Where Is the G7 Headed?
Backgrounder

Where Is the G7 Headed?

The Group of Seven (G7) serves as a forum to coordinate global policy, but experts are increasingly questioning the group’s relevance.
G7 leaders are seated around a table during a meeting at the 2022 summit in Germany.
G7 leaders are seated around a table during a meeting at the 2022 summit in Germany. Stefan Rousseau/Pool via Reuters
Summary
  • The G7 is an informal grouping of advanced democracies that meets annually to coordinate global economic policy and address other transnational issues.
  • Russia’s membership was suspended in 2014 over the annexation of Crimea.
  • Due to internal divisions and the rise of alternative institutions such as the G20, some experts have questioned the G7’s relevance.

Introduction

The G7 is an informal bloc of industrialized democracies—the United States, Canada, France, Germany, Italy, Japan, and the United Kingdom—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.

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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. The group also launched a major global infrastructure program to counter China’s Belt and Road Initiative (BRI). Moscow and Beijing, along with climate change, rising inflation and energy prices, and the lingering COVID-19 pandemic, led the agenda at the 2022 summit in Schloss Elmau, Germany. 

Why was the G7 formed, and how does it work?

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Diplomacy and International Institutions

G7 (Group of Seven)

United States

The United States, France, Italy, Japan, the UK, and West Germany formed the Group of Six in 1975 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. Canada joined the following year. 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 the 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 makes up about 45 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. Nonmember countries are sometimes invited to participate in G7 meetings.

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What happened with Russia?

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 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.

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Diplomacy and International Institutions

G7 (Group of Seven)

United States

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 targeting state media to limit the spread of Russian propaganda. Other measures are aimed at Russia’s industrial sector to curtail its military capabilities. G7 members have collectively pledged tens of billions of dollars in financial aid to Ukraine, and nearly all members, including the United States, have provided weapons. 

What other challenges has the group faced?

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,” says CFR’s 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 the COVID-19 pandemic and China’s rise as a military and economic power. 

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 Patrick says there is a growing sense that China poses a “threefold threat” to G7 countries—economically, ideologically, and geopolitically. China’s repression of Uyghurs in the Xinjiang region and its crackdown in Hong Kong have drawn condemnation from G7 members. Its massive Belt and Road Initiative (BRI) has prompted concerns about Beijing’s influence over developing countries. Brussels, Tokyo, and Washington have 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 and Japan 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 China’s BRI. The G7 pledged $600 billion in funding 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.

The COVID-19 pandemic has created additional obstacles. The group’s 2020 summit, slated to be held at Camp David, was delayed and ultimately canceled. The sharp global economic contraction caused by the pandemic forced G7 governments to respond with massive stimulus measures. Now, as economies recover, many of them are contending with rising inflation. At the same time, G7 countries have pledged billions of dollars for vaccines and other tools to combat the pandemic. The COVID-19 response and preparations for future health crises remain a priority for the group. 

Are there alternatives to the G7?

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 2018, Jim O’Neill and Alessio Terzi, then fellows at 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 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, which, Patrick says, is where it belongs. The group’s member states represent about 85 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 Atlantic Council has held meetings of officials and analysts from those countries since 2014. Trump floated the idea of a Group of Eleven, comprising the D10 countries and Russia. However, there are growing concerns about democratic backsliding in India

CFR President Richard N. 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.” 

What’s next for the G7?

CFR’s 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 2022 summit, the major agenda item was the war in Ukraine and the need to “cement a united Western bloc at a time when fatigue risks setting in,” Patrick says. Discussions focused on reducing Europe’s dependence on Russian energy and finding other ways to increase the economic pain for Moscow; the group is considering imposing a price cap on Russian oil. Additionally, the bloc faces a looming global food crisis from the war, which has resulted in shortages of wheat and other crops. 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. Indeed, German Chancellor Olaf Scholz has said he wants to develop the G7 into a “climate club.” Ahead of the 2022 summit, G7 ministers committed to a new joint agreement [PDF] on climate protection and energy security. Among other commitments, the countries agreed to work to eliminate fossil fuel subsidies, decarbonize their electricity supplies by 2035, and seek further reductions in carbon emissions in the transportation sector, with the aim of achieving net-zero emissions by 2050. 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 tends to “lump China and Russia together,” Patrick says, 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. 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. 

Recommended Resources

CFR’s Stewart M. Patrick explains the G7’s role in upholding the international standards established in the UN Charter.

For Foreign Affairs, Mark Leonard of the European Council on Foreign Relations examines the global implications of a more muscular Germany and Japan

For Foreign Policy, CFR’s Edward Alden investigates the current economic crisis and the role of the G7.

The Washington Post analyzes how an iconic photo of President Trump and other G7 leaders in 2018 reflected the geopolitics of the time.

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Emily Lieberman contributed to this report.

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