Uniting the Democracies: The G-7 Process and Beyond

 

The Group of Seven Countries: New Institutions for the West
Report of a Meeting Convened by the Next Century Initiative
Carnegie Endowment for International Peace
Washington, DC April 29,1994

The Next Century Initiative was a project founded by the Association to Unite the Democracies

 

Uniting the Democracies: The G-7 Process and Beyond

by: G. John Ikenberry

For almost half a century, the most overwhelming circumstance that united the Western democracies was the Cold War. It was relatively easy to see that the countries of Western Europe, North America, and Japan formed a political community --a community defined in terms of an external threat and manifest primarily as a security alliance.

Today it is not that easy. The end of the great postwar struggle has thrown open basic questions about the character and future of the West. It is no longer obvious that the Western democracies constitute the most robust and important grouping of states. Other regional and global groupings - such as NAFTA, EU, APEC, GATT, and the UN - - pull the democracies in other directions. If the democracies are in fact united by more than an aging alliance, those ties will have to be rediscovered, reaffirmed, and made part of the foreign policy agenda of the leading Western states.

The end of the Cold War has raised three types of questions about the relations among the Western democracies. First, what type of political community do the Western democracies represent? They have similar political institutions and they are economically interdependent, but are they also a distinctive political community or union? What sets them apart from the rest of the world? Second, are the Western democracies a political community that can provide - if strengthened - a unique type of leadership in tackling problems both within and outside the West? There are many regional and global groupings of states. Is this the one that deserves our scarce resources and loyalties? Finally, what types of institutional innovations might advance politi cal community and collective leadership among the democracies?

In this discussion paper, I do three things. First, I suggest some ways to think about the Western democracies as a political communi ty. The West has always been more than an alliance, but these other aspects of the West have been obscured and underappreciated. Sec ond, I discuss rationales and proposals to strengthen cooperation among the democracies - focusing primarily on the G-7 process. As the most visible and concrete manifestation of cooperation among the major Western democracies, the G-7 process is an obvious place to fo cus expanded cooperation and institution building. Finally, I suggest some practical steps that the G-7 countries can take to expand their cooperation - and I propose that this group commission specific stud­ies of these expanded missions and activities.

The West as a Political Community

The Cold War has left our vocabulary of world politics impover­ ished. Since World War II, the most important relations in world poli­tics could be described in terms of states, alliances, and the balance of power. In the years since the "revolutions of 1989," it is striking how difficult it has been for American and European leaders to find new ways to talk about the Western democracies. In attempting to describe the unity of the West that went beyond the NATO alliance, Bush administration officials talked about the "Euro-Atlantic Commu nity" and Secretary Baker talked about a "zone of democratic peace." More recently, President Clinton has argued that it is "time for Ameri ca to lead a global alliance for democracy as united and steadfast as the global alliance that defeated communism." They are all attempting to get at the special nature of relations among democratic states -that they share values and resolve conflicts short of war. But the recent efforts to describe the Western countries in positive terms - as a community or union of democracies - has been strained and difficult. It is a language that does not come easily to their lips; nor does it sound natural to our ears.

In attempting to find images and words to describe the grouping of Western democracies, it is useful to indicate its key features (see Deudney and Ikenberry, 1993/94). These features might be described as economic, civic, and political. If properly appreciated, these ties suggest that the West is indeed the most robust "region" in the world today - but one that also needs to be given more political and institutional coherence.

The economic relations between the democracies are deep, profound, and growing. Some analysts anticipate the emergence of full blown trade blocs in Europe, North America and Asia, but this view is wrong. Trade and investment is rising within these regions, but it is also rising across the Atlantic and Pacific. In the half century since WWII, trade and investment between the trilateral countries has increased two or three times as fast as gross output. Moreover, economic interdependence is not only rising, it s character is also changing. As Robert Reich and Peter Drucker have argued, industrial production has become more globalized, which is making it increasingly difficult to speak of corporations, products and personnel in national terms. Changes in the nature of technology and the rising costs of research and development have given birth to new forms of corporate alliances, reduced the economic meaningfulness of national borders, and created entirely new constituencies in support of an open system of trade and investment. Industrial society within the West has become increasingly of one piece.

