Introduction
The G7 is an informal bloc of
industrialized democracies—the United States, Canada, France, Germany, Italy,
Japan, and the United Kingdom (UK)—that meets annually to discuss issues such as
global economic governance, international security, and energy policy.
Proponents say the forum’s small and relatively homogenous membership promotes
collective decision-making, but critics note that it often lacks follow-through
and excludes important emerging powers.
Russia belonged to the forum from 1998
through 2014, when the bloc was known as the Group of Eight (G8), but it was
suspended following its annexation of Ukraine’s Crimea region. The G7’s future
has been challenged by continued tensions with Russia and, increasingly, China,
as well as by internal disagreements over trade and climate policies. In a sign
of renewed cooperation, the G7 reached a historic agreement ahead of its 2021
summit to overhaul the global rules for corporate taxation. More recently, the
G7 has imposed coordinated sanctions on Russia in response to its war in
Ukraine, including a cap on the price of Russian oil. The group also launched a
major global infrastructure program to counter China’s Belt and Road Initiative. Those issues, along
with climate change, food insecurity, artificial intelligence, and nuclear
weapons, led the agenda at the 2023 summit in Hiroshima, Japan.
Why was the G7 formed,
and how does it work?
The United States, France, Italy, Japan,
the UK, and West Germany formed the Group of Six in 1975 to provide a venue for
noncommunist powers to address pressing economic concerns, which included
inflation and a recession sparked by the Organization of the Petroleum Exporting Countries (OPEC) oil embargo. Canada
joined the following year, and Cold War politics invariably entered the group’s
agenda.
The European Union (EU) has participated fully in the G7
since 1981 as a “nonenumerated” member. It is represented by the presidents of
the European Council, which comprises EU member states’ leaders, and of the
European Commission, the EU’s executive body. There is no formal criteria for
membership, but all participants are wealthy democracies. The aggregate gross
domestic product (GDP) of G7 member states (not including the EU) makes up
about 44 percent of the global economy in nominal terms, down from nearly 70
percent three decades ago.
Unlike the United Nations or the North Atlantic
Treaty Organization (NATO), the G7 is not a formal institution with a charter and a
secretariat. The presidency, which rotates annually among member states, is
responsible for setting the agenda of each year’s summit and arranging
logistics for it; in 2023, Japan is acting as president. Ministers and envoys,
known as sherpas, hammer out policy initiatives at meetings that precede the
gathering of national leaders. Nonmember countries are sometimes invited to
participate in G7 meetings.
Russia formally joined the group in 1998, making it the
G8. U.S. President Bill Clinton thought that admitting Russia to the exclusive
club would lend the country international prestige and encourage its first
post-Soviet leader, Boris Yeltsin, to hew more closely to the West. Clinton
also believed that membership would help mollify Russia as the NATO security
alliance opened its doors to former Soviet satellites in Eastern Europe.
Clinton’s decision drew some pushback. Finance
ministries, in particular, were wary of coordinating economic policy with
Russia, which had a relatively small economy and large public debt. But
Russia’s backsliding toward authoritarianism under President Vladimir Putin has
provoked an even stronger reaction. Moscow’s annexation of the Crimea region of
Ukraine in March 2014 resulted in its indefinite suspension from the group.
Frictions between Russia and the G7 also grew over Russia’s support for Syria’s
Bashar al-Assad, especially in the wake of chemical attacks linked to Syrian
forces, and over Russian interference in U.S. and European elections.
As Russia’s intervention in Ukraine escalated, the United
States and EU ratcheted up economic sanctions in an effort to further isolate
Moscow. But the Ukraine
conflict has only intensified, with Russia launching a full-scale invasion
in early 2022. In response, G7 countries have imposed unprecedented sanctions on Russia. These include phasing out
imports of Russian oil and gas, a major source of revenue for Moscow, and
barring Russian banks from transacting in dollars and euros. Other measures are
aimed at Russia’s industrial sector to curtail its military capabilities. G7
members have also collectively pledged more than $100 billion dollars in financial
aid to Ukraine, and every member but Japan has provided weapons.
