Relic of the Past or Catalyst for Change? The G7 and the Future of Global Governance

Hylke Dijkstra, Ettore Greco
Relic of the Past or Catalyst for Change? The G7 and the Future of Global Governance
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The G7 has become a fixture of international diplomacy. But its exclusivity does not square well with demands for more representative global governance. The group still adds value, but its leaders should double down on efforts to win support for their agenda beyond the West.

June 2024 is a packed month in Europe. Commemorations of the 80th anniversary of D-Day in Normandy were immediately followed by the European parliamentary elections. This week, all eyes are shifting to the Italian region of Apulia, where Italy will host the Group of Seven (or G7) from June 13 to 15. And there is more to come: this G7 summit marks the start of an equally busy diplomatic summer, one that will see various high-level meetings. European leaders will gather twice in the European Council (on June 17 and again on June 27/28), followed by NATO’s anniversary summit in Washington (July 9-11). After that, on July 18, they will meet again at Blenheim Palace outside Oxford for a European Political Community meeting, before most will conclude this diplomatic tour de force by attending the opening ceremony of the Paris Olympics on July 26.

All in all, various European leaders will have seen each other seven times in as many weeks before they can go on holidays. While this meeting marathon is at least in part coincidental and not the result of intentional planning, the stakes are nevertheless enormous. As Russia’s war in Ukraine rages on and calls for a ceasefire between Israel and Hamas become ever more desperate, this is the moment for political leadership. The summer will be an opportunity for Europe to regain some initiative in global politics, which many feel are spiralling out of control. Additionally, and more importantly, autumn will create new facts: after the summer break, US President Biden will be busy campaigning for his re-election in November, while the EU will have to shift is focus on preparing for the next institutional cycle, which starts in December.

The summer will be an opportunity for Europe to regain some initiative in global politics, which many feel are spiralling out of control.

This G7 summit thus comes a crucial moment – and in many ways, the G7 is the ideal forum to kick off this diplomatic summer season. G7 meetings offer an informal and comfortable setting in which the president of the United States can meet with the leaders of France, Germany, Italy, and the United Kingdom, along with those of Canada, Japan, and the EU (represented by the presidents of the European Council and the European Commission) all in the same context. These gatherings are good opportunities for frank and strategic discussions among Western leaders. What is more, the G7 – while not a decision-making body – can and should set the agenda for the subsequent EU and NATO summits. But the G7’s strengths are also its weaknesses: when it comes to the war in Ukraine, for instance, the G7 format clearly suffers from its exclusive nature by not having the Polish prime minister present when Ukraine is so prominently on the agenda. This is even more problematic as the British, French and German leaders are, at least for the moment, all weakened domestically.

Ahead of the upcoming Apulia summit, this policy brief looks back at the origins of the G7 to take stock of its added value in a changing global order. With a focus on the group’s relation to the EU, we consider whether and how the G7 can support the transformation of global governance going forward. In doing so, we argue that G7 cooperation provides a much-needed framework for potential European and transatlantic leadership on pressing issues – however, it is also clear that the G7 has been stretching to the limits of what it can realistically deliver.

Informality and Internal Cohesion

Since its inception in 1973, the G7 has been widely viewed in the West as an important component of the global governance system and one that can contribute significantly to the stability of global economic and financial relations. The group was created in response to two major events: the collapse of the Bretton Woods agreements caused by former US President Richard Nixon’s decision in 1971 to unilaterally cancel the convertibility of the US dollar into gold, and the 1973 energy crisis that shook global energy markets and provoked highly disruptive inflationary pressures around the world. As a result of these developments, a threatening gap had opened in the global financial architecture. The G7 was conceived as an informal forum among the leaders of the world’s seven most advanced economies who were committed to reaching consensual positions on the future direction of the world economy. As such, it was considered a potentially valuable instrument to help preserve international economic cooperation and thus reassure the global markets.

From the very beginning, the performance of the G7 has thus been judged by its capacity to address the shortcomings of the international system of economic – and increasingly also political –cooperation, and to mitigate the risk factors that may undermine its stability. This core function requires that the G7 member countries have a sufficiently common understanding of the most urgent global challenges and that they manage to agree on the best ways and means to address them. Essentially a platform for dialogue and consultation that lacks any executive powers, the G7 must rely on other existing institutional instruments – such as the UN agencies, the World Trade Organization, the International Monetary Fund, the World Bank, and other international bodies – for the technical definition as well as the practical implementation of the cooperation initiatives or reform measures that it sponsors.

