The US President Donald Trump, dubbing the current G7 setup as outdated, had recently called for the expansion of the grouping into a G10 or G11 with the inclusion of India, Australia, Russia and South Korea. Apart from the US, the UK too had advocated for the expansion by pitching for the ‘D10’, a grouping of 10 democratic countries comprising of G7 and India among others to create an alternative source for 5G technology and equipment and curb reliance on China. These proposals come at a time when the major economies are increasingly becoming less influential due to their lack of unity and protectionist ideologies.
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What is G7?
The group of Seven (G7) is an intergovernmental organisation that consists of the world’s seven largest IMF-described advanced economies. Its members are:
How did it originate?
- It was formed after the 1973 oil crisis, which began when the Organisation of Arab Petroleum Exporting Countries (OAPEC) declared an oil embargo on those countries that were suspected of supporting Israel during the Yom Kippur War.
- Initially, an informal meeting was held between the finance ministers of the US, UK, West Germany, and France.
- This original group of four came to be known as the “Library Group”.
- In mid-1973, at the World Bank-IMF meetings, the US Secretary of Treasury proposed the inclusion of Japan to the original four nations. All members agreed to this proposal.
- An informal meeting was held between the senior financial officials of the US, UK, Japan, France, and West Germany which came to be known as the Group of Five.
- In 1975, France brought together the representatives of the 6 major economies: France, West Germany, the US, UK, Japan, and Italy.
- This grouping was known as the G6.
- The first meeting was held in 1975, in Chateau de Rambouillet, located 50km south-west of Paris.
- These major economies came together to discuss the oil stock, recession and global crisis.
- According to the Declaration of Rambouillet, the 6 nations agreed to meet annually under a rotating presidency.
- Canada joined this group in 1976, leading to the formation of the G7.
- Russia was inducted into this group in 1998, making it G8.
- Later, Russia was suspended following its annexation of Crimea in 2014.
What is the significance of G7?
- G7 countries together make up 40% of the world GDP.
- These countries account for one-tenth of the world population.
- The members of the G7 are the leading exporters in the world trade.
- They are also the largest contributors to the UN Budget.
- From this, it is evident that they play a highly influential role in global politics.
What do the critics say about the G7?
- Critics argue that the G7 has become irrelevant in recent times.
- G7 call itself the “leader of the world” and the “representative” of the world’s leading democracies.
- When this organisation was initially created, it attempted to strengthen democracy across the world.
- Yet, it excludes some of the largest democracies like India and Brazil. This shows that it is not functioning according to the current reality.
- There is also no representation from Africa, Latin America or the Southern Hemisphere.
- The 2019 G7 theme was “fighting inequality”.
- Yet, countries like the US are currently being plagued by racial discrimination and economic inequality.
- According to the recent report published by the non-profit Oxfam International, the G7 countries are creating a wide gap between the rich and the poor due to their capitalistic ideas within and outside their countries. This is making the global fight against poverty highly difficult.
- Also, advocating against inequality while not allowing equal representation from other parts of the world makes G7 even more unrealistic.
- Furthermore, there is a lack of representation from the current fastest-growing economies like India, China and Brazil. Including them is vital in promoting cooperation for the growth of the global economy.
- India and China are among the top 7 countries with the largest GDP in the world.
- Keeping them out in the major economic decisions prove that the G7 is not on par with the current global scenario.
- The disagreements between the members of the group have increased in recent times.
- Climate change is one of the contentious issues among the member nations as the current US government has refused to cooperate with the rest in promoting the mitigation of environmental degradation.
- The grouping is also facing a setback due to the increasing protectionist mentality among the member states.
What are the key takeaways of the 2019 G7 summit?
- Reinstating Russia: The US President Trump had advocated for Russia’s return to G7. However, there was no formal consensus on this issue.
- US-Iran tensions: President Trump stated that he was open to dialogue with his Iranian counterpart under the right circumstances. However, he had refused any compensation to Iran for any negative impacts that may have caused due to the crippling sanctions.
- Trade War: The members expressed their concerns over the ongoing trade war between China and the US and have called for a viable resolution. The US President Donald Trump had opened the doors for a trade deal between the US and China.
