Italy Leads Calls for Expanding Group of Eight Club | Business| Economy and finance news from a German perspective | DW | 23.10.2008
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Italy Leads Calls for Expanding Group of Eight Club

Italian Premier Berlusconi, whose country heads the Group of Eight industrialized nations in 2009, has called for an enlargement of the G8 to include emerging economic giants. Germany however is opposed to the idea.

Italian Prime Minister Silvio Berlusconi

Berlusconi says an enlarged G8 is better equipped to deal with the current financial crisis

Discussions about enlarging the Group of Eight rich countries' club to include emerging powerhouses in Asia and Latin America are hardly new. Yet they've taken on a new urgency due to the global financial crisis as western governments scramble to enlist the support of major emerging powers to contain the economic fallout.

Earlier this week, Italian Prime Minister Silvio Berlusconi said it's "very likely" that the G8 would invite some of the major emerging economies such as India, China, Egypt, South Africa, Mexico and Brazil to join.

A "super G8" could become a forum which can deal better with the world's current economic problems, Berlusconi said.

Traditionally, G8 nations Canada, Britain and Italy have pressed the case to open the door to emerging economies. Fellow members France, Germany, Russia and in particular Japan and the United States have been hesitant.

Support for enlargement growing

Protester raising his fist towards camera.

Prostest during this year's G8 summit in Japan

"Yet recently there's been a bit of a mood swing on this issue," Katharina Gnath of the German Council on Foreign Relations told DW-WORLD.DE. Gnath said the shift wasn't just on the financial crisis but also on issues like resources, and food prices that were discussed at this year's G8 summit.

"The G8 was not really capable of solving these issues. There is an increasing number of problems that are difficult to deal with in the present forum," she added.

Founded in 1975, The Group of Eight was based on the member states' economic importance at the time. Things have changed since then -- China and India together have a stronger economy than the 15-member euro zone.

"These two could be the first to join an enlarged G8," Christian Dreger of the German Institute for Economic Research told Deutsche Welle. "It would make sense to include these two – currently they're the countries that prevent the world from drowning even deeper in the financial mess."

The chinese wall illuminated at night

The long road to membership

Germany open to temporary expansion

But opening the G8 door to booming emerging economies isn't the only proposal on the table.

Another is a model which leaves the current G8 core structure unchanged and which would include a variety of other countries temporarily, depending on what's on the agenda, Dreger said.

Spain for instance is suffering acutely from the credit crisis -- and so could be included in any emergency summits on the topic. Spanish Prime Minister Jose Luis Rodriguez Zapatero has already urged the G8 that at any forum on the financial Crisis, "Spain must be there."

The proposal is likely to find favor with critics of enlargement since it leaves the existing members in their privileged position. Should countries like China and India indeed join the G8, the current members would lose some of their influence.

Another problem with enlargement could be that any larger group would be more diverse in its interests and opinions -- and that it will be more difficult to find a workable compromise.

Germany's position on whether or not to enlarge the G8 has shifted somewhat over the years, said Kristina Gnath.

While previous Chancellor Gerhard Schroeder was in favor of widening the structure, Angela Merkel has been more hesitant since taking office in 2005. On Wednesday, Merkel's spokesman confirmed the chancellor opposes an expansion of the Group of Eight to embrace nations such as India and China.

"She (Merkel) doesn't see an institutional expansion into a G9, a G12, a G15 and so on as the philosopher's stone," Thomas Steg said.

But she was "open" to expanding the group at certain times on certain topics so that all the relevant nations or regional organizations were part of the discussion, he added.

Enlargement vs enhanced dialogue

At the G8 summit in Heiligendamm in Germany in 2007, Merkel had called for a consolidation of the so called G8+5, which includes the major emerging economies of China, India, Brazil, Mexico and South America.

G8 leaders in 2007 in Heiligendamm, Germany

The G8 in Heililgendamm. Will they need a bigger bench?

"So I wouldn't necessarily say that Germany is an engine for enlargement but it's certainly an engine for enhanced dialogue," Gnath said.

"But with Italy taking on the Presidency of the G8 in 2009, I certainly expect that enlargement will be on the agenda," Gnath added.

Still, experts warn against expecting too much from Italy next year.

"After all, it's a decision that all the existing members will have to agree to," Gnath said.

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