What is G7? Purpose, History and Influence

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In 1973, finance ministers from West Germany, France, the UK, and the United States met in a library in the White House. This small group of four soon expanded into an intergovernmental forum known as “G7” or the Group of Seven. At its yearly summits, the G7 discusses the global economy, governance issues, international security, energy policy, and more. In this article, we’ll explore the purpose of the G7, its decades-long history, and the complicated influence it has on the world.

The G7 is an intergovernmental bloc with seven permanent members: Canada, the UK, France, Germany, Italy, Japan, and the United States. It serves as a forum for global coordination, but its effectiveness – and whether it’s even set up for success – is heavily debated.

What is the purpose of the G7?

Global coordination and leadership have always been the G7’s purpose. The main seven members – Canada, the UK, France, Germany, Italy, Japan, and the United States – represent many of the world’s wealthiest industrialized countries, so trade and economic concerns have always been among the focus areas. Security issues, climate change, gender equality, disarmament, and other emerging global crises (most recently COVID-19 and the war in Ukraine) are discussed, as well. While G7 consists of just seven members, the European Union is a “non-enumerated member” while various countries get invited to participate in meetings.

Because it exists as a political discussion forum, the G7 doesn’t have the power to create or enforce policies, like the United Nations does. There’s no treaty or permanent secretariat. There is a presidency, but it rotates every year between the seven member countries. Whoever is president must discuss that year’s priorities with the other members and host the Leaders’ Summit, which is the group’s big meeting each year. There are other meetings throughout the year, however; the G7 is active all the time. At the end of the Leaders’ Summit, the host country releases an outcome document, which details the meeting’s contents and any agreements reached between the G7 members.

What’s the history of the G7?

Before the G7, there was “the Library Group.” U.S. Treasury Secretary George Schultz, who was serving under Nixon in 1973, invited finance ministers from West Germany, France, and the UK for an informal meeting. Later that year, Japan was invited, and the group became known as “the Group of Five.” In 1975, Italy joined, and the first summit meeting took place in Paris. Members had a lot to talk about, including the financial crises, the oil shock of 1973-1974, and other issues of the turbulent 1970s. The Cold War was also a big focus for the Group during this time. They agreed to continue meeting once a year with a rotating president. In 1976, Canada joined, and the group officially became the G7. While the European Union didn’t become an official member, it began participating in the G7 as a “non-enumerated member.” The EU is represented by the European Council and European Commission presidents.

The Soviet Union collapsed in 1991, and in 1994, Russia started joining discussions. In 1998, it became an official member of G7, which made the bloc the G8. However, that version of the group wouldn’t last. In 2014, Russia occupied and annexed Crimea, which was an autonomous republic of Ukraine. Russia, Crimea, and Ukraine have a long history. When the Soviet Union dissolved, Russia agreed to recognize Ukrainian independence – which included the independence of Crimea – if Ukraine handed over its nuclear weapons. Ukraine agreed, but in 2014, Russia invaded Crimea and triggered a massive international incident. The G7 members canceled the G8 summit for that year (it was supposed to be in Sochi, Russia) and suspended Russia’s membership. Russia remains suspended, so G8 is technically no more. The group has returned to its G7 name and membership.

How does the G7 influence the world?

While G7 itself doesn’t have the power to create or enforce policies or laws, it consists of some of the world’s most influential countries. When these nations come together to discuss ideas and coordinate actions on trade, security, climate change, and more, there’s an impact. Here are some examples of where the G7 has influence:

The global economy

The countries in the G7 make up a huge slice of the global economy, including trade, global GDP, business, supply chains, and more. After discussing various ideas and making agreements, the G7 leaders return to their homes and enact decisions that have global repercussions on the markets within the G7 countries and beyond. They also reach agreements on what they do and do not support. As an example, in 2021, the G7 reached a “historic” deal on backing a global minimum corporate tax of at least 15%.

Global politics

As evidenced by Russia’s suspension in 2014 and the G7’s ongoing support of Ukraine, G7 takes an active role in global politics. There are often real consequences tied to G7’s stances, such as sanctions against Russia by the European Union and the United States. While it can’t make or enforce policy on its own, the G7’s ability to shape policy and global politics is clear.

Humanitarian aid and development

While the nature of aid and how much countries are giving relative to their GNI (gross national income) is complicated, the G7 countries are responsible for a significant percentage of the world’s humanitarian aid. According to an OECD chart, the United States gave the most in 2021 ($47.8 billion) followed by Germany, Japan, the UK, France, Canada, and Italy. Because they hold so much of the world’s aid, the G7 countries and their coordination have a major influence on where aid goes, how much is spent, what development programs are prioritized, and more.

What are the main criticisms of the G7?

The G7 has faced its share of criticism over the years, especially as technology, conflict, diplomacy, and other cultural shifts draw us further and further away from the world in which the G7 originated. Here are three of the main criticisms:

It suffers from a severe lack of representation

The G7 has just seven main members, and while the EU is involved and there are guest nations at the yearly summit, the group’s small and elite membership is frequently criticized. Without the participation of other countries, especially less wealthy ones, the G7 may be doomed to make decisions that fail to address the most urgent crises of our time like climate change and financial collapse. With just seven of the world’s wealthiest countries at the helm, is the G7 up to the task?

It’s ineffective

We discussed the G7’s influence on the world, but it’s difficult to pinpoint exactly how effective the forum is. Many critics are skeptical about the G7’s ability to transform summit discussions and statements into solid, enforceable laws and policies at the national and local levels. Like many intergovernmental groups, the G7 takes a stand on various issues, but none of the countries are required to follow through with any of their promises. Without a mechanism for accountability, can the G7 be truly effective?

It focuses on good press, not real change

The G7 talks a lot about making the world a better place, but critics say the summit has become about looking good and not doing good. Consider how G7 countries are responsible for a lot of the problems they claim to be solving. A 2019 media briefing from Oxfam points out that G7 governments fuel inequality within their own countries and abroad by “failing to implement progressive tax systems and by adopting harmful tax practices.” This has created some of the worst inequality the world has ever seen, which accelerates climate change, stagnates gender equality, increases crime and violence, and more. As G7 countries fail to keep their promises and often actively make things worse, it’s easy to see why critics say the G7 is just about maintaining appearances.

What is the G7 working on right now?

The 49th G7 summit took place May 19-21, 2023 in Hiroshima, Japan. To get a better idea of what the G7 is currently focused on, here are summaries of three official documents released following the Leaders’ Summit:

The G7 Clean Energy Economy Action Plan

In this report, the G7 reaffirmed its commitment to the Paris Agreement and reaching net zero emissions by 2050. It acknowledged how trade policies play a role in meeting this goal. Its action plan includes cooperation through the Climate Club, which was established by the G7’s Heads of State and Government in 2022; maximizing incentives; reducing emissions through trade policy; promoting clean energy technologies, and so on.

Hiroshima Action Statement for Resilient Global Food Security

The G7 members and countries like Brazil, Australia, India, and others affirm the importance of working together on global food security. Its action plan includes responding to the immediate food crises (the war in Ukraine has had a significant impact); advocating for more humanitarian assistance; preparing for future food crises; and building more resilient food supply chains.

G7 Leaders’ Statement on Ukraine

At the annual meeting, the G7 Leaders released a statement promising to stand against Russia’s invasion of Ukraine. They described Russia’s actions as a “manifest violation of the Charter of the United Nations,” and committed to coordinated sanctions and other economic actions against Russia. The document also outlined concerns about nuclear safety and security and expressed support for vulnerable countries affected by the war.