Toward a new foreign policy.

Key Recommendations

* The G8/G7 should address 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.

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 being the most prominent--provided the kind of enlightened leadership necessary to upgrade global governance.

Due to its powerful 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. 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. The G8/G7--with its annual summits, ministerial meetings, and consensus process of agenda-setting--has established a valuable process for setting inter national policy agendas for groups of countries with similar interests and concerns. However, without the presence of other similarly 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 likeminded 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 in the 1970s 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 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.

Standing at the center of global governance there 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 solved without first addressing the representation and structural problems that beset the UN. 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 policies 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 Asian 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 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.

* Provide leadership in countering international terrorism that focuses on multilateral action, maintains respect for human rights, and addresses crises like the Israeli-Palestinian conflict that spark terrorism.

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 among 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 would go a long way toward improving its credibility as an important forum of global leaders if it distanced itself from the professions of belief in free trade ideology that have characterized past summits. At the same time, the G7 leaders should refocus their attention on the grave global affairs crises--including security (arms proliferation), economic (increasing social polarization and marginalization), and environmental problems (global climate change)--for which the wealthy nations are primarily responsible.

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