initial focus on economic policy coordination of member states, to assuming an agenda-setting role for global governance, the G8/G7 is faced with mounting criticism that it is unrepresentative. How can such an elite club fairly shape an agenda that will affect all peoples and nations?

In 1999 the G8/G7, responding to a U.S. initiative, formed an associated forum called the G20 to involve a broader spectrum of nations of mostly emerging markets in deliberations about financial policy reform. Thus far, however, the G20 functions mostly as a sounding board for G7 policy initiatives, doing little to alter the G8/G7's elite character.

What type of countries should be represented in a forum limited to what the G8/G7 itself has called "systemically important countries?" Strong arguments have been made for the inclusion of China, clearly one the world's most important players in security issues and in the global economy. Others contend, however, that with the entry of authoritarian China, the G8/G7 would no longer be a forum of like-minded nations, making it all the more difficult for the member nations to reach consensus. There also exist representation questions about other emerging market economies like Brazil, South Korea, and India, whose economic power have greatly expanded since the founding of the G7. Conversely, it is not clear why a minor power like Italy or a mid-level economy like Canada should remain a member.

The G8/G7 is criticized routinely as a wealthy club whose main concern is maintaining the global economic and political stability necessary for its members to continue accumulating wealth. Expanding its membership to developing countries would give the appearance of being more representative. But it's likely that the U.S. and its allies would continue to meet apart from any expanded forum, just as the G7 (particularly in ministerial meetings) continues to function alongside the G8.

Clearly, the wealthiest and most powerful nations have a right to meet formally or informally, just as other groupings of countries with similar interests and concerns do--such as the G77 forum of developing nations. The fundamental legitimacy problem associated with the G8/G7 is not its right to exist. Rather it's the way that it has worked to promote itself as the central player in global governance--and in the process undermined the credibility of the United Nations.

In the aftermath of World War II, the U.S. and other G8/G7 members created a visionary system of global governance designed to preserve peace and promote prosperity through intergovernmental institutions, mainly the United Nations. Today, these institutions are plagued with identity and representational crises and find themselves ineffective in the face of new global challenges, such as responding to the outbreak of intrastate conflicts, stopping financial crisis contagion, and regulating transnational corporations. Structural reform is necessary if the WTO, World Bank, IMF, and UN are to meet some of these challenges, while other global problems will require new visionary agendas of global governance--and new institutions. Unfortunately, the G8/G7 has shown little leadership in addressing the deepening crisis of global governance. Indeed it has contributed to this crisis by supporting policy solutions that bypass the UN and further destructive trends in the global economy.

Key Problems

* G8/G7 countries have failed to implement many of the recommendations of past summits.

* The U.S. failure to pursue its foreign policy within the UN's framework or to pay its dues to the UN, undermines Washington's credibility as a responsible global leader, while creating widespread concern that the U.S.-dominated G8/G7 functions as the actual center of global governance.

* The lack of attention to deepening impoverishment reinforces criticisms that the G8/G7 is more concerned about increasing the most powerful nations' wealth than about its professed goal of increasing global prosperity and democracy.

Tom Barry ([e-mail]), a senior analyst at the Interhemispheric Resource Center, is codirector of Foreign Policy In Focus.