As published for the Roosevelt Room:

In a way it’s fitting that the Group of 8 Summit is being held in L’Aquila, Italy.

An old, crumbling city struggling to deal with the aftershocks of a natural disaster is the perfect site for a meeting of an old, crumbling institution struggling to deal with the aftershocks of an economic disaster.

It’s fashionable to talk of the end of the G8 – especially with the late establishment of the G20 to head-of-state “summit” status.

There’s no doubt the G8 (US, UK, Canada, France, Germany, Italy, Japan and Russia) is becoming increasingly anachronistic, especially in a global economy where big emerging market countries like China, Brazil and India are playing a larger role. The Group also began to lose its way as an economic body with the inclusion of Russia in the 1990s. (Whatever the strategic benefit, from an economic and democracy standpoint, Russia was never been a good fit.)
So maybe tremor-wracked L’Aquila is where we say “Arrivederci” to the G8?

Maybe. But don’t think bigger will be better.

What the G20 brings in terms of inclusiveness, it gives away in the ability to quickly communicate and coordinate action.

Remember that all of the “G” groups are consensus bodies, so bold, aggressive action is watered down to get agreement from the most recalcitrant member. In the G8, that involved getting agreement among a small number of mostly like-minded nations. In the G20, that means getting agreement from a large number of very diverse nations. Imagine getting the US, Argentina, China, Russia and South Africa all on the same page in the middle of a financial meltdown.

Communication and coordination are critical in a crisis. In practice within the G8, that communication occurs between the U.S. Treasury secretary, the Fed Chairman, their counterparts in G7 countries (G8 minus Russia) and the ECB. That’s a fairly small group, but it covers the overwhelming majority of global financial flows. In the recent crisis communication from this group – especially among central bankers – did result in fairly quick, well-coordinated policy responses in real time. It’s hard to imagine that kind of coordination occurring among G20 countries.

With the elevation of the G20, the G8 may have run its course. The L’Aquila Summit already has the feel of a preliminary meeting for the G20 summit to be held in Pittsburgh in September. (And after all, how many international economic summits can we really take?)

But in the next crisis we may find ourselves pining for the smaller, more effective G8.