Towards Heiligendamm: The German G-8 Agenda. Responsible, reliable, sustainable?
As the centrepiece of the G-8 summit in Heiligendamm, Germany, to be held from 6-8 June 2007, the German government intends to “shape the globalised economy and Africa's development”. At
such a level of generality one can only agree. Yet the debate begins with the “How?” On this point the approach of the German G-8 agenda proves to be deeply flawed. And: the agenda does not even
mention the long overdue reform of the summit architecture itself, writes Rainer Falk.
Many non-governmental organisations have welcomed the agenda that the German government wants to deliberate at next year’s G-8 summit. There was obviously great relief that rumours about
the marginalisation of the issues of poverty and Africa in favour of an agenda centred around issues of Northern interest have not been manifested. There were only rare expressions of “mixed feelings” (VENRO) regarding the German government’s plans for Heiligendamm.
In fact, the German G8 agenda is anything but grounds for jubilation. Instead of returning to the macro-economic coordination functions of the summit, Berlin will now give economic and development policy (i.e. Africa) the same formal priority. However, the specific design of both agenda
points is such that one has to ask whose problems are to be solved here.
* Global imbalances
In the economic policy agenda for example, “deliberations on strategies for reducing global imbalances” are planned. The government’s agenda mentions the US balance of payments deficit, the weak domestic demand in Europe and Japan and the large currency reserves in Asia. The surpluses in China and other East Asian countries, however, are not only logic consequences of the Asia crisis a decade ago but are also - given the continuing deficiencies of the international financial system - the only way to prevent further such crises. The much more serious and structural surplus problem of the world economy lies in Europe and Japan. In Europe, Germany has been producing chronically export surpluses for decades. It is exactly this structural trade surplus that has to be discussed if there is to be a serious reduction of imbalances. But the host country obviously has no
interest to do this.
Instead the German government wants the G-8 to issue a “commitment to freedom of investment in industrialised countries and emerging economies”. Although investment conditions and the “social dimension of globalisation” - such as global obligations undertaken by transnational corporations to
maintain adequate social standards? - will be dealt with as well, we are not told how this will happen.
Berlin is very specific only on the “protection of innovation against product and brand piracy”, where the interests between the old industrialised countries and the emerging economies directly collide.
The agenda items „transparency of financial and capital markets” and “energy efficiency and climate protection” certainly are points which NGOs could pick up. However as long as it remains
entirely nebulous which initiatives the German government will introduce in Heiligendamm, this remains but a small consolation.
* Twisted Africa agenda
As the just released Human Development Index 2006 documents, the gap between the richest and poorest countries continues to widen, above all due to Africa’s economies lagging behind. In view
of this fact nobody would have understood if the issue had completely disappeared from the agenda. However, the development, resp. Africa approach of the German G-8 presidency illustrates
how one can create the impression to continue the ambitious agenda of Gleneagles in 2005 while in fact setting something quite different in motion. According to the German chancellor Angela Merkel the G-8 relationship to Africa should develop into a “reform partnership”. But a closer look reveals the following: “The African states should develop structures which facilitate private investment”.
There is nothing to be said against such an approach—it is a fact that in many places in Africa conditions predominate which hinder private investment. However, the question is whether, given the
continent’s problems, this constitutes an appropriate priority. Fact is the German agenda for Heiligendamm clearly cannot be considered as a follow-up to Gleneagles. Obviously there is no intention of reviewing in detail the implementation of the G-8 promises on aid, debt relief and trade. The only issue that possibly relates to the Millennium +5 year 2005 is the significance that the fight against HIV/AIDS has meanwhile attained for all and hence also for the G-8.
Particularly for the German government it would make sense to critically review the Gleneagles commitments – as is clearly illustrated by a new report on the “Reality of Aid” just published by Deutsche Welthungerhilfe and terre des hommes.
According to the report last year’s enormous increase in German development aid was only on paper. Without debt cancellation for Iraq, Nigeria and other countries, even less money went to developing countries in 2005 than in the previous year. Deutsche Welthungerhilfe and terre des hommes therefore demand that the German government prepare an “Initiative 07.07.07” with a view toward to the Millennium Goals mid-term in July 2007 to ensure the increase of development aid to 0.7% of GNI by 2015. Yet the planning to date for Heiligendamm shows that the summit will be far from a milestone on the way to this goal.
* No G8 reform
The most pathetic chapter of the German G-8 agenda is clearly that it entirely fails to tackle the challenge of reforming the arcane summit architecture itself. The German government wants to
conduct an “intensive dialogue with emerging countries” (about what?). It wants to invite to the summit five so-called outreach countries, namely China, India, Brazil, Mexico and South Africa.
However, it intends neither to open the G-8 structure nor considers to replace it by a more representative body for the world economy. Instead the –G-8 as a “community of values” and its “functionality as a group” are to be maintained. Does that mean openness is being replaced by laager mentality? But why? To prepare for the “World War for Wealth” as a new bestselling book of Gabor Steingart (Der Spiegel) titles? The problem of the political approach chosen by Berlin for the G-8, however, is that the perceived “functionality of the group” has long since been a thing of the past.
To summarise: Does the German Presidency agenda signal responsibility, reliability and sustainability as the government would have us believe? The answer is simple and sobering. In the
fight against global economic imbalances, Berlin simply avoids its own responsibility. Considering the South’s expectations from the industrialised countries, the world champion of exports is not
exactly a paragon of reliability. The only “sustainable” aspect of the German G-8 agenda is the fact that it is directed to maintaining the tradition of an exclusive club which in reality has long superseded.
Rainer Falk, Luxembourg, is the publisher of World Economy & Development In Brief.
Recommended citation: Falk, Rainer (2006), ‘Towards Heiligendamm: The German G-8 Agenda.
Responsible, reliable, sustainable?’, World Economy and Development In Brief, Issue 4/Oct-Nov