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 attend a working session during the 2019 summit in Biarritz, France.
G7 leaders attend a working session during the 2019 summit in Biarritz, France. Ian Langsdon/Pool/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. President Joe Biden has pledged to restore the United States’ historical commitment to multilateralism. In a sign of renewed cooperation, the G7 reached a historic agreement ahead of its June 2021 summit in Cornwall, England, to overhaul the global rules for corporate taxation.

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 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 the participants are all developed 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. 

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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 European Union ratcheted up economic sanctions in an effort to further isolate Moscow. But the Ukraine conflict has hardened into a standoff, with the country’s easternmost provinces effectively under Russian control.

Frictions 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. In 2017, divisions emerged within the G7 over a proposal to impose fresh sanctions on Russia, which ultimately failed. The following year, U.S. President Donald Trump shifted course and called for Russia to be readmitted to the group, but other G7 leaders rejected the suggestion. 

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, 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. China’s rise is also creating challenges for the group.

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 in their final communiqué. In an unprecedented statement 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 at a closing news conference that Canada would “not be pushed around” by the United States.

Other leaders and many 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 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 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.

For the 2019 summit in Biarritz, France, French President Emmanuel Macron appeared to promote several agenda items on which Trump had been an outlier. These included income inequality, climate change, trade, and international taxation of digital companies, the last of which sparked disagreement between Paris and Washington. The 2020 summit, slated to be held at Camp David, was delayed and ultimately canceled due to the COVID-19 pandemic. 

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, including its use of industrial subsidies.

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 without China and other emerging global powers, the group lacks relevance. 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 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 where it belongs. The group’s member states represent about 80 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 of the member countries are grappling with similar issues, including populist backlash against the uneven effects of globalization. “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.

Since taking office, President Biden has recommitted the United States to its alliances and the broader multilateral system, and he will attend his first G7 summit as president in June 2021. Ahead of that meeting in the UK, G7 finance ministers reached an agreement to rewrite the global rules for corporate taxation in an effort to prevent multinational companies from parking profits in tax havens. The group is also reportedly set to launch an alternative to China’s BRI.

The G7 will likely feature prominently in Biden’s foreign policy, Patrick says, but he notes that Biden’s promise of a “foreign policy for the middle class” could create more friction. “Is that a foreign policy for the middle class of all G7 countries, or is that a foreign policy for the American middle class?” he says. “How is the United States going to balance its integration in the global economy and the shape of global rules with the desire to make sure that U.S. companies and U.S. citizens are in the best position to compete and win?”

Recommended Resources

In World Politics Review, CFR’s Stewart M. Patrick lays out four potential U.S. approaches to multilateralism under President Biden.

CFR President Richard N. Haass and Senior Fellow Charles A. Kupchan make the case in Foreign Affairs for a new global concert of powers.

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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