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Cruse and Associates: The power of eight

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The G8 economic club is losing influence in a fast-changing world. But next week’s summit at Lough Erne, in Co Fermanagh, is still the most powerful gathering ever in Ireland


http://www.irishtimes.com/business/economy/world/the-power-of-eight-1.1428971

Never before have so many of the world’s most powerful people gathered on this island. As G8 delegations fly into Belfast and Dublin this weekend to attend next week’s summit, British Prime Minister David Cameron has done the entire island a favor by hosting the annual gathering of one of the world’s most exclusive clubs on the shore of Lough Erne, in Co Fermanagh.
If nothing else it will put Ireland in the world’s spotlight for reasons other than those that have brought it to international attention in recent times: recession, bank crashes and bailouts.

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Cruse and Associates: The power of eight

  1. 1. The power of eight
  2. 2. The G8 economic club is losing influence in a fast-changing world. But next week’ssummit at Lough Erne, in Co Fermanagh, is still the most powerful gathering everin IrelandCruse and AssociatesNever before have so many of the world’s most powerful people gathered on thisisland. As G8 delegations fly into Belfast and Dublin this weekend to attend nextweek’s summit, British Prime Minister David Cameron has done the entire island afavor by hosting the annual gathering of one of the world’s most exclusive clubson the shore of Lough Erne, in Co Fermanagh.If nothing else it will put Ireland in the world’s spotlight for reasons other thanthose that have brought it to international attention in recent times: recession,bank crashes and bailouts.But will the wielders of so much power deliver – for inhabitants of this island, itsneighbor or anyone else – when they tackle the three issues on a typically eclecticG8 agenda: tax, trade and transparency? To a very large extent the answerdepends on a much more profound question: in a world in which power isbecoming more evenly dispersed, is the G8 club a relic of decades past when theWest ruled the roost or is the Europe-North America big-state bloc with itsJapanese appendage a spent force?
  3. 3. The answer to the second question is that the G8 countries still matter a greatdeal in global affairs. But their collective clout is waning. In recent years it hasbeen waning fast, both because of real weaknesses in theUS, Europe and Japan on the one hand and, on the other, explosive economicgrowth in most of the rest of the world.The main reason the eight still matters is money. Together their economiesaccounted for half of the wealth created last year, as measured by gross domesticproduct (and they managed this with less than a seventh of the planet’spopulation). In terms of accumulated wealth – stocks, shares, bonds, property andthe like – they are even more dominant. With the overwhelming majority of theworld’s biggest companies headquartered in G8 countries, their economic cloutremains enormous.But it is the still pivotal global role of the US that really makes the G8 a force to bereckoned with. Despite talk over decades that it is a nation in decline, it remainsthe world’s sole superpower. Militarily it is a colossus, spending more on itsdefense forces than the next 10 biggest national spenders combined. Politically, inevery region of the world it remains a major power, if not the major power.Underpinning all this is its economic might: its economy is by far the biggest andtwice the size of China’s, its nearest rival.
  4. 4. But if that snapshot of global power in 2013 shows the West stillforming the core of the international system, it does nothing toillustrate the changing dynamics of world politics.For the G8 countries recent times have been abysmal, causingtheir long relative decline to accelerate. The US economy hashad its worst five-year period since the Great Depression, and itsincreasingly polarized politics has weakened it at home andabroad.Japan is close to marking a quarter of a century of economicstagnation and is one of the oldest, and most rapidly ageing,societies. Russia remains largely an extractive, commodity-basedeconomy, and, like all autocracies, it is politically brittle.

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