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[Traduction en français]
Secondly, with regard to direct foreign investment, a domestic regime in Russia that enables the gulf resources of this world to feel comfortable about investing in there was I think identified at the very beginning by the Canadian government and by the American government, at the beginning of the Soviet-Russian transformation process, as being important in at least the medium term, which is of course now upon us.

Thirdly and finally, if intergovernmental money, in the form of actual cheques or guarantees from the G-7, is needed for Russia, it has existed since the late 1980s in more than ample measure within a single G-7 capital--Tokyo. It hasn't flown simply because the Japanese government finds it politically very difficult to do so as a democratic society while the Russian government remains committed to one of the Stalinistic legacies of their foreign policy, the military occupation of Japan's northern territories. If the beginning of a process of post-Cold-War normalcy were even to begin, I think Japanese capital would begin to flow in full measure toward the Russian republic; thus, the rest of the G-7 system would have the resources in the aggregate to devote to the poorest of the poor elsewhere.

Prof. Helleiner: The Mexican case was saved by the United States in 1994 following the presidential candidate's assassination. That was clearly the U.S. At the end of the year, in early 1995, however, the U.S. alone, without the IMF and the Bank for International Settlements, would not have been able to put enough together to calm the markets. Indeed, it was the leadership of the managing director of the IMF, breaking the rules of his own organization when he saw that the U.S. Congress was going to cause trouble for President Clinton, that generated the package that had not yet been agreed to by the Bank for International Settlements and on which the European members of his own board abstained. He put himself way out on a limb to take a lead that he thought the world economy required, because the U.S. could not.

One way or another, your question still stands, of what happens next time? The managing director of the IMF, a couple of days after, in a lead interview with The Financial Times, said in his view another ten countries, and maybe Canada is one of them, risk similar events. He strongly implied that we didn't have a system for this new world. This a whole new world. Enormous volumes of financial capital are floating around, sloshing around, at short notice. One of the critically important things the international financial machinery, the institutions, have to do, is to assign clear responsibility. If things go wrong, who is out in front? What is the crisis management system?

For some years back, when the private banks were in trouble, it was the Bank for International Settlements and a committee struck by that bank that negotiated who would serve as lender of last resort if major international banks looked as though they were going down. They agreed on that.

Currently, we do not have a similar agreed-to solution for foreseeable future crises. As long as that is the case, we are all at risk of shocks much larger than a little prior planning would permit us to avoid.

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No one has challenged John Kirton's assertion that Canada is overpaying. It's overpaying only in respect of the financial institutions to which he referred, but at the level of aggregate contributions Canada is in the middle of the pack as far as the OECD is concerned. It has chosen to divert more of its resources to multilateral institutions than some other countries have, but it hasn't assumed a larger burden than the average of the OECD. It has assumed a much smaller burden than the Nordics and the Dutch, the star performers in the support of these international financial efforts.

I'd hate for people to go away thinking we are carrying a burden that in some sense is too great. On the contrary, I think if we were to behave as other similar countries do, our burden would be larger.

The Chairman: We have ten minutes left. Mr. Bergeron.

[English translation]
M. Bergeron (Verchères): Je m'interroge un peu sur la place du Canada dans le G-7. À la lumière d'un certain nombre d'éléments qui ont été soulevés par M. Helleiner, il est bien évident qu'il y a plusieurs aspirants qui voudraient joindre les rangs du G-7. On pense, par exemple, à des pays qui ont une économie dont la taille est maintenant plus importante que celle du Canada, par exemple l'Espagne. Il y a d'autres pays, par exemple la Russie, qui aspirent à joindre les rangs du G-7 pour des raisons politiques ou autres. Vous avez vous-m&egcirc;me souligné qu'un éditorial du *itGlobe and Mail*ro du 11 octobre 1994 avait soulevé l'idée que le Canada pourrait éventuellement céder sa place à la Chine ou à l'Inde.

Qui plus est, vous avez également parlé d'une espèce de marginalisation du Canada au sein du G-7 par une espèce de G-3 informel qui comprendrait l'Union européenne, les états-Unis et le Japon.

La question que j'aurais le goût de vous poser est celle-ci. Quelle sera la place du G-7 à l'avenir? Le G-7 a-t-il toujours sa place? Ne va-t-on pas parler, dans les prochaines années, d'un G-8, d'un G-9 ou d'un G-10, où les véritables décisions seront prises par le G-3? Le Canada continuerait d'avoir une place tout à fait mineure dans ce groupe des sept, des huit, des douze ou des vingt pays les plus industrialisés. Quel est l'avenir du G-7, selon vous, et quelle est la place du Canada dans cette structure en mutation?

[Traduction en français]
Mr. Boehm: I think it's clear when you look at institutions and their evolution, whether they are financial institutions or, more globally speaking, a structure like the United Nations, 50 years on you're looking at some sort of review and some sort of change.

I wouldn't say that the G-7 is immune from that. In practice what we have developed over the past few years is a G-7-plus-one structure that brings in Russia for discussions of political issues. In Naples, Russia was there for discussion of political issues on the last day but was not involved in the macroeconomic and other discussions involving the bank, the fund and the like where Russia doesn't really play the way the other countries do.

