Predictably, the Group of 7 summit, which took place in the French coastal resort of Biarritz, turned out to be a damp squib. The G7 is an antiquated institution that should have been disbanded a long time ago.
It was initiated by the patrician former French president Valéry Giscard d’Estaing in 1975, in the aftermath of a series of economic shocks caused by, among others, the 1973 oil crisis and the collapse of the Bretton Woods international financial order.
Held in Rambouillet, the first meeting was attended by six leaders: Giscard, Gerald Ford (United States), Harold Wilson (Britain), Aldo Moro (Italy), Takeo Miki (Japan), Helmut Schmidt (West Germany). Canada only joined in 1976 to make it the G7.
Giscard’s vision was to bring together leaders of the wealthiest nations so that they know each other, work collaboratively to tackle pressing problems, and maintain confidence in the face of uncertainty about the direction of the world economy.
For over a decade the G7 played a salient role in driving global policy coordination and promoting economic stability. However, its purpose and relevance were diminished by the significant changes that occurred at the turn of the century, including the rise of new actors such as China and post-Soviet Russia. (Russia was invited to join the G7 in 1998, but was expelled from the group following its invasion of Crimea in 2014).
In particular, the inadequacies of the G7 as a global actor were sharply exposed by the 2007/8 financial crisis. The establishment of the Group of 20 (G20), which held its first summit in Washington in November 2008, in response to the financial meltdown was an admission that the G7 could no longer effectively address the numerous and increasingly complex and interconnected problems plaguing the world.
In essence, the G20 (which has its own problems but has better prospects of improving global governance provided it is restructured and revitalised) was set up to replace the G7. This makes, therefore, the continued existence of the latter baffling and anomalous.
There are several reasons why the G7 should be dissolved. Firstly, the G7 is too Western-centric. It has a Western bias and its membership does not take into account the profound changes in the distribution of global economic power.
The exclusion of China, especially, makes a mockery of the group. China has the largest population in the world. It is the second biggest economy in the world. It boasts the largest foreign currency reserves in the world. It replaced Japan as America’s biggest foreign creditor. It supplanted Germany as the world’s largest exporter of merchandise goods. And it has a vast and global economic footprint. The country’s exclusion, thus, is irrational and absurd.
Secondly, it is deeply divided: its leaders lack a common view about how to go about achieving its goals. At last weekend’s summit the host, France, had prioritised inequality and climate change as key discussion items. This was rebuffed by the American officials, who wanted the meeting to focus on economic issues. A climate change denialist, American president Donald Trump skipped the session that focused on climate, oceans and biodiversity.
Unusually, the French president Emmanuel Macron announced prior to the summit that no joint communiqué would be issued by the gathered leaders. This was a departure from normal practice, but perhaps Macron wanted to avoid a repeat of the drama that ensued after the Canada summit last year when Trump disowned the communiqué following a tiff with the Canadian prime minister Justin Trudeau.
Thirdly, the G7 has been paralysed by an unwieldy agenda. It has tackled as many and varied topics such as trade, inequality, climate change, tax evasion, financial crises, development goals, and Ukraine. Although these are important and pertinent issues, the G7 has neither the appropriate governance structure nor the legitimacy to deal with them.
Moreover, its reputation has been damaged by its notorious record of unfulfilled promises, especially those made to poor countries in the context of commitments around financing for development, sustainable development goals, and the ill-fated Doha Round of multilateral trade negotiations.
The G7 has previously provided global leadership while acting as a key anchor of policy management and coordination. However, it has outlived its purpose. Over the past few decades, the world has undergone exponential changes in terms of, among others, economies, markets, technologies and demographics.
Yet governance institutions have failed to keep up with these changes. Not only is the G7 particularly ill-equipped to address contemporary global challenges, it is a hindrance to inclusive and equitable global governance. Its perpetuation is unjustifiable.
Mills Soko is a professor of International Business and Strategy at Wits Business School. Views expressed are his own.