19 G7 and the Regional Stability

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Emporium Current Essays79G-7lii?* s?isip«!3piLITYThe Group of Seven (G-7) met in June 27, 1996 to discuss common concerns whichincluded terrorism and the economic future of their own countries in the 21st century. Anexpanding, more competitive global economy poses a threat to existing productionsystems in the industrialised countries. The creation of jobs for their own citizensemerged as another major concern of the G-7. Modest economic growth has limited jobcreation in the industrialised countries for several years now and people demandgovernment intervention to ease the situation.The less developed countries of the world, meanwhile, continue to clamour for assistance. The resulted in the inclusion of certain financial institutions, including theWorld Bank (WB) and the International Monet-ry Fund, in the June meetings of the G-7.Seventy one of the world's poorest countries have appealed to the G-7 leaders to takeaction regarding debt relief for the Third World. The countries in question belong theAfrican, Caribbean and Pacific (ACT) group of states which have ties with the EuropeanUnion. The convention under which these countries have received EU aid and trade preferences will end in the year 2000.More pressing concerns of G-7, closer to home, pertain to developments on the Europeancontinent and the expansion of the European Union (EU) and the North Atlantic TreatyOrganisation (NATO), The June 1996 G-7 summit was attended by imitation, b> theRussia Prime Minister since the President was bus> electioneering. In Russia, strong new political forces are emerging and there is some concern -regarding the future direction of economic and political reform there. The impact of political development, in Russia oncentral and eastern Europe is of importance to the region and can not be ignored by theGroup of Seven. The European Union summit which concluded on December 15,1996 discussed a draft of EU Treaty setting out the modalities of closer unioncovering80Emporium Current Essaysand expansion of the membership of NATO came under discussion. Russia's oppositionto such expansion is jj cause for concern to CIS.The West would like to believe that Russia's economic recovery began last year with thesanctioning of a US S10.2 billion loan from the International Monetary Fund.

The benefits of this assistance have not filtered down to the public. Many Russians now believe that this assistance was provided so that Russia may fight the Chechen war; whyelse would the influx of assistance have no impact on their lives, they ask. In 1993, aboutone-third of all Russians Ijved below the poverty line with a subsistence of just US SI 20 per month in purchasing power parity terms. Health care and social services that were provided under a controlled, centrally planned.economy have disappeared. This has had ameasurable impact on indicators such as. life expectancy. Between 1990 and 1994, lifeexpectancy for men fell from 64 years to 58 years while that for women went down from74 years to 71 years. The relationship between citizens and political, social and economicinstitutions has altered but new national institutions to take the place of those that have been rejected have yet to appear on the scene. Nevertheless, Russia insists on beingrecognised as a world power in the international community and expressed interest in the political and economic ordering of the near abroad.This makes it all the more difficult for institutions such as NATO and the EuropeanUnion to accept the newly independent states of East and Central Europe as equal partners or even associates in these institutions. Questions raised,in June have been thefocus of attention at the December 1996 meetings of NATO Defence Minister and leadersof the European Union. A minimum level of uniformity in the development of economic, political and security institutions and practises is required for the successful integration of new members into regional bodies. Apart from this, the institutional structure of both bodies will have to be changed if they are to accommodate pew members. This is a major exercise and change car only be mad when there is consensus amongst existing membersor, a number of issues.The December 1996 summit of the European Union debated the draft of the E'i,-opeanUnion Treaty which is geated to promoting joint action on immigration and the fightagainst international crime, corruption and drug-trafficking as wcli as proposals totransfer the responsibility for action to the EU, Moves to strengthen political and security policy within the European Union are under discussion but a Brussels based unit isalready in charge of initiatives in this field. A phased integration of theEmporium Current Essays81Western European Union (WEU), the defence arm of European cooperation which wasdormant, is now being considered for • integration into the EU. Direct EU controlof WEU will be resisted by a number" of states. The abolition of internal frontiers is alsolikely to be resisted.For both organisations and their present members, a number of issues have assumedimportance, the exponents of flexibility want to be free to cooperate more closely witheach other without fear of being blocked by a veto. Formal talks to expand membershipto include about a dozen new members will begin at the next summit which is to be heldin June 1997. There are suggestions that a two tiered membership be instituted, that is,

full membership and membership limited to co-operation in some areas. Reservationsabout accepting new members at different levels of development are countered by theneed to stabilise Europe by using Russia as an ally within the fold rather than allowing itio free float in the neighbourhood.Developments in Russia and the CIS during 1995 and-1996 have created concernregarding the future of economic reform there. In 1995, the Communist Party under Zyuganov vowed to restore the Soviet Union, limit ownership of private property andsaid it would rebuild a 'fairly large' public sector. Apparently this approach appealed tothe electorate. Mr. Lebed, the sacked security man, on the other hand, is knows to be infavour of an authoritarian political set-up under which, according to him, enterprise and public concerns would be able to function. The set-up envisaged by him was of the kindunder which a number of the dynamic Asian countries have emerged as an economicforce to be reckoned with. The approach of both, who could be serious contenders for thetop slot in future, has implications for future relationship in the region and with the G-7countries.Political developments in Russia' are being viewed with interest in some of the stales andsatellites of the former Soviet Union and with alarm in other. Many view the possibilityof renewed "close ties" with suspicion. The advanced reform countries of central Europeand the former Soviet Union, such as Poland, Hungary and the Baltic states, have notonly institutionalised reform but are cautiously adjusting the role of the state irs theeconomy to suit their own, rather than Western nations, of appropriateness. For example,the Hungarian government has, with the agreement of its central bank, decided to repayloans worth US S600 million to the International Monetary Fund before the repaymentdeadline, in ordcr to reduce the amount of interest it has* to pay on the loan. 82Emporium Current EssaysHungary's foreign exchange reserves have increased considerably and its economy can bereliably financed without outside assistance. Poland recorded a seven per cent rise in itsgross domestic product in 1995. The Baltic states are proceeding along similar lines asare the Czech Republic, Slovakia, Slovenia and the other states that participated in thetwo-day Central European integration.Some G-7 concerns coincide with those of Russia. These concerns include the expansionof the sphere of influence, particularly economic influence, of Turkey and Iran in theCentral Asian states. So far the Central Asian states have had to use routes through Russiato reach markets in both Europe and other parts of the world and their economic potentialhas been contained. Now both Turkey and Iran can offer the Central Asians alternativeroutes, for their products and commodities. In view of imminent political developmentsthat are expected to have an impact on security and the economic future of Russia andeastern and central Europe, it is likely that policy adjustments will have to be made in theregion.

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