Is it too early to enlarge the G-8 list?
During the last G-8 summit, the leaders of the group of eight so-called major economies decided to back Greece and calm the eurozone debt crisis, which poses a threat not only to the European economy, but also the entire world economy. However, as usual, they could not take the concrete step that must be taken immediately before other eurozone countries face the same problems Greece is experiencing right now.
Years ago, this group was defined primarily as the “most powerful countries.” However, this definition has not yet been clearly explained. Most powerful in what sense? Political, military, economic or cultural? If the names of the countries in this group are examined, it is impossible to find any common criteria. First, in the popular cultural sense, it is not easy to deny the Anglo-Saxon dominance. The United States, the United Kingdom, Germany, Russia and maybe France can be defined as political powers, but not Canada, Japan and, these days, Italy. Using the same logic, the U.S. is still an economic power, as is Germany, but France is not so any longer. The U.K., Italy and Japan all have some serious economic troubles. And nobody can object to the reality that Russia is a military power. The same is true of the U.S.
The position of the European countries in this sense is quite unclear. Are they trying to convince the American administration to help in solving Europe’s problems even though they know full well that the American people strongly dislike that idea? President Barack Obama preferred only to give some advice on promoting growth and job creation. It is very normal that he cannot ignore people’s accusations in an election year. And it is obvious now that it is unrealistic to expect a similar American economic contribution to the solution of Europe’s problems as in the past.
There have typically been conflicts of interest at every G-8 summit and, as a result, there has never been strong consensus and a solid idea of cooperation. However, the nature of the problems of these countries are so different from each other and, especially during the recent economic crises, these differences have widened so much that it is not reasonable to expect the emergence of concrete solutions from these meetings. Why then, are they meeting?
There are some other countries such as China and India which insist that they must be on the list of the most powerful economies. Some similar comments, although not very strong, have also been made for Brazil, a country which was declared a short time ago as the newest economic success story. Nowadays, however, the BRICS myth has some problems. In addition to the scandals on the eve of a political transition, China faces some serious economic troubles. Industrial production and, consequently, growth are slowing down, while bank deposit expansion and loan growth are weak. Trade and current account balances are also experiencing some difficulties. Inflation is creeping. India is also a huge economy like China, but it is facing similar problems now in addition to having some additional social and political troubles that are hampering growth.
The most surprising fact now is the newly emerging problems in Brazil. The most important of these are the ever-growing cost of welfare state policies and the economic dependence on exports. Growth, which is the main engine of the expensive welfare state, first stopped and then began to slow down. But the welfare state, although costly, created political and social stability which supported democratic reforms. Brazil has the potential to grow fast again but needs some new reforms. However, it must be accepted that first designing and then implementing these reforms will take time.
In short, those countries still do have not enough strength to join the list of most powerful countries, meaning that there will be no G-10 or G-11 list in the near future. However, there is also a G-20 list, and it is better to be satisfied for a time with having a place on it. They should relax, too, given that when one examines other countries in the world, it is easy to see that there are no candidates to join any other list any time soon.