The Hindu Business Line : What the G-8 meet failed to accomplish

The Hokkaido conference of G-8 nations has gained undue prominence in Indian politics because the Prime Minister, Dr Manmohan Singh, chose to attend the G-8 meet and had discussions with the US President, Mr George W. Bush, in the face of bitter opposition to the proposed nuclear deal. G-8 has become a well-known but dirty word in the Indian political vocabulary for the wrong reasons. The G-8 conference in Hokkaido was not about the nuclear deal. It was about serious globa l issues, such as global warming, oil prices, inflation and financial instability.

Convenient vehicle

The G-8 nations have been a convenient vehicle for the world’s richest nations such as the US, the UK, Germany, Japan and France, to begin with, to meet together and discuss important economic issues facing the world. About 30 years ago, it started as a smaller group. Slowly, it grew with the addition of Italy, Canada and Japan. Further additions took place later with the inclusion of India and China as invitees. But, the fact remains that the conference of G-8 nations is unrepresentative of the real concentration of wealth in the world.

For instance, G-8 does not include the main global repository of oil wealth and controller of oil prices, Saudi Arabia, which has the richest oil reserves of the world and, without whose consent and active participation, any decision on oil prices is not possible. G-8 gives only an associate status to China, which has nearly trillion dollars in foreign exchange reserves and it has a strikingly large trade surplus. Any decision on the exchange rate and trade policy by the G-8 is meaningless without the consent of China.

G-8’s incompleteness

The fact that G-8 meeting in Hokkaido did not accomplish anything great is, however, an indication, partly of its incompleteness. The richer countries of the world have to invite countries of the developing world, such as India, China and Brazil, as full members, because decisions on the economic future of the world depend very much on the way these countries manage their financial and energy policies. Hopefully, the experience of the recent conference of the G-8 nations would impress upon the urgent need for enlarging the Club to include as full members the nations that really matter.

The recent G-8 conference was dominated by the 3 Fs — food, fuel and finance. The rising food prices, the escalating crude oil prices and the disruptions in the financial sector following the US sub-prime crisis and credit crunch contributed a certain element of serious unease among the participants of the G-8 meet. What the G-8 conference accomplished in these respects is uncertain.

Careful negotiation needed

One of the percipient remarks by a Russian diplomat participating in the conference, cited by The Economist of London, was that the G-8 leaders were ambitious in trying to commit future generations to targets of reduction of emissions when, as a matter of practical politics, the rich countries of the world had not agreed on even the immediate short-term targets. There is a danger in accepting the resolutions of such conferences at their face value. They are usually word games and do not come to any specific conclusion. Countries such as India and China have started from a low base of carbon emission and if they are being asked to proportionately reduce carbon emissions to keep to worldwide targets, it will be at the expense of growth. This requires careful negotiation with the world leaders and India should be prepared for any give and take in this regard.

It is interesting to note that this time the Japanese made the conduct of the G-8 conference relatively devoid of flamboyant protests. While the earlier G-8 conferences were noteworthy for high protests by anti-globalisation NGOs and the like, the Japanese handled the whole subject very skillfully, perhaps by locating the present conference in a remote island of the country. The media reports are that the police handled the NGOs and protesting leaders delicately and did not give rise to the usual explosion of media hypes giving prominence to protesters. Nonetheless, the conference accomplished little.

Wasteful expenditure

An incidental question had been raised for debate in the visual media about the wastefulness of expenditure on holding the G-8 conference on such an ostentatious basis. A figure of Rs 2000 crore had been mentioned as the amount spent on the conference. It was pointed out by a commentator in the visual media that if this amount had been spent on provision of mosquito nets to various families in Africa, it could have avoided thousands of deaths on account of malaria. Similarly, a contribution of this magnitude could have been better spent in pushing forward the campaign against AIDS. Such well-intentioned criticisms of expenditure have always been part of the liberal credo. But, the conferences continue nonetheless.

The international financial media have been at pains to reflect on the ineffectiveness of the recent conference. The Financial Times, London, has an editorial title “Pipedreams and Cigar’s smoke”. Its main point is that the conference has not reached any valid conclusions on the main issue of global warming or oil prices and that the Group of rich nations could benefit by adding to it new members. This is also a suggestion repeated in other financial media.

Implications for India

It is not sufficient that India, like China, forms an associate member of the new 8+. It is important that India has a credible set of policy options on issues of global significance, such as energy prices, financial sector management, food prices, apart from issues such as terrorism. While it is true that our spokesmen have made significant contributions at various meetings of the type of G-8, there has not been a coordinated policy framework, outlined in advance and agreed to at a national level.

We do not want a repeat of the fractious arguments and counter-arguments about the nuclear deal to affect our stance on the international policy issues discussed at future G-8+ meetings. It is to be hoped that when the Government of India returns to normalcy after the test of strength on July 22, it will be able to devote some attention to these global issues. Of course, all this assumes that Government will be able to survive the ordeal of trust vote and emerge politically strong, albeit battered. Otherwise, the next elections will have the job of delivering a stable (?) Government to the country, which can handle such issues!

An interesting review in The Economist of the latest G-8 conference shows that the the Japanese Prime Minister, Mr Yasuo Fukuda, distinguished himself by taking some statesmanlike steps. He invited seven African leaders to join the G-8 meet and it was a gesture, which impressed the Africans, who have been fed by G-8 with promises of aid, but no performance.

The recent G-8 meet has gained importance in India for all the wrong reasons, but issues which were highlighted are bound to be significant not only to the present but future generations. The Government of India should come out with a statement on what it has accomplished at the Summit, apart from the discussions the Prime Minister had with Mr George Bush.

Future G-8 conferences should have a more sensible goal of reaching well-considered conclusions on global issues if all participants take them more seriously than as pipedreams and cigar smoke.