- The Washington Times - Tuesday, July 7, 2009

The leaders of the Group of Eight convene their annual summit in Italy Wednesday amid the most devastating global recession since the Great Depression.

The G-8 includes the world’s seven wealthy industrial democracies (the United States, Japan, Germany, the United Kingdom, Italy, France and Canada) and Russia. Except for Canada, all have suffered much bigger declines in economic activity than the United States during the past year.

Representing 870 million people whose annual economic output approaches $32 trillion, G-8 leaders will hold a “working lunch” Wednesday.

Topics will include signs that global recovery might soon begin; financial regulation reforms; exit strategies from massively expansionary monetary and fiscal policies; and the much-troubled Doha round of multilateral trade negotiations.

After lunch, the G-8 will tackle climate change, foreign aid and development.

“With signs of emerging but uneasy stability among G-8 economies, we may be approaching the bottom of the global recession,” said Jan Randolph of IHS Global Insight. “However, talk of recovery is premature, and the situation remains highly precarious.”

Mr. Randolph stressed several indicators underlying the severity of the global recession this year, including a 2 percent shrinkage in global economic activity, G-8 output declines ranging from 5 percent to 9 percent, the 10-to-20 percent contraction in world trade and the devastation, especially in many emerging markets, caused by the reversal of global capital flows.

On Thursday, the leaders of the G-5 (Brazil, China, India, Mexico and South Africa) and Egypt will join their G-8 counterparts to discuss global issues and development policies. The forum will be further broadened later Thursday to discuss future sources of economic growth and global warming. China may initiate discussions over the role of the U.S. dollar as the world’s principal reserve currency.

A communique reportedly will announce Thursday that the G-8 and G-5 have committed themselves to successfully conclude the Doha negotiations by 2010. The Doha round was launched in 2001 and has repeatedly imploded over disputes about farm subsidies in wealthy countries and tariffs levied on agricultural and industrial products by developing nations.

On Friday, when several African nations join the discussion, food security and the plight of Africa will be the major topics.

Robert Zoellick, president of the World Bank, which will join other international institutions participating in the summit, urged the G-8 leaders to direct their attention to the world’s poor. “Many of the significant gains over recent years in overcoming poverty could be lost unless we take decisive action,” Mr. Zoellick said in a letter to G-8 leaders.

“The number of chronically hungry has surged to 1 billion and is rising as more are thrown into absolute poverty by the global recession,” Mr. Randolph of IHS Global Insight noted. According to a report by the Chicago Council on Global Affairs, the United States, the world’s largest food donor, spends 20 times more on food aid than it spends on long-term, on-the-ground agricultural development.

The United States and Japan have committed half the funding for a $12 billion food-security plan. It would switch U.S. policy from food aid, which benefited American farmers for decades, to agriculture development, Mr. Randolph explained.

“The upcoming Group of Eight leaders’ summit is unlikely to have a major economic or financial impact in the short to medium term,” said Zach Witton of Moody’s Economy.com. G-8 summits typically produce more pledges than action.

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