In terms of our belonging, there have been various articles written that Canada should not belong, suggestions that Spain should be in there. But I think we have no formal criteria for membership here. We can add up all the purchasing power, coefficients and the like to see where we fit. We fit on some and we don't fit on others within the seven; that's clear.

What we have to do is think qualitatively, not necessarily quantitatively. We're a leading trading nation. We want to be in this forum, I think, for that reason. We're the fifth largest contributor in G-7 on official development assistance per capita. We are a major force in peacekeeping operations and have interests in virtually all the leading international organizations, where some of our G-7 colleagues are not represented, such as the Commonwealth and la Francophonie. We have membership in both.

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I think it's interesting, and I say this on a personal note, that in my association with the G-7 and G-7 preparations, there never seems to be any question from any of the other G-7 countries as to whether or not we belong. That question usually comes at one time or another from within Canada.

The Chairman: Could you be very quick? We're going to have to wrap up in five minutes.

Prof. Kirton: Let me just follow up on that very quickly. Since 1977, when the current membership structure was fixed, there has been a growing consensus that the seven existing members are the right ones, particularly with the admission of Canada into the G-5 finance ministers forum to make it the G-7 in 1986. Since that time, there has been a steady succession of would-be entrants almost every year, none of whom have stood the test of time.

I think I would be even harder than Peter in arguing that, if one looks at the real relative capability on the issues that have been and always are at the core of the summit agenda, Canada is clearly within the ranks of the top seven. The gulf between Canada and the nearest contender is quite large. It's also important to keep in mind that the G-7 is a global forum and, by virtue of geography alone, Canada is a global player. It has foreign policy interests that are trans-oceanic. It has a foreign policy aimed at tous azimuts. This is relatively new in the international system evolving amongst the G-7 club.

The Chairman: Mr. Volpe, a short question.

Mr. Volpe (Eglinton--Lawrence): Mr. Chairman, thank you very much. I applaud your ability to get such erudite experts before the committee. They are not only erudite but also profound in their knowledge. So I'm going to challenge them with a very simple question flowing from your question and my colleague, Jesse Flis'.

You have a wish list, and we're going into the summit in a few months. Professor Kirton, what do you suggest Canada should do that will have the same kind of clout as the actions of two former Prime Ministers that brought this about?

Prof. Kirton: It's early days in the summit preparations so my wish list is modest. If I had to pick one, it would be an agreement on the part of the G-7 in the Halifax communiqué or a shared summary that military expenditure in a way that will free resources is now a major condition for assistance in the post-Cold-War era so we can address the new security issues--broadly speaking, of sustainable development--more fully to the IFIs and MDBs.

The Chairman: We'll hear from Gordon Smith tomorrow.

we'll ask Professor Helleiner and then Mr. Bertrand if he could....

Prof. Helleiner: My bottom line is the initiation of a serious process at the intergovernmental level, one that is fully representative of review of the IMF and World Bank and their relationship with the United Nations, the World Trade Organization and the regional development banks.

[English Translation]

M. Bertrand: On devrait exiger, au minimum, que notre propre gouvernement fasse en sorte que les représentants canadiens à la Banque mondiale et au FMI rendent des comptes au Parlement, et qu'à l'intérieur de ces deux organisations-là, il fasse pression pour qu'il y ait davantage de transparence et de démocratisation. Il y a d'autres pays qui sont en train de le faire. Le Canada doit le faire aussi.

[Traduction en français]
The Chairman: Thank you very much.

Members of the committee, I would like to thank our panel very much on your behalf. I think they've given us very useful insights both for the preparation for our trip to Washington--they've enriched our experience there--and I think it will be very helpful in enabling us to write a report before the Halifax summit.

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I thank each and every one of you very much for coming.

As members of the committee know, we have a witness who is presently waiting outside, so I won't keep you long. Our next appearance before the committee is the foreign minister of the Czech Republic and I'd ask you to stay for that. I also would remind you there is a steering committee meeting at 3:15 this afternoon.

There is an informal meeting with the Peruvian delegation in Mr. English's office, room 285, Confederation Building, at 4:30 p.m., for those members of the committee who are interested and able to attend.

Also, tomorrow, and I'm sorry this is so late in getting to you, at 3:30 p.m. in room 371, West Block, we've been able to get Mr. Gordon Smith and Ms Louise Fréchette to come speak to us. You'll recall that Gordon Smith is the Deputy Minister of Foreign Affairs and Louise Frechette is the Deputy Minister of Finance. They are respectively the sherpas in charge of the general policy and the financial policy before the G-7 summit.

I am reluctant to have so many meetings. I know how busy everyone is, but I just want to remind you, if we're going to go to Washington and meet people there, it would be most important that we have met with our two primary actors in the G-7 summit prior to going. That's at 3:30 p.m. in room 371, West Block, tomorrow, and I urge all members of the committee who are able to come to that meeting.

I would suggest we take a two-minute break before we introduce the Czech foreign minister.

[Proceedings continue in camera]