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Europe: G-7 Faces Sprawling Summit Agenda This Weekend

When leaders of the Group of Seven (G-7) leading industrialized democracies and Russia meet this weekend (June 18-20) in the German city of Cologne, they'll be pondering an agenda as vast and varied as the territory of the G-7 itself. Topping the list of agenda items is global economic coordination and debt relief for the world's poorest nations. But Kosovo and the broader issue of the West's relations with Russia could well end up overshadowing talks. Our correspondent Mark Baker -- who is traveling to Cologne for the summit -- previews the main issues.

Prague, 17 June 1999 (RFE/RL) -- The G-7 summit is traditionally an economic forum. Leaders from the world's most powerful democracies -- the U.S., Japan, Germany, France, the United Kingdom, Italy and Canada -- meet once a year to coordinate economic policy and adopt troubleshooting measures.

Despite events in Kosovo, host nation Germany insists that this year's event will focus on economics, as well. In a briefing on Tuesday, the German government said it would promote an agenda to improve the financial architecture of the world economy and to offer debt relief for developing countries.

Analysts say the point of the first initiative is to improve the transparency of international capital flows to avoid future crises like the one in Asia last year when banks and funds were able to speculate against currencies and force governments to devalue. That crisis provoked an economic downturn that is still being felt around the world.

Aarel Lannoo is a senior researcher with the Brussels-based Center for European Policy Studies. He says the German initiative aims to control the behavior of large speculative funds known as hedge funds and to improve the regulation of offshore tax and registration havens, such as the Cook Islands in the Pacific or the Cayman Islands:

"[There are] three issues: mainly to look at the highly leveraged institutions, whether they need to be more regulated; secondly, to look at places where these highly leveraged institutions or hedge funds are registered, at offshore places, whether these offshore places should not be more highly regulated; and thirdly, to look at the fundamental nature of capital flows and try to see whether or not that side of the overall nature of the fundamental system can be improved."

Germany's ambitious debt-forgiveness plan could wipe out as much as $70 billion in debt owed by 36 of the world's poorest nations. Most of the debt would involve money owed to international financial institutions.

Part of the overall economic focus will also center on Russia and Western efforts to encourage economic reforms there.

German Chancellor Gerhard Schroeder said yesterday (Wednesday) that the seven nations will encourage Russia to revive its reforms with new vigor. He said the West is ready to help "if Russia is ready to help itself."

As important as these economic intitiatives are, however, the timing of the summit ensures that Kosovo and political relations with Russia will play a leading role.

U.S. President Bill Clinton is making his seventh appearance at a G-7 event and arguably his most important trip to Europe since taking office. He is due to meet with his Russian counterpart, Boris Yeltsin, on Sunday. The talks are expected to focus on Russia's involvement in the Kosovo peacekeeping force (KFOR).

Clinton enjoys a strong position going into the summit, based on the success of the NATO air campaign against Yugoslavia and the strength of the U.S. economy.

Yeltsin's situation is less clear. Russian participation at G-7 events -- alongside the world's wealthiest nations -- is always awkward. Given Russia's recent economic crisis and debt default, the country's claims to be included in the elite group -- and to rename it the G-8 -- look shakier than ever. There are also lingering questions over Yeltsin's personal health and the stability of the new Russian government.

Nevertheless, Russia played a key role in reaching a diplomatic solution in Kosovo. That fact -- and the continued presence of Russian soldiers at the Pristina airport in Kosovo (pending clarification of Russian participation in KFOR) -- assure that Clinton will give Yeltsin his full attention.

For Germany, the timing of the summit couldn't be better. Germany took full advantage of its rotating co-presidencies of the G-7 and the European Union to promote Russian involvement in the Kosovo peace settlement and to avoid a ground war there. Germany's economy -- the world's third-largest -- is also showing signs of recovery.

Chancellor Gerhard Schroeder is likely to leverage these advantages by pushing his government's economic initiatives, as well as a Balkan economic reconstruction plan that features large German and EU involvement.

Correspondents say Germany may also use its momentum to block loans to Ukraine for two nuclear power plants to replace the potentially dangerous plant at Chornobyl. The ecology-minded Green Party in Schroeder's coalition government argues that the West should not promote nuclear power for Ukraine in any form.

Ultimately, Germany's success in pushing its own agenda at the summit will depend on its ability to keep the attention of the other nations from straying too far to international hot spots and focused instead on the economic matters at hand.

Lannoo at the Center for European Policy Studies says political crises, such as the conflict over Kosovo, will always pop up to grab the headlines. But he said efforts to improve the global economic system are also important and may be of more lasting value.
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    Mark Baker

    Mark Baker is a freelance journalist and travel writer based in Prague. He has written guidebooks and articles for Lonely Planet, Frommer’s, and Fodor’s, and his articles have also appeared in National Geographic Traveler and The Wall Street Journal, among other publications.