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The Group of Eight and the European Union: The Evolving Partnership

I. The G8 Summits

The Western Economic Summits - In the Glare of the Limelight

The culmination of G8 activities are the annual western economic summits. During three days of intensive discussion, the heads of state or government of the member countries as well as the representatives of the EU, collectively known as the Summit Eight (S8) assess their countries' economic and political situation and map out the routes for the next year. These are presented in formal declarations. However, for all their obvious potential, controversy continues to surround the achievements of G8 summits. In order to fairly judge the summits, their background and inherent limitations must first be examined.

The Creation of the Summits

In the years immediately prior to the convening of the original Western Economic Summit in 1975, the western economies suffered a succession of crises that left their finance ministers searching for solutions. First was the collapse in 1971 of the Bretton Woods system which had formalized the coordination of exchange rates since 1945. Next came the first oil crisis which quadrupled the price of oil in so many months. Following these two shocks, the western economies plunged into recession and unemployment soared. In the absence of any policies of multilateral coordination, they began acting unilaterally in order to combat domestic problems thus accelerating the process of decline.

The first step to replace the elements of economic coordination lost with the break-down of the Bretton Woods system was taken by George Schultz in his role as the US Treasury Secretary. Beginning late in 1973, he invited his counterparts from the Federal Republic of Germany, France, Japan and the UK to a series of very private meetings. These discussions, known as the Library Group meetings due to their being held in the White House library, ranged across many issues relevant to the international economy.4

After becoming president of France in 1974 Valéry Giscard d'Estaing, an original member of the Library Group, began to forward the idea of a meeting which would include the heads of state or government of the largest western economies and Japan be held in the same informal format as the earlier Library Group meetings between finance ministers. Robert Putnam, an expert on the G8 summit process, notes that the purpose behind the planned first meeting came from the belief that "only heads of government could rise above petty bureaucratic concerns and overcome the increasing fragmentation of international negotiation...[needed to] offset pressures for economic nationalism." 5

The first meeting of what was to become an annual affair took place in Rambouillet, France between 15-17 November 1975. Gathered together were the heads of state or government from France, Italy, Japan, the United Kingdom, the United States, and West Germany. Canada became a member in 1976. Representatives of the European Community (EC)6 began participating in 1977. Russia's formal involvement in the summit process evolved slowly, initially being limited to the political discussions beginning in 1994 then joining the others in covering the full summit agenda at the 1997 Denver Summit of the Eight. However, it was only with the 1998 Birmingham Summit that the G7 officially became the G8.7 In their own words, the leaders at Rambouillet had "held a searching and productive exchange of views on the world economic situation, on economic problems common to our countries" 8 and had met with the intention of increasing cooperative measures in order to find solutions to these problems. It is worth noting that the G8 summits represent the first time that regularly scheduled annual formal meetings of a plurilateral nature involving heads of state or government have occurred.9

The Content of the Summits

A content analysis of past summit communiqués reveals a high degree of consistency in subject matter (see Appendix A for a chronology of G8 summit dates, locations, their objectives and actions). However, there is considerable evidence, particularly since the early 1990s, that evolution has occurred with respect to the content of summit communiqués . Initially limited to economic and monetary issues related to the energy crisis, beginning with the 1979 Tokyo Summit areas discussed expanded to cover political developments and environmental concerns. To their credit, rapid response to current issues, particularly politically-sensitive events, have been included in their statements. Notably, beginning with the 1995 Halifax Communiqué, the S7 expanded both the scope and time horizon of their vision by calling for a reform of international institutions to meet the challenges of the 21st Century. This process reflected the growing realization of the interconnectedness of political, economic, social and environmental issues.

During the years 1975-1980 the summits were concerned primarily with the two successive oil crises and the resulting need for cuts in consumption of oil as well as finding alternative energy sources. On the economic front, continuous references to reducing inflation and unemployment were made. In monetary matters the participants pledged to work together to avoid extreme fluctuations in exchange rates. The 1978 Statement on Air Hijacking was the first political statement.

The summit process encountered serious setbacks during the 1981 Ottawa Summit and especially the 1982 Versailles Summit. With most of the original summit leaders now out of office, personalities and priorities began to diverge. Even though the S7 recognized that their economies desperately required growth, the approaches deemed appropriate varied. Personal differences in non-monetary areas, particularly trade issues, diverted the attention of the leaders. The result was that little effective action was taken during these two summits.

