President Obama will announce Friday that the once elite club of rich industrial nations known as the Group of 7 will be permanently replaced as a global forum for economic policy by the much broader Group of 20 that includes China, Brazil, India and other fast-growing developing countries, administration officials said Thursday.

The move highlights the growing economic importance of Asia and some Latin American countries, particularly since the United States and many European countries have found their banking systems crippled by an economic crisis originating in excesses in the American mortgage market.

For more than three decades, the main economic group was the Group of 7 — the United States, Britain, Canada, France, Germany, Italy and Japan. During the Clinton years, Russia was gradually added, not because of the size of its economy, but to help integrate it with the West. Administration officials said the group would still meet twice a year to discuss security issues. But for practical purposes, the smaller group will become more like a dinner club that defers to the broader group on the economic issues that have dominated summit meetings for nearly three decades. The development, as Mr. Obama was hosting a summit meeting here for leaders of the Group of 20 — 19 countries and the European Union — also highlighted the lingering disparity between the elite group of mostly Western powers and the mass of poorer nations. For all of Mr. Obama’s talk about greater inclusiveness for countries like Brazil and China, the meeting in Pittsburgh remains dominated by the financial crisis that began in the United States and has preoccupied the old boys’ club.

The issue that many developing countries feel much more strongly about — knocking down barriers to trade, especially in politically sensitive sectors like agriculture — is barely likely to be part of the official discussions.

Rather, the packed agenda includes proposals to raise capital requirements for financial institutions, rein in executive compensation and reduce imbalances between shop-till-you-drop countries like the United States and export behemoths like China, Germany and Japan.

Even as Mr. Obama participated in his first Group of 8 meeting in July in L’Aquila, Italy, he seemed to have doubts about its suitability as a forum for solving the world’s problems. At the time, his aides characterized the session as merely a way station between Group of 20 meetings.

“We view this meeting and this discussion as a midpoint between the London G-20 summit and the Pittsburgh G-20 summit,” said Mike Froman, the president’s chief negotiator.

(via New York Times)

Related posts:

1. China steals Climate Week spotlight, but U.S. still in the hot seat
2. The Climate War
3. Climate at the G20: Obama to press cuts in fossil fuel subsidies