Group of Seven likely to play same old song

July 06, 1992|By Carl Schoettler | Carl Schoettler,Staff Writer

MUNICH, Germany -- The leaders of the world's seven richest nations have come to Munich like aging members of a rock band that hasn't yet learned to play music of the new age. They haven't been playing the old tunes very well lately, either. And they're not even very popular any more.

The Group of Seven sounds like the name of a rock band. But they're the heads of Canada, France, Germany, Great Britain, Italy, Japan and the United States. They've been meeting annually since 1975 -- when they were six; Canada joined in 1976 -- for what is called the World Economic Summit.

This year they are Chancellor Helmut Kohl of Germany, who is the host; President Bush; Prime Minister Brian Mulroney of Canada; President Giuliano Amato of Italy; Prime Minister John Major of Great Britain; President Francois Mitterrand of France; and Prime Minister Kiichi Miyazawa of Japan. Also attending as a kind of shadow sovereign is Jacques Delors, president of the Commission of the European Community.

They come to Munich as more and more people in their countries are expressing distrust of established leaders. President Bush, Prime Minister Mulroney and Chancellor Kohl find their popularity at a low ebb. Prime Minister Major has just barely won an election he was expected to lose. Italy seems pleased to have a president to send at all.

They also arrive at a time when their countries are self-absorbed. Germany's unification costs far exceed what anyone expected in human or economic terms. The United States is in the midst of an election campaign focused on internal problems. Japan's economy is sagging.

Unemployment -- the focus of the first summit in 1975 and a recurring issue since -- is high this year in all of the G-7 nations except Japan. The 7.8 percent jobless rate in the United States has dashed Mr. Bush's hopes of coming to the summit with a strong recovery at home. Sixteen million people are unemployed in the summit countries.

Treasury Secretary Nicholas F. Brady stressed last week that the U.S. delegation in Munich would push the necessity to maintain a growing world economy. But there is little agreement on how to coordinate international trade, interest rates and investments.

The summit will be held in the royal splendor of the Residenz, a sprawling assortment of rococo and baroque palaces and courtyards that was the seat of the Bavarian princes until 1918.

The chief guest will be Russian President Boris N. Yeltsin, who will come to lunch Wednesday after the meeting has formally ended.

President Bush suggests Mr. Yeltsin's Russia is the eighth member of the G-7, an idea that has gone nowhere. England and Germany say not now. Dieter Vogel, the German government spokesman here, said Russia does not have the economic or political qualifications.

Japan opposes Russian membership until the two nations' territorial dispute is resolved. The Japanese want the Russians to remove themselves from the Kuril Islands the Soviet Union occupied at the end of World War II.

Mr. Yeltsin says he will not ask for admission to the G-7 but will press for financial assistance.

He wants at least to be allowed to delay payment of the former Soviet Union's $68 billion in debts. of which Russia has assumed about two-thirds. A consensus of the delegations here indicates he will get a dispensation of at least two years.

The International Monetary Fund had wanted Russia to curb inflation, running at 1,000 percent, and halt supports for oil that hold prices in Russia far below world levels.

An infuriated Mr. Yeltsin said Saturday that he would not come to Munich to beg for aid.

The United States is working to get him a firm pledge from the G-7 nations to deliver the $24 billion aid package he has been promised. At the Residenz, delegates say he probably will get this money, and yesterday's IMF announcement on extending a $1 billion advance to Russia seemed to set the course.

Aid to Russia and plans to get the world economy moving again are believed to be the only things that have a chance of gaining approval here.

As the delegations arrived and settled in yesterday, it seemed that the General Agreement on Tariffs and Trade would remain unresolved. Politics and protectionism make GATT simply too hot to handle during three days in July.

Mr. Bush believes the GATT talks are vital to world economic growth. But pushing the issue risks a repeat of the past two summits, when pledges for a political push to the trade talks went nowhere.

U.S. Treasury Secretary Nicholas F. Brady said last week that GATT should wait until September. As the meeting opens, it appears that it will.

Worldwide environmental problems and the related issues of making old Soviet nuclear reactors safe are on the agenda. Money may even be forthcoming to fix the reactors. Germany worries about them and wants them secure. And Germany is, after all, the host.

A European diplomat said he thinks the hard questions will be asked at this summit.

"But," he said, "I don't think we should expect something clear and decisive to emerge."

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