Why G7 summit may prove critics wrong

IT IS commonly argued that big multilateral summits rarely matter; however, the recent Group of Seven (G7) summit in Japan may prove the detractors wrong.

The G7 took a series of key decisions that may have strong ramifications in the coming years. This, too, as the club of leading Western economies intensified its transition towards becoming a major geopolitical actor.

One of the biggest potential “forks in the road” here was the decision, more than 450 days into the Ukraine war, for the G7 to reverse its opposition to giving F-16 fighters to Kyiv. This may indicate stronger, longer-term commitment to the war, not least because it will take many months, if not years, to fully train a critical mass of Ukraine’s pilots to use the jets.

Amid conflicting reports about whether Russia may have seized the eastern Ukrainian city of Bakhmut in fighting, the G7 has in effect doubled down on its support for Kyiv, including a new US$375 million package of US military aid. Even German Chancellor Olaf Scholz, who has concerns about the F-16 announcement, said the deal sends a “message to Russia” that it “cannot expect to succeed even if it counts on a long war”.

Ukrainian president Volodymyr Zelensky also got to meet a number of key non-aligned powers for the first time, including Narendra Modi. The Indian prime minister has overseen India’s bilateral trade with Russia rising to record levels, driven largely by increasing its imports of oil.

This engagement was a deliberate ploy on the part of the G7 to broaden the forum’s appeal to wider nations, especially in the “Global South”. This year, some 16 nations attended other than the core seven, including India, Brazil, Indonesia, Vietnam, plus Comoros and the Cook Islands (representing the African Union and Pacific Islands Forum respectively).

The goal with this larger grouping is to get the Global South more aligned with G7 positions, especially vis-a-vis Russia and China. Many developing economies, because of their close linkage with Russia and/or China on natural resource issues, are cautious of becoming part of any G7-led coalition. Yet, the Global South countries are important because their market share is growing, and their global gross domestic product share (based on purchasing power parity) is now more than 50 per cent.

Yet, while Ukraine means Russia is the immediate threat for the G7, the West increasingly regards China as the key, long-term challenge. In this context, one of the most striking elements of the final communique is the focus on economic coercion, which it is argued “undermines the policies and positions of G7 members as well as partners around the world”. For instance, when Lithuania allowed Taiwan to open a representative office in its capital, Vilnius, in 2021, it was subjected to a Chinese ban on exports.

The G7 announced a new toolkit to “increase collective assessment, preparedness, deterrence and response”. This includes a “coordination platform” to help nations assist each other by increasing trade or funding to any country that is targeted by China.

China and other authoritarian powers such as Russia are also a headache for global supply chains, and the G7 has asked the International Energy Agency (IEA) to make recommendations by the end of 2023 for how best to diversify supplies, including critical minerals, energy, and clean energy manufacturing. Some early clues as to what the IEA is likely to recommend are in a report, released last weekend, which was specially commissioned for the G7 summit.

The report asserts that there is much more countries can do, including developing industrial strategies that leverage their competitive advantages, but international cooperation will be crucial to ease, hasten and extend any progress. Key measures proposed by the IEA include: identifying and building strategic partnerships, both within the G7 and beyond; facilitating investment in emerging market economies with pooled investment, knowledge-sharing and other strategies to reduce risks for capital-intensive components of supply chains; sharing best practices and domestic experiences on measures relevant to accelerating progress in diversification; and promoting manufacturing technologies and strategies to enhance resource efficiency.

There are still many big debates that need to take place within the West around what de-risking actually means for China, including how far some of the sensitive technology export restrictions should go, and what sort of collective measures need to be taken against economic coercion. However, the G7 has provided a clearer framework around how relationships with Beijing among advanced economies need to be rebalanced.

On the broader energy front, the G7 controversially agreed that – given the exceptional impacts of Russia’s war against Ukraine – “publicly-supported investment in the gas sector can be appropriate as a temporary response”. It also acknowledged the “important role that increased deliveries of liquefied natural gas can play”, as nations phase out reliance on Russian energy.

This represents a significant victory for Germany, which pushed for such an endorsement despite opposition from others, including the United Kingdom and France. London and Paris previously said this undermines the shift from fossil fuels. Non-governmental organisations are also disappointed that the communique failed to commit to a fully-decarbonised power sector by 2035, and that there is no specified end date for the use of unabated coal power, which are positions proposed by Japan.

That criticism aside, the G7 did commit on the transport front to a highly-decarbonised road sector by 2030, and achieving net-zero emissions on roads by 2050. This includes progressing towards a share of more than 50 per cent of zero-emission Light Delivery Vehicles (LDVs) sold globally by 2030.

Various actions were highlighted that countries are taking, including policies for achieving 100 per cent or the overwhelming penetration of sales for zero-emission vehicles in the LDV category by 2035 and beyond. The policies include actions to achieve 100 per cent electrified vehicles for new passenger car sales by 2035, and promotion of infrastructure and sustainable carbon-neutral fuels, including sustainable bio- and synthetic fuels.

Historically, the G7 also tackled the thorny issue of artificial intelligence (AI) for the first time, committing to “advancing multi-stakeholder approaches to the development of international standards”. It was also agreed to set up a “Hiroshima AI process” in collaboration with the Organization for Economic Cooperation and Development and the Global Partnership on AI (a group of 29 countries) which, by end-2023, will discuss governance, intellectual property rights and responsible use.

It is for these reasons that the G7 summit may prove much more important than usual. From Ukraine to China, and supply chains to AI, key decisions were taken that could have a very significant bearing on international politics and economics in the mid-2020s and beyond.

The writer is an associate at LSE IDEAS at the London School of Economics.