- Current political and economic issues succinctly explained.
The Group of Seven (G7) is an informal bloc of industrialized democracies—Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States—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 was suspended following its annexation of Crimea. The G7’s future has been challenged by continued tensions with Russia, disagreements over trade and climate policies, and the larger Group of Twenty’s (G20) rise as an alternative forum. Meanwhile, U.S. President Donald J. Trump has deepened divisions within the bloc, raising questions over cooperation on various policies.
France, Italy, Japan, the United Kingdom, the United States, and West Germany formed the Group of Six in 1975 (Canada joined the following year) to provide a venue for the 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. Cold War politics invariably entered the group’s agenda.
The European Union has participated fully in the G7 since 1981 as a “nonenumerated” member. It is represented by the presidents of the European Council, which comprises the EU member states’ leaders, and the European Commission, the EU’s executive body. There is no formal criteria for membership, but the participants are all developed democracies. The aggregate gross domestic product (GDP) of G7 member states makes up nearly 50 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. Ministers and envoys, known as sherpas, hammer out policy initiatives at meetings that precede the gathering of national leaders.
The Russian Outlier
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 Crimea in March 2014 resulted in its indefinite suspension from the group “until Russia changes course and the environment comes back to where the G8 is able to have a meaningful discussion,” according to a joint statement.
The decision of the seven other members to meet as a reconstituted G7 was “basically a reprimand saying you’re not in our club, you don’t meet certain standards of international behavior, much less domestic behavior,” says CFR’s Stewart M. Patrick.
As Russia’s intervention in Ukraine escalated, the United States and European Union ratcheted up sanctions in an effort to further isolate Moscow. The Russian economy, which fell into a deep recession in 2015, has gradually recovered, albeit dragged down by sanctions and volatile oil prices. But the Ukraine conflict has hardened into a standoff, with the country’s easternmost provinces under Russian control. Russia announced sanctions of its own against European officials, and a peace plan, the Minsk accords, has been largely ignored.
Tensions also grew over Russia’s role in Syria, especially in the wake of chemical attacks linked to Syrian government forces, and over Russian interference in U.S. and European elections. However, divisions emerged within the G7 over a 2017 proposal to impose fresh sanctions on Russia, which ultimately failed. And in 2018, President Trump shifted course and called for Russia to be readmitted to the group. Other G7 leaders have so far rejected Trump’s suggestion, although French President Emmanuel Macron hosted Putin ahead of the group’s 2019 summit in Biarritz, France.
G7 Revival, Interrupted
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,” said CFR’s Patrick, with both common interests and common values. However, Trump has undermined G7 unity on a number of issues, with trade and climate chief among them.
In comments surrounding Trump’s first trip abroad as president, which included the 2017 G7 summit in Sicily, the distance between his administration and the rest of the bloc was laid bare. In Brussels for a NATO summit, Trump criticized Germany’s trade surplus and threatened to block U.S. imports of German cars, sparking an angry reaction from Chancellor Angela Merkel. European allies balked at Trump’s stance on NATO after he accused them of not spending enough on their own defenses and refrained from endorsing the alliance’s mutual-defense provisions.
At that year’s G7 summit, Trump refused to recommit the United States to the 2015 Paris Agreement on climate and hinted at plans to withdraw from the agreement, leading other members to take the unusual step of singling out the United States on the issue in their final communiqué. In an unprecedented statement at a campaign rally following the summit, 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.”
The following year’s G7 summit, in Charlevoix, Canada, proved still more difficult. Even before his arrival, Trump wrong-footed his counterparts by calling for Russia’s readmission. The group eventually cohered around a final communiqué, but Trump rescinded his endorsement of it minutes after his departure, angry that Prime Minister Justin Trudeau said Canada would “not be pushed around” by the United States at a closing news conference.
Other leaders and several analysts were alarmed by Trump’s testy relationship with the rest of the group. Merkel called Trump’s behavior “sobering and a bit depressing.” CFR’s Patrick wrote that President Trump seemed “prepared to abandon the transatlantic relationship, and even the concept of ‘the West,’ as pillars of U.S. global engagement.”
At the same time, European leaders have had to contend with a laundry list of regional challenges, including promoting economic reforms throughout Europe, resolving ongoing debates over budget deficits, navigating the United Kingdom’s withdrawal from the EU, and maintaining cohesion during a period of rising nationalism.
Trump’s poor relationship with several G7 leaders has exposed deep divisions, leading some to fear that there might not be a future for the group. Others, including CFR’s Sebastian Mallaby, disagree. Mallaby concedes that the G7 is “divided, ineffectual, and more of a source of displaying the weakness and disunity” of its members than a forum to resolve global issues. But he sees this as a blip, predicting that Trump’s successor will return the G7 to its traditional status. “If you look at it from the point of view of Canada or Japan or the European members of the G7,” Mallaby says, the group’s appeal as a small club that includes the United States becomes more evident. “They don’t have an alternative.”
As Trump has replaced Putin as the prime source of G7 tensions, the group has oscillated between adapting its positions to Trump’s presidency and taking a more confrontational stance. For the 2019 summit in France, President Macron appeared to favor the latter option, promoting several agenda items on which Trump has been an outlier. These include income inequality, climate change, trade, and international taxation of digital companies, the last of which sparked disagreement between Paris and Washington.
CFR’s Patrick predicts the group will disagree about the need to defend democracies from rising authoritarianism and about the UK’s pending exit from the EU. Trump has found common cause with new pro-Brexit British Prime Minister Boris Johnson, and he has encouraged EU dissolution, a stance Patrick has called “pernicious” and “misguided.”
Rise of the G20
In addition to its internal divisions, the G7 is no longer as influential as it once was, many analysts note. Some argue that without China and other emerging global powers, the group lacks relevance. In 2018, Jim O’Neill and Alessio Terzi of the European research institute Bruegel wrote that the G7, “in its current formulation, no longer has a reason to exist, and it should be replaced with a more representative group of countries.”
Many analysts also believe the power and prestige of the G20, a forum for finance ministers and central bank governors from nineteen of the world’s largest countries as well as 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, which, Patrick says, “is much more where they belong.” The group’s member states represent about 80 percent of global GDP and two-thirds of the world’s population.
U.S. President Barack Obama affirmed this in 2011, calling the G20 the “premier forum for global economic coordination.” Many observers note that the forum was most effective during the 2007–2008 global financial crisis; G20 leaders first met in Washington in 2008, after the fall of Lehman Brothers.
“The Washington summit in 2008 and the London summit in 2009 did much to avert a new great depression,” writes the Brookings Institution’s Thomas Wright. “Unprecedented cooperation between the world’s largest economies provided liquidity that limited the contagion of the banking crisis, kept markets open and prevented countries from resorting to protectionism, and provided a stimulus that cushioned the drop in growth.”
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 Obama and Chinese President Xi Jinping used the summit to jointly announce their accession to the Paris Agreement.
At the 2017 meeting in Germany, however, the G20 ran into the same problems the G7 has come across in recent years, as countries proved divided by trade issues and 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.