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Too Many G's

I rather like Simon Johnson's suggestion that the G-8 be scrapped and the G-20 imbued with more importance:

First, emerging markets have obviously risen in both respectable clout and ability to make trouble. China's exchange rate policy is a leading example, but think also about Mexico, Brazil, or India. Having a global economic discussion (e.g., on climate change or aid to Africa) without these players fully at the table does not really make sense--particularly as the G20 now operates effectively at the heads of government level. And inviting these countries to a dinner or other event on the fringes of the main meeting just adds insult to injury.

Second, the Europeans are now organized into a loose political union and all of the major economies--except the UK--are in a currency union. What is the point of sitting down with Italy, Germany, France, and the UK separately? It is much more effective when they--and other Europeans--work out common positions and bring those to the table collectively. The European Union belongs to the G20 but not the G7.

Third, the idea that the U.S. and its allies "lead" by any kind of economic policy example is plainly in disarray. The recent crisis focuses our attention, but we've seen two or three decades with irresponsible credit and throwing fiscal caution to the winds across these countries. These countries traditionally position themselves as "G7 models" worth emulating; this message needs to be toned down.

President Obama obviously has a talent for diplomacy (e.g., at the April G20 summit). He should use the Pittsburgh G20 summit in September to transition away from the dated emphasis on the importance of a G7/G8 heads of government meeting (e.g., reduce the excessive display of nothingness, lower the hype, have it feed into the G20 more explicitly). Canada, chair of the G7 next year and usually very sensible on these kinds of issues, can help.

By Ezra Klein  |  July 8, 2009; 2:02 PM ET
Categories:  Solutions  
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Comments

We do not need intellect of Simon to tell us that G8 has become ineffective and needs to be replaced by G20. What we need is to understand how will this unfold in absence of a sudden switch. Sudden switch is impossible because no one is going to bell the cat and tell Germany/French/Italy to send only one representative while UK retains it's seat. That cannot be pulled off.

What needs to happen is President Obama simply to declare that 'let us conduct the business in G20 and scrap G8 altogether'. He needs backing from at least one more G8 country. Japan, Italy, UK and France being in the loser camp; they are unlikely to back. This means it is Canada or Germany who needs to back the idea of scrapping G8 to be replaced by G20. Germany is the best candidate. Only then it will happen. What is it that in the domestic politics of Germany which will push her to opt out of G8? May be nothing and only for Merkel to decide.

Posted by: umesh409 | July 9, 2009 12:16 AM | Report abuse

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