The British Prime Minister, David Cameron, is having a bit of a romp. Last year, the United Kingdom hosted the 2012 Olympics and Paralympics, and celebrated Queen Elizabeth’s Diamond Jubilee. This year, Britain holds the rotating presidency of the G8, the high point of which is the heads of government meeting at Loch Erne in County Fermanagh, Northern Ireland, Monday and Tuesday June 17 and 18.
Cameron has declared the UK presidency’s top issues to be transparency, tax and trade. Adopting the alliterative style of the Prime Minister, one might characterize those issues as ranging from the worthy to the weird to the workable.
At the worthy end of the scale, the UK hosted a G8 Nutrition for Growth Conference on June 8, which pledged £2.3 billion to feed undernourished children. Britain itself is contributing £655 million, despite traversing austerity which the Institute for Fiscal Studies and the Institute for Government predict could last until 2020.
The weird choice concerns Cameron’s focus on international tax transparency. The topic is important, but there is little logic in trying to deal with it at the G8, since tax harmonization needs a far larger forum and there is disagreement among G8 members themselves. Cameron has also committed an embarrassing own-goal, since as UK Prime Minister he has put the UK’s overseas territories and crown dependencies, some of which operate as key international financial centers, in the awkward position of having to remove doubts which he raised himself about their reputation for tax transparency.
Far more workable within the G8 is the issue of trade, because industrialized country economics is where the G8 came from and what it is supposed to do. Japan looks set to join the Trans Pacific Partnership, which would mean TPP membership covers nearly half of the region’s trade — and still manages to exclude China. The Transatlantic Trade and Investment Partnership (TTIP) announced by the European Union and the United States in February 2013 has received overwhelming support and could create around €300 billion per annum in additional output and nearly a million new jobs on both sides of the Atlantic. (France’s defense of its cultural exception will be accommodated, but not allowed to derail TTIP progress.)
The original G6 — France, West Germany, Italy, Japan, the United Kingdom and the United States — soon joined by Canada to make it the G7, was born in a time of adversity, after the oil shock of the early 1970s, and was meant to formulate a response by the industrialized western world to economic downturn.
Russia joined to form the G8 in the 1990s when it looked like the former Soviet Union might embrace democracy. Ironically, today, the head of state or government having attended G8 meetings the longest is Vladimir Putin, who has remained in office all this time precisely because of Russia’s democratic deficit. Next year’s G8 takes place in Russia, at Sochi, on the Black Sea, with Putin as host.
Setting aside the anomaly of Russia, the top industrialized economies that make up the G8 find themselves now in a beleaguered state not unlike that of the 1970s — except that today’s problems stem not from an outside shock, but from an inner weariness.
Consequently, the G8 should renew itself by returning to its starting-point of restoring the health of the world’s biggest industrialized economies. Queen Elizabeth, in her speech from the Throne in May setting out the next year’s policies, said: “My Government’s first priority is to strengthen Britain’s economic competitiveness.” Britain has the opportunity, in its role as president of the G8, both at Loch Erne this week and during the rest of this year, to make competitiveness the goal of the G8 as a whole. That single goal should be adopted by the G8 heads of government for the full cycle of the next eight years of meetings — including in Russia next year (a summit which Putin wants desperately to go well).
Skeptics could argue that the G8 represents the wrong forum even for competitiveness, but that depends on how competitiveness is defined. At present, different constituencies in different countries debate the merits and methods of competitiveness, but there exists no over-arching set of principles or objectives for how the traditional industrialized countries can get their competitiveness back. The G8 is the perfect forum in which to articulate that, and, in particular, to set forth three chief principles.
First, the acknowledgment that recapturing competitiveness necessitates a broad, integrated, holistic approach. This is not about manufacturing or GDP growth alone, but about whether our countries and societies and peoples will be successful in the 21st century.
Second, the assertion that, in order to restore competitiveness, not only must our industrialized countries work together — the TTIP is an excellent example — but, crucially, within each of our countries the public sector and the private sector, government and business, must work together. Private enterprise cannot solve public policy problems, despite what some think in the United States. The state cannot provide market solutions, despite what some think in France.
Third, the recognition that the sources of our future competitiveness may be different from the sources of our success in the past. Technology, globalization, demographics and a whole host of other political, economic and societal changes require us to re-think our strengths and weaknesses as we look toward the future.
Prime Minister, espousing competitiveness as your core issue represents the best opportunity to make the most of this year’s G8 presidency — and to make your mark in history, by setting the stage for the success of the West in the decades to come.
Nicholas Dungan is a senior fellow with the Atlantic Council’s Program on Transatlantic Relations. This piece first appeared in The Huffington Post.
Photo credit: bisgovuk