The following three summits, 1983-1985, called for almost identical objectives: the reduction of inflation, interest rates, and unemployment. With the intention to stem the rise of protectionism, several members, led by the US, called for a new round of GATT talks at the 1985 Bonn Summit. However, due partly to the contentious subject matter that would be on the negotiating table, the participants were unable even to agree on a starting date. In fact, the Bonn Summit is one of only two Western Economic Summits which Putnam and Bayne have declared to have 'exacerbated international tensions'.10

Action to improve economic coordination among the Group of Seven, especially in the area of multilateral monetary surveillance, was emphasized during the summits of 1986-1988. The coordinated efforts of the G5 finance ministers had resulted in the achievement of the 1985 Plaza Agreement which re-valued the US dollar. The success of this action resulted in the formal establishment of the Group of Seven Finance Ministers and Central Bank Governors at the 1986 Tokyo Summit.11

At the 1987 Venice Summit, the S7 encouraged this new group to increase policy coordination and to work closely with the International Monetary Fund (IMF). These steps to delegate the issue of monetary coordination to their finance ministers and central bank governors were taken just in time. They thus enabled the government leaders to turn their attention to the events that soon were to develop in Central and Eastern Europe.

Three themes overwhelmingly dominated the Western Economic Summits from 1989-1993: 1) the urgent need for economic assistance packages in Central and Eastern Europe, 2) the completion of the Uruguay Round, and 3) environmental concerns.

The 1989 Paris 'Arch' Summit was a turning point in European Community relations within the G7. The G7 requested the Commission of the European Community to coordinate assistance to Poland and Hungary. The Community's Poland and Hungary: Assistance for Restructuring of the Economy (PHARE) program and establishment of the Group of Twenty Four (G24)12 assistance to these two as well as other reforming Central and Eastern countries was commended at the 1990 Houston Summit. Reflecting the importance that the G7 attributed to the changes occurring in the Soviet Union, first Soviet President Mikhail Gorbachev in 1991 and thereafter, Russian President Boris Yeltsin, were invited to meet with the G7 leaders at the summits in an ever increasing capacity. After an emergency joint meeting of the G7 foreign and finance ministers, on 14-15 April 1993, a $43 billion assistance package for Russia was announced.13

Beginning with the 1989 Paris Summit, the G7 stated their commitment to initially progress and then to actually complete the General Agreement on Tariffs and Trade (GATT) Uruguay Round of multilateral trade negotiations in each of the next several economic declarations. A successful conclusion to the trade talks was foreseen by the end of 1990, 1991, 1992, and 1993. However, it was not until political pressure was placed on the main protagonists leading up to the 1993 Tokyo Summit that a significant breakthrough was achieved in the form of a substantial market access package. With the additional resolution of the impasse over agricultural liberalization, the Uruguay Round was eventually concluded on 15 December 1993. "The first green summit" was how The Economist described the 1989 Paris Summit.14 Indeed, eighteen points were dedicated to the topic of the environment, emphasizing the urgent need for international cooperation. Taking place soon after the Rio Conference on the Environment, the 1992 Munich Summit as well as the 1993 Tokyo Summit, noted the importance of international cooperation on the environment and called on non-G7 countries to help in ratifying the Framework Convention on Climate Change.

Beginning with the 1994 Naples Summit, the S7 began to prepare for the future. For the next three summits, in addition to the traditional economic and monetary issues, they called for a vast review of international institutions, particularly the IMF, World Bank and UN, in order to make them more effective.15 The rapid rate of technological change was first addressed at Naples in 1994 and again in 1995 at Halifax. The Naples Summit resulted in the launching of the Global Information Society in 1995.

The Summits of 1997 and 1998 reflected the new post-Cold War situation. Russia was invited to formally join the G7 and the participants made the first coordinated efforts to deal with the growing effects and anxieties of globalization. The 1997 Denver Summit of the Eight had a diverse agenda including aging populations, international crime and development. However, the predominant topic was that of employment.

The 1998 Birmingham Summit witnessed the revitalization of the G8. Russia's official membership brought a necessary increase in representation. However, its contribution to the G8 summit process and programs has not yet been significant. The achievements of the Birmingham Summit were evidence of a visibly more positive as well as practical approach. As Chairman of the G8 Summit, UK Prime Minister Tony Blair called for a new informal format which allowed the leaders to discuss the primary issues of employability, international crime and economic growth and development openly and spontaneously rather than from a pre-arranged script. Other areas of discussion, such as the new financial architecture and the environment were for the first time delegated to the appropriate ministers of the G7/G8 who met one week before the summit. This division of responsibility enabled increased efficiency as each priority topic was given more time for discussion by the leaders.

