July 17, 2006

G8 launch bid on trade amid strains on MidEast

By Caren Bohan and David Clarke

ST PETERSBURG, Russia (Reuters) - Group of Eight leaders on
Monday launched a fresh bid to pin down an elusive global trade
pact, seeking to give a positive outcome to a big-power summit
riven by discords over the Middle East.

With the United States and France in open dispute over the
approach to the Israeli offensive in Lebanon, hopes of progress
toward unblocking deadlocked world trade talks raised spirits
at the end of the first G8 summit to be held in Russia.

"Before we had our lunch discussion I was somewhat
pessimistic," said British Prime Minister Tony Blair after the
United States, leading developing countries and other major
trade players met in a final summit session. "I am less
pessimistic now."

German Chancellor Angela Merkel, host of next year's
summit, said she was gratified to hear leaders of Brazil,
India, Mexico and South Africa pledge to try to reach a deal to
rescue the Doha round, whose goal is to lift millions out of

"We (all) will do everything to bring these negotiations in
the next few weeks forward and make them a success," she said.

G8 leaders have told their negotiators and World Trade
Organization chairman Pascal Lamy to broker a breakthrough on
the Doha round.

The United States quickly dispatched its trade
representative to Geneva, where the WTO is based, to join
ministers from five other trade powers to try to clear
roadblocks over subsidies and tariffs on farm and other goods.

With divisions still apparent over how to handle Israel's
offensive against its Hizbollah foes in Lebanon, an issue that
nearly hijacked the summit agenda, the progress on trade
appeared to be one of the few clearcut summit achievements.

Summit host Russian President Vladimir Putin was in an
upbeat mood as he brought the curtain down on the three-day
gathering in a tsarist-era palace on the rain-lashed shores of
the Gulf of Finland outside his home town of St Petersburg.

"We achieved all our goals and there has not been a single
issue on which we would not agree," he said.


Putin had seen the summit from the start as a chance to
showcase a new, self-confident Russia, riding high on an
economic boom buoyed by record world oil prices, and enhance
its status as an emerging energy superpower.

He also used the occasion to defend himself against charges
of backsliding on democracy and pledged not to change the
constitution to allow himself to run for a third term in power.

An unambitious formal agenda of energy security, combatting
infectious diseases and promoting education held little
controversy and required no follow-up or financial commitment
by member states.

Russia had to concede to European Union concerns over its
conduct in energy markets to get agreement on energy security.
But it did not bow to demands to ratify the Energy Charter, an
international rulebook for oil and gas market activity.

Assistance to Africa, put at the top of last year's summit
by Britain's Blair but initially ignored by Russia for this
year's meeting, also found its way onto the agenda.

U.N. Secretary General Kofi Annan said there had been
progress since the 2005 G8 summit in Gleneagles, Scotland, "but
there is much more to be done."

Aid agencies were critical however. "If the G8 leaders
continue to drag their feet on their promises to Africa, the 36
million people who demanded action last year will not forgive
them," Oxfam spokesman Irungu Houghton said.


The United States squabbled openly with G8 partner France
over interpretation of a joint summit declaration that urged
Israel to be restrained in its offensive in Lebanon but told
Hizbollah it had to make the first moves to end the crisis.

France's Jacques Chirac, who has differed with Washington
by criticising Israeli action as excessive, said late on Sunday
that the G8 was basically calling for a ceasefire -- an
interpretation contested by Washington, Israel's big backer.

Annan said Security Council members would immediately start
hammering out a detailed agreement on deploying a multilateral
security force to Lebanon, following up a G8 proposal.

But the initial reaction from Israel was cool. "I don't
think we're at that stage yet. We're at the stage where we want
to be sure that Hizbollah is not deployed at our northern
border," Israeli government spokeswoman Miri Eisin said.

On trade, despite the optimistic assessments, it was not
clear what compromises the main players were ready to make.

All the major players -- the United States, the European
Union and key developing countries -- will have to abandon
entrenched positions on farm subsidies, agricultural tariffs
and market access for goods and services.

Tim Brenton, analyst of Moscow-based investment bank
Renaissance Capital, said in a research note: "We think the WTO
negotiations are still the biggest potentially market-moving
item on the summit's agenda."