“The Parties agree that an armed attack against one or more of them in Europe or North America shall be considered an attack against them all … if such an armed attack occurs, each of them … will assist the Party or Parties so attacked by taking … action as it deems necessary … to restore and maintain the security of the North Atlantic area.”

– Excerpt from the Washington Treaty, Article IV

“The problem is the willingness and the capability of those countries does not necessarily match their ability to spend …”

– Ajbinder Sull, President and Chief Investment Officer, Pacifica Partners Inc.

* * *

The Chicago NATO Summit yielded an important, albeit somewhat imprecise, message regarding NATO’s commitment to Smart Defense: In light of economic turmoil, member countries are dedicated to sharing resources and working together to develop capabilities they could not otherwise achieve.

Already, NATO has implemented a handful of initiatives that fall under the canopy of Smart Defense. In a press conference following the Summit, NATO Secretary General Anders Fogh Rasmussen called attention to an agreement between NATO allies in the Baltic States to take turns patrolling that airspace. Doing so, Rasmussen said, allows the countries to contribute additional resources to other areas, such as Special Forces.

During the Summit, NATO members also agreed to what Rasmussen called a “robust package of more than 20 multinational projects” moving forward. The agreements range from acquiring remote-controlled robots that help in clearing bombs, to pooling and sharing boats for patrolling tumultuous areas such as the Horn of Africa.

But the challenge ahead will be whether NATO countries, amid escalating economic turmoil, can make good on their intentions financially. Even as Rasmussen speaks of plans to purchase, acquire and share, NATO members are slashing their defense budgets — the irony, of course, being that some countries may find themselves unable to financially support the programs specifically designed to ease that burden.

For example, Spain presented its 2012 budget in April, and announced a plan to cut €27 billion. Although the defense sector isn’t the hardest hit, the proposed budget nevertheless calls for €6.3 billion in defense cuts.

In February, Italy’s Ministry of Foreign Affairs announced that Italy would reduce its fighter jet order by more than 30 percent, from 131 F-35s to 100 or slightly fewer. The Ministry reported that overall cuts also include personnel cuts: 22,000 soldiers, 7,000 Navy sailors and 10,000 members of the Air Force.

Greece also plans to cut defense spending significantly. Cuts would include a reduction in the purchasing of military material by €300 million, as well as a reduction in other military expenses by at least €100 million.

Speaking of Greece – it’s impossible to mention the deteriorating country without acknowledging the growing skepticism that it may soon exit the eurozone. Martin Edwards, a political scientist and member of the New Rules for Global Finance Coalition, said Greece’s exist from the eurozone would have tremendous global repercussions.

“It’s not because the Greek economy is so big – far from it,” Edwards said. “It’s that the spectrum of that leaving is going to produce all sorts of turmoil in markets, and I don’t think we’re ready for the level of pressure that Spain, Portugal and Italy are going to fall under.”

“Because once Greece leaves,” Edwards continued, “the question is ‘OK, who’s next?’”

In light of widespread budget cuts and the eurozone’s uncertain future, concrete examples of Smart Defense may be harder to define. It is worthwhile, then, to look at a sample of NATO countries in the framework of their niche capabilities, or services they specialize in and contribute to the alliance.

Sally Painter, Chief Operating Officer at Washington-based consultancy Blue Star Strategies and a member of the U.S. Committee on NATO, said a focus on unique capabilities is particularly important when considering NATO’s smaller member countries.

“For instance, smaller countries aren’t going to have a huge military air force,” Painter said. “But they could do other things.” Painter offered Estonia and Latvia as examples. While Estonia specializes in Special Forces and cyber security, Painter said, Latvia specializes in de-mining capabilities.

Poland, another example, specializes in training and deploying armed forces. Poland Armed Forces regularly contribute warships to NATO’s maritime operations, and has helped train Afghan Army and police forces.

