Are the rich states being dwarfed by world's emerging economic giants?


Sometime eight is too small a number. And sometimes it is just right, writes JAMIE SMYTH

WHEN THE leaders of the world’s eight leading economies waved goodbye to L’Aquila at the end of the G8 summit yesterday, they heralded commitments on climate change, food security and the economy. But they left a more fundamental question unresolved: in an increasingly interconnected world, is the G8 still the best format to solve the biggest international problems?

Brazil’s president Inacio Lula da Silva, who was invited to attend the summit on Thursday, didn’t pull his punches, telling G8 leaders there needed to be fundamental reform to give big developing states a seat at the table.

“The G8 no longer has a reason to exist,” he told journalists on the eve of the summit, arguing that without China, Brazil, India, Mexico and South Africa – the biggest developing states that are known as the G5 – there could be no agreement to combat climate change or solve economic problems.

Lula has a point. When G8 summits began as a “fireside chat” in 1975, the invitees – France, Britain, Germany, Italy, Japan, and the US (Canada joined the group in 1976 and Russia in 1998) – dominated the global economy. But China and Brazil now boast bigger economies than Canada, while China, Russia and India are in the top five world emitters of greenhouse gases.

The growing weight of the big developing countries was starkly illustrated at the discussions at L’Aquila on climate change, with China and India in the G5 resisting requests by G8 leaders to sign up to a joint statement that would have recognised the need for all to reduce global greenhouse gases by 2050.

The collapse of the world trade talks last year due to a dispute between the US and India also underlined the growing weight of the big developing countries on the world stage. The G8 simply can’t ignore them anymore.

G8 organisers are aware of the changing balance of power, and Italian prime minister Silvio Berlusconi invited almost 40 world leaders to attend different days of the summit. This enabled US president Barack Obama to chair a discussion on climate change in the major economies forum, which is composed of 17 states that account for 75 per cent of total emissions. And when the summit focused on food security, the leaders of Libya, Angola, Egypt, Nigeria, Senegal and Ethiopia joined the G8 and G5 states for talks.

But at the end of the summit, G8 leaders called for reform. “I don’t know how you can convince a country with a billion people like India to fight against climate change if you only invite them to the end of a summit to settle the bill,” said French president Nicolas Sarkozy, who plans to create a G14 (G8 with the EU plus the G5) during its G8 presidency in 2011.

Germany, which is lobbying for a permanent seat on the UN security council, also says the G8 format is no longer sufficient. “We are seeing that the world is growing together and that the problems that we face cannot be solved by the industrialised countries alone,” said chancellor Angela Merkel, who has suggested that the G20 is the best format for the future.

The severe financial crisis last year, when the global banking system almost collapsed, has rapidly elevated the G20, which was initially set up at the level of finance ministers, into an influential decision-making global body. It has unveiled ambitious plans to reform the financial system, avoid protectionism and bolster the International Monetary Fund with new cash. But some G8 states, particularly Japan, feel it is too unwieldy to deal with sensitive issues.

“Could a Group of 20 have a meaningful discussion in 60 minutes?” asked Japanese government spokesman Kazuo Kodama at the summit this week.

European Commission president José Manuel Barroso, who represents the EU at G8 summits, acknowledges that the eight industrialised economies cannot solve the big issues alone. But he says the G8 will survive as a more informal group that provides a more intimate setting for deep discussions.

“The Iran conversation that we had on the first day of the summit would simply not have been possible in a larger G14 or G20 format,” he says.

Obama, who attended his first G8 and added some much needed momentum to the summit, told reporters the format was in “a transition period”. “One thing that is absolutely true is that for us to think we can somehow deal with some of these global challenges in the absence of major powers like China, India and Brazil seems to be wrong-headed,” he said.

Where this “transition” will lead the G8 to is not yet clear.

Gs and Brics: mapping the acronyms       

The G stands for “Group of...”

G8: US, France, Britain, Russia, Italy, Germany, Japan, Canada. An annual discussion and co-operation forum set up by the world’s major industrialised countries in 1975.

G5: China, Brazil, India, Mexico and South Africa. This term refers to the five biggest developing countries which are now regularly invited to G8 summits. The first ever G8 plus G5 statement was issued in L’Aquila.

G2: This is the acronym that refers to the growing dialogue between US and China. (In Ireland, G2 refers to the Irish Military Intelligence Service.)

G20: Set up in 1999 at the level of finance ministers, last year the format was extended to leaders in the wake of the economic crisis. Permanent members are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the UK, the US and the EU.

Bric: Brazil, Russia, India and China. The term was first coined by a Goldman Sachs economist and refers to the big four fast- growing developing economies. The Brics account for one- quarter of the world’s land area and 40 per cent of the global population. They held their first summit in June.