Context: U.S. President Joe Biden at the Group of Seven (G-7) nations meet had agreed on a united approach to China that called for diversifying supply chains to reduce dependence on one country. The leaders explained that they are not looking to decouple from China rather they are looking to de-risk and diversify our relationship with China.
On the issue of tensions between China and Taiwan, there was a clear understanding among most of the allies that if China were to act unilaterally against the self-governed island Taiwan, there would be a response.
Further at the summit on side-lines of the G7 meet Prime Minister Narendra Modi met with Ukrainian President Volodymyr Zelensky and ensured that India will do “everything” necessary to resolve the war in Ukraine.
What is the agenda for G7 Summit this year?
- Launch the Hiroshima Action Statement for Resilient Global Food Security with partner countries to address needs today and into the future; and
- Deliver our goal of mobilizing $600 billion in financing for quality infrastructure through the Partnership for Global Infrastructure Investment (PGII)
- Member reiterated the importance of a free and open Indo-Pacific, which is inclusive, prosperous, secure, based on the rule of law, and that protects shared principles including sovereignty, territorial integrity, peaceful resolution of disputes, and fundamental freedoms and human rights
- They also condemned in the strongest possible terms the war of aggression by Russia against Ukraine, which constitutes a serious violation of international law, including the UN Charter.
- The G7 Leaders’ Hiroshima Vision on Nuclear Disarmament, we express our commitment to achieving a world without nuclear weapons with undiminished security for all, through taking a realistic, pragmatic, and responsible approach.
About G7
- The Grouping began as the Group of Six in 1975- with a meeting of leaders of US, UK, West Germany, Italy, France and Japan, because of the Oil crisis and global currency exchange issues that decided to meet annually.
- The Group of 7 (G7) is an informal group of seven countries — the United States, Canada, France, Germany, Italy, Japan and the United Kingdom, the heads of which hold an annual summit with European Union and other invitees
- Together the member countries represent 40% of global GDP and 10% of the world’s population
- G7 has no legal existence, permanent secretariat or official members
- Leaders of G7 countries meets annually and discusses emerging global issues
- India has been a special invitee to the G-7 on several occasions in past two decades- including 5 consecutive years from 2005-2009 during global economic crisis. This year Indian PM was invited at summit.
Challenges faced by G7
- Changing Economic Situation: When constituted the G7 countries accounted for close to two-thirds of global GDP.
- They now account for less than a third of global GDP on a purchasing power parity (PPP) basis, and less than half on market exchange rates (MER) basis
- Seven largest emerging economies (E7, or “Emerging 7”), comprising Brazil, China, India, Indonesia, Mexico, Russia and Turkey, account for over a third of global GDP on purchasing power parity (PPP) terms, and over a quarter on MER basis.
- It is a “First World Elite Club” that has not grown its membership to include emerging economies like India and China.
- By cutting out Russia and China, the G-7 ensure the polarisation of the world into the two blocs, even as ties between Russia and China get stronger.
- G-7 countries are also military partners means that the economic agenda of the grouping often takes a backseat over political issues
- G7 failed to head off the economic downturn of 2007- 08, which led to the rise of the G20.
- Contemporary issues missed: G7 has not raised concerns with respect to contemporary issues, such as the COVID-19 pandemic, climate change, the challenge of the Daesh, and the crisis of state collapse in West Asia.
- No Concrete Plan: It had announced its members would phase out all fossil fuels and subsidies but has not so far announced any plan of action to do so.
- Unlike other institutions, G7 is not a formal institution with a charter and a secretariat.
- Lacks representation: Russia, China and India which are influential global players with important role in global economy are not members of this group.
- Internal Divisions: US president Donald trump had challenged the unity of G7 members stating that contending that U.S. allies took advantage of the United States.
- There is a growing sense that China poses a “threefold threat” to G7 countries—economically, ideologically, and geopolitically.
Way forward for G7 and India
- A new mechanism is required to handle the emerging global challenges - Trade war, economic slowdown, Political turmoil in countries, counterterrorism & non- proliferation.
- There is need for including in it the seven future leading economies, plus Germany, Japan, the U.K., France, Mexico, Turkey, South Korea, and Australia
- Finding effective solutions to burning issues like Ukraine war, Global economic slowdown, Iran's nuclear program, peace and stability in Afghanistan, Gulf and West Asia, reduction in tensions in Korean peninsula and South China Sea.
- India’s tightrope walk between the West and Russia- China has just become more difficult- the G7 statement indicates a point of no-return
- The US-China rivalry is likely to step up in the Indo- Pacific with the new economic initiatives planned: from Indo-Pacific Economic Forum to the PGII to counter China’s Belt and Road Initiative- India joined the IPEF but India has not signed on to the PGII plan yet.
- India’s partnerships with countries like Indonesia, Brazil. South Africa, ASEAN etc that are still seeking to balance ties with both blocs will get stronger.
- India’s role as the balancing power in the room is evident: at the BRICS summit last week, India ensured that anti-West language did not enter the text, while at the G-7 outreach, it ensured that statements condemning Russia and China were not part of the documents that India signed.