Experts hoped that the reconstituted G7 would have the
potential to better facilitate collective action. Without Russia, the group was
more “like-minded and capable,” according to former CFR fellow Stewart M.
Patrick, with both common interests and common values. However, President
Donald Trump challenged G7 unity on a number of issues, with trade and climate
chief among them, contending that U.S. allies took advantage of the United
States. Trump also split with the group by calling for Russia’s readmission to
the bloc. Other challenges stem from China’s rise as a military and economic
power, increasing nuclear proliferation, and the rise of artificial
intelligence.
At his first G7 summit, in 2017, Trump refused to commit
the United States to the Paris Agreement on climate and hinted at plans to
withdraw from the deal, leading other members to take the unusual step of
singling out the United States in their final communiqué. In an unprecedented
statement following the summit, then German Chancellor Angela Merkel questioned
the cohesiveness of the transatlantic relationship, saying that for the first
time since World War II, Europe “must take our fate into our own hands.” Other
leaders and many analysts were alarmed by Trump’s testy relationship with the rest
of the group during his presidency. At the same time, European leaders of the
G7 have contended with a laundry list of regional challenges, including
navigating the UK’s withdrawal from the EU and maintaining cohesion amid rising
nationalism.
Alongside the Russia challenge, CFR’s Sheila A. Smith
argues that the G7 will have to
respond to China’s growing ambitions. Previously, China’s repression
of Uyghurs in the Xinjiang region and its crackdown
in Hong Kong drew condemnation from G7 members, and its massive Belt
and Road Initiative has prompted concerns about Beijing’s influence
over developing countries. Brussels, Tokyo, and Washington have all shared
grievances over Beijing’s state-led economic model and alleged unfair trading
practices. China’s growing trade and defense ties with Russia have also caused
concerns. But there are reportedly divisions within the group over how to
respond to China, as some European countries are leery of jeopardizing
commercial ties with the world’s second-largest economy. At the 2022 summit,
assembled leaders overhauled the 2021 Build Back Better World initiative,
creating the Partnership for Global Infrastructure and Investment as an
alternative to Belt and Road. The G7 pledged $600 billion in public and private
investment for the new strategy, though it’s unclear whether the group will be
able to match the resources that China has devoted to its project. As of May
2023, the United States has mobilized $30 billion in public and private
investment toward the project.
Fallout from the COVID-19 pandemic and the Russian
invasion of Ukraine has created additional obstacles. In 2020, the sharp global
economic contraction caused by the pandemic forced G7 governments to respond
with massive stimulus measures. In many countries, economic recovery has been
accompanied by record levels of inflation and food insecurity. Meanwhile,
repeated nuclear threats by Putin, alongside an increasingly bellicose North
Korea, have reinvigorated worries about nuclear weapons. “While it may seem
passé to call for a world without nuclear weapons, there is fresh impetus for a
renewed international effort to mitigate the possibility of nuclear weapons
use,” Smith writes. Some experts fear that rapidly advancing artificial
intelligence could raise
the risk of nuclear conflict.
In addition to its internal divisions, external dynamics
have chipped away at the G7’s global influence, many analysts note. Some argue
that the group lacks relevance without China and other emerging global powers.
In 2021, the Financial Times’ Gideon Rachman wrote that “the fact the G7 no longer represents
most of the global economy—and is skewed towards the Euro-Atlantic
region—remains a problem.” However, leaders from outside the G7 are frequently
invited to G7 summits. Australia, Brazil, India, Indonesia, South Korea, and
Vietnam all participated in 2023.
Many analysts believe that the power and prestige of
the Group of Twenty (G20), a forum
for finance ministers and central bank governors from nineteen of the world’s
largest countries and the EU, has surpassed that of the G7. Emerging powers
including Brazil, China, India, Mexico, and South Africa, whose absence from
the G7 was often noted, all belong to the G20. Russia remains a member of the
G20, despite calls by some G7 countries for its removal. The group’s member
states represent about 78 percent of global GDP and three-fifths of the world’s
population.