The Western democracies are also united by a shared civic identity. Common norms, public mores, and political identities are the invisible sinews that unite a political community, and the Western democracies share powerful civic affinities. This civic identity is simply the overwhelming consensus within these Western societies in favor of liberal democracy, market economics, ethnic toleration, social pluralism, and the rule of law. Viewed from the perspective of the entire 20 th century, it is remarkable how Western polities have narrowed and converged on similar civic values and political practices. It is not that ethnic and national loyalties have disappeared, but rather that they have been "tamed" - they have increasingly had to compete with a multitude of modern and secular identities. An ethnic of toleration exists in Western political culture, an ethnic that permits, celebrates, but also mutes ethnic and national differences.

A final element that ties the Western democracies is a set of shared political institutions. The democracies exist in a complex political order made up of intergovernmental links and decision-making procedures as well as formal multilateral organizations. There are three layers of this complex political order. One level is the network of intergovernmental consultations - which includes the activities of the G-7 process. These links are of many sorts - formal, informal, bilateral, multilateral - and many of them have been spelled out in recent "declarations" between the United States, the EU, and Japan.

Another layer of the Western political order is the myriad public and private consultations, lobbying, and coalition-building that spills across the Western democratic world. The capitals of the major democracies - not least Washington, D.C. - are full of lawyers and others engaging in the pulling and hauling of transnational politics. Ja­ pan and Western Europe do not have elected officials in Washington, but they do have representatives.

A final layer of the Western political order is composed of multiple regional and global multilateral institutions ~ the IMF, GATT, World Bank, OECD, etc. These institutions were all created largely by the Western governments, and for the most part they are still governed by these states. They also remain important mechanisms for the political management of relations within the West.

What emerges from this picture of the Western democracies is a far more complex and elaborate political order than our Cold War-trained eyes can appreciate. Well established traditions, linkages, and practic­ es bind these democracies together. The question today is whether this political community can be preserved and harnessed to accom­ plish more.

Why Focus on Strengthening G-7 Ties?

There are three reasons why the Western democracies -particularly the G-7 countries - should expand their efforts at cooperation. First, this group of states is the most wealthy and powerful in the world to­ day. The United States and Japan are the largest economies in the world - and the other G-7 countries are not far behind. Together they account for roughly two-thirds of world production. Promoting more cooperation among these countries will provide the most "bang for the buck" in efforts to deal with post-Cold War problems.

Second, they are all liberal democracies, and history tells us that de­ mocracies have unusual capacities and inclinations to work together. We know democracies rarely go to war against each other, but they al­so are particularly receptive to intergovernmental and transnational consultations and cooperation. Never in history have all the leading great powers been democracies - and this provides an unprecedented (and perhaps passing) opportunity for joint action.

Third, there is a wide range of issues - both within the West and outside - that demand action. I would argues that building closer re­lations among the democracies is, in fact, an end in itself. But there is much more they can do now ~ both directly and working through multilateral institutions - to address pressing economic, political, and security problems.

There are other countries that might make claims to G-7 member­ ship. If the G-7 were, strictly speaking, a grouping of the largest econ­ omies, China would out rank most of the current members. Also, if the G-7 were, strictly speaking, a grouping of the largest democracies, India would certainly be eligible. Likewise, if the G-7 were, strictly speaking, a grouping of the world's "great powers," Russia would cer­tainly quality, and indeed Russia has recently requested membership.

These claims are not without merit and they should be debated. But ultimately it comes down to what it is that one wants to accomplish ~ and in which venue. As I suggest above, the G-7 countries are a "nat­ ural" grouping. They remain the leading industrial democracies, linked together by a postwar history, common values, and practical re­alities.

Three Proposals for Reform

It is easier to argue that the Western democracies should increase their cooperation than it is to find agreement on specific proposals. Proposals for action might be broken down into three types. One set of proposals simply attempts to improve current G-7 coordination of economic policy -- the traditional activity of the G-7 process. A sec­ ond set of proposals seeks to expand the G-7 process into new areas of political, social, and security cooperation. A final set of proposals is most ambitious, seeking to establish separate bodies or assemblies of representation across the democratic world.

