The G8 summit: A chronicle of
wasted time By M K Bhadrakumar
With less than 10 days before the Group of
Eight (G8) summit meeting at St Petersburg, the
United States has quietly yanked the carpet out
from under the prestigious forum.
The
International Monetary Fund (IMF) announced last
week a list of countries that will initiate
consultations to "produce a common vision for
action, with balanced contributions and collective
benefits, to address vulnerabilities that affect
... the international financial system". The list
of countries is headed by the US, of course, and
includes China, Saudi Arabia and Japan.
Washington has implied that the G8 [1] is
not necessarily the lead forum for exercising
"multilateral surveillance" when it comes to
dealing with the issues and imbalances of the
world economy. The list of invitees to the IMF
high-level talks on global financial
imbalances is a virtual
"who's who" of countries that Washington considers
relevant to addressing pressing issues of
financial imbalances in the world economy. And the
list excludes Russia, the host of the G8 summit on
July 15.
Curiously, the development came
on the eve of Russia making the ruble a fully
convertible currency effective July 1, joining a
select group of 20 countries (including the US,
Canada, Japan, the eurozone and Scandinavian
countries, Britain, Australia and New Zealand)
that do not put restrictions on currency control
and regulation.
Are we seeing the first
steps toward "modernizing" the G8 - or replacing
it? It's difficult to predict. Giving Washington
the benefit of the doubt, the forces at work in
the world economy - especially the shift in power
from the West to the East - make the G8 look
rather old and tired. (Countries at the St
Petersburg summit account for less than 45% of the
global gross domestic product.)
The global
economic situation has changed since the Group of
Five was born (and later expanded into the G7) in
the early 1970s in the shadow of the great oil
crisis, the debilitating Vietnam War, a shaky
dollar and massive global financial imbalances.
The current predicaments and uncertainties
threatening the world economy bear similarity to
the situation prevailing in then.
Arguably, as Professor William Smyser of
Georgetown University recently wrote, the one
important task the St Petersburg summit could hope
to accomplish would be to transform itself as a
"summit of transition", which might prepare for
the future and "lay the foundation for succession"
by recognizing the contemporary realities of the
shift in global power.
"The first and
essential step should be to invite China and India
to join the G8, making it the new G10," he wrote.
"That would bring the forum's share of world GDP
back over the 60% level that is necessary to lend
authority to its decisions ... Moreover the summit
should not even be burdened with politics ...
wasting time and engaging in pointless arguments
about political issues ... If not, the markets
will take the decisions."
Though the US
thinking on these systemic aspects of the world
economic and financial order remains unclear,
there are unmistakable signs that Washington
doesn't expect any earth-shaking outcome from the
G8 summit in Russia. Second, the impression is
quietly gaining ground that the political economy
is not even the principal agenda item at the St
Petersburg summit.
From Washington's point
of view, the G8 used to be a cozy little affair,
notwithstanding the gala, luxurious physical
setting of its annual summits. But things have
unexpectedly become very confusing - what with the
"multilateralism" that crept in after oil-rich
Russia's proactive membership in the exclusive
club. For Washington, G8 proceedings have ceased
to be predictable and St Petersburg has become a
grin-and-bear-it summit.
The US seems
determined to deny Russian President Vladimir
Putin's view of the summit as a symbolic
recognition by the world powers of post-Soviet
Russia's resurgence on the world scene, if that is
what he is thinking. Or, at a minimum, the Kremlin
must be made to sacrifice some of its interests
for the sake of claiming success in hosting the
summit. But are things turning out quite the way
Washington anticipated?
It's likely that
coinciding with the G8 summit, Russia's World
Trade Organization accession (which US President
George W Bush claimed to be personally monitoring)
may finally be drawing to a conclusion, with
Washington giving its final nod. The signing of an
agreement with the US removes the last obstacle
for Russia before formally commencing the process
of joining the WTO - giving a new impetus to
Russia's globalization.