- Climate Change: Discussions on climate change was held in the session on “Climate and Biodiversity”. Notably, the US President skipped this meeting. The members pledged to provide $20 million to fight the forest fire in the Amazon Rainforest.
- US-Japan trade agreement: A deal was signed between the US and Japan to secure access to Japan’s market for several American agricultural goods. Also, Japan had agreed to buy large portions of corms from America.
- Hong Kong: The members of the G7 agreed on the importance and existence of the Sino-British Joint Declaration of 1984 and supported Hong Kong’s autonomy.
India and G7:
- The G7 summit was hosted by France this year.
- PM Modi was invited by the French President Emmanuel Macron under the special invitation.
- The MEA termed this invitation to be the “reflection of personal chemistry” between the two leaders and also the recognition of India as a major economic power.
- G7 addressed several issues related to India such as:
- On the side-lines, India highlighted its efforts on addressing the issues of climate change, water stress, and ocean pollution.
- Eg: Banning of the single-use plastics, promoting renewable energy usage, saving water and also the protection of the biodiversity.
- In the session on “Digital Transformation”, PM Modi highlighted India’s increased usage of new and innovative technologies and also the promotion of digital payments.
- He also highlighted the use of technologies to solve the problem of social inequalities and the promotion of empowerment and inclusive growth.
What is the D10 proposal?*
- The proposal for formation of the D10 grouping has been gaining currency amidst the growing anti-China sentiments- stemming from the surveillance and national security concerns, COVID-19 crisis, Hong Kong issue, etc.
- D10 is a proposed grouping of the G7 countries and 3 other countries (India, South Korea and Australia).
- It was proposed by the British PM as a group of 10 democratic countries to create an alternative supply source of 5G technology and equipment.
- This is seen as an alliance against the Huawei Group of China.
- The proposal comes in the backdrop of the UK government granting conditional authorization to Huawei to conduct 5G trials in the country. The market share of the Chinese telecom giant was capped at 35%.
- The permission had attracted much disapproval from the US administration as it defied the US’ plan to drive a ban on Huawei’s entry into the 5G sector.
- Following the criticism (from domestic and foreign sectors), the UK government has started to work on a plan to phase out Huawei’s involvement in British 5G network by 2023. D10 is one of the measures.
- The D10 club is considering 2 routes:
- Helping establish new entrants in the 5G market
- Pooling investment to Nokia and Ericsson- firms capable of providing 5G equipment.
- The USA is also expected to step up its sanctions against the Chinese state-owned firm this September. This would restrict Huawei’s use of American-made components (like semiconductors and software) for manufacturing 5G equipment.
- This upcoming sanction has triggered a UK National Cyber Security-level review on Huawei’s ability to supply the equipment to the UK. It has further expedited the UK’s moving away from the tech firm.
What is the proposal for an expanded G7?*
- The G7 Summit was recently postponed to the latter half of 2020 over concerns of the group being ‘of outdated format’, besides health concerns due to the COVID-19 pandemic.
- The US President called for an expansion of the current G7 to a G11 format by including India, Russia, South Korea and Australia.
- The current US administration had previously called for the inclusion of Russia into the grouping in recognition of its ‘strategic importance’.
- Interestingly, in 1979, the USA had vetoed a push by Japan to include Australia in an expanded G7.
- In the present times, South Korea and Australia are seen as US allies.
- The other G7 allies are expected to resist the inclusion of Russia.
- G7 is one of the important international groupings when it comes to economic and political decisions.
- However, its stance in recent times has become redundant due to its lack of unity and exclusion of the emerging economies.
- Thus, G20 is playing a far more crucial role in recent times.
- Therefore, the G7 must upgrade its membership and its structure so as to stay on par with recent times.
- Currently, all major economies including the US and the EU are seeking to have a close economic and trade ties with India and China is becoming a major player in the global economy.
- India and China should be included as the permanent members of the G7 for it to regain its importance in the current international politics.
There is a need for revamping of such international groupings to reflect the actual global scenario and to improve the representation of emerging nations. While this is being done, there is a simultaneous need for consensus among the grouping’s members and a well-established grounds for the alliance.
Practice question for mains:
G7 is being called ‘an outdated group of countries’. What are the advantages and challenges in revamping the Group of Seven? (250 words)