Emporium Current Essays 79 G-7 lii?* s?isip!

3p iLITY The Group of Seven (G-7) met in June 27, 1996 to discuss common concerns which included terrorism and the economic future of their own countries in the 21st century. An expanding, more competitive global economy poses a threat to existing production systems in the industrialised countries. The creation of jobs for their own citizens emerged as another major concern of the G-7. Modest economic growth has limited job creation in the industrialised countries for several years now and people demand government 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 the World 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 take action regarding debt relief for the Third World. The countries in question belong the African, Caribbean and Pacific (ACT) group of states which have ties with the European Union. 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 European continent and the expansion of the European Union (EU) and the North Atlantic Treaty Organisation (NATO), The June 1996 G-7 summit was attended by imitation, b> the Russia 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 on central and eastern Europe is of importance to the region and can not be ignored by the Group of Seven. The European Union summit which concluded on December 15,1996 discussed a draft of EU Treaty setting out the modalities of closer union covering80 Emporium Current Essays and expansion of the membership of NATO came under discussion. Russia's opposition to such expansion is jj cause for concern to CIS. The West would like to believe that Russia's economic recovery began last year with the sanctioning 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; why else would the influx of assistance have no impact on their lives, they ask. In 1993, about one-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 a measurable impact on indicators such as. life expectancy. Between 1990 and 1994, life expectancy for men fell from 64 years to 58 years while that for women went down from 74 years to 71 years. The relationship between citizens and political, social and economic institutions 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 being recognised 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 European Union 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 the focus of attention at the December 1996 meetings of NATO Defence Minister and leaders of 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 members or, a number of issues. The December 1996 summit of the European Union debated the draft of the E'i,-opean Union Treaty which is geated to promoting joint action on immigration and the fight against international crime, corruption and drug-trafficking as wcli as proposals to transfer 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 is already in charge of initiatives in this field. A phased integration of the Emporium Current Essays 81 Western European Union (WEU), the defence arm of European cooperation which was dormant, is now being considered for integration into the EU. Direct EU control of WEU will be resisted by a number" of states. The abolition of internal frontiers is also likely to be resisted. For both organisations and their present members, a number of issues have assumed importance, the exponents of flexibility want to be free to cooperate more closely with each other without fear of being blocked by a veto. Formal talks to expand membership to include about a dozen new members will begin at the next summit which is to be held in 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. Reservations about accepting new members at different levels of development are countered by the need to stabilise Europe by using Russia as an ally within the fold rather than allowing it io free float in the neighbourhood. Developments in Russia and the CIS during 1995 and-1996 have created concern regarding the future of economic reform there. In 1995, the Communist Party under Zyuganov vowed to restore the Soviet Union, limit ownership of private property and said it would rebuild a 'fairly large' public sector. Apparently this approach appealed to the electorate. Mr. Lebed, the sacked security man, on the other hand, is knows to be in favour 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 kind under which a number of the dynamic Asian countries have emerged as an economic force to be reckoned with. The approach of both, who could be serious contenders for the top slot in future, has implications for future relationship in the region and with the G-7 countries. Political developments in Russia' are being viewed with interest in some of the stales and satellites of the former Soviet Union and with alarm in other. Many view the possibility of renewed "close ties" with suspicion. The advanced reform countries of central Europe and the former Soviet Union, such as Poland, Hungary and the Baltic states, have not only institutionalised reform but are cautiously adjusting the role of the state irs the economy 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 repay loans worth US S600 million to the International Monetary Fund before the repayment deadline, in ordcr to reduce the amount of interest it has* to pay on the loan. 82 Emporium Current Essays Hungary's foreign exchange reserves have increased considerably and its economy can be reliably financed without outside assistance. Poland recorded a seven per cent rise in its gross domestic product in 1995. The Baltic states are proceeding along similar lines as are the Czech Republic, Slovakia, Slovenia and the other states that participated in the two-day Central European integration. Some G-7 concerns coincide with those of Russia. These concerns include the expansion of the sphere of influence, particularly economic influence, of Turkey and Iran in the Central Asian states. So far the Central Asian states have had to use routes through Russia to reach markets in both Europe and other parts of the world and their economic potential has been contained. Now both Turkey and Iran can offer the Central Asians alternative routes, for their products and commodities. In view of imminent political developments that are expected to have an impact on security and the economic future of Russia and eastern and central Europe, it is likely that policy adjustments will have to be made in the region.

Each state in the Group Seven has its own particular line on one issue or the other. The United States is concerned about security arrangements and terrorism; Germany is promoting Monetary Union in the EU; France is concerned about the tendenc) of the United States to assume that leadership in all fields devolves on its nominees. It is also interested in creating employment opportunities and a uniform social policy in Europe. Britain is concerned about maintaining its independent status within the EU and the moves to extend integration into the sphere of judicial, foreign and defence policy. Japan which has substantial interests in other regions is more interested in the economic repercussions of international cooperation, containing the fallout of global economic adjustments and the internationalisation of crime, corruption and terrorism. On these broader concerns, all the states appears to be prepared to cooperate. Their approach to the resolution of problems emphasises containment, keeping them out of the G-7 states, rather than tackling the underlying cause. almost every aspect of governance and the induction of new members. At a meeting of NATO Defence Ministers held at about the same time, alliance command structures