Sporadic proposals to equip the G7 with a secretariat and an institutional structure of its own, thus transforming it into an international organisation, have never gained much traction. Instead, the view that the informal nature of the group and its lack of a bureaucratic structures are its core assets has prevailed.

An Expanding Agenda

The G7’s central task has therefore been to provide political support and impulses to other international actors that can advance international cooperation. To fulfil this mission, the group needs to promote inclusive and far-sighted initiatives that go beyond the strict interests and concerns of its members and also meet those of the wider international community. The G7 system of rotating annual presidencies often means that the group’s “regional focus” – the regions of the world on which it concentrates its attention during the annual summits – changes from one year to the next; however, there has arguably been a considerable degree of continuity in the programmes and initiatives that the group has endorsed or promoted.

Since the late 1990s, the G7 has gradually expanded its agenda to encompass all major global issues. The “financial track” has continued to play a central role, but it has been complemented with a growing number of ministerial meetings and working groups dealing with a wide range of themes that are of global significance. The current economic agenda of the G7 is largely dominated by the overarching desire to ensure greater economic security and safer and more resilient supply chains. These new economic policy priorities are now seen by the G7 countries as inextricably linked with their efforts to counter China’s expansionist plans and Russia’s weaponisation of its energy resources in support of a revanchist foreign policy. More generally, the G7 now addresses financial and economic issues in strict conjunction with strategic concerns. As a result, it has become an increasingly important forum for Western strategic coordination.

The G7, the EU, and Transatlantic Relations

The European member states have often played a prominent role within the G7. In fact, it was thanks to a joint initiative by then-French President Valéry Giscard d’Estaing and former German Chancellor Helmut Schmidt that the G7 Summit in its current form was established in 1975. Previously, G7 members had only met at the level of economic and finance ministers. The G7 was seen as an instrument to allow Washington to share its global responsibilities in safeguarding economic and financial stability. For Giscard d’Estaing and Schmidt as well as for their Italian counterparts, engagement in the G7 went hand in hand with efforts to deepen European integration and gradually raise the international profile of the European Union (then still the European Communities).

The EU as an institution became a full participant of the G7 in 1981. It is currently represented by the presidents of the European Council and of the European Commission, who are bound to present the EU’s common positions, even if non-represented EU member states regret this arrangement. Those individual G7 member states that are also members of the EU (France, Germany, and Italy) enjoy some diplomatic room to advance their own national priorities, especially when they hold the annual rotating presidency of the group. Brexit has not had a significant impact on the diplomatic game within the G7; in fact, London already took autonomous positions on several international issues before it left the EU.

As a sort of steering group of the West for other international organisations, the G7’s capacity to indicate new avenues for global governance transformation requires political convergence among its members. This alignment, in turn, depends largely on the state of transatlantic relations. At various times in the history of the G7, the US and Europe have been at odds over strategically relevant issues, including on how to manage major international crises and whether to support existing international regimes or promote new ones. The transatlantic disputes during the Trump presidency have significantly hampered the G7’s performance overall. Other repeated transatlantic divergences have concerned fundamental aspects of the global governance agenda.  

Many of those divergences remain unsolved while others, for instance, regarding industrial subsidies or the regulation of new technologies, have only emerged of late. However, the common interest in the face of heightening strategic rivalries with China and Russia has pushed the transatlantic partners to adopt a broadly cooperative approach in their relations in general and within the G7 in particular, even as significant points of friction persist. This development has also been favoured by the high priority that the Biden administration has placed on preserving the US’s transatlantic ties. Managing transatlantic disputes may become more complicated again in case of a leadership change in Washington following the presidential election in November – and this may also have adverse effects on the G7’s proceedings.

The G7 and Global Governance

When it comes to Russia’s war against Ukraine, the G7 states have so far shown a remarkable political cohesion and unity of action. Over the last few years, there has also been a growing convergence within the group towards a common platform for dealing with the strategic implications of China’s rise. The rivalries with China and Russia have thus become a central focus of the G7’s strategic coordination efforts. The growing entanglement between economics and geopolitics has been reflected in a G7 agenda that sees economic priorities as largely shaped by strategic considerations. Nonetheless, the US and the group’s European members have repeatedly clashed over questions relating to trade relations, industry subsidies, technological cooperation, and the fight against climate change. During the Biden presidency, thanks to the renewed climate of transatlantic cooperation and the enhanced strategic links with Japan, many attempts have been undertaken to reduce frictions in those policy sectors, but the results have so far fallen short of expectations.  

