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Putin's absence may overshadow G8 summit moves on economy and oil prices

This article first appeared in the St. Louis Beacon, May 18, 2012 - WASHINGTON – Leaders of eight of the world’s major economies have plenty of topics to discuss when they meet this weekend – including persistent economic doldrums, stubbornly high oil prices and the potential threat of Iran’s nuclear program.

But the Group of Eight (G8) summit at Camp David, Maryland, may well be notable for the absence of one of its leaders – Russian President Vladimir Putin – than for any progress on reviving the European economy, pressuring Iran to temper its nuclear ambitions or finding ways to keep oil prices stable.

At a time when Putin appears to be reassessing his nation’s relationship with the United States, the former and recently reelected Russian leader made a strategic choice by  scheduling his first state visit as president to China rather than attending the G8 meeting. In his place, he is sending former President Dmitry Medvedev to Camp David.

The G8 – the United States, Germany, France, Japan, Italy, the United Kingdom, Canada and Russia – is the successor to the G6, which had gathered the leaders of those powers (minus Canada and Russia) in France in 1975 to discuss economic and energy issues in the wake of the oil-price crisis of the previous year.

Putin’s absence would mark the first time one of the leaders had willingly opted not to attend. While he cast that decision in terms of domestic concerns, Putin seemed to be acknowledging the new reality of international economics: China, which is not a G8 member, is a rising superpower and major customer for Russia’s oil, gas and minerals.

Despite Putin’s absence, and in addition to the scheduled discussions about African food security issues, experts say the G8 summit may make news on several fronts:

  • After weeks of negotiations, the U.S. and several other countries may agree to tap into their emergency oil reserves in a coordinated fashion. The temporary oil-price dip that would follow that release would be a sign of solidarity with the European Union, which starts a full embargo of Iranian oil in July.
  • President Barack Obama is scheduled to meet Friday with the newly elected French president, socialist Francois Hollande, who may prove to be an ally of Obama in pressuring German Chancellor Angela Merkel to support a more extensive stimulus package to help bail out troubled European economies.
  • While there will be intense discussions about coordinating economic sanctions or other moves against Syria and Iran, the absence of Russia’s president – as well as the fact that China is not a G8 member – dims the outlook for significant action on that front.

“We need the Russians and the Chinese to be much more helpful with Iran,” said Sen. Roy Blunt, R-Mo., a member of the Senate Intelligence Committee, adding that he was disappointed that Putin chose not to attend the G8 summit.
Blunt told reporters Wednesday that it “could solve one of the world’s big problems if they would join the U.S. and Europeans and others to actually put the final economic pressure on the Iranians” to slow their nuclear ambitions.

While they won’t attend the G8 summit, Russian and Chinese leaders – as well as Obama – are expected to attend the G20 summit in Mexico in mid-June.

That group of the world’s 20 biggest economies, including fast-growing China, India and Brazil, is viewed by some as more representative than the G8, whose countries represent only 14 percent of the world population but half of the international economic output.

“The idea of the G6 made sense back in 1975, when those six nations represented the world’s most powerful economies,” said Richard C. Longworth, a senior fellow at the Chicago Council on Global Affairs. “But with the rise of China, India and Brazil in recent decades, the G8 represents a much smaller part of the world economy.”

Moving from Chicago to Camp David

This year’s G8 summit was originally planned for Chicago – arranged in tandem with the NATO summit that will start Sunday in the Windy City – but Obama decided last month to move the G8 to Camp David, a White House retreat in Maryland.

The main reason given was that the more secluded site would allow more personal interactions among the leaders. But another reason was that demonstrators cannot get very close to the secluded Camp David, other than the nearby small town of Thurmont or a couple of state parks.

Even so, protestors from the Occupy movement and other groups are hoping to make a splash as they demonstrate at sites where they allowed to gather. The more massive protests, however, are scheduled to take place in Chicago starting on Sunday at the NATO summit.

Obama is scheduled to meet with the new French president and some other European leaders at the White House on Friday morning to discuss a more active approach to solving the European economic crisis, amid fears that prolonged political instability in Greece could lead to its withdrawal from the Euro common currency.

Later on Friday, Obama will helicopter to Camp David for the full G-8 summit, which his staff says will “address a broad range of economic, political and security issues.” While White House officials would not discuss whether tapping into strategic oil reserves would be on the table for discussion, other sources said it would be at least discussed.

A number of congressional Democrats, including Sen. Claire McCaskill, D-Mo., have urged Obama to release oil from the nation’s Strategic Petroleum Reserve

“While the nation’s economy slowly recovers and Americans continue to face serious financial challenges in their everyday lives, I believe you must act to provide relief in gas prices,” McCaskill wrote in a Feb. 23 letter to Obama.

“Specifically, I urge you to act without delay to release adequate reserves of oil from the Strategic Petroleum Reserve (SPR) ... to stabilize gas prices here at home now.” 

While the price of gasoline at the pump has dropped a bit in recent weeks, it remains high – and could possibly rise again once the full sanctions against buying Iranian oil kick in. But Blunt and most other Republicans argue against tapping into the oil reserve, saying that any benefit would be temporary.

According to a report by a Japanese news agency and Reuters, Obama plans to raise the issue of oil reserves on Saturday when the G8 leaders discuss energy issues and the Iranian sanctions. While Germany has resisted tapping into its stockpiles, and the chief of the International Energy Agency has questioned the need for such a step now, the leaders of Japan and France appeared to be willing to take part in a coordinated release.

“As an economic matter, the timing [of an oil release] would require explanation,” international energy expert David Goldwyn told Reuters. “As a foreign policy tool this would be a smart bomb detonated in the heart of the Iranian economy with no physical casualties.”

African ‘food security’ initiative on G8 agenda

Start of update: At a symposium Friday on food security and global agriculture -- attended by several African leaders, including the president of Ghana and prime minister of Ethiopia -- Obama announced that the G8 would launch a new partnership to reduce hunger in needy nations in Africa by increasing investments in regional agriculture.

The initiative, called the New Alliance for Food Security and Nutrition, will try to mobilize private capital and resources for African farming from the G8 countries and several international development organizations -- including the World Bank -- to try to reduce hunger among an estimated 50 million people.

Obama told the symposium that the G8 leaders "face urgent challenges -- creating jobs, addressing the situation in the eurozone, sustaining the global economic recovery. But even as we deal with these issues, I felt it was also  important, also critical to focus on the urgent challenge that confronts some 1 billion men, women and children around the world -- the injustice of chronic hunger; the need for long-term food security."

A White House fact sheet says G8 leaders would announce the signing of letters of intent from nearly 50 local and multinational companies to invest over $3 billion across the agricultural value chain in Grow Africa countries. Another 60 companies have signed a declaration of support for developing African agriculture and public-private partnerships.

Obama said that African leaders, including four who attended Friday's meeting -- the presidents of Ghana, Tanzania and Benin as well as the prime minister of Ethiopia -- had agreed to help coordinate the private and international efforts, with an emphasis on helping small farmers essential to African agriculture. In addition to the World Bank, other international groups that will be involved in the initiative are the African Development Bank, the United Nations’ World Food Program and the International Fund for Agricultural Development.

"Food security is a moral imperative, but it’s also an economic imperative," Obama said Friday. "History teaches us that one of the most effective ways to pull people and entire nations out of poverty is to invest in their agriculture.  And as we’ve seen from Latin America to Africa to Asia, a growing middle class also means growing markets, including more customers for American exports that support American jobs." (End of update)

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