Global Policy Forum

By John W. Sewell and Michael H.C. McDowell

Washington - Leaders of the seven richest countries will meet next week in Cologne for the latest Group of Seven summit. Russia will join them. The discussions will be dominated by Kosovo. Otherwise the agenda will be business as usual, with ringing statements about the general health of the world economy, expressions of concern over the impact of globalization - but very little action. So Cologne is likely to be yet another missed opportunity to tackle the deep problems exposed by the globalized economy.

The leaders who meet in Cologne should be bold. Current proposals to modify international financial ''architecture'' are useful but insufficient. So are suggestions to ease the crushing debt burdens of the poorest countries. Complacency obviously has set in. The global financial crisis seems to have ended. Fears over Brazil's economy appear to be waning. Russia has muddled through, escaping commercial and social disaster. The world economic system seems sound.

Nothing could be further from the truth. Asia is still in a depression; Brazil is just getting off the ropes; Russia is barely a player in the international economy. And the human costs of the crisis endure. Furthermore, we are in the early stages of globalization, and another major economic crisis could lie just around the corner. As the World Bank president, James Wolfensohn, has said, the financial emergency may be over but its impact on developing countries will be long-lasting. Economies and people recover far more slowly than markets.

The G-7 governments have endorsed international development targets that promise to halve the number in poverty by 2015, cut infant deaths in the poorest nations by two-thirds, and enroll all children in primary schools. But actual levels of aid continue to fall, and those development goals are in jeopardy. The financial crisis has forced governments to slash social spending at a time when it is even more needed. There is a growing backlash against globalization in both industrial and developing countries, and it is in all our interests to counter siren calls for protectionist policies and other forms of withdrawal from international cooperation.

The momentum for reform is slowing down, yet the crisis in emerging market countries is likely to be longer and deeper than first thought. Complacency in industrial countries is spreading to many developing economies, where initial interest in fundamental reforms has given way to inertia. There is also trouble beyond the international financial system. World Trade Organization members have been unable to pick a new chief. Trade ministers meeting in Seattle in November may have difficulty launching a much needed new round of global trade negotiations - not least because the U.S. Congress is currently disinclined to grant negotiating authority to President Bill Clinton.

Reforms must go further and more players need to be involved. Unfortunately, current trends are not promising. Most G-7 members seem to have rejected President Jacques Chirac's proposal for a representative global summit to discuss more fundamental reform of the world economic system.

Yet G-7 leaders do have some breathing space, thanks in part to the spectacular performance of the American economy, which has been driving global growth. The key question is how long this will last. Just long enough, we think, for launching more productive and far-reaching international discussions addressing the benefits and costs of a globalizing world economy.

The only way to marshal the leadership to address financial volatility and the other challenges of globalization is to convene a onetime meeting of heads of state or government. Making more than incremental progress will require effective, high-level political direction. Existing mechanisms are inadequate. G-7 membership is too narrow. The annual World Bank and IMF meetings are too preoccupied with finance. The United Nations is too large.

There is ample opportunity to convene a Globalization Summit before the end of next year. President Chirac's proposed meeting this fall could be broadened beyond finance; it could be tied to the next G-7 meeting in Japan, or built into the Millenium General Assembly of the United Nations in 2000.

Before another financial crisis strikes, a representative group of two dozen top leaders from the Group of Seven, emerging economies and low-income countries should meet to discuss globalization and how to ensure that the benefits are maximized and the costs minimized. Yet another G-7 meeting with precooked communiqués is a recipe for drift in the world economy, and perhaps for disaster. Mr. Sewell is president and Mr. McDowell a fellow of the Overseas Development Council, an international policy research institute based in Washington. They contributed this comment to the International Herald Tribune.

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