“It’s interesting because some of the smaller countries have per capita the largest group of people on the ground,” Painter said. “And so there is recognition that it may not be your dollars, but you’re giving us something even more important – you’re giving us your people.”

But some economists say willingness without spending power might not be enough in times of severe financial turmoil.

“I think the issue it comes down to,” Sull said, “is if other European countries are no longer willing to shoulder their share of the burden, or they aren’t able to, then perhaps NATO will have to shrink its mission, it’s mandate or the number of members.”

Americans know as well as anyone how politics can get in the way of progress. For the Eurozone, it’s same song, different verse.

At a meeting of the European Parliament committee meeting on May 31, Mario Draghi, European Central Bank president, called the Eurozone “unsustainable.” During the same meeting, International Monetary Fund leader Christine Lagarde denied that a bailout was being prepared for Spain, while Spain’s economy minister, Luis de Guindos called for Berlin’s help. All this came after a seemingly staid meeting of the world’s top economic powers at the G8 summit in May.

The release of the Camp David Declaration following the summit indicated the member countries’ philosophical shift toward growth measures for a European economic recovery. In fact, the word “growth” appeared 10 times in the document’s 500-word section on the economy.

It seemed that Germany, previously the strongest proponent of European austerity, had taken a revised stance.

“The G8 summit has really marked an important moment highlighting the change in position,” said Domenico Laurenti, senior fellow at The Brookings Institution. Angela Merkel’s “fiscal consolidation policies are being contradicted.”

To some economists, the G8 summit’s conclusions seemed to only treat the symptoms rather than the infection itself. The proximity of the NATO summit overshadowed much of what the G8 needed to accomplish.

“It seemed to me while NATO was fiddling, Greece was burning,” said Sean Kay, an Ohio Wesleyan University professor and author who specializes in international politics. “These two large meetings produced almost nothing for one of the most serious crises.”

“In a European context, growth versus austerity is a non-argument,” said Steve Dunaway, an adjunct senior fellow for the Council on Foreign Relations. “A lot of economists have strongly urged growth versus austerity. It’s easy to say that when it’s other people’s money financing growth.”

No country knows that better than Ireland, which recently voted to ratify the deficit-fighting European Fiscal Treaty Referendum. Passing with a 60 percent vote on June 1, the treaty will add to the already dire straits of the Irish people, who are already taking a huge tax hit as an attempt to keep the country from going bankrupt.

If Europe is to truly spark the growth called for in the Camp David Declaration, investments will have to be made, and that money will need to come from somewhere. The declaration underscores the need for boosting the Eurozone countries’ private sectors, as well as increasing public-private partnerships.

While this won’t necessarily mean the Acropolis would become the Coca-Cola Acropolis, EU leaders will have to find new ways to dig themselves out of debt.

“You can’t, with conventional means, pursue both austerity and growth,” said Alan Deardorff, associate dean and economics professor at the University of Michigan who has consulted for several international economic and trade organizations. “There’s an inherent contradiction in the two objectives they have in mind.”

He explained that the obvious way to stimulate growth is to spend more or tax less, both of which increase deficits. This would be the exact opposite of austerity. Deardorff said there are attainable fixes such as removing barriers for trade and reducing friction in labor markets, but that’s where politics get in the way.

“What’s important to keep in mind is the lack of physical integration in the EU,” said Jakob Thomas, research analyst at the Milken Institute, an economics think tank in Santa Monica, Calif., highlighting the fundamental differences in economic makeup for each of the European Union member countries. “There needs to be some other equalizer.”

Some ideas on the table include: issuing Eurobonds, a consolidated debt instrument sold by the EU as a means to fund the Eurozone; increasing lending from the European Investment Bank to boost the private sector and infrastructure projects; and lifting regulatory barriers that limit hiring and firing abilities, adding flexibility to the labor market.

The Eurozone member countries were having to wait until the next EU summit on June 28 and 29 to see if there will be any political muscle behind these ideas.

