Conclusion

Despite its many successes in the 1990's the G7 as an institutionalized system of overall global governance faces several challenges in the future, all of which are manifest in the planning of and prospects for the June 20-22 “Denver Summit of the Eight” thus far.

The first is the need for an institution led by a new leader serving as host each year to sustain the momentum on those thematic emphases, such as international institutional reform and multilateral trade liberalization, that require a multi-year programme rather than one-year push to accomplish. President Chirac at Lyon in 1996 did relatively little to carry through on the Halifax emphasis on institutional and particularly UN reform, leaving the most dedicated G7 members to maintain the momentum by acting within the IMF and other international institutions. It is also noteworthy that in establishing the theme that will dominate at Denver, President Clinton has entirely neglected the issue of international institutional reform that he did so much to initiate at Naples in 1994.

A second is the absence, in the American year as host, of any follow through at the ministerial agenda on the G7's 1990's microeconomic agenda. In part as a result of the US institutional weakeness in having no popularly-elected ministers or those with independent power bases within coalition governments or party factions, there are no meetings to followup the U.S. initated employment ministerials, or those for information and emerging behind-the-border issues.

A third challenge, of which the second is but a part, is the abandonment of any effort to have the leaders engage in serious examination or emphasis of the classic economic agenda of the G7: exchange rate management, macroeconomic management, microeconomic policy, trade and investment, and north-south relations (outside the narrow African initiative that President Clinton has proposed). Seldom has a G7 Summit been so devoid of economic content. This is a particular problem at a time when issues of exchange rate intervention, European unemployment, the advent of the EMU, the progress of MAI and the relaltionship of an invetsment regime with associated environment and labour issues warrant leader-level attention, and when new leaders lacking finance ministry experience, from the United Kingdom and perhaps elsewhere, need to be socialized into the collective economic framework.

The central cause of this abandoment of a core economic agenda constitutes the fourth challenge - to find a durable means to cope with Russia's constant pressure for greater inclusion while maintaining an ability to manage emerging macroeconomic and structural issues in a forward-looking way. The United States' central purpose at Denver - to make Russia appear as a full member of a newly- named “Summit of the Eight” has left little time for any economic discussions among the seven, and led to an emphasis on an issue - global environment conventions - where the Russians are functionally relevant. It stands in sharp contrast to the French formula for assauging Russian pride and supporting President Yeltsin's re-election prospects with a separate, issue-specific summit on an issue of central relevance to Russia. It also suggests, paradoxically in a post- cold war, globalizing era, a return to the primcy of high politics, now with a much lower status country, and a predominant concern with offering the Russian's concession for the enlargement of NATO to embrace small market democracies once within their sphere.

The underlying cause of the prospective low performance of Denver on the emerging structural issues in the global economy is not only a poorly engaged, domestically- distracted President missing an opportunity to display leadership at the outset of his second and still fresh electoral mandate. It lies in the dynamics of relative capability, where vibrant US growth and a soaring US dollar over the past year and in the first quarter of 1997 provide a strong concentration rather than equalization of capabilities among the G7. In so doing they provide a powerful disincentive for US adjustment and followership, and leave less the other G7 members can do to make Clinton, now equipped with the prerogatives of host, to listen and learn. Thus the task of having the G7 show the required leadership on the new structural agenda will have to be left to the G7 summit hosted by new British Prime Minister Tony Blair next year.