3 July 2005
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Diplomatic sources say that the Group of Eight (G 8) industrialized nations may invite China and India to join the elite club when its 31st summit meeting is held in Scotland this week or, at least, will agree on doing so in the next summit in Russia in 2006.
The G8 took root in 1975, when French President Valery Giscard d’Estaing invited the leaders of the United States, Britain, Germany, Italy, and Japan to hold a summit in Rambouillet, near Paris, to discuss economic and financial questions in the world. Canada became a member in 1976, turning the then G6 into G7, and with Russia being formally included in 2002, the G7 was renamed G8. The European Community or its successor the European Union (EU) has also been part of the club since 1977.
When Russia was included in the club, some analysts questioned the move, asking why Russia and not China? Others wondered if the move only stemmed from a political consideration, given Russia’s less economic significance in the world than China’s. They argued that Washington and its allies brought Russia in to contain any desire by Moscow to backslide towards cantankerous militarism that might threaten the West.
In recent years, there have been several calls to expand the club so it would become more powerful for binding agreements on global standards concerning good governance, free trade, human rights, working conditions, or environmental matters. One was Belgian Prime Minister Guy Verhofstadt’s initiative in 2001 to bring in representatives of regional economic groups other than EU. The proposal led to nothing but a move by French President Jacques Chirac to invite leaders of several developing countries to have informal dialogues with G8 leaders at the 29th summit meeting, held in Evian, France, in 2003.
The first to call for the inclusion of China and India in the G8 club, however, was Italian Prime Minister Silvio Berlusconi, who, during last year’s G8 summit in Sea Island, Georgia, was quoted as saying: “It does not make much sense for us to talk about the economy of the future without [these] two countries that are protagonists on the world stage”. After this statement, the leaders of Russia, Britain, France, and Germany followed suit, leading some observers to believe that the European leaders’ enthusiasm to bring in the two Asian giants, and probably Brazil, was aimed at balancing the overwhelming presence of the United States.
Statements supporting the expansion of the G8 to G10 or G11 have also been viewed by some as a bold diplomatic manoeuvre by the US and EU to neutralize the growing clout of the G20, a bloc of developing nations led by China, India, and Brazil which are also an integral part of the Group of 77 - the largest single grouping at the United Nations. By joining the G8, the three countries would be forced to leave the G20 and G77 and the two groups would lose considerable influence.
However, one must not forget that offering membership to China and India is dictated by their current and potential roles in the world economy and international arena. As recently expressed by Brazilian Foreign Minister Celso Amorim, the G8, by inviting the rising economic powers to join the ranks of the club, will do a favour to itself, not to them. The argument is valid as many issues of concerns cannot be dealt with without the participation of these developing powers. Take, for example, the current and projected rise in oil prices, which is mainly attributed to the growing consumption of energy in China and India. Another issue is the group’s concern over China’s policy of keeping the yuan artificially low and consequently giving its exports an advantage.
It goes without saying that the two Asian giants, in some respects, are more important to the global economy than some of the G8 current members such as Canada, Italy, Russia, and even France.
With a growth of 9-10 percent a year over the past two decades, China has been growing faster than any major economy. It is now the world’s fourth largest trading nation, second largest importer of petroleum, third largest car market, and second attracter of direct foreign investment after the US. It produces 20 times more steel than the EU, consumes about 40 percent of the world’s cement, and possesses more foreign exchange reserves than any country other than Japan – nearly US$ 610 billion in 2004 compared to only $36 billion, $71 billion, and $61.5 billion in the case of Canada, France, and Italy respectively. By 2010, China is expected to become the world’s third largest economy, surpassing Germany.
India, on the other hand, has been on the rise for the last 14 years. Its economy has been expanding at 6.5-8 percent annually, making it one of the fastest growing in the world. The growth momentum has contributed to a significant reduction in poverty rates. India is now a self-sufficient nation in food, one of the leading countries in the field of satellites and their launch vehicle space, and the world’s largest exporter of software. It also has one of the world’s largest pools of highly trained technical manpower. In terms of external debt, India is in a better position than Canada, Italy, and Russia. With $140 billion in 2005, it possesses more foreign exchange reserves than these three countries and France.
With the expansion of the UN Security Council virtually frozen, India’s membership in the G8 could make up for its dream to win a permanent seat in the council, especially that the G8 is now the international arena where all political, economic, and security questions are decided.
Some Indian analysts have already urged New Delhi to prepare for joining the club of rich nations and get used to distancing itself from the fellow developing countries. According to one, India needs to do more to lessen its poverty so it would not look “like a crow in the company of swans at the expanded G8 summit”.
Dr. Abdulla Al-Madani
*Academic researcher and lecturer in Asian affairs