Rationale Behind Formation of G8

G8 is an informal group of eight of the world’s most industrialized nations that meet on an annual basis to discuss issues of global concerns on an international forum. Following the 1973 oil-crisis, which had resulted in a period of global recession, United States had called an informal gathering known as the Library Group (at the White House library) in 1974, where senior financial officers from United States of America, United Kingdom, West Germany and France were invited to address the problem of soaring fuel prices. The G6 was formalized only in 1975 when the then French Prime Minister hosted a summit that saw participation from the same countries as those of the Library Group. Canada was subsequently included in 1976 Summit, making it the G7. Although Russia included in 1997 as one of the G8 countries, ranks behind Brazil at the eleventh place in terms of overall wealth, yet its abundance in oil and gas reserves has earned Russia its place among the world’s most powerful economies.

This year, in July, one of the major issues brought up at the G8 Summit at Japan was climatic change, and for the first time saw involvement of 5 developing economies including India, China, Brazil, Mexico, and South Africa, thus transforming the Summit into G8+5. The G8 summit proposed a reduction in global level of carbon emissions, and called for thorough support from India and China. This was in the light of the fact that India and china are heavily populated. However it is well known that it is indeed the developed economies that contribute most to world pollution. Data collected by World Resources Institute shows that Canada ranks 9th in total energy consumption(2003), per capita closely followed by other G8 nations, whereas India and China rank far below, their consumption levels being 1/20th and 1/10th of Canada’s, respectively. Moreover, as per data collected by Carbon Dioxide Information Analysis Center (CDIAC) in 2004, US accounts for 22.4% of the total annual CO2 emission in the world while the corresponding statistic for India is 4.9% only. Although China is said to have passed US in greenhouse gas emissions (2006), yet it is exceedingly unreasonable of the G8 economies to expect countries like India and china, to cut down on their energy consumption and carbon emissions at the cost of their development, when these developed nations have themselves achieved massive feats in terms of GDP growth and other socio economic factors on account of decades of high levels of energy consumption and enormous quantities of greenhouse gas emissions Thus, India and china have refused to agree on legal restrictions on carbon emissions to be enforced by the G8 nations and instead have insisted the latter to take the initiative in this direction. It is by far a reasonable demand since the G8 nations are successful developed countries with high levels of GDP per capita, and thus their economies are not likely to suffer adverse effects..

As evident, there are huge expectations from the leaders of the world’s strongest industrialized nations who get together to discuss a plethora of global issues ranging from health, education, energy and environment as well as terrorism, justice and law enforcement. However, G8 countries often have to face strong repulsion from protestors. At the 27th G-8 summit, one of the largest and the most violent anti-globalization movements occurred, holding G-8 members responsible for various issues such as “global warming, the AIDS problem (due to strict medicine patent policy), soaring oil prices, and the food crisis and widespread poverty in Africa and developing.”.

Although it is irrational to attribute the entire blame to G-8 nations, yet to some extent the allegations can be supposed true. Structural as well as socio-economic changes in the G8 nations can at times jeopardize global economic stability. For example, US economy has been showing very little growth especially since the world economy was reportedly declared to be in a “good condition” at the 2007 G8 summit in Germany. Unemployment rate (in USA) has risen to 6.1% p.a. (as on August 2008). In addition, stock markets have been falling, resulting in a hike in interest rates and thus, causing the domestic market to suffer. Imports have shot up, ultimately leading to a depreciation of the dollar, which is the main cause of hot money fleeing in all economies, resulting in worldwide inflation: rising prices of food, oil and other goods; which became one of the prime issue of the 2008 G-8 Summit held in Japan. This has brought the G-8 Summit back to where it started; discussing the same problems for which the forum was initiated..

The proposal by G-8 members to set up a food reserve to counter the mounting food crisis was overshadowed by the figures given by the World Bank relating to the short term food needs that have crossed a whopping $ 10 billion. Inspite of the $50 mn pledged by Japan in food aid, in addition to $200 mn committed to help developing countries with rising price level, there is a general feeling of apprehension over the ability of G-8 countries to solve the food and oil crisis..

However, it must not be forgotten that G-8 summit was formed to unite the world leaders, not so that they conjure quick-fix solutions to complex problems, but to bring these problems into focus on a global platform and think and discuss about them. Its aim is to place the building blocks of the structure of an ever expanding idea, however rough and patchy the initial sketch may be. Hence, these global concerns may not find immediate resolution at the G-8 summit, but a beginning is surely made by attending to them and enlightening economies all over the world in its wake..

Tripti Bhatia

[Image Source: http://flickr.com/photos/grantneufeld/35004164/]