G-7 Offers East `Help for Self-Help'
TWO themes dominated the talks of the Group of Seven leaders here this week: reviving a sluggish world economy and helping Russia.
In a final communique released at the end of their three-day economic summit yesterday, the United States, Canada, Britain, Germany, France, Italy, and Japan said that "increasingly, there are signs of global economic recovery."
The recovery is expected to "gain momentum" in the second half of this year, said German Chancellor Helmut Kohl, the summit's host. Weak forces for growth
But Chancellor Kohl also acknowledged that "the forces for growth are still not strong enough." The G-7 economies, which together make up 63 percent of the global economy, are poking along at a discouraging 2 percent growth rate. Unemployment among the seven has increased 27 percent since 1990.
In the face of these conditions, leaders of the world's seven most industrialized nations pledged to "adopt policies aimed at creating jobs and growth," recognizing that "individual circumstances" in each country couldn't guarantee a completely coordinated approach.
Chief among the guidelines for growth outlined in the communique was the need for sound monetary and fiscal policy, especially concerning budget deficits. Summit participants praised efforts being made in Germany and Italy to control their deficits. They said that this would create conditions to lower interest rates and that lower interest rates would then spur on investment and jobs.
But summit participants said the biggest boost to job creation - and to the struggling economies of Central and Eastern Europe - would be a settlement of the long-stalled world trade talks, the General Agreement on Tariffs and Trade (GATT). The G-7 again set a target for completing the GATT talks; this time the deadline is the end of 1992. "I'm not only optimistic, I would go a little further and I would say that I really expect that by the end of this year we will at last reach this objective," Kohl sa id.
Timing appears to be the key to GATT. French President Francois Mitterrand is unlikely to do anything that might endanger a September referendum on the Maastricht Treaty.
"There will be more of a readiness on the part of the French after the referendum," said President Bush.
Like last year, the G-7 summit had a visitor from Moscow. But Russian President Boris Yeltsin's style - and the circumstances of his visit - was different from Mikhail Gorbachev's.
In his brash way, Mr. Yeltsin decided to come to the summit a day early, and summit leaders were obliged to set a place for him at the dinner table Tuesday night instead of receiving him after the summit yesterday afternoon. But the heads of state noted that Mr. Yeltsin is a man of action who has already carried out significant economic reforms.
They praised last week's agreement between the International Monetary Fund and Russian Deputy Prime Minister Yegor Gaidar, in which Russia is to lower its deficit and inflation in exchange for the release this August of $1 billion in IMF funds - the first slice of a total of $24 billion in aid, including $6 billion for a fund to stabilize the ruble if Russia stays the course of economic reform. A crucial difference
There is a crucial difference between the Gorbachev and Yeltsin visits, said a senior British official. Last time, he says, Mr. Gorbachev arrived with a 100-page economic plan "that made absolutely no sense." This time, he says, Russia is a member of the IMF and has agreed to an IMF plan of action.
"I think both sides have learned from last time that (a) we need an economic reform plan, and (b) if we get that coherent plan, then the G-7 needs to respond and I think that this time we've done both," the official said.
In all, Yeltsin can look forward to $4.5 billion in near-term assistance, according to a US official: the $1 billion loan from the IMF; $2.5 billion from expected debt rescheduling; and another $1 billion that will be released from the World Bank and the European Bank for Reconstruction and Development. Yeltsin also will receive technical and monetary assistance to improve the safety of Russia's nuclear power plants, though no amount was specified in the communique.
Canadian Prime Minister Brian Mulroney told his colleagues that the G-7 could be more generous with aid for the former Soviet Union and Eastern Europe, according to a Canadian official. But the prevailing opinion of the G-7 leaders was that Russia should receive "help for self-help," and that the most important thing was to create economic conditions in Russia that would attract private investment.
Not wanting to leave other countries in need on the sidelines, summit leaders underlined support for Central European nations, including a recommendation that funds earmarked for Poland's currency stabilization be redirected to support Poland's market reforms.