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Growing pains for G8 club of rich nations

by Staff Writers
Toyako, Japan (AFP) July 10, 2008
The global economy has changed dramatically since the leaders of the world's major economies first sat down around a table in a French chateau in 1975 to discuss the first oil shock.

More than three decades later after the informal club of rich nations was formed, the Group of Eight is accused of lacking legitimacy by critics who say it must reform if it is to survive.

But while the G8 again included rising economic powers such as China and India in expanded summit talks in Japan this week, they made no headway on the sensitive issue of whether to open the door to them as full members.

The rich nations and emerging powers also failed to bridge their deep divisions on cutting emissions blamed for global warming.

The dilemma the G8 faces, analysts say, is that if it keeps the door shut to new members it risks becoming irrelevant, but if it expands too much there may be too many people around the table to come to any meaningful decisions.

"It is hard for the G8 to go back, but it is also hard to go further. It is stuck in the middle of somewhere," said Andrew Cooper, professor of political science at the University of Waterloo in Canada.

"On an array of issues -- on currencies, on oil, on development issues -- you have to have China, India and Brazil" involved, he said.

"It is risky, because these countries are not the light-minded countries. You are not going to go back to the cozy, fireside (meetings of the) 1970s. But if you are wanting to make the G8 work, there is a real logic to do that."

The presence of the energy-thirsty emerging nations reflects how much the tectonic plates of the global economy have shifted since the rich nation's club held its first informal meeting in France.

While the G8 accounts for two-thirds of global gross domestic product, no Middle East oil exporters were invited and the summit's call for efforts to boost global crude supplies had little impact on energy markets.

With the exception of Russia, the G8 does not include any major oil exporters, giving them little scope to cool red-hot oil prices, while most of the growth in energy demand is coming from booming emerging economies.

"It is very difficult for G8 leaders to solve problems such as oil if the important players on that issue are absent from the talks," said Tomoko Fujii, senior economist at Bank of America in Tokyo.

"At the same time if you widen it to become too large, it would be difficult to say whether that would allow more room for solutions," she added.

International Monetary Fund head Dominique Strauss-Kahn said on the sidelines of the summit that it was "certainly a good idea" to expand the G8.

French President Nicolas Sarkozy last year proposed expanding the G8 to the G13, taking in China, India, Brazil, Mexico and South Africa.

But G8 members appear less keen, notably Japan, which is reluctant to relinquish its status as the only Asian member of the club.

The first summit meeting was held between Britain, France, Germany, Italy, Japan and the United States at the Chateau de Rambouillet in the suburbs of Paris in November 1975 in the wake of the first oil crisis.

Since then Canada and Russia have also been allowed to join the summits.

Even in its present format, it is hard for the G8 to find time for in-depth discussions on all the problems on the table, from the global economy to climate change, the food crisis to Zimbabwe, North Korea and Iran.

"I can assure you that leaders are not likely to have personally discussed the wide range of issues at their meetings," said Robert Fauver, who had served as the top G8 aide to US president Bill Clinton.

"It takes roughly one hour to go around the table listening to comments from each leader," he said. "So clearly the output was not connected to what was really taking place in the meeting."

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China, India rise while US slips in Fortune company rankings
Washington (AFP) July 9, 2008
The number of US firms among the Fortune 500 list of top global companies slipped to the lowest level in over a decade while Chinese, Indian and Mexican firms gained, the magazine reported Wednesday.

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