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G8: Majority Favours An Exclusive Club

Ramesh Jaura

TOYAKO, Japan, Jul 8 2008 (IPS) - The Group of Eight (G8) will remain an exclusive club of major industrial nations at least for a year. Whether the next year’s summit in Italy will decide on its expansion – to include Brazil, China, India, Mexico and South Africa – is an open question.

This emerged Tuesday on the second day of the G8 summit meetings in Toyako on the northern Japanese island Hokkaido.

A senior Japanese foreign ministry official said expansion of the G8 was not on the summit agenda. But “a summit participant” brought it up. A brief discussion revealed that the majority view was not to alter the present G8 format.

Among the reasons given was that the G8 is a grouping of nations that share some common values, Foreign Ministry spokesman Kazuo Kodama told IPS. It was also argued that enlargement of the G8 will have an adverse effect on the quality of discussions.

Kodama declined to name the country that initiated the discussion on G8 expansion. But the proposal could have been tabled by French President Nicolas Sarkozy or British Prime Minister Gordon Brown. The two are known to favour G8 enlargement.

The current structure reflects the global economic situation of the 1970s, when French president Valéry Giscard d’Estaing organised the first economic summit in 1975.

Six countries took part in that summit: France, West Germany, Italy, Japan, Britain and the United States. On the agenda were the international monetary disorder and the oil crisis. The leaders declared they were “determined to overcome high unemployment, continuing inflation and serious energy problems.” Soaring energy prices are an important theme also of the current G8 summit in Japan.

While the majority of G8 members wish to remain an exclusive club, there is consensus that dialogue with some of the major non-G8 countries is of critical importance.

The Jul. 7-9 Hokkaido Toyako summit has the largest participation: 14 heads of state and government, the European Union Commission and the African Union Commission as well as UN Secretary-General Ban Ki-Moon and World Bank president Robert Zoellick.

But enlargement is not considered the only alternative. A view taking the rounds is to do away with the G8 in its present format and go for theme-oriented rounds of discussions two to three days ahead of the UN General Assembly in September. Such ‘summits’ would be organised by different groups of states once a year or once in two years.

The debate about G8 expansion coincided with a discussion on the world economy. The document approved Tuesday indicates that though the G8 countries dominate the world economy, they are showing signs of nervousness at robust growth in emerging economies. “Emerging market economies are still growing strongly though our growth has moderated,” the document says.

But at the same time, soaring commodity prices, says the document, especially of oil and food, pose a serious challenge to stable growth worldwide, have serious implications for the most vulnerable in the developing countries, and increase global inflationary pressure.

The G8 nations resolved to promote “a smooth adjustment of global imbalances through sound macroeconomic management and structural policies in our countries as well as emerging economies and oil producing countries.”

An emerging, or developing, market economy (EME) is defined as an economy with low-to-middle per capita income. Such countries – including Brazil, China, India, Mexico and South Africa – constitute approximately 80 percent of the global population, representing about 20 percent of the world’s economy.

The G8 want the EMEs with large and growing current account surpluses to adjust their foreign exchange rates to those of the industrialised nations. In return they say they will attend to various political, economic and social challenges for extending globalisation’s benefits to all.