First, Clinton Mutates NATO; Now, The G-7: Why Denver Should Be The First — And Last — ‘Summit Of The Eight‘
(Washington, D.C.): President
Clinton’s decision to transform the Group
of Seven (G-7) meeting in Denver on 20-22
June into a “Summit of the
Eight” comes on the heels of, and
parallels, his evisceration of another,
vital Western inter-governmental
institution: The North Atlantic Treaty
Organization (NATO).
Unfortunately, just as Clinton’s
“Founding Act” which grants
Russia both a “voice”
and a de facto “veto”
over the West’s premier security
arrangement, (1)
his decision to make Russia what amounts
to a full-fledged member of the G-7 will
likely mutate this important economic and
geostrategic coordinating mechanism. Such
a step promises, at best, to condemn the
Group of Seven to irrelevance.
More likely, it will turn this conclave
into yet another vehicle for abetting Moscow’s
agenda — at the expense of the U.S. and
its allies.
Dumbing Down the Discussion
Such a prognosis is borne out by what
is — even by G-7 standards (2)
— an extraordinarily anodyne set of
discussion items for the Summit of the
Eight. According to Deputy Secretary of
the Treasury Lawrence Summers, (3)
the topics will be:
- “…ways to address the
profound economic and social
effects caused by the aging
of our societies.” - “…provid[ing] the degree
of flexibility necessary for
companies to adapt [to structural
changes in the
economy]…produced by technological
change and economic integration.“ - “…how to cope with the
risks to global financial
stability that have accompanied
the benefits of financial
integration.” - “endorsement of a concerted
international strategy to assist emerging
economies in
strengthening their financial
systems, including a new,
universally applicable set of
core principles for banking
supervision.” - “…a broad international
effort to strengthen growth and
development in Africa.” - “…[urge] nations by the
year’s end to participate in an
international convention to criminalize
bribery.“
In addition, Secretary Summers
declared that the G-7 want to aid Russia
in its bid to penetrate every other major
international economic organization by
“…see[ing] Russia join the Paris
Club in 1997, the World
Trade Organization in 1998
and the Organization for Economic
Cooperation and Development at an appropriate
time in the future.”
A Real Agenda
Unfortunately, there are far more
pressing economic and geostrategic
developments that should be on the
Western industrialized democracies’
agenda — but cannot be, lest Moscow’s
direct and problematic involvement in
each of them prove inconvenient, if not a
show-stopper. These include:
- Assuring the West’s
Access to the Vast Hydrocarbon
Resources of the Caspian Basin:
The huge oil and natural gas
deposits of the Caspian Sea
region — by some estimates
second only to those of the
Persian Gulf in terms of
exportable surpluses for the 21st
Century — would enable Western
nations, including the United
States, to reduce their reliance
on Mideast sources. (4)
Russia, however, appears
determined to: monopolize
transportation routes; challenge
the current demarcation of
sovereign control over the
central deposits of the Caspian
Sea; and destabilize the
government of Azerbaijan — the
one Western-oriented, secular
Muslim state of the region that
is anxious to do business and
enhance security cooperation with
the United States and its allies. (5) - Reconstituting an
Effective, Multilateral Export
Control Regime:
President Clinton has repeatedly
issued Executive Orders declaring
the proliferation of weapons to
be an “extraordinary threat
to the national security” of
the United States. He has also
proclaimed himself
“personally committed to
developing a more intelligent
export control policy, one that
prevents dangerous technologies
from falling into the wrong
hands….” What he has
determinedly refused to
acknowledge, however, is that the
“wrong hands”
includes Russia — a
preeminent diverter of militarily
relevant technology and
proliferator of dangerous weapon
systems. (6) - Addressing the Abuse of
the U.S. and International
Securities Markets: Both
Russia and China are increasingly
issuing dollar-denominated and
other bonds as a means of
attracting large sums of
inexpensive, undisciplined and
largely non-transparent cash. In
addition, Moscow and Beijing
appreciate that this greatly
expanded borrowing base has the
further virtue of penetrating key
constituencies in Western
economies and their societies
that have, heretofore been
largely beyond the reach of
communist recruiters, national
military establishments and
intelligence services (i.e.,
securities firms, pension funds,
insurance companies, corporations
and individuals). Over time,
arguably hundreds of firms and
many thousands — if not millions
— of people in the West will
have a vested financial interest
in opposing the imposition of
meaningful economic sanctions,
containment strategies and other
penalties that might be
appropriate responses to Russian
and/or Chinese misdeeds. (8) - Preserving — and
Broadening — Economic Sanctions
as a Western Policy Tool:
Western allies, and their
respective business communities,
have increasingly sought to
undermine and delegitimate the
use of economic sanctions — the
only middle ground between empty
rhetoric (read, diplomatic
protests) and military action.
