Financial Post G7 Record

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[Financial Post G7 Record]

Financial Post, Weekly edition, Sat 10 Jun 95, page 13

Keywords: International finance Foreign exchange Politicians Government policy

CHRETIEN AND THE PLAYERS AT THE G-7: A snapshot of who's who at Halifax: their backgrounds and political handicaps

Bud Jorgensen

Rarely has a Canadian prime minister had such an opportunity to influence world events.

The Mexican crisis and widespread concern about volatility in currency markets have focused attention on a need for action and Jean Chretien has come forward with an agenda.

Whether it is an achievable agenda is an open question, but the fact is that Chretien will be in a unique position at the Halifax summit.

Not only is Canada the host country, but he and Jacques Chirac of France have stable political futures. Two of the leaders - John Major of Britain and Lamberto Dini of Italy - will almost certainly be gone by the time the 1996 summit is held in France.

The other three are boxed in by domestic considerations and their freedom to deliver on international commitments may be limited.

While Bill Clinton demonstrated an ability for decisive international action with his bailout plan for Mexico, the initiative caused strains with the U.S. and its allies.

The Germans and British were particularly incensed over the part of the plan that involved the International Monetary Fund in an aid package to stabilize markets for the peso and shares on the Mexican bolsa.

Clinton's international profile was damaged by the Mexican episode because other leaders were presented with a fait accompli on a matter over which they were divided.

Seen in its best light, the peso fiasco put a priority on the need for revisions to the way nations respond to financial crises. But several governments have reservations about expanding the role of the IMF because of the cost and because many of the ideas for reform might restrict national monetary policies.

Chretien's interest in reforming international financial institutions invites a comparison with a political mentor, Lester Pearson. As a junior MP in Ottawa in the mid-'60s, Chretien served a stint as parliamentary secretary to Pearson, who was then prime minister.

During the past year, Chretien has travelled extensively and has met more than 30 heads of government, establishing a broad network of personal contacts.

The one alliance that is potentially difficult is with Chirac, who has not bothered to hide his empathy with separatist leaders in Quebec.

Chretien was in Paris the day after Chirac won the election and Chirac apparently declined a request from Chretien for a meeting.

The official explanation is that Chirac could not be the host of a visiting head of government for protocol reasons because he did not formally take over from Francois Mitterrand until May 17. Perceptions persist, however, that relations are strained between the two most politically secure G-7 leaders.

But Chretien has excellent rapport with another high-profile French public official - Michel Camdessus, executive director of the International Monetary Fund.

Camdessus was in Ottawa this week for a speech at a private foundation and used the trip for a lengthy meeting with Chretien and Finance Minister Paul Martin.

PM TAKES HANDS-ON APPROACH: With a comfortable majority in Parliament and no sign of a credible national opposition, Jean Chretien has the freedom to pursue foreign policy issues. He also has the inclination. Participants were surprised at the depth of interest when he recently assembled a group of economists for a six-hour briefing. Chretien's top-level meetings have included Finance Minister Paul Martin and most G-7 issues are being run past policy teams at the finance department. While the foreign affairs department has a role, the key policy officials are at the Privy Council Office and the Finance Department.

PRAGMATIST MOVES INTO ELYSEE: Among the G-7 leaders, Jacques Chirac has the most secure political future. He took office on May 17 for a seven-year term and early indications are that he will have wide support within the National Assembly. Elections for members of the assembly are three years away, so Chirac should have broad latitude to pursue promises to lower France's 12% unemployment rate. He will be more pragmatic and less intellectual than predecessor Francois Mitterrand. On foreign policy issues, he is expected to be more nationalist than internationalist.

LONGEST YEAR LOOMS: Historically, U.S. presidents turn inward in the last year or so of their term. Bill Clinton's potential Republican opponents for the November 1996 election are more isolationist than usual and Republicans now have majorities in both houses of Congress. Clinton will be forced to concentrate on domestic matters, but there remains a chance that he will stake out certain foreign policy issues in order to present a statesman-like image to voters. But foreign affairs follows trade and the U.S. may care more about the Americas than Europe or Asia.