And economic experts aren’t optimistic about any quick movement forward.

“I don’t see the G8 doing much,” said Mark Weisbrot, co-director for the Center on Economic and Policy Research. “It’s really up to the European authorities — i.e. the Troika [the EU, IMF and ECB] — to put an end to this mess, and they are moving quite slowly at present.”

BY PREETI UPADHYAYA

In the saga of the financial crisis crippling the Eurozone, it is fitting that Greece has been the currency union’s Achilles Heel.  The country is running on fumes.  Under a caretaker government, its coffers are nearly empty and there are legitimate fears that by the end of June, Greece will be unable to qualify for a second round of bailout disbursements negotiated by the EU and the International Monetary Fund.

On top of that, the radical leftist anti-austerity party Syriza came in second place in last month’s elections and its leader, Anthony Tsipras, has laid out specific policy proposals that are in direct opposition to the country’s financial backers.  The combination of these forces has turned the once distant possibility of Greece exiting the Eurozone into a much more plausible event.

However, experts say there is little incentive for either the Greeks or the rest of the Eurozone for an exit to happen.  An exit from the Eurozone is unprecedented, and the cost of Greece leaving is difficult to calculate, though the figure has been roughly estimated between 600 billion and one trillion euros.

A Greek exit “would trigger a huge wave of contagion and uncertainty throughout the Euro area.  A Greek exit would especially endanger the adjustment efforts in Italy and Spain, and we’re talking about a potential meltdown of the whole Eurozone,” said Domenico Laurenti, senior fellow in the Global Economy and Development Program at the Brookings Institution in Washington, D.C.

Greece’s economy would also suffer tremendously were it to leave.  Without aid from the European Union and the International Monetary Fund, Greece would likely see severe economic contraction and might enter a long, painful period of slow rehabilitation.  It would also be isolated from most of its major trading partners.

“Essentially Greece would be cut out of the European markets.  As long as they stay, Europe will provide a better anchor of stability that goes well beyond the common currency.  Were Greece to leave the Eurozone and the EU, the anchor of stability would be lacking and there would be financial panic all over the country, which could trigger adverse political actions,” said Laurenti.

There are plenty of arguments suggesting that a Greek exit from the Eurozone is not a matter of if, but when. The country’s ballooning government debt and rigid economic structure make it extremely uncompetitive on the global market.

Steve Dunaway, formerly a senior official with the International Monetary Fund, explained that while an exit from the Eurozone might be initially very shocking and painful, it could be the best option for Greece in the long term.

“The benefit is that the Greeks would get their old currency back and an immediate, sharp exchange rate depreciation which would help make the country more economically competitive, especially in terms of tourism,” Dunaway said.

Greeks will go to the polls to elect a new government on June 17, and this election will be a deciding factor in the country’s economic fate.

“The Europeans have factored [Greece’s situation] into their policy plans and as long as Greece will be able to form a pro-European, pro-Reformist cabinet, they will find a solution,” said Laurenti.

He added, “These are uncharted waters and with such a complex situation and multiple players, an unexpected bad event could happen that could escalate the crisis and push Greece out.”

If Greece in fact cannot make the necessary adjustments to remain in the Eurozone, it will be an unprecedented change in the twelve-year-old currency union, and the economic and political ramifications are largely to be determined.  Fears of a domino effect are at the top of the minds of policymakers.  If Greece goes, the next countries likely to follow suit are Spain and Portugal, and potentially Italy.

“One of the benefits of a currency union is that it lowers transaction costs and increases trade.  The smaller the union gets, the less these benefits apply, so the less attractive the EU becomes altogether.  Nobody wants to set this precedent,” said Jakob Thomas, a research analyst at the Milken Institute, a Santa Monica, California- based economic think tank.

And while Greece constitutes only 2% of the Eurozone’s GDP, Spain, Italy and Portugal are a “really systemic component of the Euroarea”, said Laurenti.

