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Changing Patterns at the G7 Summit
Nicholas Bayne

G8 Governance No.1 (May 1997)

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The Summit and the End of the Cold War

When Hanging Together was completed in 1987 and when the leaders met in Toronto in 1988, neither scholars nor practitioners had any inkling of the coming upheaval in Eastern Europe. Even those busy preparing for the 1989 Summit were unaware - until the very last sherpa meeting, in July, focused on a Summit response to events in Poland and Hungary. But though taken by surprise by the collapse of the Soviet empire, the Paris "Arch" Summit rose to the occasion.

The leaders made clear at the Arch their determination to help establish working democracies and market economies in Poland, Hungary and the rest of East Europe. They set up a mechanism to coordinate assistance, in the form of the G24 chaired by the European Commission. After some initial problems over involving the IMF and IBRD in its work, the G24 settled down, gradually included all East European countries and put together a series of useful financing packages.

Jacques Attali, the effective inventor of the European Bank For Reconstruction and Development (EBRD) -- as his memoirs make clear -- used the G7 sherpa process to get it started. Later Summits encouraged the Central and East European countries to join or rejoin the Fund, Bank and GATT and promoted agreements to get them better trade access. Arguably the G7 should have been more generous, both in aid and trade openings. But generally their arrangements for East Europe worked well and should be regarded as one of the successes of the third cycle.

Russia and the USSR were altogether harder. The Summits wanted to encourage the reform process launched by Gorbachev, whose policies liberated East Europe, made Soviet foreign policy more responsible and moved towards a more open, democratic society in the USSR. But Gorbachev remained a communist and Russia had no tradition of democracy. His economic policies were volatile, showing no great control or understanding.

The leaders in Paris in 1989 were surprised to receive a letter from Gorbachev. In fact, as some of us suspected at the time, this was another Attali initiative, as he has admitted. He had encouraged the Russians to write and even supplied a draft. It led to nothing at Paris. But it made the other Europeans, including the UK, think about using the G7 to get close to Gorbachev and influence the Soviet reform process.

At Houston the Americans, whose preparations were chaotic, were taken aback to find how far the Europeans were ready to go in helping the USSR. Houston, in July 1990, only agreed on a study of the Soviet economy and the help it needed. But in August Margaret Thatcher suggested publicly that Gorbachev be invited to meet the G7 leaders; and this became part of British planning for London 1991.

But as the London Summit approached, the prospect of the USSR holding together looked increasingly shaky. The Soviet economy was in deep trouble and Gorbachev's policies were as indecisive as ever. By May the British had cold feet about inviting him; but by then the others, even the US, wanted to press on. However, no one wanted to pour large sums of money into a black hole. So Gorbachev, when he came to London, got little more than words of encouragement. By then even a massive injection of funds, would have been too late to save him. As it was, a few months later the Soviet Union collapsed. Yeltsin firmly took charge in Russia. Gaidar, his Prime Minister, began the first stage of the switchback course of Russian economic reform.

Both the reform itself and the construction of western aid packages were far harder than anything done in Eastern Europe. The Russian economy was much bigger and in a much worse state. Disentangling Russia from the wreckage of the Soviet Union added great complications, especially as regards external debt. The G7 had some guilt feelings about Gorbachev and over-compensated at Munich 1992. They promised Yeltsin too much - $24 billion - more than could be delivered.

By the 1993 Tokyo Summit the G7 were better organised, but the Russian economy was in a deteriorating condition and the Russians resented being supplicants. Overall, one must regard the Summit record of helping Russia as a mixed success; there was some damage to the G7's reputation, for promising and not delivering, and disappointment that so much effort produced so little result.

The Summits have had better success with the Russians from 1994 onwards, by shifting attention from the economic to the political agenda. At Naples the Russians were admitted as full members to the foreign policy discussions, shifted from the first to the second day to accommodate this. This part became the P8, while the economic part was still G7. The Russians were pleased - but of course wanted to be invited to both days and create a full G8. The Russians have a right, as permanent members of the UN Security Council, to be in the political exchanges. But they have no equal right to join the economic circle.

So in 1995 and 1996 the leaders sought to distinguish G7 from P8, despite Russian pressure. This was done at Halifax 1995, though the leaders gave Yeltsin the consolation of holding a special nuclear safety Summit in Moscow in April 1996. At Lyon 1996 it was easier to handle Chernomyrdin than Yeltsin. Even so, environment slipped from the first to the second day, to find something extra for the Russians. But this cannot go on indefinitely.

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