THE Group of Eight (G8) nations gathered this week in the United States for their annual summit. On the agenda: The state of the world economy, oil prices and interest rates. But the situation in Iraq and the broader Middle East stole the show. The G8 members - the US, UK, France, Germany, Canada, Italy, Russia and Japan - are some of the most developed and richest nations in the world, accounting for the bulk of the world's GDP. But today, countries like China and India are major players on the world stage. They are also emerging as economic powerhouses. Yet, they do not have a seat at the table. China's economy, by some accounts, is much larger than Canada and Italy, both members of the G8. As in many international and multilateral organisations, the victors of World War II continue to dominate the decision-making process. The United Nations, International Monetary Fund and World Bank are just some of the examples. The world has changed; it has become more interdependent and integrated, with new players on the scene, but these organisations continue as though time has stood still. The G8, even though it is not an "institution", is nevertheless part of an important global policy-making process. Its decisions affect the markets and indeed, the economies of developing countries and the livelihood of the poor. The Plaza Accord is an example. The G7 decision in 1985 to drive down the US dollar and force the Japanese to revalue the yen was aimed at fixing America's large deficits. The co-ordinated effort by the G7 (Russia joined in 1998) resulted in a 30 per cent decline in the dollar over the next two years. The yen doubled in value against the dollar in 2 1/2 years. But while the Plaza Accord helped the US solve its difficulties, it created major problems for developing countries. The external debts of countries, especially those denominated in yen, increased substantially - Malaysia was one of them. Some analysts also point to the Plaza Accord as having sown the seeds of the Japanese economic crisis. It certainly destroyed the rapid growth that the Japanese economy had enjoyed, to the envy of many, after World War II. Professor Jiang Ruiping, chairman of the Department of International Economics at the Foreign Affairs College in Beijing, said post-war Japanese economic growth, "which depended heavily on foreign resources", was thrown into a "yen revaluation depression". Tokyo resorted to zero-interest-rate money printing that set off the country's huge real estate and stock market bubbles. When these crashed, Japan was plunged into an economic crisis from which it is yet to fully recover. There have been some concerns that the G8 will once again resort to a similar move over China. The Bush Administration has been very critical of Chinese monetary policy and has called for a revaluation of the yuan. But Beijing has said "No". Washington has blamed China for many of its problems, a theme not much different from that in 1985, when Japan was the target. For many years, protests and alternative events have criticised the G8 summit for defending the interests of the rich and powerful at the expense of the majority of the world's population. The participation of new and emerging nations is necessary and important. Their views need to be heard and they should have a say in the discussions. The developed countries cannot continue to ignore their role. Terrorist activities and the impact of Sept 11 on the rest of the world is a good example. While Washington continues to preach to the world the need for co-operation in fighting terrorism and building a coalition to help resolve the problems in Iraq, the reality is different. Riding high on the unanimous UN resolution authorising the return of Iraqi sovereignty, Bush caused tensions with France on Iraq to resurface. He called for a greater Nato presence in the country adding, "We will work with our Nato friends to at least continue the role that now exists and hopefully expand it somewhat". But French President Jacques Chirac had a different view. He said: "I do not think that it is Nato's job to intervene in Iraq ...Moreover, I do not have the feeling that it would be either timely or necessarily well understood." "I see myself with strong reservations on this initiative," Chirac added. Bush, playing host to the G8 leaders, is determined to push his Middle East initiative. He has invited some of the leaders from the region to discuss his plans over lunch with other G8 leaders. But the Arab world's most influential nations - Egypt and Saudi Arabia - are not represented. Leaders from Iraq, Algeria, Bahrain, Jordan, Yemen, Turkey and Afghanistan will be there. Also not on the invited list is the Chairman of the OIC and NAM. Last year, France as host invited Malaysia as NAM chairman as did Japan before that. It is ironic that with the Middle East, and issues related to the region, Iraq and terrorism so high on the agenda, Washington chose not to invite the main organisation representing the Islamic world - the OIC and its chairman. Undoubtedly, it is the prerogative of the host to invite whoever it chooses. But when the major issue today is the fight against terrorism, and with the US branding the terrorists as "Islamic" and looking at the Muslim world with suspicion, it makes sense to engage and not isolate them. Co-operation and discussion is what is called for, not exclusion and avoidance.