Until Greece’s elections are determined, it is a waiting game to see whether the country will remain in the Eurozone.  However frightening the possibility is, a Greek exit from the Eurozone is not a deliberate policy on anyone’s part.  Not only would Greece be leaving the currency union, it would also have to forgo its membership in the European Union.

“Keeping Greece in is important to the stability of the Eurozone, which is important to the stability of the whole global economy,” said Laurenti.

A recent update on G-8 actions to improve food security left some international organizations calling for more. The Camp David Accountability Report detailed the progress of G-8 members on fulfilling commitments to the L’Aquila Food Security Initiative that began in 2009. The $22 billion program was created to help low-income countries decrease the vulnerability of their food and agricultural systems, as well as to halve hunger and poverty.

Each participating country is at a different stage of fulfilling its commitment before the deadline at the end of 2012, the report said.  And, although L’Aquila donors will commit 99 percent of the funds by then, the report and many organizations such as ActionAid, point out that disbursed funds are a better measure of progress. To have the most significant impact, some argue, the disbursements need to be sped up.

“The disbursed money is money that’s reaching people,” said Katie Campbell, a senior policy analyst at ActionAid. “Governments can commit money but it can take years to get to the field. There’s not necessarily a time frame on that commitment.”

G-8 members are meeting this May against a backdrop of one of the worst global recessions in history, and the best course of action for recovery is the hottest topic up for discussion at their summit.

The countries’ leaders need a meeting of the minds to figure out how to boost their sluggish economies, but economists say many factors are dragging down growth. For starters, the United States and Europe have a sensitive symbiotic economic relationship, which continues to upset the slow improvement.

“Whenever bond markets have a suspicion that these political responses are insufficient, you get increasing spreads and high volatility.  I do expect this (slow growth) to continue for quite some time,” said Francisco Torralba, a Morningstar economist.

“This takes many quarters for it to be clear for everyone. The more austerity you have, the less growth, then the more unemployment, and tax revenues decrease, so the debt hole increases,” Torralba said.

Recovery in the Eurozone presents a special problem because of its distinction as a group of individual economies trying to come to a consensus before making major changes, such as hammering down an acceptable austerity program.

“They’re bickering about the size of it,” said Martin Edwards, associate professor of international relations at Seton Hall University.  “External observers are saying, ‘The point of creating this reserve is to make it so damn big that you can’t use it.’

If one country had a financial hiccup, he said, the EU could easily handle that kind of austerity agreement, but when multiple countries are in trouble, and because EU member countries have to make decisions collectively, it can become a long debate about who would get more or less money.

As an example, he said, the German public is getting weary of lending money to help other countries. “The bill is effectively becoming due for Germany. They’re dragging their feet, which is obviously a problem.”

A push for fiscal union in the EU – austerity agreements are only one example of that – is not new.  But now, Edwards said, European institutions such as the European Central Bank and the IMF aren’t creating incentives for countries to keep their sovereign budgets down, which is stifling any movement forward.

Member countries are currently allowed to handle their own fiscal policy, and some are choosing to cut sovereign budgets as a short-term fix.  Torralba said this presents a problem.

“Spain in particular has chosen to implement the fiscal austerity goals that are far too aggressive,” he said. “They’re just damaging to the economy in the short term,” he said, adding that a timeline of 10 years instead of three for Spain to reduce its deficit would be more realistic and less damaging.

He explained Spain and other countries leave many fiscal decisions to regional governments, and it can be slow-going to have these smaller decision-makers look at the bigger, global economic picture when global financial groups ask them to.

The slow recovery also calls into question the viability of global financial institutions in their current state and under the current leadership. Though the IMF has been traditionally headed by a European and the World Bank by an American, Domenico Lombardi, senior fellow at Brookings, said perhaps we will see a regime change as emerging markets such as China, South Africa and Brazil gain more stake as their economies grow.

