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The G7 Summit and the Reform of
Global Institutions

Nicholas Bayne

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The G7 Summit is at the same time an institution and an anti-institution. This makes it hard to pin down, but it may be the secret of its survival. It has many of the attributes of established inter-governmental organizations meeting at head-of-government level, such as the North Atlantic Treaty Organization (NATO), the European Union, the Commonwealth or even the UN. But the Summit is meant to be quite different from such meetings. It was invented by President Giscard d'Estaing of France and Chancellor Schmidt of Germany, twenty years ago, in rebellion against the formality of large international meetings, which had frustrated them when they were finance ministers. Giscard and Schmidt wanted instead a direct, unscripted, unbureaucratic exchange between a few heads of government. Even today, after many disappointments, the G7 heads of government long for such a refreshing and stimulating encounter, of a kind they would never expect from a UN or NATO Summit or even a European Council.

But by the early 1990s, the Summit had moved a long way from this ideal. The fundamental reason for heads of government to meet has always been that they can reconcile the domestic and external pressures of national policy, in a way that other ministers cannot. As the overlap between domestic and external policies has increased with globalization, so the requirement to reconcile conflicting pressures has grown, dragging heads of government into international disputes. But as economic levers pass from the hands of government into the private sector, both at home and abroad, so the ability of heads of government to determine policy and resolve disputes is eroded.

In consequence the agenda of the G7 Summit became hopelessly overloaded. The original list embracing macroeconomic and monetary policy, international trade, debt and development was long enough. But this was expanded to cover the environment, drugs and help for Eastern Europe and the former Soviet Union. An extra day of non-economic, foreign policy discussions was added, complicated by the requirement to accommodate the presence of the Russians. With this mass of intractable problems, it was hardly surprising if the Summit leaders failed to agree or if understandings reached at the Summit came apart later. But if the leaders tried to resolve matters and failed, this damaged their reputation and discredited the Summit process.

The worst example of this was the repeated undertaking, at the Summits of 1990, 1991 and 1992, to get the GATT Uruguay Round finished by the end of the year - only for it to fail each time because of disputes between G7 members. This conspicuous failure obscured the valuable contribution which the G7 leaders had made to the Round in other ways: by backing a strong dispute settlement mechanism and the conversion of the GATT into the WTO; by keeping the Round alive through a painful recession; and by using the 1993 Tokyo Summit to clinch the decisive deal on market access. The G7 heads of government began to share the dissatisfaction with the Summit process already widespread in the media. The British Prime Minister, John Major, started a movement to retrieve the informal, personal origins of the Summit.

So the first challenge for the Canadian Prime Minister, Jean Chrétien, in preparing to preside over the 1995 G7 Summit, was to lighten the process so that the leaders could have some direct, spontaneous exchanges. To that end, he cut back the ceremony and spectacle which had been associated with meetings in renaissance palaces in Munich (1992) and Naples (1994). He held the Summit in the medium-sized harbour town of Halifax, Nova Scotia, where the leaders, on their way to their meetings, mingled with the local citizens and holiday- makers, which they had never done before. They had one evening at the circus, but otherwise every minute spent together was used for discussion and every meal was a working meal.

But there are two risks in relying too much on spontaneous exchanges and Halifax was not immune from either. The first is that the leaders simply focus on the crises of the moment. At Halifax, Bosnia dominated the political exchanges and, on the first evening, threatened to drive everything else off the Summit agenda. The Bosnian Muslims timed their attempt to break the siege of Sarajevo to coincide with the Summit, while the Bosnian Serbs were still holding many UN peace- keepers as hostages. The leaders could not ignore these events and strongly denounced them; but in practice they could not affect what happened on the ground. Chechnya also occupied much time when President Yeltsin arrived, as Chechen terrorists had seized hostages in Boudonnovsk, though anyway the G7 leaders wanted to express their anxieties about Russian policy.

