Bayne: The G8 and the Globalisation Challenge

The G8 and the Globalisation Challenge

Sir Nicholas Bayne, London School of Economics and Political Science
Paper prepared for the Academic Symposium G8 2000 on "New Directions in Global Governance? G8's Okinawa Summit", University of the Ryukyus, Okinawa, July 19-20, 2000

When Professor Robert Putnam and I worked on our first book on the summits, called Hanging Together, in the 1980s, globalisation was not in our vocabulary. The key concept for us was interdependence. When the summit leaders last met in Japan, in 1993, they did not mention globalisation; the first reference is in their communiqué from Naples in 1994. But when I came to write the sequel to Hanging Together, which is called Hanging In There and appeared earlier this year, I soon concluded that the recognition of globalisation and the response to it had come to dominate the summits of the 1990s. It is still top of the agenda today, in Okinawa at the start of a new decade. My remarks will analyse this response by the G7 and G8 — I leave it to others to say what globalisation is.

The summits of the mid-1990s, starting with Naples 1994, thought that globalisation held no fears for the G7 countries themselves. After all, they had been dealing with interdependence since 1975 and even earlier; they thought that globalisation was all gain for them. However, they doubted whether the international economic system could stand the strains generated by globalisation; and for four years, up to Denver in 1997, they concentrated on the reform of multilateral institutions. This had intrinsic value, since it involved the G7 leaders more closely in the institutions, instead of their earlier aloof attitude. This was a necessary response, and work on the international system continues today, as I shall discuss later. But it was not a sufficient response.

As those years passed, the G7 leaders came to realise that globalisation placed new demands on them at home, as well as internationally. To harvest the benefits of globalisation, they needed dynamic and competitive market economies — but that was not enough. They also needed to intervene to set and implement the rules for those markets and to help the weak who fell behind and were marginalized by globalisation. Above all, they had to counter public fears about globalisation, where their populations worried at becoming vulnerable to external forces beyond their control.

So the 1998 Birmingham summit marks a turning point. It was not only the first G8 summit, with the Russians as full members, and the first where the heads of government met on their own, without supporting ministers. For Birmingham the leaders chose an agenda focused on four themes. I might call these the four evil spirits of globalisation, as they are the issues which generate the strongest public concern about globalisation. Cologne in 1999 and Okinawa this year have expanded the definition of these themes, but the four evil spirits still make up the core of the G8 agenda. They are: loss of jobs; crime and internal disorder; financial panic; and world poverty. None of these are new subjects for the G8; many of them go back to the dawn of summitry. But globalisation requires the summits to tackle them in a new way.

How should we assess the G8 response to globalisation so far, as reflected in the record of Birmingham and Cologne and the expectations for Okinawa? I offer four broad comments, leading to some general conclusions.

First Comment: Domestic Penetration.

The first pair of topics — jobs and crime — draw the G8 deeper and deeper into domestic policy issues. This is as expected — globalisation requires more international action on issues formerly considered domestic. The discussion of employability at Birmingham expanded to cover education and social protection at Cologne and will further expand this year to encompass policies for older citizens. Here the leaders learn from each other and develop standards of good practice. The discussion of crime has also spread to cover conflict prevention. This topic involves strengthening justice, human rights and public order within countries. But it also means fighting international criminal movements; globalisation and new technology, I fear, facilitate these, just as they encourage more honest activities.

These topics are well-chosen, in my view. They need persistent attention from heads of government. But even with this, progress towards their objectives of higher employment levels for all and lower crime rates is bound to be slow. There is a danger of creating expectations of quick results which will later be disappointed.

Second Comment: the International System.

The second pair of themes — financial panic and world poverty — focus more on the international system. For nearly three years now, since the outbreak of the Asian crisis in 1997, the G7 have given high priority to creating new international financial architecture. The work has rather lost momentum as the crisis atmosphere receded. No one knows if it will be robust enough to deter or to withstand future crises. But at least calm has returned. Large parts of the world economy — notably the US — have remained dynamic and even those areas hit hardest are recovering strongly.

