Russia to Assume G-8 Leadership Amid Criticism

Russia will take over the chairmanship of the Group of Eight industrial nations at a time when there are growing concerns about President Putin's commitment to democracy. Fred Bergsten, director of the Institute for International Economics offers his insights.

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DEBBIE ELLIOTT, host:

Now a foreign policy story with a surprising twist. Tomorrow, Russia assumes the chairmanship of the Group of 8 leading industrial democracies. On the face of it, Russia doesn't seem to meet the criteria for membership in this influential club. In terms of gross domestic product, Russia ranks 15th in the world and there are growing concerns about President Vladimir Putin's commitment to democracy.

To find out how Russia came to the helm of the G8, we've called Fred Bergsten, director of the Institute for International Economics.

Welcome to the program.

Mr. FRED BERGSTEN (Director, Institute for International Economics): Glad to be here.

ELLIOTT: So the roots of this date back to the '90s when it was then called a Group of 7 and the Group of 7 invited Boris Yeltsin to come to their summit as an observer. Why did that happen?

Mr. BERGSTEN: There were two reasons. One was to thank Russia for accepting the expansion of NATO into Eastern Europe. The other was to reward Yeltsin for moving Russia in the direction of democracy. And as he took steps, sometimes halting but seemingly irreversible in the direction of Russia's becoming a democracy, the observers say they shifted into full membership. That incidentally has been somewhat debated within the group, and whereas the Germans view the Russians as a full member from early on, the US never quite did so. That's why this year's chairmanship of the G8 is so significant. Obviously, if you chair the group, you're a full member of the group.

ELLIOTT: Now we should be clear that the reason Russia is chairing the G8 this year is because it's a rotating chairmanship.

Mr. BERGSTEN: That is right. The traditional members rotate annually. They're now in--I think it's the fifth or sixth cycle and Russia, since it became a member or partial member, has wanted to get in the queue. What happened this year is that the Germans who were next in line graciously volunteered to step aside for a year to let Russia have the chair in 2006.

ELLIOTT: But the Russians don't participate in all of the G8 sessions I understand.

Mr. BERGSTEN: That is correct. In fact, the most important operational part of the G7, G8 really occurs at the level of the finance ministers and central bank governors. They meet several times a year and are the closest thing we have to a steering committee for the world economy. They don't always function too effectively, but they have the responsibility for trying to manage world economic stability, growth and the like. The Russian participate only in a very limited way in that group. They may attend one of the sessions in a full day or two-day meeting, they may come to a dinner, but they do not get engaged in the most sensitive parts of those discussions.

ELLIOTT: Why don't they participate fully?

Mr. BERGSTEN: The reason is simply that their economic weight does not justify it. They're too small. They're, in fact, in many senses still a developing and fairly poor country. They don't have much to say on the big global issues of growth, trade, finance, exchange rates and all that. So they're basically kept at arm's length from that key operational group.

ELLIOTT: So doesn't that make it a bit odd that they're now assuming the chairmanship of this organization?

Mr. BERGSTEN: It's quite odd. Here they are becoming the chair of the group just at a time that there's increasing concern around the world that Russia is moving in an anti-democratic direction. Indeed, there have been a lot of people, including in the United States, who have suggested that Russia should be kicked out of the G8, far from being allowed to chair the group. So there's a real tension in the process. I'm sure the other countries will try to use Russia's chairmanship to wean them back in the democratic direction and counter some of the things that have seemed to be happening in Russia lately, but it is a very embarrassing situation for the group as a whole and it raises fundamental questions about how serious an operation it is.

ELLIOTT: Fred Bergsten is director of the Institute for International Economics.

Thanks you, sir.

Mr. BERGSTEN: Good to talk.

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