Year in review: Germany and the G-8

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Germany hands major G-8 initiatives to Japan as it relinquishes its presidency

Chancellor Angela Merkel can look back on a successful presidency of the Group of Eight (G-8) over the past year, as Germany hands over key international initiatives to Japan.

The Outreach Programme to five emerging economies -- China, India, Brazil, Mexico and South Africa -- has been set up by Merkel to continue a dialogue between them and the G-8 on key themes over the next two years.

"This is very rare for the G8," said Katharina Gnath of the German Council on Foreign Relations (DGAP) in Berlin. "Normally the presidencies set their own agendas and decide whom to invite, but this goes well beyond the German presidency."

Technology transfer, particularly on climate change, freedom of capital movement, protection of intellectual property rights and development, particularly in Africa are to be the topic of regular meetings into the Italian presidency in 2009.

"This has potentially far-reaching consequences," Gnath said, pointing to the role of the Organization for Economic Cooperation and Development (OECD) in providing a platform for the meetings.

Climate woes

Climate change was perhaps the overriding theme for Merkel at the G-8 summit in Heiligendamm in June, and there were many critics of Merkel's failure to nail US President George W. Bush to clear targets.

"I would prefer a binding target," French President Nicolas Sarkozy said after a compromise deal was struck.

"Perhaps little was achieved, but not much more could have been achieved," Gnath said, noting the way Bush finally began to acknowledge the scientific basis for global-warming concerns.

"You wouldn't have heard that two years ago."

Merkel herself announced her success in cautious tones. Calling the agreement a "major step forward," she added, "I can very well live with this compromise." Different tone

The tones were very different when Bob Geldof and Bono criticized the deal struck on aid to Africa.

"What happened over the past two days was bollocks," Geldof said in one of the less inflammatory comments spoken at a press conference called as the summit closed.

The two musicians, who have devoted their energies to raising awareness on poverty in Africa, came close to calling Merkel a liar for reneging on promises made to them in the run-up to Heiligendamm.

The pledge of $60 billion to fight disease in Africa drew charges from aid agencies that it was old money that had been promised previously.

Gnath believes the criticism is unjustified, criticizing instead the focus on headline figures rather than on how the money is spent.

"Of course the impact is determined by money, but also by what policies are pursued. Headline grabbing is not conducive to good policy," she said.

Hedge funds

A third theme close to Merkel's heart was regulation of hedge funds and other highly leveraged financial institutions but this was pushed off the Heiligendamm agenda at the insistence of the US and the British.

The theme was, however, discussed in other forums, including the meeting of the finance ministers in Washington in October.

"There has been movement, and the Japanese presidency can pick this up," Gnath said.

She points also to a positive shift in the debate away from the polemical to considering the real problems of making financial institutions more transparent.

Many are oositive on the future of the G-8 and its role in focusing on the world's economic and financial problems, although the group faces immense challenges from the shift in the balance of global economic and political power.

"The main benefit lies in building the momentum of political will," said Gnath, noting that the G-8 is not an executive body that can implement measures on issues like climate change.

The UN climate conference in Bali in December provided the acid test of that will, she added: "The political pressure is on the G-8."

1 January 2008

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