The West cannot afford to ignore
the fact that trade, as well as
financial, sanctions may be the
most effective and certainly
the most proportionate
response to the predations of
ever more sophisticated
proliferators, terrorists, drug
cartels, money launderers,
criminal syndicates, technology
thieves — and the hostile
military establishments that
often are behind or collaborating
with these subversive elements.
The G-7 should make clear
in the Denver Summit’s political
declaration that any effort to
destabilize Azerbaijan or
otherwise restrict the free flow
of Caspian oil to world markets
will be met with a unified
Western response aimed at
countering such strategically
threatening actions.
What is more, as Dr. Peter
Leitner — a Senior Strategic
Trade Analyst in the Clinton
Defense Department — told the
Joint Economic Committee on 17
June 1997, thanks to a deliberate
Clinton Administration policy
aimed at eviscerating the
“national security export
controls that we came to know and
rely upon” during the Cold
War, all there is to show for
this Mr. Clinton’s “more
intelligent export control
policy” is:
“…a handful of
weak, ineffectual regimes
which are little more
than cardboard cut-outs
designed to maintain the facade
of an international
technology security
system, but [that] offer
virtually no protection
from nations seeking to
develop advanced
conventional weapons or
weapons of mass
destruction.” (7)
The G-7 must recognize the
urgent need to reconstitute an
effective multilateral export
control regime on the model of
the Coordinating Committee on
Export Controls — an arrangement
that maintains, and enforces,
controls on strategic technology
exports to Russia and China so
long as these nations engage in
the diversion of such technology
to their respective militaries or
to the West’s other potential or
avowed adversaries.
As Roger W. Robinson, Jr., the
first occupant of the Casey
Institute’s William J. Casey
Chair, has documented, (9)
in recent years China has issued
over $6 billion in
dollar-denominated bonds —
financial instruments that have
been offered by enterprises which
are, in at least a number of
cases, “… closely
connected to the People’s
Liberation Army (PLA) and the
Chinese military industrial
complex.” These bonds are
facilitating the PLA’s efforts to
raise funds to underwrite its
offensive military build-up,
conduct espionage, technology
theft and influence operations in
the United States, suppress human
rights and pursue other
activities inimical to Western
interests.
The G-7 nations should
create forthwith a multilateral,
security-minded screening
mechanism that would interact
with their respective
intelligence services, the NATO
economic secretariat and the
OECD, to review prospective
foreign borrowers (particularly
Chinese and Russian state-owned
enterprises and banks). The
purpose of such reviews would be
to ensure that these entities are
not engaged in — or in some way
advancing — activities harmful
to Western security interests,
principles and values.
The G-7 must bear in mind
Benjamin Franklin’s admonition
that “We will hang together
or hang separately.” The
West must cooperate in the
promulgation and enforcement of
economic sanctions — even in
instances where some perceived
short-term losses will accrue to
their national or business
interests (e.g., in terms of
export opportunities, job
creation, etc.). In addition,
greater use must be made of
financial sanctions, particularly
in relation to Western bond
markets, as such sanctions more
often than not involve no
underlying trade transactions,
projects, jobs or
people-to-people contacts. Hence,
they entail less economic damage
to Western economies and risk
less political blow-back than
other types of economic
sanctions.