Proposal 1: Improve Economic Policy Coordination. The G-7 pro cess arose in the early 1970s as an annual gathering of finance ministers and state leaders engaged in informal discussions of macroecon omic and monetary policy problems. Over the years, it has become an elaborate process of consultations: annual meetings of leaders, periodic meetings of finance ministers, and ongoing talks between depu ties (or "sherpas"). This process has come in for increasing criticism in recent years. Some critics find it too elitist and exclusive - a "club of the rich" - while others find it too narrowly focused on economics and, ultimately, ineffectual. Some critics advocate a cutback in activities; others urge expansion.

The objective of the G-7 process is to consult and - if possible -- coordinate monetary, exchange rate, and other areas of economic poli­ cy. In the late-1970s, the G-7 process was the venue for "commit ments" on trade, energy, and growth policies. In the mid-1980s, the G-7 process was used to coordinate shifts in exchange rates (Putnam and Bayne, 1987). Today, discussion of coordinated growth policies is again the leitmotif of G-7 diplomacy, taking the form of American calls for Europeans to lower interest rates and the Japanese to lower trade barriers and stimulate their slumping economy. In return, these countries have criticized America's chronic budget deficit and other failures of economic leadership.

One proposal is to cutback the elaborate gatherings of G-7 leaders and ministers. The annual meetings of heads of state have become largely ceremonial. Rather than conducting "real" business, these summits essentially provide photo opportunities and precooked communiques. In this view, the often wide gap between G-7 rhetoric and action only serves to undermine the legitimacy of the process. Some officials (such as British Prime Minister Major) suggest a return to the original format -informal gatherings, no set agenda, and no commu nique. Others would be happier with no summits at all.

Another proposal moves in the opposite direction, toward more formal and institutionalized policy coordination In this view, more could be done to coordinate macroeconomic policy, resolve trade problems, stabilize exchange rates, and so forth. One recent study of the G-7 process argues that more can be done to facilitate coordination of poli cy: promote more frank discussions of economic problems; provide more clearly defined mandates for ministers and deputies; encourage leadership and accountability; and facilitate agreement on analytical frameworks and policy guidelines. The specific proposals deal with strengthening the infrastructure of policy coordination: establish a secretariat to provide a greater "institutional memory" of G-7 delibera tions; expand the surveillance capability of the process; rationalize and reduce the participants in the process (Dobson, 1991).

There is wide agreement that the annual summits are in serious need of reform. There is also a general skepticism within the monetary and financial community about too much institutionalization of the co ordination process. A lot of the ministerial and deputy consultations take place in other venues - such as committees of the IMF and the OECD -- and joined by central bankers and other economic policy bureaucrats. Moreover, there are "intellectual" limits to policy coordination. While at various moments over the years there has been conver gence of economic policy thinking among the G-7 countries, it actuall y is quite rare. More often there is serious debate about the objectives, instrumentalities, and impact of policy coordination. For these reasons, the greatest contribution of reform might be to promote wider political cooperation and joint leadership -rather than the particulars on narrow economic policy coordination.

Proposal 2: Expand the Agenda of G-7 Cooperation and Joint Leadership. A second set of proposals seek to address the larger problems of political leadership and cooperation in the West after the Cold War. The worry is that without more vigorous efforts to build an agen da and mechanisms for cooperation, the strains and conflicts of post- Cold War industrial life will overwhelm these countries (Rowan, 1992). Some analysts eye the regularized consultations of G-7 sherpas and finance ministers and wonder if these routines can be expanded to other policy areas.

One proposal would be to simply call for "new" issues to be taken up by the G-7 countries. Some issues would be political and security oriented: codify and reinforce decisions made between the countries on security relations; statements of joint policy regarding regional security arrangements; visions and expectations about the evolution of relations between the former communist countries and the Western se curity order. Other agenda items would help guide and reinforce decisions made at the United Nations on matters of peace keeping, peace enforcement, conflict resolution, etc. Perhaps more importantly, the G-7 countries might take up more formal and explicit consideration of aid, trade, and investment policy with Russia and the CIS. The weak (some would say failed) Western response to the upheaval in the former Soviet Union should lead Western leaders to reconsider their ca pacities for coordinated action - and lead to a bolstered G-7 presence in this policy area.

