diff --git a/gcc/cp/ChangeLog b/gcc/cp/ChangeLog
index 7473cab405a176d259da9161bdf7c009dfc74156..d7a843f8ad5eee45c1924377a9097fcfeb80806c 100644
--- a/gcc/cp/ChangeLog
+++ b/gcc/cp/ChangeLog
@@ -1,3 +1,8 @@
+2001-07-10  Mark Mitchell  <mark@codesourcery.com>
+
+	* pt.c (tsubst_decl): Set DECL_CONTEXT for namespace-scope
+	variables.
+
 2001-07-10  Jason Merrill  <jason_merrill@redhat.com>
 
 	* semantics.c (cp_expand_stmt): Fix for null
diff --git a/gcc/cp/pt.c b/gcc/cp/pt.c
index b6016402e16ffb361a51bba26b70c1db3378b280..3d6279a82823dd81224999c839c7ce80130b896c 100644
--- a/gcc/cp/pt.c
+++ b/gcc/cp/pt.c
@@ -5946,12 +5946,13 @@ tsubst_decl (t, args, type)
 	  ctx = tsubst_aggr_type (DECL_CONTEXT (t), args, 
 				  /*complain=*/1,
 				  in_decl, /*entering_scope=*/1);
+	else if (DECL_NAMESPACE_SCOPE_P (t))
+	  ctx = DECL_CONTEXT (t);
 	else
 	  {
 	    /* Subsequent calls to pushdecl will fill this in.  */
 	    ctx = NULL_TREE;
-	    if (!DECL_NAMESPACE_SCOPE_P (t))
-	      local_p = 1;
+	    local_p = 1;
 	  }
 
 	/* Check to see if we already have this specialization.  */
diff --git a/gcc/testsuite/g++.old-deja/g++.ns/template18.C b/gcc/testsuite/g++.old-deja/g++.ns/template18.C
new file mode 100644
index 0000000000000000000000000000000000000000..4b3f720e74bab5dbaf12ffd2d12a6d1b1df6210d
--- /dev/null
+++ b/gcc/testsuite/g++.old-deja/g++.ns/template18.C
@@ -0,0 +1,24 @@
+// Build don't run:
+// Origin: Andrey Slepuhin <pooh@msu.ru>
+
+namespace A
+{
+  int j;
+
+  template <typename val_t>
+  struct X
+  {
+    inline X ()
+    {
+      extern int j;
+      i = j;
+    }
+
+    int i;
+  };
+}
+
+int main ()
+{
+  A::X<int> x;
+}