Tuesday, December 27, 2005

G8 Relevance?

Daniel Drezner’s blog talks about G8 and Russia’s participation in that.
( http://www.danieldrezner.com/blog/ ) The bigger question is how G8 itself is relevant in today’s world. I have lots of doubt on this account. Following are the observations:

- Within G8, interests of North America (US & Canada), Japan and European countries are aligned differently. Simply because these countries are called industrial economies by convention does not help in today’s Global Capital world which is generally obsessed with the growth rate and it matters less which industries bring those growth rates – commodity, outsourcing or traditional manufacturing. As the world addresses issues of political stability and rule of law in coming days, where can Capital have the maximum opportunity to grow becomes the criteria. Past ‘has been’ is not the likeliest of places where Capital wants to reside.

- Clearly European economies along with Japan are hobbled with decreasing population, high social cost and generally less responsive state to economic challenges. Naturally, these are not the places conducive to Capital growth.

- When the single most obsession for American interests is all about China and it’s phenomenal growth, why does it matter for America to engage so much with G8?

- The bandwagon of China and India story is likely to have some leg which reduces the importance of G8. True, both China and India are observers to G8 meetings; but may be the time has come for their full inclusion (probably India could wait) and more intense engagement with these countries rather than bothering with Italy and France. Let us face it – Italy, France and Canada are not going to be places where the world is going to be ‘on fire’ as far as the Global Economy is considered.

- If being major import soaking points of the world is the only criteria (again Germany, Japan and to some extent Canada are exceptions here due to their solid exports); then what about Middle East, especially Saudi Arabia, which is consuming voraciously paid by petro-dollars?

- Politically too, how many of G8 countries are in the capacity to set the tone in World Affairs today for a sustained global growth? Germany, Italy, France and Canada – to what an extent are these players crucial in implementing things on Global Scale? Indian Trade Minister along with Brazilian Trade Minister plays more active (or destructive depending on your perspective) role in WTO.

So it looks like G8 is more of ‘past organization’ rather than an organization looking to future and with any ability to change things in global economy. USA seems to be the only country which has dynamic economy (even if it has some problems) with the political ability to make difference. May be for USA to engage with China, India and some other economies (S. Korea, Brazil and Saudi Arabia come to mind) on regular basis is more beneficial. Then where would politics come? Indeed it matters less what politics is when one is dealing with money. There are different forums and different platforms with different means to address political issues. I mean we are not dealing with apartheid South Africa which needed all out economic sanctions which however Iran may need today. It is not about internal rules related to NGOs which matter most, but the response of economic sanctions to Iran which will matter most to USA. Russian and European countries are beholden to Iranian market and Iranian oil & gas (China is no different). Only Canada and Japan could come on the side of USA as far as Iranian sanction goes. What does this indicate is internal contradictions of G8 do not make it very suitable to address tomorrow’s global economic and political challenges.

All in all it is worth to inspect relevance of G8 in entirety, rethink admission criteria to this club, it’s purpose and it’s way of working.

Umesh Patil
San Jose, CA
December 27, 2005


Nikolas K. Gvosdev said...

Rethinking the G8 is important because like many other organizations it moved away from its initial purpose which was during the oil shocks to coordinate the major economies of the Western world plus Japan.

Now it has become a quasi-Security Council like organization moving beyond economic coordination among a group of trading economies to trying to set a global agenda.

Defining the role of the G8 alongside thinking about the global role of both China and India (no longer purely "regional" powers) is definitely needed.

jesus.c said...

the truth is that none of this matters repent your sins foolish mortals

p.s the relevance of the g8 has never been the point, it was simply a method of allowing world leaders to meet face to face