But the WTO
agreement cannot be linked directly to the G8. The
development comes rather as a sideshow to the
summit. It is within the realm of possibility that
the US has struck a backroom deal with Moscow to
the effect that as quid pro quo for the WTO
agreement, US business interests will be served in
a lucrative Russian aircraft deal with Boeing.
Equally, the Bush administration had been pressing
for a mega-deal for Chevron and ConocoPhillips -
the US oil majors that have bid for Russia's
Shtokman gas fields.
It seems Bush's
frequent telephone calls to Putin in recent weeks
and behind-the-scenes communications may result in
a few business deals being sewn up on the
sidelines of the G8. Any backroom Russia-US deals
are yet to emerge - and neither side would admit
them - but it is conceivable the US would
accommodate to some extent the Russian desire to
highlight energy security as the main agenda item
of the G8 summit meeting. That would enable the
Kremlin to claim "success" for the St Petersburg
summit.
Meanwhile, getting a share of the
Shtokman fields for the US companies would be a
major score for Bush (and Vice President Dick
Cheney). From the Russian point of view, it is yet
another instance of having to appease Washington.
Interestingly, Russia's Gazprom announced
over the weekend that the successful bidder for
the giant Shtokman gas deposits off the Arctic
coast would be made known next month. The
short-listing of competing companies - Norway's
Statoil, France's Total and America's Chevron and
ConocoPhillips - was completed last September.
Meanwhile, in the run-up to the G8 summit,
negotiators from the two countries reached an
agreement at the last minute to extend by seven
years a joint program aimed at elimination of the
old Soviet nuclear warheads. But in essence these
are mere symbolic moments lending themselves to
useful photo opportunities in St Petersburg.
Moscow for its part has begun putting the
G8 summit in perspective as but one part of its
so-called multi-pronged foreign policy. Russian
spokesmen have been careful not to build up hype
over the summit. Presidential aide Igor Shuvalov
cautioned that no "surprises" are to be expected
out of the summit.
But if Washington
harbors hopes that Moscow will blink on issues
such as the Iran nuclear standoff or energy, that
also won't happen. According to Shuvalov, "Russia
will be defending its interests and its position,
and will maintain its stance even if it is at
variance with that of other members states."
Bush in a recent address in New York
publicly maintained that it was nonetheless
important for him to attend the G8. "My strategy
with Vladimir Putin is to be in a position where I
can talk frankly to him. I have heard some say,
'Do not go to the G8.' I think that would be a
mistake for the United States not to go to the G8,
because I need to be in a position where I can sit
down with him and be very frank about our
concerns."
He will continue to tell Putin
that he should not fear democracy, he said.
The G8 summit comes as a watershed event
in Russia-US relations. Soviet Russia scholar
Stephen Cohen wrote in an essay in The Nation
magazine titled "The new American cold war" that
Washington had been simultaneously pursuing two
different policy tracks with the Kremlin during
the past 15 years - "one decorative and outwardly
reassuring, the other real and exceedingly
reckless". The decorative policy featured
soulmates "Bill [Clinton] and Boris [Yeltsin]" for
the first eight years of the post-Soviet era and
currently "George and Vladimir", but it
camouflaged the real US policy, which Cohen
described as "a relentless, winner-take-all
exploitation of Russia's post-1991 weaknesses".
This "real" US policy toward post-Soviet
Russia Cohen characterizes as "even more
aggressive and uncompromising than was
Washington's approach to Soviet communist Russia".
Writing on the eve of the G8 summit, Cohen
pointed out that time is running out for a new US
policy toward Russia. But he concluded
articulating his profound sense of gloom that any
change of thinking in Washington is unlikely.
There are signs Moscow is increasingly
getting disillusioned with Washington. "To be
honest, not everyone was ready to see Russia begin
to restore its economic health and its position on
the international stage so rapidly," Putin said at
a recent conference. "Some still see us through
the prism of past prejudices and see Russia as a
threat. Some are ready to accuse us of reviving
'neo-imperialist' ambitions or, as we have heard
recently, come up with accusations of 'energy
blackmail'."