The attention given to debt relief over many years is the chief contribution from the summits to the problems of the poorest countries. The major advance made at Cologne last year recognised the danger of poor countries being left behind by globalisation. But after Cologne raised high hopes, actual implementation has been disappointing. Recent summits, especially since Lyon in 1996, have addressed other issues of importance to low-income countries. But these have not advanced as they should. Duty-free trade access for these countries is marred by too many exceptions; the untying of bilateral aid has not been agreed; the reduction of poverty during the 1990s has been far too slow; and the volume of aid has fallen over the decade. To restore their reputation, the G8 must match their good intentions by action. Okinawa is likely to agree some new targets on progress against infectious diseases. Such progress is essential; but targets are no good without the resources to meet them.

Third Comment: Helping the Good Spirits.

Recent summits have come to concentrate on the evil spirits or problem areas of globalisation. But what about some more attention to the good spirits, which help to harvest the benefits of globalisation? I greatly welcome the decision this year to focus the summit on the diffusion of information technology. There is no doubt that IT is a driving force behind globalisation. It has grown and spread so strongly because of its accessibility and openness to enterprise and innovation. But that does not mean governments can treat it with benign neglect. There are issues of privacy, fraud, public morals and consumer protection where rules are necessary. There are areas like education, where public encouragement and standards are needed. Above all, the benefits of IT must not simply accrue to the rich, but must be spread so as to contribute to development, especially of the poorest.

Okinawa should yield some useful guidance on IT. But I deplore the continued neglect of another good spirit of globalisation — trade liberalisation. Successful globalisation depends on international rules which encourage competitiveness and extend into new sectors of the economy as they develop. But at both Birmingham and Cologne the G8 failed to resolve their differences about what the next round of WTO negotiations should do. This contributed to the sorry failure at Seattle last November, both inside the conference hall and outside, where there were far too few voices arguing the merits of liberalisation against the massed demonstrators. Okinawa provides an opportunity to correct this neglect. But I see no signs of better agreement, either on a new round or on serious transitional measures. I only hope Genoa can do better next year.

Fourth Comment: Legitimacy and Credibility.

One feature of globalisation is that far more countries are now active in the international economic system — that is part of its meaning. So the G8 has more of a problem of legitimacy — why should the rest of the world's governments pay attention? The summits focused on this issue in the mid-1990s, but since then have rather lost the thread — and the failure at Seattle vividly demonstrated this.

All the G8 members realise that cannot expect others to accept their leadership blindly. But it is equally wrong to think that others are bound to reject whatever the G8 agree on; it remains their duty to lead, but to do it persuasively and tactfully, associating others as much as they can. I observe with interest the growth of —G8-plus' meetings both at summit and ministerial level, for example on the Balkans, on nuclear tests and on reforming the financial system. But the G8 cannot rely on bodies of limited membership like the new G20 to spread their influence. They must also be active in strengthening global institutions and making their procedures more inclusive, in the WTO, the Fund and Bank and the UN.

The G8 also has a problem of credibility with public opinion. The summits have not been effective in getting across their message to their peoples and reassuring them about globalisation. They make too many worthy commitments which are not met. So they alienate responsible NGOs, like those who are committed to the poorest; and they leave the field to anti-globalisation campaigners on the streets or on the Internet.

Conclusion

This can only be a mid-term report on the quality of the G8's response to globalisation. In my view, the summits have identified well the nature of globalisation, its strengths and its dangers. They have been less successful in the measures they have advocated. I do not find that surprising. The G8 summits are obliged to struggle with the hardest problems around. If they had been simple, they would not need to come up to summit level. So it is all too likely that the summits will make mistakes. I believe that they will be forgiven if they do, provided that they recognise them and try to correct them. An iterative treatment of issues by the G8 is inevitable. But they will lose respect and credibility if they make promises which they do not keep or neglect those issues which demand their attention.

—	This Information System is provided by the University of Toronto Libraries and the G7 Research Group at the University of Toronto.
	Please send comments to: g7@utoronto.ca This page was last updated August 15, 2024.