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Revitalizing the G-7: Prospects for the 1998 Birmingham Summit of the Eight

by John Kirton and Ella Kokotsis

March 1998

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On 15-17 May 1998, the leaders of the Group of Seven economic powers (Britain, Canada, France, Germany, Italy, Japan, and the United States), the European Union, and Russia will assemble in Birmingham, England, for their 24th annual summit. Under the energetic leadership of their host, Britain's prime minister, Tony Blair, they will concentrate on the Asian economic crisis and international financial institutional reform, the once domestic challenges of employment and crime, and perhaps the prospect of a financial crisis in Ukraine and development in Africa. Russia will be confirmed as the eighth member of the club (thereby changing the G-7 into the G-8) and its president, Boris Yeltsin, will be included in all sessions except for a brief meeting of the seven to discuss hard-core economic affairs and perhaps those relating to Ukraine and Russia itself. For the first time in summit history, the retinue of attending ministers will be absent. The leaders will deliberate in an informal, retreat-like setting and take decisions that will set directions for the world as it approaches the next millennium.

These innovations in agenda, membership, and format will likely do little to silence the many G-7 (and now G-8) summit sceptics. During a weekend of listening to pronouncements from this pinnacle of global power, the sceptics will find it all too easy to repeat their chronic chorus of complaints - some of which are, of course, valid. The chorus centres on the charge that the G-7 is ineffective and irrelevant in a post- cold war, globalizing world where the international order is shaped, variously, by a dominant United States, by a G-3 of the United States, a unifying Europe, and Japan, by countries such as China and other emerging economies outside the obsolescent G-8 club, or by multinationals and markets which possess the money, wisdom, and confidence that the G-8's cash-strapped, cowed governments lack. In this view, the fast approaching world of the millennium will make overwhelming demands on the G-8. These include the classic tasks of maintaining growth and trade liberalization in the world economy; the 1990s challenges of reform in post-cold war Russia; managing the global ecosystem; and deterring or defeating aggressors in the Persian Gulf, the Korean Peninsula, or the former Yugoslavia. To this list must be added an array of once domestic subjects which are spilling on to the international agenda; the systemic risk from the financial crisis in Asia; intense transnational processes such as crime and disease; and potential threats from expansionist powers such as the People's Republic of China. And these challenges have to be met by a group that remains nothing more than an annual gathering of politicians, devoid of the collective organizational capacity of the venerable United Nations, the expanding quasi-supranational European Union (EU), or the World Trade Organization (WTO). Moreover the sceptics will charge that the G-7 today features a lame duck American president, a Japanese prime minister immobilized by domestic economic weakness, and an unpopular German chancellor preoccupied with re-election in September. In these circumstances it will be difficult for Tony Blair to inject into the process the youthful enthusiasm that is necessary if the G-8 is to be rebranded, in substance as well as name and image, as an effective international institution ready to lead the world into the new age.

Blair and his colleagues, however, could well measure up to the task and prove the critics wrong. Indeed, the Birmingham summit shows signs of marking a new beginning for the G-7 and its rebirth as an institution looked to and accepted as the centre of global governance in the new era. Its potential revitalization rests in the first instance on its record during the 1990s. As the cold war came to a peaceful end, a democratic and market-oriented order was put in place and the processes of globalization were shaped to bring unprecedented prosperity and other forms of well-being to much of the international community. Although the G-7 had little success with its initial attempts to advance major issues, such as completing the Uruguay Round of multilateral trade negotiations and inducing irreversible political and economic reform in Russia, its efforts were effective in the end. To be sure, the 1997 Denver summit was something of a disappointment, as the preoccupation with welcoming Yeltsin to the first "Summit of the Eight" left little time for major progress on economic issues or for dealing with the looming Asian financial crisis.

But G-7 leaders will begin their Birmingham encounter in the knowledge that behind the public front of the fifty-three year old International Monetary Fund (IMF), they have since Denver collectively provided the leadership, in public funds and policy direction, that saved the global economy from a potentially contagious financial crisis in Asia and simultaneous financial strains in Russia. Innovations in agenda, membership, and format at Birmingham should provide the capacity to cope with Asia, a still beleaguered Russia, and an EU about to introduce its single currency. The summit should also deal effectively with such human security issues as employment and crime, with leadership that can come only from statespeople with a comprehensive competence and vision that transcend parochial portfolios or technical concerns. And with an America rendered more modest by its early 1998 confrontation with Saddam Hussein, Japan acting at long last to solve its seven-year financial drag, and a determined Germany moving to reinvigorate Europe, the conditions could be ripe for substantial summit success by the time Birmingham opens.

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