G-7 | 01 Oct 2019

Last Updated: July 2022

The Group of Seven (G-7) is an informal bloc of industrialized democracies—France, Germany, Italy, the United Kingdom, Japan, the United States, and Canada—that meets annually to discuss issues of common interest like global economic governance, international security and energy policy.

• Recently, at the 48^th G7 Summit, Indian Prime Minister invited the G7 Nations to tap into the huge market for clean energy technologies emerging in the country.
  • Germany holds the presidency of the G7 in 2022.
  • The German Presidency has invited Argentina, India, Indonesia, Senegal and South Africa to the G7 Summit.

What is the History behind the Establishment of G-7?

• The G-7 has its roots in an informal meeting of the finance ministers of France, West Germany, the U.S, Great Britain, and Japan (the Group of Five) in the wake of the 1973 oil crisis.
  
  • The French President invited the leaders of West Germany, U.S, Great Britain, Japan and Italy, to Rambouillet (France) in 1975 for further discussions on global oil crisis.

Membership

• France, West Germany, Italy, Japan, the United Kingdom, and the United States formed the Group of Six in 1975 to provide a venue for the industrialized democracies to address pressing economic concerns.
  
  • In 1976, Canada was also invited to join the group and the first meeting with all G-7 nations was hosted by the United States which was held in Puerto Rico in 1976.
• The European Union has participated fully in the G-7 since 1981 as a "non enumerated" member.
  
  • It is represented by the presidents of the European Council, which represents the EU member states' leaders, and the European Commission (the E.U.’s executive branch)
• The G-7 was known as the G-8 for several years after the original seven were joined by Russia in 1997. The inclusion of USSR in G-7 was meant as a signal of cooperation between East and West after the Soviet Union’s collapse in 1991.
  
  • The group returned to being called G-7 after Russia was expelled as a member in 2014 following the annexation of the Crimea region of Ukraine.
• There are no formal criteria for membership, but participants are all highly developed democracies.

How does the Summit Participation take place?

• Summits are held annually and hosted on a rotation basis by the group's members. The host country not only holds the G7 presidency but also sets the agenda for the year.
• Invitation to Global leaders are sent by host nation to participate in summit as special invitees. Countries like China, India, Mexico, and Brazil have attended summit at various occasions.
  
  • The leaders of important international organizations like European Union, IMF, World Bank and the United Nations are also invited.

What is the Difference Between G-7 and G-20?

• G-20 was founded in 1999 after the Asian financial crisis in 1997-1998, it initially started off as a meeting of finance ministers and central bank governors.
  
  • However, as a response to the financial crisis of 2008, the G-20 was upgraded to head of state level in an inaugural summit in Washington, D.C.
• While the G-7 mainly has to do with politics, the G-20 is a broader group that focuses on the global economy.
  • It’s also known as the “Summit on Financial Markets and the World Economy” and G20 members represent more than 80% of the global GDP.
    
    • Apart from the G-7 countries, the G-20 comprises Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa, South Korea, and Turkey.

How the G-7 Lost Power?

• Subtle shift of power: in 2008, while the G-8 talked about food inflation and all kinds of other admittedly important world issues, they completely missed the 2008 global financial crisis.
  
  • The G-20 stepped in at their summit and addressed the root of the problem. They requested the United States to regulate its financial markets more.
  • After that, it became apparent that the G-20 emerging market countries, which had largely escaped the crisis, were necessary partners of any global initiative.
  • The G-20 Summit superseded the G-8 as the world's most important meeting of all global leaders.
  • As a result, it signaled the end of the old world order and the beginning of a new one.
• The forum's small and relatively homogenous membership promotes collective decision-making, but critics note that it often lacks follow-through and that its membership excludes important emerging powers.
  
  • The G-7 is an informal bloc and takes no mandatory decisions, so the leaders’ declarations at the end of the summit are not binding.
• The evolution of G-20 which represents the aspiration of emerging economies like India, China, Brazil etc had challenged the west dominated groupings like G-7.

What is the Relation Between G-7 and FATF?

• In response to mounting concern over money laundering, the Financial Action Task Force on Money Laundering (FATF) was established by the G-7 groping in Paris in 1989.
  
  • In 2001 its mandate expanded to include terrorism financing.
• Recognising the threat posed to the banking system and financial institutions, the G-7 Heads of State or Government and President of the European Commission convened the Task Force from the G-7 member States, the European Commission and eight other countries.
• The FATF’s primary objective is to ensure that “financial systems and the broader economy are protected from the threats of money laundering and the financing of terrorism and proliferation, thereby strengthening financial sector integrity and contributing to safety and security.”

What are the Other Highlights of G7 Summit?

• PGII:
  • G7 announced the collective mobilization of 600 billion dollars by 2027 under Partnership for Global Infrastructure and Investment (PGII) to deliver “game-changing” and “transparent” infrastructure projects to developing and middle-income countries.
• LiFE Campaign:
  • Indian Prime Minister highlighted Global Initiative for LiFE (Lifestyle for Environment) campaign.
    • The goal of this campaign is to encourage an eco-friendly lifestyle.
• Stand on Russia-Ukraine Crisis:
  • Russia-Ukraine crisis has pushed the energy prices to a record high, Indian Prime Minister addressed the need for equal energy distribution amongst the population of rich and poor nations.
  • On Russia-Ukraine war, Prime Minister reiterated his stand that there must be an immediate end to the hostilities and a resolution should be reached by choosing the path of dialogue and diplomacy.