The main thrust of Putin's
speech was that a balance of interests could still
be possible at the G8. "Russia does not want
confrontation of any kind. And we will not take
part in any kind of 'holy alliance'."
But
any balance of interests can only emanate from a
framework of mutual understanding and
accommodation. First, Putin suggested, Washington
must jettison its "old views and prejudices" about
post-Soviet Russia. Second, the primacy of
international law in interstate relations
(including non-interference in the internal
affairs and respect for national sovereignty) must
be upheld. Third, there is no scope for double
standards in mutual dealings.
But
indications from the US corroborate what Cohen has
written - that there is no reason to expect any
shift in Washington's Cold War mentality toward
Russia. If so, what will be its impact on the G8
summit? There is a growing feeling in Moscow that
Russia already has put up with enough.
The
Kremlin does not seem to be in any mood to let
Washington use the summit to embarrass Moscow on
the democracy issue. "Sometimes the [US] words and
thoughts do not coincide," said Vladislav Surkov,
the powerful deputy head of the Kremlin
administration. "For example, they talk to us
about democracy while thinking about our
hydrocarbons."
There is indeed much to
what he says. Russian Energy Minister Viktor
Khristenko made it clear in a television interview
on Saturday that Russia was not going to sign the
Energy Charter Treaty (which aims at setting
ground rules and treaty obligations regarding
third-party pipeline access and transit
obligations) during the summit.
Meanwhile,
Russia is also going ahead with forging bilateral
energy deals with European countries. An agreement
was signed on June 22 with Hungary for the
extension of Russia's Blue Stream gas pipeline to
Central Europe. Italy has dealt an even more
severe blow to Washington by concluding a
significant energy deal bilaterally with Russia on
the eve of the G8 summit.
Evidently,
European nations are savvy enough to realize that
their interests are not necessarily served by
dovetailing their energy diplomacy with the United
States'.
This is nonetheless a Pyrrhic
victory for the G8. This was not what Russia had
in mind when it declared last year that energy
security would be the main theme of its G8
presidency in 2006. Russia's call seemed so
logical and timely then. But even as the ride to
St Petersburg began six months ago, the horizon
began to darken and a new type of rhetoric
appeared over "energy dependency", turning the
entire paradigm of energy security into a zero-sum
game.
However much Russia tried to
emphasize that energy security involved security
of supply and demand and that it sought real
interdependence consistent with Russia's keenness
to integrate with the Western economies, the US
kept warning the European Union to refrain from
allowing itself to be persuaded by the Russian
argument. The discussion kept returning to the
EU's level of dependency on Russian energy supply.
It was a matter of time before geopolitics
made its entry into the debate, insofar as energy
sales contribute as much as a quarter of Russia's
GDP and hydrocarbon exports provide the base for
the country's economic recovery, and, in turn, act
as the strategic underpinning for Russia's return
to the international stage as a major power.
By April, simmering passions had burst
into the open with allegations and
counter-allegations that Russia's state-owned
entities were playing the capitalism wild card by
stealthily acquiring assets in the European energy
market, with Russia pointing its finger at the
vise-like grip over the European domestic energy
sectors that their governments were loath to
relinquish.
The contradictions in the
various stances became at once apparent: within
the EU there is little "free market" in energy;
Russia resists EU and US calls to open up access
to its Soviet-era pipeline systems; and the US has
no moral right to interfere and preach
transparency and commercial practices to prevail
in the energy market when it just recently showed
no qualms in discouraging the China National
Offshore Oil Corp (CNOOC) from making even a
modest bid to acquire stakes in the US energy
company Unocal.
The net result is that
hopes have receded that the G8 summit would be a
landmark event on matters involving energy
security. Thanks to last-minute intervention at
the highest levels of leadership in Moscow,
Washington and European capitals, the prospect of
a potentially debilitating rift over energy
security bringing down the G8 may have shrunk. But
no significant agreement is likely to be reached
at the G8 summit, either.
