In These New Times

FE Editorial : G-7 + crisis = G-14

The Financial Express
Posted: Oct 11, 2008 at 0008 hrs IST

With the world in crisis, are seven countries enough to tackle it? Expansion of G-7 has been debated off and on ever since BRIC (Brazil, Russia, India and China) became a force to reckon with. This crisis may be the time to expand the club. World Bank president Robert Zoellick has been admirably clear on this, calling for G-7 to become G-14, adding India, China, South Africa, Mexico, Russia, Brazil and Saudi Arabia. It needs to be said that some of these countries are more important to global plans than, say, Italy, a founding member of G-7. Asian representation, in particular, is crucial because the big economies of this continent will grow even amidst the crisis at healthy rates, though disappointing by their own recent standards (see previous edit for India’s prospects). More big economies mean better coordination. How national actions can make a crisis worse was clear when Ireland’s unilateral declaration of complete guarantee of all bank deposit, a policy soon followed by countries like Denmark and Greece, began a large-scale transfer of funds within the EU, weakening already weak banks in other member countries of the EU which hadn’t guaranteed all deposits. Read the rest of this entry »