Monday, September 8, 2008

Possible Advantages & Disadvantages of G-8 Expansion


September 9, 2008

In the international relations arena there is an increasing debate about the possible advantages and disadvantages of expanding the Group of Eight (G-8). The aim of this article is after a brief historical introduction with reference to the G-8 and its role to try to understand the pros and cons of G-8 expansion in the light of the recent public debate.

The group of the world's eight most industrialized countries includes Canada, France, Germany, Italy, Japan, Russia (only since 2006), the UK and the USA. Previously, Russia was admitted to the meetings of the then G-7 countries only as an observer. This forum was created in the 1970s and initially it brought together the governments of France, West Germany, Italy, Japan the U.S and the U.K. At that time, the world was partly trying to recover from the oil shock of 1973 and the following economic recession spurred by the huge increase in the price of oil. The idea of creating a group including the most industrialized countries was linked to the fact that it could be very helpful to cyclically have a forum where to discuss at the highest level about the international economic situation. It is important to understand that also today the G-8 is not an organization but a forum. The participation of Italy to the group was partially opposed in the 1970s by some other countries that were casting doubts about the stability and the results of the Italian economy.
The problem that has arisen since the last years is that the membership of the G-8 is not completely matching anymore all the real powerhouses of the world economy. This means that G-8 countries are without any doubt important economic players, but that in order to have a sound and complete discussion about the international economic trends new members should probably be added to the forum. Among them it goes by itself to mention China, India and Brazil, but others countries like Turkey, Indonesia, Mexico and South Africa could also be considered. In Paragraph 1 it will be discussed the advantages of extending the G-8 membership, while in Paragraph 2 it will be done an evaluation of the disadvantages of such an extension.

Paragraph 1  Advantages
As well as for some other international organizations (but I repeat the G-8 is not an international organization) the actual real risk for the G-8 is to lose legitimization if it does not increase its membership. Obviously, if G-8 meetings continue in the future to have a membership only partially covering the most important economic players the risk of losing legitimization will become a reality. The world economy is not anymore only driven by the U.S., Europe and Japan. Asia is economically speaking rising powerfully and the balance of power is moving from the Atlantic Ocean to the Pacific Ocean and the Indian Ocean. The advantages of an extended G-8 membership could well comply with the reason and the aim of this kind of forum. Similarly to the G-8, the I.M.F. (the International Monetary Fund) risks losing importance as well, if it does not restructure its voting structure. Given the fact that an increased membership is necessary for the G-8, the real issue is to understand how to reform it, i.e., to understand which country should be admitted.

This is the core of the problem. According to some analysts the G-8 should be transformed into a G-20 adding at least 12 more countries. But others speak of  a G-22 adding 14 new members. Probably, the right way to solve the problem could be to have a first extension of the membership adding those countries, like China and India, that already represent a big chunk of the world economy. Then, after this first extension, others could follow suit in the future when their economies will have increased their role with reference to the world economic trends. 
Paragraph 2  Disadvantages
The clear and obvious disadvantage of an increased membership is the possible slow motion of the decision-making procedures during the meetings of the new G-10 (G-20?, G-22?). Increasing the number of actors could block the discussions or bring about additional frictional topics among member states. For example, the admittance of Russia in the forum in 2006 created a shift of the discussed topics from mainly economics themes to geopolitical considerations given the new assertiveness of Russian internal and external politics (this shift happened well before the Russian intervention in Georgia). Another good example of the difficulties created by a broad membership, although in a different context, is the W.T.O., where since the inception of the Doha Round in 2001 the process has been blocked by the different positions expressed by the member states.

Another disadvantage for a G-8 expansion could be that an enlarged membership would probably require the transformation of this sort of forum, which is the actual G-8, into a real organization capable of coordinating meetings with more delegations, topics and possible political frictions among the involved member states. The forum would have to be transformed into a real organization with additional costs, which not all the countries want to sustain.  
All this said, according to the expounded analysis, the advantages of G-8 expansion well outweighs the disadvantages. Maintaining an economic forum that is not able anymore to represent the world economy is definitely useless. Similarly, other international organizations will necessarily change their membership and one of these is the I.M.F. In other words, with reference to the group of the most industrialized countries it is worth having a new forum with more actors where the decision-making process could be slow, but where, at least, the forum is a living body well representing today’s world.         



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