Another area where the G-7 countries have recently moved is em ployment and labor policy. The recent G-7 jobs conference in Detroit, convened at the urging of the Clinton administration, marks an impor tant turn in the agenda of the seven leading industrial democracies. The meeting in Detroit was the first G-7 conference ever to bring to gether the labor ministers of the G-7 countries. "In some ways," a NYT reporter noted, "just as the North Atlantic Treaty Organization is groping to redefine itself and its priorities to stay relevant, so, too, is the Group of Seven" (Friedman, 1994). This recent conference seems to underscore a need felt by officials across the Western industrial world - that the G-7 governments need to focus on common social and employment issues, and not just on the more rarified issues of exchange rates and interest rate management.

Of course, the G-7 process has periodically dealt with political and security issues. The early Reagan years saw an expansion of the annu al G-7 summit agenda to include East-West issues. Announcements and communiques often outline the broad goals of Western security and foreign policy. But this is not where the center of gravity of G-7 activity lies. Nor do the ministerial and deputy-level processes accommodate these issues on a regular basis. Most of the work of the G-7 process takes place at the deputy level - and these representatives are almost always economics experts who are positioned in finance ministries. If the agenda is truly to change, so too will the institutions and operations of the Group of Seven.

For those seeking to expand the agenda and coherence of cooperation among the G-7, institutional reform is important. The specific proposals are several, but they all seek to build new institutional enti ties so as to facilitate and reinforce coordinated action. The new institutional creations are meant to have a practical impact on ongoing in tergovernmental consultations - to provide channels, resources, and support. But they are also often proposed for symbolic purposes as well - to provide concrete expressions of common values and commitments (much as flags, capital buildings, and anthems do for national governments).

Specific proposals include the establishment of a secretariat, a Council of Ministers, and assorted advisory bodies (see Ikenberry, 1993). As mentioned earlier, a G-7 secretariat would strengthen the institutional memory of a complex intergovernmental process that stretches over the life of many specific government administrations. A small secretariat would also encourage collaboration among Europe­an, American, and Japanese officials by bringing them together with the specific purpose of searching for common problems and solutions. The OECD, the IMF, and other organizations already have some of this functional capability - but a G-7 secretariat would be smaller and more proximate to executive policy-makers.

Another idea is the creation of a G-7 Council of Ministers, modeled after the EU body of the same name (see Group of Thirty, 1991). This group would be composed of cabinet-level ministers, with ministerial attendance varying according to the subject under discussion. Unlike t he EU Council of Ministers, the G-7 Council would not make treaty- based and binding decisions, rather it would be a deliberative body empowered to make recommendations to the heads of state. The practical values of the Council is to provide an ongoing formal venue where high-level substantive discussion can take place outside the camera's eye. Symbolically, it is meant to convey that the last seven industrial democracies have linked themselves at the ministerial level. It would signify that they are building mechanisms for "routine" policy making.

Out of this body, other policy and institutional innovations could flow. The G-7 Council of Ministers would be an authoritative body that could issue reports on specific issues of the global condition. It could also generate charters or declarations that might further deepen the formal links between the leading industrial democracies.

Proposal 3: An Assembly of Democracies. One of te reoccurring criticisms of the G-7 process is that it is too narrow and exclusive - it is an elitist venue which is primarily an extension of the executive branches of the Western governments. In this view, the problem with the G-7 is two fold. It is partly a problem of its small, clubish membership: why should officials of the just seven governments pretend to preside over problems of the entire globe? It is also a problem of the narrow base of the process: except for the heads of state, G-7 officials are far removed from democratic electorates. These criticisms lead many question the legitimacy of the entire enterprise.

Out of these concerns, some observers have talked about creating directly-elected assemblies or deliberative bodies. One proposal would be to create an Assembly of Democracies - a directly-elected representative body drawn from countries that are democratic. Such ideas are really quite old. Western intellectuals and activists have discussed them for many years in their quest to unite the democracies. The European Parliament is an obvious model for such an assembly, but the mechanisms and membership of such a body could range widely.

The purpose of a democratic assembly would be more symbolic than practical. It would be an attempt to create new realms of authority within the Western body politic. If political cooperation is to grow more intensive between the Western democracies, the institutions that make up the political process will need to be firmly grounded within the domestic societies of each country. Western public are deeply suspicious of transnational elite institutions. But they are willing to cede authority to international organizations when those bodies embody principles of accountable that they understand. It is worth pon dering how the United Nations might have evolved had direct elec tions of participants been part of the initial institutional design. It may well be that the West does not need more capable intergovernmental bodies, but if such bodies do emerge they will need to be imbued with democratic ideals.

