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Nicholas Bayne[1] and Robert D. Putnam

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The End of the Cold War

Political Impact

No one at the Toronto Summit of 1988, at the end of the second seven-year cycle, would have forecast that the Soviet empire would start to crumble in the next 12 months and that this would dominate the summits of the next seven years. The key reform liberation of Eastern Europe, took effect shortly before the Paris "Arch" summit of July 1989. That summit created the G-24, composed of OECD countries and chaired by the European Commission. The G-24 was to coordinate technical and financial help to th working democracies and market economies after 40 years of communist rule.

Attention shifted very quickly from events in Eastern Europe to the future of the Soviet Union itself. In 1989 Soviet General Secretary Mikhail Gorbachev sent to the leaders in Paris a letter which staked a claim to take part in the summit. This le Secretary, Geoffrey Howe, as a cry for help. Over the next four years the G-7 summits wrestled with the problem of how to encourage first the Soviet Union and then Russia towards a modern market economy and a working democracy. Russia had experienced ne there than in Eastern Europe. As well, the stakes are higher, since the end of communist rule offered a chance to transform Russia from a hostile superpower into a good neighbour in Europe and an influence for peace, rather than conflict, in the rest of

During this period, the G-7 leaders invited first President Gorbachev in 1991, and then President Boris Yeltsin in 1992 and 1993, to discuss directly with them the modalities of international programmes for assistance. It was the first time the summ a frustrating business. The G-7 leaders, together with the international financial institutions, were ready to commit large sums of money to help Russia, but only in support of well-defined programmes of reform. These were hard to prepare and often prov economy were so great and the democratic structures so fragile. Furthermore, the Russians, remembering their recent superpower status, hated to be supplicants.

To the relief of all, the Naples Summit of 1994 changed the pattern. Yeltsin was invited not as a supplicant -- one of the economic problems on the G-7 agenda -- but as an equal partner in the political discussions which make up half the summit proc the Russians are taking part in the preparations for the summit. This move recognises the constructive role the Russians have been playing in international affairs, as responsible members of the UN Security Council, and their contribution to dealing with in Chechnya cast a cloud over this, but do not obscure the whole landscape.

The Russians may not be content indefinitely to participate in only half of the summit rather than all of it. They are already seeking admission to the economic discussions, though their economic power falls far short of their international politica summit membership; if the Russians are there throughout, do not the other major economies have an equal claim to attend? The underlying rationale of the summits is that they should be small meetings of influential leaders who share basic democratic value So the G-7 leaders will be reluctant to enlarge their numbers, even to admit countries of growing economic strength such as China, India, Brazil or Mexico. The G-7 will probably conclude that they can exert more influence as a small cohesive group than a are other factors, also linked to the end of the Cold War, which are affecting the authority of the G-7 and which argue for keeping the same membership.

Economic Impact

With the end of the Cold War, the doctrine of central planning has been exploded and open, market-based economic strategies are accepted world-wide. This has created, for the first time since World War II, a universal economic system. The G-7 summi when it was founded, and the number of influential players is growing, notably from East and South Asia and from Latin America. The IMF, World Bank and the new World Trade Organization (WTO), which has replaced the GATT, now have virtually world-wide mem to join the WTO. The idea of "collective leadership" by the G-7 has become less credible.

At the same time, the influence of national governments over their own economies is shrinking. With rare exceptions, international trade and flows of foreign direct investment have grown faster every year than domestic output. The share of each eco of complete national control grows inexorably. This process of "globalization" has been going on for decades -- indeed, Giscard perceived it 20 years ago -- but the East-West confrontation masked the trend by making governments give priority to their sec security imperative is gone, economic issues, which governments control only imperfectly, have become the main focus of international exchanges.

While the Cold War continued, Western governments felt bound to unite against the strategic threat of the Soviet Union and did not allow any economic disputes to damage their solidarity. That constraint is now removed. It already appears that the G problems among themselves. This is most striking in the recent confrontation over Atlantic fisheries between Canada and the European Union. But these factors also weighed on the G-7 leaders' efforts at recent summits to resolve their differences over in successful conclusion.

The Uruguay Round, launched in 1986, was due to finish in December 1990. As this date approached, the Houston Summit of 1990 attempted to give a strong stimulus to completing the Round on time, but differences on agriculture between North America o other were obstructing agreement. The summit reached a delicate compromise -- but it proved too ambiguous and fell apart. The Uruguay Round failed to reach a conclusion that year and had to be extended.

In 1991, at the London Summit, the leaders committed themselves again to complete the Round by the end of the year and to involve themselves personally in the outcome. But there was still no deal on agriculture between the United States and Europe

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