The Bottom Line
Unless and until such items are
considered on the G-7 agenda, this
organization will fail to serve the sort
of catalytic and coordinating function
for common Western interests to which it
has, on occasion at least, contributed in
the past (notably, the Williamsburg
economic summit of May 1983 where a joint
strategy was implemented on a
security-minded East-West trade, energy
and financial regime and the decision to
deploy Pershing II and Ground-Launched
Cruise Missiles in Europe was affirmed).
Since the inclusion of Russia in these
talks will virtually ensure that no such
deliberations can occur in Denver, it can
only be hoped that the next economic
summit will again be a Group of Seven
meeting, one in which the West’s critical
economic and geostrategic interests can
be candidly addressed.
– 30 –
1. See the Center
for Security Policy’s Decision
Brief entitled Founding
Act or Final Act for NATO? (
May 1997).
2. For example, see
the Casey Institute’s Perspective
entitled Stealth Summit: The
Incredible Shrinking G-7 (
1 July 1996).
3. Remarks by
Secretary Summers before a World Trade
Conference in Denver, 10 June 1997.
4. See in this
connection the Center’s Caspian
Watch Series: Caspian
Watch #6: Weinberger Issues Timely Alert
Against Interest Group’s Hijacking of
U.S. Caspian Policy (
May 1997); Caspian Watch #5:
Senator Byrd Takes the Lead in Securing
US Access to 200 Billions of Barrels of
Oil in the Caspian Sea (
February 1997); Caspian Watch
#4: House-Senate Conference Must Strike
Proper Balance for American Interests
(No. 96-D
85, 17 September 1996); Caspian
Watch #3: Center, Washington Post Agree
— Congress Must Do The Right Thing By
U.S. Interests in the Caspian Basin
(No. 96-D
76, 1 August 1996);
Caspian Watch #2: The Great Game Is On —
Will the Republicans in Congress Play?
(No. 95-D
87, 1 November 1997); and Caspian
Watch #1: Russian Power-Plays on ‘Early
Oil’ Hallmark of Kremlin Expansionist
Past — And Future? (
2 October 1995).
5. It is worth
noting that, toward this end, Russia has
been increasing its military presence in
the region, arming neighboring rival and
territory-seeking Armenia, and conspiring
with radical Islamic Iran.
6. Russia has,
according to former Secretary of Defense
Caspar Weinberger and Peter Schweizer,
provided the Iranians with
“nuclear-related technologies,
missile components and other advanced
equipment” with the stated purpose,
per a June 1996 joint statement,
“…of preventing the presence of
[Western] power in the Caspian Sea.”
What is more, Russia has expressed an
intent to transfer supersonic SS-N-22
missiles (a missile designed to attack
U.S. AEGIS ships and aircraft carriers)
to China. If past practice is any guide,
China will be willing, in due course, to
transfer the SS-N-22 to Iran — enabling
that nation further to threaten the free
flow of oil through the Straits of
Hormuz.
7. See the Center’s
Press Release entitled Profile
in Courage: Peter Leitner Blows the
Whistle on Clinton’s Dangerous Export
Decontrol Policies (
June 1997).
8. For more
information on the implications of
Russian bonds on Western markets, see the
following Casey Institute Perspectives
entitled: If You Like the
Rigging of the Lebed Dismissal, You’ll
Love the Rigging of the Global Credit and
Securities Market (
17 December 1996), The Debate
Over Russia’s Financial
“Break-out”; Where Will It End
for U.S. Taxpayers, Interests?
(No. 96-C
110, 4 November 1996) and Russian
‘Bondage’: Moscow’s Financial Breakout
Gets Underway with Wildly Oversubscribed
Eurobond Sale (
26 November 1996).
9. For more
information concerning Chinese
penetration of Western bond markets see
the following Casey Institute products: Dangerous
Upshot of Clinton-Gore’s China ‘Bonding’:
Strategic Penetration of U.S. Investment
Portfolios (
April 1997), USA Today
Illuminates Case for Urgent Action To
Halt Chinese ‘Bondage’ (
May 1997) and Non-Renewal of
MFN for China: A Proportionate Response
to Beijing’s Emerging, Trade-Subsidized
Strategic Threat (
June 1997).
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