Toward a New Foreign Policy.

Global governance lies in shambles, but there is little indication that the world's most powerful political leaders have the inclination or will to reform current institutions or create new ones. Within the multilateral institutions, blame and recriminations abound, leaving no room for self-criticism and change. Neither have the various groupings of like-minded nations--the G8/G7 and the G77 as the most prominent--provided the kind of enlightened leadership and visionary thinking necessary to upgrade global governance.

Due to its booming economy, its lead in information technology, and its lack of military competitors, the U.S. once again exercises hegemonic power in the capitalist world--which now encompasses virtually the entire planet. As such, the U.S. must assume a large part of the blame for the dismal state of global governance, and a large part of the responsibility to set international affairs on a more forward-looking path. A new approach to U.S. participation in the G8/G7 would be a good place to start. In its deliberative capacity, the G8/G7 could play a key role in highlighting the need for substantial reforms in the decisionmaking institutions of global governance and in forging an international consensus on the policies needed to address global climate change and other pressing transnational issues.

Washington and the other G8/G7 leaders could begin by taking the representation and legitimacy critiques more seriously. Within successful global governance, there can be a constructive role for self-constituted groupings of like-minded countries such as the G8/G7. Unfortunately, this is not the case today. Without the presence of other strong country groupings (particularly of developing countries) and in the absence of more democratically constituted multilateral institutions, the G8/G7 countries have assumed an unhealthy degree of power.

Rather than working to foster forums of other like-minded nations, the U.S. has historically sought to undermine groups that it cannot or does not control. Just as the wealthy industrialized countries benefit from sessions involving only other like-minded nations and leaders, so too will poor and developing countries benefit from strategy meetings with their counterparts throughout the South and in the transitional states. The concerted campaign led by the U.S. to crush the factions within the UN supporting a "new international economic order" and its aid embargo against leaders of the nonaligned movement are cases in point. The apparent reemergence of the G77 at a meeting in April 2000 is a positive development that deserves U.S. support and encouragement, and more weight needs to be given to the G24, a smaller grouping of developing countries and emerging markets.

At the center of global governance, however, must be effective, representative intergovernmental institutions, starting with the United Nations. The representation and legitimacy problems of the G8/G7 need to be addressed, but these problems cannot be adequately considered without first addressing the representation and structural problems that beset the UN. One reason the G8/G7 has grown to be a such an influential player in global governance is the out-dated structure of the UN Security Council, whose permanent membership is limited to five nuclear powers, thereby keeping G8/G7 members Japan and Germany on the outside. If there are strong, credible, effective, and representative institutions at the center of global governance, the legitimacy of self-constituted forums like the G8/G7 will be less of an issue. Policies are needed that will ensure a system of global governance that has both strong decisionmaking institutions at the center and informal, consultative groups around the perimeter.

In their role as responsible global leaders, G8/G7 policymakers should adopt agendas that foster such a global governance system. At the same time the leaders and ministers can advocate policy that will go a long way toward meeting its stated objective in 1975 of "strengthening democratic societies everywhere." These include:

* Proceed with earlier commitments made during the Asia financial crisis to reform the international financial architecture to address the problem of large speculative capital flows instead of its present focus on patching the architecture's cracks and its asymmetric attention to reforming the policies of borrowing nations.

* Increase economic aid commitments at least to the UN target of 0.7% of the donor's gross domestic product. (The U.S. contributes less than one-seventh of this target, the lowest level of any major industrialized nation.)

* Substantially expand the 1999 Cologne summit's commitment to IMF/World Bank debt relief programs, eliminating 100% of the bilateral and multilateral debt of the 51 poorest nations.

* Commit (without demanding parallel commitments from developing countries) to substantial cuts in carbon emissions at least as deep as those called for in the Kyoto Protocol.

* Finally, return to where it began--macroeconomic policy coordination among industrialized nations--with policy recommendations to address the structural problems in their own economies that could jeopardize global economic stability. First up for review should be the U.S. economy, with its unsustainable trade deficits and private debt--both of which are at record highs. Also in keeping with a renewed focus on macroeconomic policy coordination, the G8/G7 should strive for an agreement between Washington, Brussels (EU), and Tokyo to reduce the volatility of the three key exchange rates of the current international financial system by agreeing to impose upper and lower bands on the euro-dollar, dollar-yen, and euro-yen exchange rates, along with measures--such as a currency exchange tax--to reduce speculative attacks on these rates.

The G8/G7--with its annual summits, ministerial meetings, and consensus process of agenda-setting--has established a valuable process for establishing international policy agendas for groups of countries with similar interests and concerns. However, for this deliberative process to be constructive, it must in the G8/G7 case focus on the grave security (arms proliferation), economic (increasing social polarization and marginalization), and environmental problems (global climate change) for which these countries are themselves primarily responsible.

Key Recommendations

* At the top of the G8/G7 agenda should be the grave security, economic, and environmental problems for which these countries are themselves primarily responsible.

* The G8/G7 could play a key role in highlighting the need for substantial reforms in the decisionmaking institutions of global governance.

* Policies are needed that will ensure a system of global governance that has both strong decisionmaking institutions at its center, and informal, consultative groups around the perimeter.

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