“They can express very good candidates,” Lombardi said. “There’s no reason why the U.S. or Europe would need to keep that monopoly [on those institutions]. The other regions are capable of having a good candidate.”

“In the best scenario Europe will be in a convalescent phase for the next several years,” he said. “Europe will go into a slight growth or very moderate growth.”

If things take a turn for the worse, however, Torralba said there could be some shakeups in terms of which countries actually remain in the Eurozone.

“If there was a big surprise meltdown [that] involved Spain, Italy or both defaulting or leaving the Eurozone, that would be a big shock.  I would expect growth to slow down, possibly have a mild recession in the U.S., but that’s only in the worst-case scenario in the Eurozone. In the absence of that, I think the impact of what’s happening in the Eurozone is not going to be much bigger or smaller,” he said.

Chinese airmen parade during a full honors arrival ceremony July 12, 2000, in Beijing. Source: Linda D. Kozaryn/U.S. Dept. of Defense

BY JOHN SOLYMOSSY

Chinese government leaders will not take part in either the G-8 or NATO summits, though the growing importance of China in the global economy is the 800-pound gorilla in the room at both forums.

Several countries currently included in the G-8 “club,” such as Italy, Canada and France, have faded in importance globally even as China’s influence has soared.  Many experts believe for the G-8 to remain an influential and important organization, it will have to consider how China might fit into its global alliance.

On the other hand, Scott Kennedy, a political science professor at Indiana University, believes that China’s exclusion from the G-8 and NATO has signaled the rise of importance of the G-20 alliance.

“The G-8 is a group of wealthy democracies, who also happen to be military allies. China doesn’t fit in either group [NATO included],” Kennedy said. “A recognition of the problem of China not fitting in the G-8 was the creation of the G-20, which is now much more important in discussing global economic issues than the G-8.”

The G-20 is a group of 19 countries and the European Union that was formed to build a working relationship between economically well-established countries and emerging countries. China along other emerging economies, India and Brazil, are included in the G-20 group.

One of the main items on the agenda for both summits is the economic struggle of European union countries as well as the United States. China’s meteoric economic development over the past 10 years has led countries such as the U.S. to develop a significant dependence on China’s economy. The U.S. trade deficit with China increased three-fold in the past decade, reaching $295.5 billion at the end of 2011.

According to a study produced by HSBC, a global banking and markets company, China eventually will rise to the top as the world’s largest economy. The study states, “There will be a marked decline in the economic might of many small population, aging, rich economies in Europe.”

China had more than $3 trillion in foreign currency reserves as of 2011, which makes it the world’s biggest lender, even larger than the World Bank in loans to developing countries.

Even so, China is not immune to global trends and the nation with the world’s largest population posted a global trade deficit in February and has been hurt by the economic problems in Europe and the economic slowdown last year in the United States.

The one major roadblock for China’s inclusion to the G-8 has been that it is not a democracy. However, the emergence of China’s economy and its  future as a global juggernaut should transcend the political affiliations of the G-8 club as their dependence on China continues to grow.

November 2011 Austerity Protest in Lisbon, Portugal. Source: E10ddie via Wikimedia

BY RACHEL LANDEN

As the Eurozone debt crisis lingers, economists warn that financial shockwaves may soon make their way across the Atlantic.

“For the U.S., the EU is the biggest single trading partner, which is why there is so much attention given to the economic problems of Europe,” said Animesh Ghoshal, professor of economics at DePaul University. “People might wonder why others are so worried about Greek debt and what is happening to the euro, but if their economy tanks… it is definitely going to have an impact on the U.S.”

The U.S. and the EU share the largest bilateral trade relationship in the world, with approximately $4 billion of goods, services and investments flowing

between them every day. European countries purchase more than 20 percent of American exports, so it’s no wonder the financial issues plaguing the Eurozone might make their way to the U.S.

President Obama expressed the same concerns last October, warning, “If Europe is weak, if Europe is not growing, as our largest trading partner, that’s going to have an impact on our businesses and our ability to create jobs here.”