Many observers argue that the G20 was most effective
during the 2007–08 global financial crisis. G20 leaders first
met in Washington in 2008, after the fall of the investment bank Lehman
Brothers. While such consensus has been harder to come by in the years since
the crisis, G20 summits have been the occasion for setting ambitious goals. At
the 2014 summit, hosted by Australia, leaders adopted a plan to boost their
economies by a collective 2.1 percent, which they did not achieve. In Hangzhou,
China, in 2016, President Barack Obama and Chinese President Xi Jinping used
the summit to jointly announce their accession to the Paris Agreement.
Yet, at the 2017 meeting, in Germany, the G20 ran into
the same problems the G7 has come across in recent years, as countries proved
divided by trade issues; the United States blocked a planned reference in the
communiqué to the need to “resist all forms of protectionism.” The following
year, in Argentina, the G20 achieved what the G7 could not, releasing a
communiqué to which all its members agreed. But, as critics pointed out, this
consensus was only made possible by sidestepping disagreements on trade, climate
change, and migration.
There are also calls for new multilateral arrangements.
Some experts have endorsed an expansion of the G7 to include Australia, India,
and South Korea, thereby forming a “D10” group of democracies. The Washington-based think tank
Atlantic Council has held meetings of officials and analysts from those
countries since 2014; however, there are growing concerns about democratic backsliding in India. While president,
Trump floated the idea of a Group of Eleven, comprising the D10 countries and
Russia.
CFR President Richard Haass and Senior Fellow Charles A.
Kupchan have called for a new concert of powers comprising
the United States, China, the EU, India, Japan, and Russia, reminiscent of the
nineteenth-century Concert of Europe. The proposed system would have permanent
representatives supported by a secretariat to avoid what Haass and Kupchan
describe as the “fly-in, fly-out” nature of G7 and G20 summits. The group would
be focused on practical cooperation rather than ideological alignment to avoid
“haggling over detailed, but often anodyne, communiqués.”
Patrick says the G7 still has value because all member
countries are grappling with similar issues. “It’s sort of a manageable
steering group of the West,” he says. “They’re a repository, an embodiment of
common values and a similar rules-based approach to world order.” In addition,
the G7 can serve as a useful platform for “prenegotiation,” he says, allowing
members to hash out disagreements before taking proposals to the G20 or other
forums.
At the 2023 summit, the war in Ukraine remained a major
agenda item. Discussions focused on maintaining support for Ukraine ahead of
its planned
counteroffensive and cracking down on sanctions circumvention. The
bloc also discussed the worsening global food crisis, which stems in part from
the war. At the 2022 summit, the G7 called on Russia to cease attacks [PDF] on
Ukrainian agricultural infrastructure and pledged $4.5 billion for improving
global food security.
Climate concerns also remain at the forefront; German
Chancellor Olaf Scholz has said he wants to develop the G7 into a “climate club.” Ahead of the
2023 summit, G7 ministers committed to a new
joint agreement on climate protection and energy security. Among
other commitments, the countries agreed to increase offshore wind and solar
capacity by 2030, but stopped short of setting the same deadline for phasing
out coal or restricting investments in natural gas. The efforts are part of a
plan to achieve net-zero emissions by 2050, a goal that G7 leaders reiterated
at the summit in Hiroshima. However, climate efforts could take
a back seat as members focus on curbing energy prices.
Another problem for the bloc is managing the dual threat
of Russia and China while maintaining cohesion. While the United States has at
times taken a confrontational approach toward China, other members are less
keen to provoke confrontation with Beijing. The G7 could therefore try to avoid
alienating China as it tries to further isolate Russia. During a trip to China
prior to the G7 summit in 2023, French President Emmanuel Macron said the EU
should avoid becoming pulled into a conflict between the United States and
China over Taiwan, drawing backlash from some
U.S. lawmakers. At the 2022 summit, the group rebuked China for human rights
abuses but also urged the country to use its influence with Russia to stop the
war in Ukraine.
References
https://www.cfr.org/backgrounder/what-does-g7-do#chapter-title-0-2