THE HAGGLING, SWEET TALKING and arm twisting that went on at the World Bank and International Monetary Fund meetings last week are over. But the ramifications from last week's finger pointing will be felt for awhile to come.

The failure by the Group of Five - the United States, Japan, Germany, the United Kingdom and France - to reach any agreement on interest rates, exchange rates or budget deficits illustrates how difficult the business of economic coordination among the world's industrial countries really is. The world's

financial community has been spoiled by the success of the Plaza Agreement in September 1985 and bold action by Treasury Secretary James A. Baker III in drawing up his Baker Plan for the developing country debt crisis at last year's meetings in Seoul.A letdown this year was inevitable. Still, widespread disagreement on the vital economic factors leads one to wonder what basis there is for coordination.

The United States continues to pressure West Germany and Japan to lower interest rates and stimulate domestic demand. The Europeans and Japanese hound the United States to lower its budget deficit and help stabilize the dollar.

Mr. Baker says unless demand picks up in Japan and West Germany the dollar will have to sink further to make U.S. exports competitive. But the U.S. position is weakened by the fact that Federal Reserve Board Chairman Paul A. Volcker only two weeks ago said the dollar has fallen far enough.

The difficulty here is that everybody is right and everybody is wrong. While the United States is right to push for greater domestic growth among its major trading partners, it is ludicrous for it to ignore the ill effects of such massive budget deficits.

Mr. Baker was thoroughly unconvincing when he said, "We have not only demonstrated political commitment to reduce the deficit, but have set a steady course for deficit reduction over the years ahead."

Any reduction in the U.S. budget deficit must be complemented by corresponding growth in the West German and Japanese home markets. The West Germans were burned in 1979 when President Carter browbeat them into expanding their economy. Subsequently, the West Germans were hit by a bout of inflation and they are gun shy about trying again.

But these are different times. The rise in West German inflation in 1979 was not solely attributable to that country's reflationary policies - the oil shock that year from the Iranian revolution was a major factor. Also, the West Germans would not go it alone this time; the Japanese must share the burden.

The West Germans say their annual growth of 3.5 percent is sufficient. But C. Fred Bergsten, director of the Institute of International Economics in Washington, points out that since the huge U.S. growth spurt of 1983-84, the West Germans have, despite growth in recent years, not fully caught up to the United States. To get there, Mr. Bergsten says, the West Germans must maintain 4.5 percent to 5 percent growth over two or three years.

The Japanese remain unenthusiastic about cooperating in the international economic arena unless Congress is wielding its protectionist blackjack. Clearly, Japan's projected growth rate of 2 percent is insufficient. Yet the Japanese remain timid about implementing growth-boosting measures - like tax cuts or the issuance of construction bonds - for fear they will increase their internal debt.

But with such massive external account and trade surpluses, the Japanese must be more cooperative. As the world's largest capital exporter, Japan must assume the responsibility of leadership rather than hiding behind the skirts of the United States or the Europeans when the economic climate begins to cloud up. Implementation of the Maekawa plan for increasing domestic demand would put enormous pressure on the rest of the G-5 to live up to their pledges made at the Plaza.

The G-5 agrees that exchange rates, interest rates, balance of payments and growth are the most important economic indicators for monitoring economic performance. If these indicators become askew in any of the industrial countries, recommendations are to be made in an effort to pull the offender back into the fold. But the problem is that this system of "surveillance" lacks teeth. Unless individual nations are willing to make short-term sacrifices, the monitoring system is purely an academic exercise. Nor does it take much sophisticated surveillance to realize the U.S. budget deficit is too high and the Japanese growth rate too low.

G-5 members were cooperative in one respect last week. All parties tried to play down the fact that the G-5 had failed to reach any meaningful agreement.

"We did not accomplish anything directly," Japanese Finance Minister Kiichi Miyazawa said, "but certainly the fact that we met will be helpful in future meetings."

Nigel Lawson, British Chancellor of the Exchequer, blasted the press for playing up the gloomy short-term economic picture, when "it's the medium term that matters most." At the risk of drawing Mr. Lawson's ire, we suggest the medium-term prospects for G-5 coordination seem little better.

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