The fear is that a Europe in recession would result in lessened demand for U.S. goods. As some European countries are already implementing austerity measures to deal with their sovereign debt crisis, tighter fiscal policy will inevitably lead to fewer purchases.

However, Ghoshal said “there isn’t a great deal that the U.S. can do” to mitigate the financial fallout. While the European Union will have to search for solutions to this problem on its own, the trading partners can work together to reduce trade restrictions, particularly in the agricultural and aerospace sectors.

The EU currently restricts, and in some cases, excludes, the U.S. from selling certain agricultural products to its member nations. Further, arguments have arisen between the U.S. and the EU over accusations that the U.S. subsidizes Boeing, just as the EU subsidizes Airbus.

These disagreements and interferences with an open and competitive market have constrained trade potential between the two. Resolving these disputes could help soften the blow to the trade relationship that may come as a result of the debt crisis.

But finding common ground and reaching an agreement will more likely come from the Transatlantic Economic Council, a body set up in 2007 between the U.S. and EU to stimulate growth and create jobs, rather than by national leaders meeting as the G8.

If progress isn’t made right away, however, the silver lining may be that the countries most directly involved in the European financial crisis aren’t the United States’ top importers. The United Kingdom and Germany lead the U.S.-European trade, importing nearly $56 billion and $49 billion in goods and services, respectively, last year. Meanwhile, Greece, the poster child for national indebtedness, imported just over $1 billion of goods and services from the U.S. in 2011.

The EuroZone crisis heightens NATO’s urge to take immediate effective measures to prevent members’ economic problems from turning into a general, more dangerous security crisis.

NATO relies on contributions from member countries to fund its initiatives. As European countries undergo severe austerity cuts, including massive cuts to defense budgets, their capacity to fulfill those financial obligations diminishes.

“Negative growth, or slow growth, cuts into the ability to sustain the type of funding that is necessary for NATO to operate,” said Ambassador J.D. Bindenagel, a veteran of the U.S. diplomatic corps and 2002 recipient of the Presidential Meritorious Service Award.

The question NATO must address – now more than ever – is how to prevent diminishing finances from weakening the alliance and thwarting its ability to execute its goals.

Enter Smart Defense, the conceptual umbrella under which NATO encourages members to take an aggregate approach to defense spending. This means communication between members and a commitment to share resources. It means transitioning from an inward-looking to a multinational stance. In a perfect world, Smart Defense would enable NATO members to maintain strong defense capabilities in spite of widespread austerity.

In Chicago, NATO plans to streamline its Smart Defense strategy by:

– Identifying shared military projects that will focus solely on addressing critical capability shortfalls
– Creating long-term shared projects including missile defense, Alliance Ground Surveillance and air policing
– Outlining concrete projects for 2020 that will cover such areas as Joint Intelligence, Surveillance and Reconnaissance and air-to-air refueling

A commitment to Smart Defense is complicated for a number of reasons, however, especially as countries struggle to reduce their deficits.

Unilateral spending cuts in Europe, for instance. European countries are so focused on reducing their own budgets, they aren’t monitoring what their neighbors are cutting. Former NATO Secretary General Jaap de Hoop Scheffer, in an April presentation in Chicago, suggested, “We don’t want to end up without any tanks.” On the reverse side, NATO also wants to avoid needless duplication.

Shared doesn’t always mean equal. – that’s another issue. Different countries have different views on the instruments – such as gross national income and or GDP – that should determine equitable burden sharing. Larger nations typically aren’t as keen on sharing resources.

Smart Defense also means taking a smarter approach to existing collaborations. Consider the NATO Response Force: Countries participate on a rotational basis, and if the alliance votes to deploy the force during a particular country’s tenure, that country must cover the costs. De Hoop Scheffer called it a “reverse lottery,” and suggested NATO explore a fairer alternative.