The contents of the summit communiques, while often repetitive, reflect an ever expanding agenda of the G8. This aspect is encouraging in that it indicates a dynamic component does indeed exist within the G8 process. A US official commented that the communiqués serve a useful function as they are an articulation of policy.16 However, as discussed in the following section, restructuring of implementation procedures in order to improve the rather dismal record of actual implementation of proposals is needed in order to strengthen their image as well as their ability to promote new initiatives and develop successful programs.

The Impact of the Summits

As a result of the lack of significant measures that have come out of the annual gatherings, and too little follow-up of those that have been made, criticism of the summits has been widespread. In a study that assessed the summit declarations from 1975-1989, the authors judged that "although the verdict differs somewhat by summit and issue, we conclude that the credibility of summit undertakings must generally be rated low."17 This has led critics of the G8 to claim that the summit process is "past its prime" and that the meetings "suffer from a glut of glitter and a shortage of substance."18

However, when examined in a manner that takes full account of economic and political realities, a more balanced conclusion of the impact of the summits results. A major conference report on the impact of economic summits gave the following appraisal:

When they result in vague or obfuscatory communiqués and waffling comments by the participants, as has happened on occasion, both the significance of summits and their credibility are impaired. But when they identify specific problem areas and reach agreement on clear directions for dealing with them, the summits can be an important influence in promoting changes in national and international policy, especially if the heads of government urge action upon their return to their respective capitals.19

Clearly, inherent limitations exist. Until the Birmingham Summit initiated a new, more informal summit, the S8 had gathered for a three-day meeting with an agenda that allowed little opportunity for ad hoc discussion. The participants of the original Library Group, as well as the heads of state or government that met at the first few summits, were able to gain a much more significant personal understanding of the domestic pressures their counterparts faced, therefore making mutual decisions more realistic and workable than the later summits.

Factors external to the G8 also contribute in limiting the effectiveness of stated objectives. General elections, particularly when resulting in leaders not familiar with the G8 process, may lead to less than desired political attention to summit issues. Unexpected political and economic crises and extended recessions can bring about diversions and changes in priorities.

However, the purpose of the G8 summits should not be judged solely by the tangible results nor should the declarations be the single measure of their success. They are still the only opportunity for the leaders of the major eight industrialized countries and the representatives of the Commission of the EU to gather face-to-face and discuss topical economic and political issues common to all. The summits also serve as an important deadline for the completion of policy programs involving the participants.

Putnam and Bayne note that the leaders see their role not so much to negotiate and implement detailed policies as to provide an overall strategy for their countries to pursue. This is accomplished in three principal manners: 1) endorsing general principles, 2) promoting individual commitments by summit participants, and 3) giving impulses to wider negotiations in other bodies."20 If one weighs the impact of the summits by these measures, their record is improved.

Summit Reform

A member of the media covering the 1993 Tokyo Summit described the summits as "long on bureaucracy, formality and pageantry, short on substance".21 Indeed, pageantry accounts for the vast majority of scheduled events during the summit. Prior to recent steps being implemented for more informal discussion, a commentator estimated that only five hours of free discussion time remained after all the formal events were completed.

While efforts at reform were seen at the 1994 Naples and 1995 Halifax summits, 22 the momentum slowed until UK Prime Minister Tony Blair, as Chairman of the 1998 Birmingham Summit, initiated a set of new procedures. The result of Blair's efforts was the introduction of a private retreat held on the second day of the summit. With a policy of no assistants, no reporters and no neckties, the informal nature of the retreat allowed the S8 to openly discuss the three chosen themes of unemployment, international crime and global financial assistance. On the basis of comments after the retreat, the leaders seemed unanimous in their support for the new informal format. Germany officials stated their intention of continuing the retreat at the 1999 G8 Summit to be held in Cologne.

In addition to the leaders' retreat, other changes in protocol implemented at the Birmingham Summit were the separate meetings of the G7/G8 Finance Ministers and the G8 Foreign Ministers. Held in London one week prior to the Summit, these meetings allowed the ministers to discuss the intricacies of their relevant portfolios, prepare detailed conclusions and present their recommendations to the S8. The delegation of responsibility implicit in these pre-summit meetings allowed both the ministers and leaders to accomplish a greater amount in their limited time together. These internal reforms have established a more solid basis on which the G8+1 can meet the challenges of the 21st Century.

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Updated: June 25, 1998

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