Beyond the transatlantic realm, the G7 also faces a broader challenge that concerns its very raison d’être. Its DNA as a Western steering group with a geopolitical agenda is fundamentally at odds with the more representative and inclusive nature of the international organisations that it is aiming to steer. It is widely recognised that the G7, given its very limited membership and the declining geopolitical weight of its members, is not in a position to lead the diplomatic processes to find cooperative solutions to, for instance, emerging global health threats or the multi-faceted repercussions of climate change. Agreements on those or other global issues must necessarily be negotiated in wider, more inclusive fora.

Reluctant Reformers

Moreover, the G7 has actively damaged its image, particularly in the Global South, by resisting efforts to meaningfully reform the IMF’s quota system and change the related voting shares in favour of emerging and developing economies. While a reform of the IMF’s governance, which included a review of the quotas, eventually took effect in 2016, it was widely regarded as too timid. Since then, no progress towards a fairer redistribution of quotas has been made (a new proposal by the IMF to modify the quota formula is now expected for mid-2025). If anything, over the last few years Western countries have shown a growing reluctance to promote or accept reforms of the global governance system that would require them to cede decision-making power. The mounting antagonism with Russia and especially China has greatly contributed to a hardening of this conservative attitude. This has also become a major sticking point in the G7’s relations with the countries of the Global South, which are eager to obtain a more equal distribution of power.

The G7 has actively damaged its image, particularly in the Global South, by resisting efforts to reform the IMF’s quota system and change the related voting shares in favour of emerging and developing economies.

However, more inclusive cooperation frameworks such as the G20 lack the internal cohesion that marks the G7, which strongly limits their potential to contribute to effective global governance. The G7 should therefore continue to propose solutions that have a realistic prospect of being discussed and accepted in negotiation frameworks where other regions and groups of countries also have a voice. The group should also aim to strengthen and expand those parts of its agenda that may facilitate its outreach effort towards the Global South, in particular vis-à-vis the African states that are the regional focus of Italy’s G7 presidency this year. This will require renewed commitments by the G7 states to develop cooperative programmes that can foster dialogue with the Global South in crucial sectors, such as global health, debt restructuring, mitigating the effects of climate change. and food security. Finally, the G7 should also promote the consolidation and further development of the financial instruments needed to make concrete progress in those fields.

A Valuable Complement – With Clear Limits

While it remains an informal international institution, the G7 has become a permanent fixture of the global governance landscape over the last 50 years. Over time, it has significantly expanded its policy scope and has developed into a strategic coordination forum for Western states. While its informality is generally seen as a strength – something that will be on display again in Apulia, where the G7 leaders will meet in an informal and comfortable setting – it is reliant on other, formal international organisations to implement its agenda. This creates friction, not least because of the discrepancy between the G7’s nature as a steering group of the West and the increasing demands for global governance to be more inclusive and representative.

For officials in Brussels, the G7 looks like an attractive source of European leadership in world affairs. With two seats at the table – one each for the presidents of the European Commission and the European Council – the EU institutions are clearly well represented. Moreover, the G7 is a forum that allows for big-picture strategic thinking, thus allowing its European members to reach beyond what is currently possible with the EU27. In this sense, the G7 format still provides a valuable complement to other global governance institutions. At the same time, it is also clear that the G7 has been stretching itself to the limits of what it can deliver. It does not have an effective implementation machinery and its design as an exclusive club runs counter to growing demands for fairer and more representative global governance. When they meet in Italy soon, the G7 leaders should keep these limitations firmly in mind and double down on their efforts to win support for their agenda beyond the Group of Seven. The regional focus of this year’s summit is a good place to start.

Hylke Dijkstra is Professor of International Security and Cooperation at Maastricht University in the Netherlands and Project Coordinator of ENSURED.

Ettore Greco is Executive Vice President of the Istituto Affari Internazionali (IAI) in Rome, Italy. He also heads the institute’s Multilateralism and Global Governance programme.

Photo: Simon Dawson / No 10 Downing Street (via Flickr; CC BY-NC-ND 2.0)
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