Many analysts say Smart Defense is a good policy. “We have to take our security dollars and go further,” said Sally Painter, Chief Operating Officer at Blue Star Strategies, a Washington-based international consultancy, and member of the U.S. Committee on NATO.

“As part of the alliance, there’s always been recognition that each country has a unique capability,” Painter said, echoing the NATO / Smart Defense emphasis on the importance of allowing members to concentrate in niche capabilities.

But, Painter cautioned, Smart Defense is a tactic, not a vision. Painter said the economic crisis has generated a crisis of leadership and confidence in Europe. One side effect, Painter said, is a sense of enlargement fatigue among members that shuts the door to potential members like Macedonia.

“It makes sense economically to let more countries in as long as they fit the requirements,” Painter suggested. “If there’s a crisis in one of the non-NATO European countries, NATO will have to deal with it anyway.”

Lodge at Camp David. Source: United States Navy

BY PREETI UPADHYAYA

When G-8 leaders convene in Camp David several pivotal world dynamics will underpin their agenda.  The state of the economy and the shifting global power structure will be present in every conversation and issues at the heart of the U.S. – European Union relationship will guide the agenda.

The G-8 leaders will focus on details of the slow global economic recovery, and industrialized nations’ role in aiding Arab Spring countries.  Other probable topics include nuclear nonproliferation, climate change, food and energy security and development issues.

These issues will be discussed in the context of the global economy undergoing swift and dramatic change.  G-8 leaders must grapple with orchestrating a recovery from a deep global recession that has called into question whether the capitalist model is the best for global economic success.

Meanwhile, China and India continue to gain momentum as strategic and economic powers.  Additionally, differences are emerging in the strategic priorities of the United States and the European Union.  While the United States increasingly looks to Asia for its strategic partners, the EU continues to focus on the Middle East and North America.

These key dynamics are the backdrop that brings together leaders from The United States, France, Germany, Italy, Japan, the United Kingdom, Canada and Russia.

At the same time, the so-called BRIC countries – Brazil, Russia, India, China (sometimes South Africa is included in this grouping) – are leading the global economic transformation, says Professor Patricia Werhane, chair of business ethics at DePaul University.  She compares the growth of these emerging markets, compared to the G-8 countries, to the perennial story of the tortoise and the hare.

“With the G-8 countries there is too much emphasis on the short term.  BRICs are like the tortoise, moving slowly but steadily along while the G-8 countries are like the hare racing towards the finish line,” says Werhane.

She explains that BRICs are where global economic growth is centered because these countries have overall less debt and more small- to medium-sized enterprise startups.  She points to the example of Chile as a small country with high economic growth, low unemployment and low public debt.

While the G-8 member countries ought to be paying a lot more attention to this macro shift in the global economy, Werhane said, they’re likely to sidestep the issue because of the pressing need for an economic recovery that is to dominate the meeting’s agenda.

The tenuous economic situation in Europe has implications far and beyond the countries directly affected, one expert said.

“China has a major stake in the EU simply due to its trade volume,” says Professor Jay Chandran, department chair of International Business at Northwood University.  The EU crisis, he explained, has negatively affected China’s exports to the region. “There’s a fear among more pessimistic economists that if the EU crisis worsens, oil prices will collapse, causing the Russian ruble to weaken,” he says.

The EuroZone crisis is also calling attention to the leadership of global financial institutions such as the World Bank and International Monetary Fund.

European leaders are now looking to the BRICs for economic support of the recovery, but this support is sure to come at a compromise over the traditionally western leadership of the World Bank and IMF.

“The BRICs would want a trade concession or a European deal to end the ‘gentlemen’s agreement’ about governing the World Bank and IMF,” says Professor Martin Edwards, who teaches international relations at Seton Hall University.

