G7 loses grip on global policy to O5

http://www.atimes.com/atimes/Global_Economy/JE09Dj03.html


A distinct set of global institutions governs the international economic system: the World Trade Organization, the International Monetary Fund, and the World Bank. Each has its specialty, and they are complemented by a number of even more specialized institutions with more restricted membership, such as the Bank for International Settlements and the Organization for Economic Cooperation and Development.

Each institution is aware of the others, but none is responsible for the overall coherence of their various policies let alone the achievement of international objectives. The United Nations does not play this role, though it sometimes convokes treaty negotiations on economic affairs, such as the Law of the Sea and the Convention against Corruption. On international economic and financial issues, the UN serves at best as a discussion forum. Its major contribution is considerable technical assistance to developing countries in specific areas like health and agriculture.

There is one international forum able to bring coherence to the different institutions dealing with trade and financial policy: the Group of 7. Since 1976, the club of G7 (Group of Seven) countries has met annually at summit level, and semiannually (or as needed) at finance minister level. When the G7 reaches a consensus, it is then generally adopted and implemented by one or more of the relevant global institutions, which the club has been able to control. At least, that's how it used to be.

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Similarly, the heads of state of the G8 have invited groups of developing-country leaders to meet with them on the fringes of their summits. In 2007, the G8 formulated a more permanent outreach project, the Heiligendamm Process. Under Germany's leadership, they brought the governments of Brazil, China, India, Mexico, and South Africa closer to their fold as the Outreach 5, at least for a two-year trial period of discussions on economic policy matters of mutual concern: investment, research and innovation, development (particularly Africa), and energy efficiency to combat CO2 emissions.

This lets the cat out of the bag. The G7 has lost control of global policy and the O5 is not going to return it to them. WTO negotiations are stuck. As US negotiating authority has expired, it is not clear why they even continue to go through the motions at the WTO headquarters in Geneva. The IMF has run out of paying customers. When Turkey repays its last outstanding loan, there will be very few nonconcessional loans still outstanding. All former customers are seeking a large enough cushion of foreign exchange reserves to prevent having to return to the IMF for help under its traditional terms. The World Bank is still recovering from the presidency of Paul Wolfowitz, who resigned the post in June last year barely two years in office, and the distrust he sowed in borrowing countries.
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laughing madly

The k and the r.

:shrug: