Does the G7 Have a Future? What Holds This Alliance Together?

  • The G7 is a remnant of the past where the world was divided between the Soviet Union's political views and their allies versus the US and it's Western world allies.
  • The agenda of the G7 has changed to one that promotes the importance and unity of the EU and NATO.
  • The future of G7 dominance is unclear and without strong unity among the members it could result in a loss of global economic power.

The 45th G7 (Group of Seven) Summit is being held from August 24–26, 2019, in Biarritz, France. The Group of Seven consists of the US, Canada, United Kingdom, France, Germany, Italy and Japan. France has identified the following main objectives for the 2019 Summit:

  1. Fighting inequality of opportunity, access to education and high quality health services;
  2. Reducing environmental inequality by protecting our planet through climate finance and a fair ecological transition, preserving biodiversity and the oceans strengthening the social dimension of globalization through more fair and equitable trade;
  3. Taking action for peace against security threats and terrorism which weaken the foundations of our societies; and
  4. Tapping into the opportunities created by digital technology and artificial intelligence (AI).
All G7 members are also members of NATO (The North Atlantic Treaty Organization).

The G7 is a remnant of the past where the world was divided between the political views of the Soviet Union’s and their allies versus those of the US and it’s western world allies. The first summit took place in 1975 in France. At the time Japan and Germany were interdependent on the US. Simply put, the G7’s primary goal is the global advancement of the West.

However, times have changed dramatically since the collapse of the Soviet Union and the disintegration of the Warsaw Pact that ended communist influence in Europe. Moreover, the agenda of the G7 has changed to one that promotes the importance and unity of the EU and NATO. Brexit has weakened the unity within the EU. Not adding the BRICS (Brazil, Russia, India, China and South Africa) as members also weakens the summit.

Furthermore, Russia is starting to reemerge as an influencer in Europe, including among the populist movements causing disruptions in the West. Russia lost membership in 2014 due to the Crimea annexation. At the time the trajectory should have been staying as G8 and soon thereafter adding China, making it G9. Especially, since the Yuan at the time became an alternative reserve currency.

The summit is almost counterproductive. President Donald Trump is reluctant to attend and the US is focusing more and more on nationalism. The Amazon fires are on the top of the agenda which is a huge blow to global climate. However, the topics pertaining to the economy are at an impasse from the start.

The trade war between the US and China is costing each nation close to 2% of their GDP. It is predicted the US will sooon have a trade war with the EU as well.

China’s main exports:

USA main exports:

The issue with global security and terrorism is more imminent, with Trump threatening to release terrorists or send them back to G7 members’ respective countries.

French President Macron decided to suggest Russia’s return to the G7 membership in exchange for concessions including a revival of the (or creation of a new) nuclear treaty to avoid a fresh global nuclear weapons race. Trump seconded the idea to bring Russia to the discussion table. Russian Press Secretary Dimitry Peskov stated Russia does not have an objective to returning as a member of the G7, especially since EU President Donald Tusk suggested inviting Ukraine to the next summit meeting.

Additional discussions are ongoing to revive the Paris Accords, an agreement within the United Nations Framework Convention on Climate Change (UNFCCC) dealing with greenhouse-gas-emissions mitigation, adaptation, and finance, signed in 2016.

One of the main topics is the stability of global trade. Trump’s proposals are not being welcomed by other G7 members. He’s looking to increase manufacturing in America, reduce imports, protect US high tech patents and perhaps even control prices.

Future dealings with Russia present a few conundrums: There are valid concerns surrounding the latest nuclear explosions in Russia and the impact on the environment; The future of Russia’s nuclear weapons program; Russia’s involvement in the Middle East; and Russia’s help in the War on Terror.

G7  member nations compounded global  power:

  • 10% percent of Population
  • 30% of GDP
  • 22 million square km territory
  • 11.1 million barrels of crude production
  • 31.6% electricity produced
  • 7.2 million cubic meters of water resources
  • 7.2 million cubic km of forestry 3 million weapons per capita

Real GDP Growth Annual Percent Change according to IMF:

Thus far the biggest faux pas at the summit is France’s invitation to Iran’s Foreign Minister Javad Zarif. The idea is to keep the lines of dialogue going to avoid destabilization in the Middle East. Trump refused to comment on the issue of Iran and Zarif being there.

This was the first appearance of Boris Johnson from the UK who provided Trump with an additional ally at the summit– a balance to the Macron-Trudeau alliance.

The future of G7 dominance is unclear and without strong unity among the members it could result in a loss of global economic power.

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Christina Kitova

I spent most of my professional life in finance, insurance risk management litigation.

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