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Last Updated: Friday, 4 February 2005, 13:53 GMT
G7: ambitious or overblown?

By Evan Davis
BBC economics editor

Crowds in London's Trafalgar Square to hear an appeal from Nelson's Mandela
The G7 meeting is promoting a rousing agenda
The red carpet rolls out, and the long-awaited London premiere of the G7 extravaganza opens at last.

Surely, it's the hottest ticket in town?

True, the US is unfortunately sending along an understudy - Treasury Secretary John Snow has a cold and is staying at home. But nevertheless, the show is bound to be a hit.

Yet what exactly is the G7 finance ministers meeting?

It's probably best to think of it as being like a rather obscure Ibsen play, though the fanfare around it this time is making it seem like a new Andrew Lloyd Webber musical.

So a meeting that normally struggles to get off the business pages of the newspapers is suddenly a prime-time event.

There are demonstrations about world poverty, Nelson Mandela is in town, and some non-G7 countries have been invited along. And Gordon Brown is pushing his plan to help Africa.

Competing agendas

But it means that in this one G7 finance ministers meeting, there are two competing agendas.

There is one about world poverty, which will fight its way onto the table, and probably some progress will be hailed.

UK Chancellor of the Exchequer Gordon Brown on a visit to Africa in January 2005
Mr Brown's G7 theme is solving poverty in Africa

And there is another G7 agenda - a more workaday one, concerned less with the big issue of changing the world, and more with changing the currency markets. This is the familiar staple of finance ministerial gatherings.

While the crowds outside talk about debt, fair trade and aid, the issue in the front of the finance ministers' minds right now is more likely to be the dollar, and the Chinese currency, the yuan.

The dollar is uncomfortably low for the Europeans, and the yuan is uncomfortably low for pretty well everybody.

The G7 ministers can vent their frustrations and desires, argue about who is to blame for the global imbalances - is it the Americans importing too much, or the Chinese exporting too much? China has been invited along this time to hear the G7's views.

High expectations

But this meeting has a particular problem; whichever agenda you look at, expectations are too high. Whether it is the currency markets watching for a communique that might move markets, or the demonstrators outside wanting to Make Poverty History, the G7 finance ministers will struggle to deliver.

UK Chancellor of the Exchequer Gordon Brown and the Governor of the People's Bank of China, Zhou Xiaochuan
China's central bank governor can expect to hear plenty of complaints

On currencies, the G7 doesn't have the power to determine China's exchange rate policy, which is what it ideally wants to do.

And on poverty, there is no common G7 view on how to "make it history", so the meeting ultimately won't solve that.

So while it's the hottest ticket in town for the weekend, the audience may find itself curiously unfulfilled.

Fortunately, the G7 show has just begun - there are three more finance ministers meetings this year to pick up where this one stops.


BBC NEWS: VIDEO AND AUDIO
What the G7 ministers will be discussing



SEE ALSO
Mandela calls for poverty action
03 Feb 05 |  UK Politics
Blair launches appeal for Africa
27 Jan 05 |  Business
Brown in 100% debt relief pledge
28 Jan 05 |  Business
EU 'too slow' on economic reforms
27 Jan 05 |  Business
Economists warn on US debt crisis
26 Jan 05 |  Business
China continues breakneck growth
25 Jan 05 |  Business

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