The second risk is that the leaders simply conclude their discussions by proposing more meetings in the G7 format. President Chirac of France, for example, suggested another G7 meeting on job creation, like the one held in Detroit in 1994. Yeltsin proposed a special G7 Summit on nuclear safety, to be held in Moscow in 1996. These extra meetings appear to clutter up the G7 apparatus, against the professed intentions of the leaders, and to siphon issues away from the wider international institutions competent to handle them.

But Yeltsin's proposal for a special summit on nuclear safety shrewdly disposed of another controversy hanging over Halifax. Ever since the G7 leaders invited Gorbachev to meet them in London in 1991, they have wrestled with their precise relationship with the Russian President. Associating the Russians with the Summit helps to reconcile them to the loss of their superpower status and encourages them to persist in economic and political reform. But the Russians always dis- liked coming to the summits as supplicants. At the Naples Summit in 1994, and again at Halifax, Yeltsin was invited as a full participant in the political discussions, making G7 the G8. This was greatly welcomed by Yeltsin, but encouraged him to seek access to the economic discussions as well. The G7 leaders did not think the Russians could contribute anything to the economic discussions but disliked rebuffing Yeltsin outright. The special meeting on nuclear safety will enable the G7 leaders to involve Yeltsin in another summit-related event, while keeping their economic circle intact.

This Russian bid to attend all the Summit, not just part of it, opens the whole question whether the G7 Summit still has the right membership. Though called the Group of Seven or G7, the participating countries at the Summit - US, Japan, Germany, France, Italy, UK and Canada - are always joined by the European Commission, making a minimum of eight delegations. The country holding the presidency of the European Union (EU), when that is not held by Germany, France, Britain or Italy, makes a ninth participant. If the Halifax Summit had been held in July 1995 rather than June, Spain would have taken part as presidency.

Many have argued in recent years - I did so myself in 1993 - that the G7 is no longer representative of the range of countries active in the international system. In particular, large, populous countries, like China, India, Mexico and Brazil, deserve more weight as they open up their large, internal markets. But the strongest argument against this is that the present G7 members need more than ever the close links provided by the summit process to defuse disputes among themselves and to counter the strains of globalization. The present G7 membership provides the best opportunity for exerting reciprocal pressure between the highly developed countries of Europe, North America and Japan, which would be lost if the composition were changed.

1995 provided several good examples of bitter economic disputes between the G7 members while they prepared for Halifax:

These examples illustrate well the sort of economic disputes which disturb the post-cold war world. First, the security restraint no longer applies. It is hard to imagine a major power like Canada forcibly arresting a trawler of another NATO member country while the cold war was on, even if a small country like Iceland might have done so. Secondly, the frontier between domestic and external policy is obscured. Canada claimed that foreign over-fishing had destroyed its native Atlantic fishing industry, on which Newfoundland in particular depended. The American complaints were about the way the internal Japanese market for cars operated, not about any restrictions at the border.

Thirdly, the disputes were aggravated by the absence of a multilateral dispute settlement mechanism or the failure to use one. The Northwest Atlantic Fisheries Organization (NAFO), which regulates fishing in the region, contained no such mechanism to which Canada or the EU could apply. The new draft UN Convention on Straddling Stocks, agreed in New York in July 1995, now provides for such mechanisms and obliges members of regional fisheries organizations to use them. There should not therefore be a repeat of the Canada/ EU clash. For the cars dispute, Japan and the United States should properly have used the dispute mechanism of the new WTO, but the United States declined to do so. A bilateral US/ Japan deal was finally concluded within the deadline. If the Americans had proceeded to retaliation, this would have been a serious set-back for the new multilateral trade regime.

The media presumed that the US/Japan cars dispute would be a main item for the Halifax Summit and were disappointed when, wisely, it was not put on the agenda. But the G7 Summit, with its wide exposure to the media, is a bad place to resolve such acute bilateral disputes where domestic interests are strongly engaged. Summits are much more successful in helping to anticipate or deter such disputes and to reinforce the international machinery for solving them. That was, in fact, the principal achievement of the Halifax Summit, through the medium of its review of international institutions. The remainder of this article examines and assesses this review.

Copyright ©, Government and Opposition 1995. Reproduced by permission of the author and Government and Opposition.

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