While economic issues are more than likely to dominate the G-8’s agenda, a range of other topics fall in the realm of the G-8’s interests and priorities, and might be discussed.  They include:

*  Global security, especially in Afghanistan and Arab Spring countries.  Werhane says Afghanistan might be highlighted because all G-8 countries except Japan will overlap with NATO on this issue.

“Even Japan has a stake in Afghanistan due to its geographical proximity,” she explained.

*  The Deauville Partnership.   Participants meeting in Paris in late April agreed on actions to support democratization in Egypt and Tunisia, after those countries ousted their autocratic leaders.

They focused on four areas for effective governance, thought to be essential for economic growth and prosperity: open government and anticorruption, asset recovery, the policy environment for small and medium-sized enterprises, and international exchanges.

*  Climate Change. With the populations of developing countries steadily on the rise, there is a pressing need for global investment in green technology.  However, the topic of climate change is one that is often overlooked, largely because G-8 countries are slow to claim responsibility for contributing to greenhouse gas emissions and other environmental problems.

Werhane says that G-8 leaders generally delegate the issue of climate change to scientists, and often brush off the subject as an academic matter rather than one of political significance.

*  Nuclear safety.  The future of nuclear power has been called into question after Japan’s tragic Fukushima earthquake.  This has focused more attention on the world’s energy supply as a whole as many countries with long-standing nuclear programs consider the risks and benefits associated with that form of energy.

President Obama may have nudged a few eggs down the South Lawn during the annual Easter Egg Roll, but outside the White House, advocates from ActionAid, a nonprofit organization working to eliminate poverty and injustice, gave the U.S. leader a not-so- subtle push of their own.

A life-size cutout of the president humorously depicted as a “Hunger Hero” stood next to a large poster emblazoned with, “Obama: Find the will to be a hunger hero at the G8 summit.”

Food security is defined by the United Nation’s Food and Agriculture Organization as “a situation that exists when all people, at all times, have physical, social and economic access to sufficient, safe and nutritious food that meets their dietary needs and food preferences for an active and healthy life.”

Whether the President will rise to the occasion and address food security is still up in the air, but considering how charged the issue of food and agricultural security will be in Washington D.C.’s political climate that weekend, there’s a good chance the issue will be discussed at Camp David.

As it turns out, the timing is ripe. The L’Aquila Food Security Initiative, a $20 billion financial commitment that was to be disbursed over three years from the 2009 G8 summit, is to expire this year. The agreement outlined measures to reach global food security by focusing on sustainable agricultural development while keeping a strong commitment on ensuring adequate emergency food assistance.

“L’Aquila created huge expectations, especially in Africa,” said Richard Mkandawire, former leader of the Comprehensive Africa Agriculture Development Program, which aims to help African countries reach a higher path of economic growth through agriculture-led development. “Naturally, these expectations need to be addressed.”

But foreign budget austerity may challenge talks of establishing a new food security initiative with financial backing.

“If countries can’t pledge in terms of monetary investment at this point because of fiscal constraints, which we understand, then we’re pushing for an impact target, said Katie Campbell, a senior science policy analyst at ActionAid. “We are saying that countries should commit to pulling 50 million smallholder farmers out of poverty over the next three years through agricultural development.”

The Symposium on Global Agriculture and Food Security, which will be convened in Washington by the Chicago Council on Global Affairs the day before the G8, will highlight the need to incorporate more private-sector investment and increase the role of African leadership.

“The development agenda has been orchestrated in the past from outside the countries,” Mkandawire said. “Countries in Africa really need to see that this is their own agenda, and we need to commit our own resources.”

Critics of private-sector investment say the profit motive is inherently problematic when addressing food security and poverty alleviation due to conflicting incentives. Yet, increasing reliance on non-governmental players is fast becoming a reality.

“In a nutshell, there’s no alternative,” said Keith Wiebe, the deputy director of the agricultural development economics division of the Food and Agriculture Organization of the United Nations. “We always think of large-scale commercial enterprises, but the biggest private sector is farmers themselves.”