CARETAKER CABINET RUNS ITALY: Even Lamberto Dini will be surprised if he is still prime minister when next year's G-7 summit is held. His is a cabinet of ''technicians,'' and Dini has said that he will stay in office only long enough to bring forward a package of political reforms and prepare for new elections. Italy's fragmented parliament has had a series of coalition governments. A new electoral law would scrap the system of proportional representation that allows minor parties a place in parliament. But getting changes through a fractious legislature will be a difficult job that will keep Dini focused on domestic matters.

COALITION RESTRICTS KOHL: Helmut Kohl is not in a position to make promises to his G-7 counterparts. He leads a coalition government and needs coalition support on fiscal policy. Monetary policy is the preserve of the Bundesbank, and it would be politically dangerous for a German politician to attempt interference. Kohl's government likely will survive to the end of its current term in 1998 but political weakness of its junior partner in the coalition, the Free Democratic Party, creates uncertainty. The FDP failed to get the minimum 5% popular vote in 11 of the last 12 state elections.

TORY PARTY FACES TURMOIL: The big question mark over John Major's tenure is whether he can survive until the next election, which must be held by 1996. Polls repeatedly show the Tories will lose badly and a succession of scandals make it unlikely they can recover. Under party rules, the leader can be unseated by a vote of caucus members, which happened to Major's predecessor, Maggie Thatcher. There has been frequent speculation that Major will suffer the same fate so that the party can present a fresh face to the electorate. Chancellor of the Exchequer Kenneth Clarke is considered a potential successor.

JAPAN FIGHTS DEPRESSION: A strong yen belies the deep economic problems that will keep Tomiichi Murayama occupied with domestic matters. The financial system is riddled with overvalued assets and Japan may need international co-operation in a restructuring of its banks and insurance companies. Government and business in Japan have a long record of joint actions for national interests, and there is no reason to expect it will be different this time. But the severity of the problems left over from the speculative real estate and stock market bubbles of the 1980s will leave Murayama little time for foreign issues.

JEAN CHRETIEN Prime Minister of Canada

Political history: Elected PM November 1993; Liberal Party; first elected MP in 1963; Parliamentary secretary (prime minister and finance), 1965-67; cabinet member 1967-84.

Education: Law, Laval University, Que.

Other: Corporate lawyer, 1984-90.

Age: 61

JACQUES CHIRAC President of France

Political history: Elected May 1995; neo-Gaullist RPR party; mayor of Paris, 1977-86, 1989-95; prime minister 1974-76, 1986-88; cabinet minister, 1967-74.

Education: Public administration; Institut d'Etudes politiques, Ecole nationale d'Administration.

Other: Military service in Algeria.

Age: 62

BILL CLINTON President of the United States

Political history: President, January 1993; Democratic Party; Arkansas governor, 1979-81, 1983-93.

Education: Law; Georgetown University, Oxford and Yale Law School.

Other: Professor at University of Arkansas Law School, 1974-76.

Age: 48

LAMBERTO DINI Prime Minister of Italy

Political history: Coalition PM since January 1995; no political affiliation; treasury minister in previous government.

Education: Commerce and economics; Universities of Florence, Minnesota and Michigan (PhD).

Other: Italian central bank deputy, 1979-94; International Monetary Fund executive, 1959-79.

Age: 64

HELMUT KOHL Chancellor of Germany

Political history: Chancellor since October 1982; Christian Democratic Union; opposition leader, 1976-82; political party offices, 1966-76.

Education: Political science; Universities of Frankfurt and Heidelberg.

Other: Political party volunteer at 17.

Age: 65

JOHN MAJOR Prime Minister of Britain

Political history: PM since November 1990; Conservative Party; MP since 1979; parliamentary secretary and cabinet posts 1981-90; Lambeth Borough Council, 1968-71.

Education: Rutlish Grammar School.

Other: Bank executive positions, 1965-79.

Age: 52

TOMIICHI MURAYAMA Prime Minister of Japan

Political history: PM since June 1994; Social Democratic Party; first elected to Diet in 1972; district assembly member, 1963-72; municipal council member, 1955-63.

Education: Economics; Meiji University.

Other: Labor union official, 1951-55

Age: 71

This information is provided by the Financial Post.
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Revised: June 3, 1995

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