Just as importantly, if such an assembly were founded as an institu­tion representing the world's democracies, it could serve to strengthen and encourage the newly emerging and struggling democracies among them. Very little real political authority would be lodged in such a body, but it could stand in symbolic support of the democratic revolu tions of our age. When Russia recently asked for membership in the G-7, it is not really asking to participate in the management of monetary and exchange rate policy - it is asking for a seat at one of the world's great councils. It is an effort to gain legitimacy and standing in the world community, particularly among the leading industrial democratic states. It might be useful to think of a Democratic Assembly as one way to produce a new club that struggling democracies can join - something with advantages for everyone.

Some Practical Next Steps

This paper has tried to sketch a rationale and some initial proposals that might be part of an agenda to unite the democracies. I have argued that such an agenda needs to be two-fold. One is practical and institutional: finding creative ways to bolster the existing capacities for coordinated action among the G-7 countries. The other step is more intellectual and political: changing the way people think and talk about the community of Western democracies. Ultimately it is our "mental software" that matters - our ingrained images, loyalties, and expectations about the Western democracies as a deeply rooted politi cal community. The Cold War may have helped unite the democracies, but it also served to delay a public discussion of the true character and future of the West.

There are many promising areas of reform, many of them embodied in the proposals sketched above. The next step in the process should be the filling out of these and other proposals. I suggest that this group commission a series of study papers that give more thought and detail to the ideas. These study papers might be divided into two types: one type would be concrete "new missions" that the G-7 might undertake; the other type would deal with institutional proposals ~ both within the G-7 process and outside it.

The study papers might focus on the following six topics:

•   G-7 aid to Russia and the CIS. This paper would look at existing aid levels, sources, and coordination among the leading industrial de­ mocracies. It would propose steps to strengthen the mechanisms for coordinated action.
•   Strengthening the democracies. This paper would examine the material and institutional steps the G-7 countries have taken (and should take) to lend support to the nascent market democracies in Eastern Europe and the CIS.
•   G-7 support for regional economic groupings. This paper would look at what the Western states can do to encourage the evolution of economic regionalism in benign and open directions. The G-7 might eventually issue a declaration on the terms and conditions of acceptable regional associations.
•   Social welfare and employment. Following the discussions of the Detroit jobs summit, the G-7 countries should find ways to prevent structural economic problems from breeding economic conflict and breakdown. The OECD already works in this area, but much more can be done at high levels policy making levels and among Western pub lics. This paper would consider practical next steps.
•   G-7 institutional reform. This paper would examine specific op tions that might increase the capacities within the G-7 process for co ordinated action. These might be institutional, such as the creation of a secretariat and/or a Council of Ministers, or they might be more in formal and ad hoc.

(6) Broader institutional innovations. This paper would take the widest view of desirable long-term steps to build political community among the Western and world democracies. The purpose would not be practical proposals that could gain immediate agreement, but steps that would be the grist for our collective mill in the next century.

 

 

 

Bibliography

Deudney, Daniel and G. John Ikenberry (1993/94) "The Logic of the West," World Policy Journal Winter, Vol. X, No A

Dobson, Wendy (1991) Economic Policy Coordination: Requiem or Prologue? (Washington, D.C. Institute for International Economics).

Friedman, Thomas (1994) "World's Biggest Economies Turn to the Jobs Issue," New York Times. 14 March, D l.

Group of Thirty (1991) The Summit Process and Collective Security: Future Responsibility Sharing (Washington, D.C: Group of Thirty).

Ikenberry, G. John (1993) "Salvaging the G-7," Foreign Affairs (Spring), Vol. 72, No. 2.

Putnam, Robert and Nicholas Bayne (1987) Hanging Together: Coop eration and Conflict in the Seven-Power Summ its, rev. ed. (Cam bridge, Mass.: Harvard University Press).

Rowan, Hobart (1992) "Industrial Nations Losing Common Sense of Direction," Washington Post. 5 January 1992, HI.