LEADERS of the Group of Seven (G-7) industrial democracies have sent in the world's financial system for a tuneup.
"In the financial area, this was one of the most successful economic summits in recent years in terms of concrete accomplishments," said Lawrence Summers, undersecretary for international economics at the United States Treasury Department.
But the G-7's intentions may get gummed up in a Republican-controlled and reluctant Congress. The summit's call for a doubling of an emergency financing fund to help bailout countries who suffer a Mexico-style financial crisis must win approval by US legislators, as well as other nations which have a say in multilateral financial organizations.
President Clinton already found resistance on Capitol Hill to the proposed fund. Sen. Phil Gramm (R) of Texas, a presidential aspirant, blasted the idea as "international welfare."
The engine job will be done in the next several months - or perhaps years in some cases - at such key institutions as the International Monetary Fund (IMF), the World Bank, several regional development banks, the United Nations and its numerous agencies, and the Bank for International Settlements.
Many of these institutions, created after World War II, are now 50 years old and, in the view of G-7 leaders, need tuning up to deal with globalization of the world's economy and rapid cross-border flows of massive amounts of money.
Instructions were given these "shops" by the seven leaders in a communique issued Friday at their summit in Halifax. The summiteers were Mr. Clinton; Jacque Chirac, the newly elected president of France attending his first summit; Helmut Kohl, the veteran German chancellor; Lamberto Dini, prime minister of Italy and a caretaker in the office; Tomiichi Murayama, Japan's prime minister, having to deal with a trade dispute over autos with the US; John Major, the beleaguered prime minister of Britain, and Jean Chretien, prime minister of Canada.
With the departure last month of Francois Mitterrand after 14 years as French president, for the first time in the 21-year history of such summits no socialist was present. All seven leaders advocate a free-market economy.
The seven appealed last Wednesday and again Saturday to the warring factions in the former Yugoslavia to cease fighting immediately and resume political negotiations - with no immediate effect in Bosnia.
President Boris Yeltsin of Russia arrived Friday for talks with the seven on political affairs and financial assistance. The seven told Mr. Yeltsin that the "situation in Chechnya should not be resolved by military means." Later Saturday, at a meeting with Clinton, an annoyed Yeltsin described Chechnya as "the center of world terrorism, of bribery and corruption and mafia."
Nonetheless, the seven plan to gradually make Russia a full member, assuming it develops a strong free-enterprise economy and maintains a democratic government.
This year a Russian "sherpa" joined the "sherpas" from the seven in planning the events of the summit. And Yeltsin joined in formal discussions with the seven Friday evening.
The G-7's economic communique indicated several major goals:
*Prevent another system-threatening financial crisis, like that following the Mexican devaluation crisis earlier this year.
The IMF was urged to improve an "early-warning system" by getting nations to publish key economic and financial data in a timely way, following specified standards for those data. Central bank balance sheets should be published monthly, Mr. Summers said. The IMF should also deliver "franker messages" to countries that appear to be avoiding necessary actions.
Wealthy nations should double the $27 billion in the so-called General Arrangements to Borrow, an arrangement to provide supplementary funds to the IMF. This new "emergency financing mechanism" would be available to the IMF to provide money quickly to nations in financial trouble if these nations meet tough conditions aimed at getting them back quickly into financial shape. The plan is to invite some other smaller European nations, such as Austria, and Asian "tigers" to help out.
*Enhance cooperation among financial regulators and supervisory agencies to avoid another financial fiasco such as that involving Barings Bank this year. Financial institutions, banks and others, could be required to improve safeguards and standards, provide more information to the public or regulators.
r Continue reforms in such multilateral institutions as the IMF, the World Bank, and regional development banks (for example, Asian Development Bank) aimed at ensuring their consideration of environmental issues, easing poverty, and encouragement of private enterprise when making loans.
* Ease debt burdens of the poorest countries to the IMF, World Bank, and regional development banks. A British proposal to sell some of the IMF's gold for debt relief has won US approval, but not that of Germany. Another possibility would be to pledge the gold against IMF loans that would then be used to reduce the debt.
*Make the United Nations and its agencies more efficient. Avoid duplication or overlap with new institutions, such as between UNCTAD (UN Conference on Trade and Development) and the new World Trade Organization.
Another G-7 meeting of top-level ministers will be held on jobs next year in France. The next G-7 summit will be in Lyon.