The G7 and G20 summits present an important opportunity for some of the world’s largest economies to work together on prevailing geopolitical, economic, and security issues. However, they have come under criticism, separately and as a whole, in light of their stated objectives.
Some argue that the G7 no longer accurately represents the world’s most significant economies. China and India are the most notable absentees in this year’s summit roster. On the other hand, the G20 grows ever more relevant as international trade and capital ebb and flow over time. On the flip side, the many members of the G20 find themselves crippled in facing the challenge of Russia’s continued aggression against Europe. Where the G7 unified against the global threat, the G20 has had to tread cautiously between relationships that have been torn apart between the global west and the global East. Calls to exclude Russia from G20 relationships grow increasingly insistent, although decisive action is yet to be taken.
Both the summits – the G7 with its focus on meeting the challenges of ‘coercive economic policies’ and the G20 in its unresolved stance on the Ukrainian humanitarian crisis – also face the common obstacle of having global politics taking centre stage over what was initially planned to be economical and financial forums for its member states. The two platforms are in danger of devolving into political factions representing the global West and a new global South.
This evolution of the two summits is likely due to the loose coalition that binds its member states – both the two forums are informal associations with no constitution or written agenda. The informality allows for more open discussions and agreements between countries while laying the direction of these same discussions open for political influence. The parts the two forums are to play in the future will likely depend on how they solve this key issue.
What happened this year at G7
This year’s G7 talks featured a range of topics such as climate change, global health, technology, and food security. Representing some of the wealthiest economies in the world, policies and agreements between the seven countries have the potential to affect the global economy more than most. The seven countries (UK, US, Japan, Italy, Germany, France, and Canada) account for 27% of the world GDP and 15% of world GDP growth in the past decade. The G7 brings the world’s most economically powerful countries together to influence global trends and tackle emerging global issues.
The focal point of the G7 summit this year, of course, was renewing the commitment of the member states to stand united with Ukraine against its Russian aggressor. In a statement issued following the summit, G7 leaders made clear their intention to make Russia bear the financial burden for the reconstruction of Ukraine. China was another unlikely player addressed on the topic of the security of the global economy in an unusual addition to the traditional post-event communique. The economic policies of the 2023 summit focused on heightened supply chain resilience, countering economic coercion, and the protection of critical technologies. These were described as only being aimed at ‘diversifying and de-risking the world economy as a whole. Why the communique thought it fit to state that these policies were not designed to harm or decouple China’s interests is up for speculation.
The G7 Leaders’ Statement on Economic Resilience and Economic Coercion calls for a new platform to coordinate responses to economic coercion, also pointing to growing concerns on the part of its member for economic security in the face of aggressors. An agreement to strengthen multilateral export controls on dual-use technology also appears to be a measure that implicitly targets China.
The G20 this year
The G20 summit is similar to G7 in that it encourages coherence between the national policies of its members. The similarities can only be drawn in such broad terms, however, as it is far less exclusive than the G7, boasting 43 combined member states, as opposed to the seven-member states and the EU of the G7.
The G20 talks at the major economies meeting in India did not profit from the convergence of opinion seen at the G7 however. Contentions among the members failed to reach an agreement on a global phase-out of fossil fuels. This was the result of a disagreement between cutting back on fossil fuel use without using carbon capture technology and depending on carbon capture technology over reductions in fossil fuel use. The states who pushed back against reduction in oil use account for a not-inconsiderable portion of the world GDP combined, largely owed to their fossil fuel production. These include China, Russia, South Africa, and Indonesia.
A policy brief by Think20, the Global Engagement Group for the G20 this year also highlighted the need for global public investment to meet global challenges effectively. The brief recommends that the summit, which is to be held in September, leverages its geo-economical status to develop global public investment. In addition to insulating the world GDP against future crises, this pathway is described as having the potential to meet the needs of the century in terms of climate, health, and other common global challenges. Global public investment would not replace the current Official Development Assistance programme to which all countries contribute. Rather, it would run in parallel with the programme to lessen the burden of countries that have to compete for public goods with others with access to more resources. Such an effort would reduce inequalities in how the world GDP is distributed across nations.
The aims of the two summits seem to be poles apart, but in terms of the bigger picture, are united in addressing the biggest challenges that humanity and the planet face today. Russia’s war in Ukraine, climate change, and economic expansionism are all crises that have multi-faceted impacts on global inequality and political instability. The G7 and G20 summits are useful platforms for its members to collaborate on how they intend to meet these challenges, for they are challenges that no one country can solve for themselves. The mere existence of the two forums itself promotes cooperation and dialogue between the nations instead of isolationist policies that could upset the delicate balance of power between powerful nations.
(Theruni Liyanage)