G-8: Globalisation's Politburo

Mao Ze Dong, the founder of modern China, took delight in dismissing the most powerful capitalist countries as «paper tigers»: «In appearance, [they] are terrifying, but in reality they are not so powerful», he wrote in the legendary Little Red Book. On the other hand, they are also «real tigers which can eat people». Yet the growing resistance of peoples will turn them «into paper tigers».

Is the group of the eight most powerful industrialized countries (G8) a «real» tiger or just a «paper» tiger? Are their annual «informal» summits anything more than well staged media shows where grey-haired gentlemen produce themselves, cultivate reciprocal friendships, but achieve very little in real terms?

Anyone looking for substance behind all the summit rhetoric may well gather this impression. The official G8 website itself plays things down by maintaining that the view of the G8 as the world's «management board» is «far from the truth». It is an informal club with neither binding authority, rules, headquarters nor secretariat. It does not compete either with the UN, WTO or the international financial institutions (www.g8.fr/evian «Questions about the G8»).

Born of crisis

When the finance ministers of the USA, West Germany, France and the UK met 30 years ago in April 1973 at the White House library to discuss the desolate state of the world economy in a relaxed setting, they did not know that they were laying the cornerstone for the subsequent G7 meetings. One of the four, Giscard d’Estaing, as Head of the French Government, took the experience to heart in 1975 and invited the Heads of the six leading industrial countries to the informal Rambouillet «World Economic Summit». In addition to France, the USA, UK, Italy, Japan and West Germany were present. Canada joined in 1976 at the wish of the USA, followed later by the President of the EU Commission–as an observer. With the Cold War over, Russia first became a guest in 1991, then a fully-fledged member in 1998, though still excluded from important G7 consultations (e.g. of Finance Ministers).

Rambouillet was a crisis summit. After the protracted post-war boom, the world economy had slipped into a profound crisis and the Bretton Woods currency system had collapsed. The «Cold War» was ongoing, and the USA became bogged down in the Indochina War. The North found itself on the defensive against fledgling «Third World» nations which, through the UN, were clamouring for a new, more just world order. The petroleum-producing countries turned off the oil spigot. Against this complex backdrop, the G7 meeting was intended to help coordinate the economic policies of the leading capitalist countries, limit the growing internal conflicts of interests and work out new rules for the world economy.

Rollback against the «Third World»

Born on the defensive, the G7 soon took the political offensive: the «paper tiger» now had teeth. The major turning point came with the onset of the «Third World» debt crisis (payment moratorium by Mexico, 1982). The G7 became a «power centre, from which the North-South rollback was organized» (Rainer Falk of the German Think Tank WEED). The defensiveness toward the demand for a new world economic order turned into an «offensive strategy, which imposed a ‘drastic remedy’ of structural adjustment on the entire South». This doctrine was formulated in 1983 in Williamsburg (USA), where the G7 Summit laid out the aim of the debt strategy–valid to this day–of ensuring the so-called «debt servicing capacity» of the poor countries. It gave the IMF the central role of enforcing the neo-liberal structural adjustment policy and collecting debt interest payments.

Nerve centre of globalisation

In the 1990s, following the end of the Cold War, the G7/G8 increasingly became the nerve centre of globalisation. The agenda was constantly broadened and ministerial consultations became more extensive. In addition to economic and security policy, new topics were added, including environment and energy policy, financial architecture, terrorism, development policy, human rights, drugs, education and the information society. The debt question too is an evergreen topic. The G8 evolved into the control centre for world politics and economics, where binding policy prescriptions are laid out for other international institutions. This is particularly evident in the IMF and World Bank, where the G7 control the voting majority.

In their view, they have been completely successfully in so doing. They managed to dismiss the «Third World» demand for a sovereign role in the world economic system. They celebrated themselves as the victors of the Cold War, launched the Uruguay round and, despite internal contradictions, brought it to a successful culmination with the founding of the WTO.

Nevertheless, their capacity effectively to master pressing world problems such as poverty, environmental pollution and the injustices of the world economic system is being increasingly challenged. Public demonstrations started relatively modestly in 1984 in London and in 1985 in Bonn (first street actions), then assumed massive proportions in Birmingham (1998) and Cologne (1999) with the Jubilee 2000 debt campaign. The 250,000-strong gathering in Genoa represents the largest (if tragic) protests to date.

Development policy rhetoric

But it is not just G8 policies that are facing growing scrutiny, so is its legitimacy as well. The G8 is «globally unrepresentative, but globally relevant», as Rainer Falk aptly sums it up. It is in fact an exclusive club that sets world policy, but encompasses only eight governments (and 60 per cent of world GDP). You do not simply join this club, at best you are co-opted. The South is better represented even in the IMF, despite its limited voting power. The fact that since Genoa a few Heads of State from developing countries and the UN Secretary-General have been allowed into the family photo has changed nothing.

The G8 responded to the criticisms by intensifying its development policy rhetoric. Under pressure from the Jubilee Movement, it expanded the debt relief initiative for poor countries in 1999 and approved funds for debt reductions. Every summit since then has been promising impressive-sounding sums for new projects, funds and task forces. In part it is a matter of redirecting already approved funds, in part the pledged funds are never paid in. A good example is the Global Fund to Fight Aids, Malaria und Tuberculosis decided on at Genoa in 2001. While UN Secretary-General Kofi Annan put the needs at 7–10 billion dollars annually, the G8 decided on a modest 1.2 billion. And even this sum has not been forthcoming so far.

According to the G8 Information Center at Toronto University, G8 members hardly implement Summit decisions. Compliance is high only with respect to trade and energy-related decisions; generally speaking, the Governments of the UK, Canada and Germany are the most honourable. A look at development aid budgets will reveal just how seriously G7 countries take development policy commitments: according to the OECD, between 2000 and 2001 development aid from all seven countries contracted by 2 billion dollars (38.20 versus 40.22 bn).

Pepo Hofstetter, Swiss Coalition pof Development Organisations (Alliance Sud)

G8 Information Center