The debate over how to better represent emerging countries in the G-8 and other international fora has gained in urgency with the phenomenal shifts in the global balance of economic power in recent years. Without China, by far the largest holder of foreign reserves and one of the top CO2-emitters, or India and Brazil, key players in multilateral trade negotiations, common global solutions are hardly feasible. And then there is the legitimacy problem; the elite group has long been criticized for not being representative and accessible for non-members, especially African countries.
The Heiligendamm Process
The Heiligendamm Process establishes a new form of dialogue for the G-8 and the five “outreach countries” (O-5)—China, India, Brazil, South Africa, and Mexico.4 The parties agreed to embark on results-oriented discussions, which will be reviewed at the 2009 summit. The OECD was invited to assist the work of a high-level steering group and a working group with organizational and academic expertise. The process will be organized along four thematic pillars: crossborder investment; innovation and intellectual property rights; energy and climate change; and development (particularly in Africa).
Contrary to one-off negotiations, a long-term perspective of interaction increases the sustainability of compromises and potentially furthers cooperation between the G-8 and the O-5 countries. With the Heiligendamm Process, close dialogue is ensured at least for the coming two years. This is important as the G-8 develops from small, informal talks among heads of state and government into a permanently active network. The accession of Russia to the “political” G-8, but not to the G-7 of finance ministers, has already shown that the G-8 can operate beyond full membership on a topical basis. The Heiligendamm Process is a further development in this direction.
Looking Ahead
For the Heiligendamm Process to be successful and widely accepted a number of challenges must be met:
- While emerging countries would like to see their role in global governance strengthened according to their increased economic importance, they are not willing to become involved at any price. A number of O-5 countries are wary of forming too close and formal ties with what is known as a club of rich nations. This cautiousness is reinforced by the fact that the Heiligendamm Process is linked to the OECD, an organization dominated by Western industrialized nations.
- The O-5 (with the exception of Mexico, already an OECD member) does not want to be discriminated against in a parallel but distinct process of “enhanced engagement” with the OECD. Although the O-5 was reassured that the OECD would only play a supporting role in the Heiligendamm Process, it remained worried that the two tracks could become entangled.
- The chosen topics of the Heiligendamm Process are delicate. This year’s G-8 meetings, which the O-5 participated in, showed that many key compromises will be very difficult to conclude. At the recent G-4 trade talks to save the Doha Round, India and Brazil demonstrated that they will stand their ground even if intransigence risks foiling the agreement.
- The declaration launching the Heiligendamm Process was issued by the O-5 and the German presidency, not by all G-8 members. For the multilateral dialogue to be successful and the results to be implemented, the new process cannot rely on the Germans and the OECD secretariat alone. All eight members, especially the next two presidencies (Japan and Italy) as well as the United States, need to be fully convinced of its relevance for the group’s work to bear fruit.
Time To Act
The establishment of the Heiligendamm Process marks an important first step in involving emerging countries in global economic governance, potentially serving as a catalyst for reforms in other organizations like the International Monetary Fund, the World Bank, and the OECD. Now it is important to build upon the political momentum from the summit. While financing of the OECD support group has been clarified, the heading of the steering group must be finalized quickly in order for actual dialogue to start as soon as possible.
In an effort to foster closer cooperation between the G-8 and emerging countries, the Heiligendamm Process is one important element—but only one. Emerging countries will only commit to common goals and solutions if they are convinced that their voices are being heard in the G-8 negotiations, both at the preparatory meetings and at the main summit. Given the growth dynamics of emerging countries, their increased involvement will remain a long-term challenge far beyond Heiligendamm.
Katharina Gnath is head of the Globalization and World Economy Program at the German Council on Foreign Relations (DGAP) in Berlin.
This article is presented as an excerpt from a longer essay published in the Global Edition of Internationale Politik, Germany’s foremost foreign policy journal and a collaboration partner of the Atlantic Community.
Beyond Heiligendamm, IP Global Edition Fall 2007
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