Meanwhile, all
concerned are sensing the cold reality of
interdependency in energy security. The breakdown
in Ukraine's talks with Turkmenistan over gas
prices last week threatens a cutoff in gas
supplies to Ukraine by Ashgabat, prompting Ukraine
to find the easy way out by once gain
surreptitiously siphoning off gas from Russia
transiting through Ukraine westward to Gazprom's
European customers.
Thus Europe is just
getting reminded how vital is Moscow's goodwill -
that unless Russia once again generously makes up
for Ukraine's "theft", there will be a harsh
winter season ahead in Central and Western Europe.
For the US this comes as an untimely setback to
its efforts to cajole the EU to join hands with it
for collective bargaining with Russia at the G8
summit over energy security.
The G8 summit
could be the last opportunity to stabilize
US-Russia relations - before the US presidential
2008 campaign begins to take over American
attention.
But one cannot see this
happening. Unresolved tensions in the next two
years have the potential to escalate as Ukraine's
admission to the North Atlantic Treaty
Organization (NATO) approaches, pushing the
US-Russia relationship from its current state of
estrangement to real alienation. As Cohen put it,
the likelihood is that "new Cold War orthodoxies
and dangers" will stay put at the center stage of
Russia-US relations.
The absorption of
Ukraine by NATO could well turn out to be the
point of no return for Russia's relations with the
West. But there is hardly any sign that the Cold
War zealots in Washington involved in their
tireless crusade against post-Soviet Russia are
even taking note of the brooding intensity with
which Moscow regards Ukraine as vital to its
Slavic identity and military defenses.
Certainly, the next stage of NATO
expansion into the territory of the former Soviet
Union and the subsequent military encirclement of
Russia as well as the renewed US intrusions into
Russian politics have already prompted Moscow into
countermeasures.
The list of Russian
"preemptive measures" against the geopolitical
harm that the US is doing to Russia already runs
long: the strengthening of Russia's "strategic
partnership" with China; the highly nuanced
Russian position on the Iran nuclear issue; the
independent course being charted toward the Muslim
world; the stationing of surface-to-air missiles
back in Belarus; charging Ukraine and Georgia with
market prices for energy supplies; hardening of
its position over Transdniester (region of
Moldova, which broke away from that country in the
dying days of the Soviet Union but remains
unrecognized internationally); and the "frozen
conflicts" in Transcaucasus (the southern
Caucasus); the strengthening of the Shanghai
Cooperation Organization and the Collective
Security Treaty Organization; and incipient trends
toward forming a "gas alliance" with Iran and the
Central Asian countries.
Russian thinking
is increasingly imbued with dark suspicions
regarding US intentions - a belief that Washington
is aiming to seize control of Russia's immense
energy resources and nuclear armaments by
encircling it with NATO satellite states and
"de-sovereignizing" Russia. The Cold War remnants
who dominate the intellectual and political scene
in the US are far too conceited to assess
rationally that Russia has a sovereign right to
evolve its domestic and energy policies and, more
important, that it has the political will to do
so.
From this angle alone, the forthcoming
G8 summit in St Petersburg faces a real danger of
being commented upon in the fullness of time as a
chronicle of wasted opportunity.
Note 1. The G8 comprises
the members of the Group of Seven and Russia. The
G7 members are Canada, France, Germany, Italy,
Japan, the United Kingdom and the United States,
which together account for about two-thirds of the
world's economic output. Russia officially became
the eighth member of the G8 at the 1997 Denver,
Colorado, "Summit of the Eight". But while Russia
is a G8 member, it does not participate in
financial and economic discussions, which continue
to be conducted by the G7. Russia has the G8's
smallest economy.
M K
Bhadrakumar served as a career diplomat in the
Indian Foreign Service for more than 29 years,
with postings including India's ambassador to
Uzbekistan (1995-98) and to Turkey (1998-2001).
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