CHAPTER TWO - WHY HALIFAX MATTERS

The litany of global problems overshadowing the marking of the 50th anniversaries, in 1994 of the founding of the Bretton Woods institutions and of the United Nations this year, hardly bears further reciting. Dire warnings abound, from provocative essays such as Robert Kaplan's "The Coming Anarchy" (The Atlantic Monthly, February 1994), said to have had some impact on G-7 leaders prior to the Naples Summit, to the sobering burden of evidence accumulating in the reports issued by international organizations and emanating from recent global conferences (Cairo on population, Copenhagen on social development, and Berlin on climate change). Yet despite this outpouring of rhetoric, as one writer puts it, "a strange sense of unreality" surrounds these anniversaries. 5 It is as though the international community is trapped in muddling along the same path as before, notwithstanding a widening gulf that separates the deepening diagnoses of interrelated global crises affecting economic welfare, socio-political stability and ecological health, from the rather hesitant actions so far being undertaken in collective response.

We believe it is important therefore to affirm our agreement with witnesses who argued strongly that the world economic system is not performing well in some critical respects - notably in being able to provide economic security and a broader sharing of the benefits of economic growth to the majority of the planet's population. It is important that the reasons why be correctly identified and analysed to the greatest extent possible. But it is as important that the problems which are already apparent not be evaded and put off until another day. Only five years from the next millenium, what is needed is for leadership to start somewhere. In improving the operations of a globalizing market economy, described by Professor Gerald Helleiner of the University of Toronto as "remarkably undergoverned" [16:15], the G-7 countries must assume a major responsibility, and in that context Canada now has a special opportunity to play a motivating role as host of the 21st Summit.

The Committee is under no illusions that the G-7 countries alone - representing a declining fraction of world population and economic activity - can pretend to make decisions for the international system as a whole. As witnesses underlined, the developing countries are increasingly challenging any unilateral positions being taken by the G-7 club, even within the Bretton Woods bodies which they have traditionally dominated. This emerged clearly at the annual IMF-World Bank meetings in Madrid last October, and was again a backdrop to the April 1995 meetings in Washington of their interim and development committees. Nevertheless, in its two decades of existence, the G-7 has emerged as a de facto, if still informal, institution of global governance. Moreover, as Professor John Kirton pointed out, the very select size, however unrepresentative, of this forum can increase the chances that decisions will actually be taken. In his optimistic view, G-7 summits, much of the `raison d'être' for which emerged from the breakdown of the original Bretton Woods regime in the early 1970s, have subsequently provided "critical political impetus" for reforms to international institutions that they might otherwise have been unable to manage by themselves [16:10].

No doubt there are many valid criticisms which can be made of the G-7 as a "governance" structure and process, including a rather uneven record of compliance with many of its summits' own declared objectives. 6In our Washington roundtable, Fred Bergsten, Director of the Institute for International Economics described the G-7 as being "neither efficient nor legitimate". Yet we do not see how moving to an even smaller G-3 "steering" group would be likely to improve matters in this respect. There are also the occasional debates about whether Canada even belongs at this exclusive table. We certainly think that Canada's membership is merited, if only by an international profile which includes a major contribution to building the present system of multilateral organizations. There would be no point to arguing that Canada should be expected to exert influence through sheer economic weight. But Canada has made a difference in the past (as in the 1988 Toronto Summit on the issue of debt reduction), and can continue to earn its place within the G-7 by the quality of its participation, and by its unique "middle-power" capacity to act as a bridge-builder to other parts of the world.

That said, we tend to agree with the sceptics that as the summit process comes of age, entering its third decade, it is in a sense on trial and must prove itself in terms of substantive results, not simply fine words in a declaration. Halifax is a key test in that regard, being the first Summit following the Bretton Woods 50th anniversary, and the first of a new three-year cycle (the next summits will be in France in 1996 and the United States in 1997). We are also mindful of the appeal from an American witness for Canada to act as a catalyst for serious systemic reforms which address the dangerously growing disjunction between weak liberal-democratic governance institutions and rapidly globalizing markets and technological processes. Observing that Canada played an important role in brokering the development of the post-war liberal internationalist system, Dr. Orin Kirschner argued that "no other country in the G-7 is better positioned to play a leadership role within the G-7 Bretton Woods reform process." [22:9]

Of course, for this to happen in even a modest way will require the commitment of significant political capital by the Prime Minister and the government. Halifax will not pass the test simply by Canada being in the privileged position as host. That is why in our first recommendation we called for the government to work towards developing a set of concrete working positions on the major international reform issues that could be put before G-7 leaders in June. In addition, the Committee is concerned that what happens at Halifax not be perceived as only an affair that matters to leaders and officials in backrooms. If the Summit is to produce results that matter in terms of shaping international public policy, there must also be a greater effort to involve national publics more in this process. At a minimum, public awareness needs to be fostered of the importance for domestic well-being of preserving a viable multilateral system, and of what should be expected from any decisions taken in Halifax.

Without sufficient information or adequate benchmarks, the opportunity could be missed to deepen Canadians' own appreciation of their stakes in reforming institutions for the global economy of the future. Our hearings and this report aim to make a contribution at the preparatory stage. In addition, however, the Committee recommends that the Government develop a strategy for informing Canadians of its key objectives going in to the Summit, and for disseminating the results of Summit decisions. Priority should be given to an elaboration of specific commitments to Bretton Woods and international financial reforms. That subject should be a principal focus of the next national foreign policy forum to be held this fall, with this being seen as only one step in opening up the review process to greater public involvement, both directly and indirectly on an ongoing basis through their parliamentary representatives.