Ever wonder what the G7, Group of 7 is, what it does, and why it matters? Or maybe you’re confused about the difference between the G7 and the G20? Here is an explanation of the G7, its history, and its relevance today.
What is the G7?
The G7, or Group of 7, is an informal gathering of leaders from the world’s largest economies. The countries represented are the United States, France, Germany, the U.K., Italy, Japan, and Canada. Russia was a member of the group when it was known at the G8.
The country was suspended in 2014, however, after its annexation of Crimea. The current G7 countries represent 58% of global net wealth and 10% of the world’s total population.
While the G7 has a small portion of the world’s population, it has a significant share of global wealth. The decisions are taken at G7 Summits matter. Their impact goes beyond the countries who participate in the meetings; they have a global effect.
Why does the G7 matter?
Held annually since 1975, the summits have provided the heads of state of the world’s most powerful countries an opportunity to speak with each other directly.
No decisions reached the G7 Summit are binding, but there is typically a communiqué released afterward stating the major conclusions reached during the gathering.
At the 2018 summit, US President Donald Trump withdrew his support from the collective communiqué at the last minute, making the G7 gathering look fractured and weakened.
The 2019 summit, held in Biarritz, France in August, did not end with a communiqué as a result. French President Emmanuel Macron nixed the tradition of releasing the statement to avoid a repeat of 2018’s mishap.
The G7’s significance is primarily political since decisions that emanate from it are not binding. What the world leaders agree upon is important, nonetheless.
As powerful, like-minded heads of state, they influence the international policy agenda. G7 Summits also provide forums for leaders to negotiate bilateral deals, unencumbered by diplomatic bureaucracy.
History of the G7
The first meeting in 1975 was held between the US, France, the U.K., West Germany, Italy, and Japan. Canada joined the year after, officially dubbing it the Group of 7. In 1977 the leaders asked the European Union to send representatives as well, which it still does today.
The EU doesn’t count as one of the “7” because it’s not its own country and has more of an observer status than the other participants.
The first meeting was called to respond to the economic crises that were gripping the world at the time. The oil shock of the 1970s and its aftermath posed serious problems to industrialized and developing nations alike.
In the 1980s and 1990s, the G7 range of policy areas expanded to international security as well. The Heavily Indebted Poor Countries Initiative, whereby developing states with massive amounts of debts can have their loans forgiven, also originated with the G7.
What does the G7 do?
Some started calling the G7’s relevance into question around the turn of the 21st century. Then the 2008 financial crisis hit. World leaders were forced to take an active stance on macroeconomic policy to better regulate the world’s financial markets.
The Summit’s policy portfolio continues to expand. Some of the issues covered at this year’s meeting were fighting poverty, promoting equality, environmental sustainability, and cybersecurity.
The G7 is also more transparent than before, opening a dialogue with non-governmental organizations on specialized policy areas.
What is the difference between the G7 and the G20?
The G7’s efficacy is also critiqued because it leaves out some of the world’s major emerging powers, like China, India, and Brazil. That’s where the G20 comes in.
The G20 includes Argentina, Australia, Brazil, Canada, China, the EU, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the U.K., and the United States.
The G20 was started after the Asian financial crisis in the late 1990s, to give some of the world’s emerging market economies a seat at the table. The G7 is geared toward a range of global issues, whereas the G20 is focused on economic security.
The G7, neither an international organization nor a binding institution, are informal by nature. It remains important for global governance, though, having an impact on which issues get discussed and how world leaders react to them.
What is the G7?