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Growing world economic powers knocking at Group of Eight's door

Sunday, July 3, 2005

WASHINGTON -- The exclusive club of world leaders known as the Group of Eight has an identity crisis. It often is described as a collection of the richest countries or largest industrial democracies.

It is neither.

The partnership is under pressure to open the door to new members; China, India and South Korea come to mind. Doing so would reflect the rapidly changing global economy and maintain the strategic role for which the group was organized in the first place.

Yet not one of the current members seems to want to make the first move toward expansion.

These strains will be on display in Gleneagles, Scotland, this week when President Bush meets with leaders from Britain, Canada, France, Germany, Italy, Japan and Russia for the group's 30th annual economic summit.

China's economy has surpassed Italy's and is racing to the front of the global pack. India, the world's largest democracy, is surging ahead, too.

Australia, Brazil, Mexico, the Netherlands, South Korea and Spain all boast economies that are stronger than Russia's.

"It's hard to talk meaningfully about the world economy any more without China being included," said Grant Aldonas, an international trade lawyer who was commerce undersecretary in Bush's first term. Aldonas said a strong case could be made for bringing in other nations with fast-growing economies.

British Prime Minister Tony Blair, this year's summit host, has invited leaders from Brazil, China, India, Mexico and South Africa to attend the summit.

A former U.S. ambassador to the United Nations, Richard Holbrooke, suggested in a speech to the Asia Society in New York last month that the annual G-8 summit had become "a complete anachronism" because it includes Russia, Italy and Canada but neither China nor India.

By 2050, the countries with the top economies are expected to be the U.S., China, India, Japan, Britain, France, Germany and South Korea.

So is it time to adjust the membership?

"My preference would be to expand it. It's very hard to knock countries off," said Gary Hufbauer, a trade economist at the Washington-based Institute for International Economics. Perhaps expanded to as many as 18 countries, he said.

"I see it happening in stages. I don't think they can admit another country without admitting China first. And the problem then becomes, if they admit China, they will really have to concede that democracy is not a central criteria," Hufbauer said.

The problem with inviting China, critics say, is that all current members have open-market democracies.

Yet democratic India is excluded despite having a dynamic economy and the expectation it will be a major player on the world stage for years to come.

At the first economic summit in 1975, the participants were the U.S., Britain, France, Germany and Japan. It turned into the Group of Seven with invitations soon going out to Canada and Italy.

The European Union also sends a representative.

Russia become a full-fledged member in recent years. Earlier, Russian and Soviet presidents could attend the meetings as observers.

With Russian President Vladimir Putin hosting the 2006 summit, his G-8 partners have raised concerns about his recent steps to roll back democratic reforms. In addition, it has focused more attention on why Russia, No. 16 on the World Bank's most recent listing of world economies, is even a G-8 member.

The cloud of the Russian presidency and the rapid growth of many developing-world economies could bring enormous momentum to overhaul the G-8, said James Steinberg, deputy national security adviser in the Clinton administration.

"I see a kind of perfect storm coming together" that could set changes in motion beginning with the next summit, said Steinberg, who now works at the Brookings Institution, a Washington think tank.

At a White House briefing on Thursday, the president's national security adviser sidestepped a question that dealt with the nature of Russia's participation and next year's meeting.

"Obviously, the question will be, what does President Putin want to try and accomplish under his chairmanship," said Stephen Hadley.

"There will be some conversations, obviously, in that part with others, but basically, that's pretty much the prerogative of the chair," Hadley said.

On the Net:

State Department background on the Group of Eight: http://usinfo.state.gov/ei/economic--iss...

Official Group of Eight site: http://www.g8.gov.uk/

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