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The meeting of G7 countries is going on in Cornwall, England. The expectation from this meeting is to draw out a framework that is inclusive and resilient in nature. The new Cornwall Consensus should be able to overcome the lacunas of the current Washington consensus.
The Washington consensus supports the notion of free market and globalization. However, it failed to prevent the occurrence of the 2008-09 financial crisis, raised inequalities within the countries, and neglected focus on social goods like education and health. Due to this, the countries are facing greater challenges in coping up with the Covid-19 pandemic. Thus, relying on the Washington consensus is not feasible for developed as well as developing countries.
Therefore, it is now imperative that grouping creates a new consensus that can reflect the demands of the 21st century.
About G7 countries
- The G7, originally G8, was set up in 1975 as an informal forum. It brought together the leaders of the world’s leading industrial nations. It was established to tackle the oil crisis of 1973 created by the OPEC oil embargo.
- The member states are Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States. The EU is not a member but is usually invited to the summits.
- The member countries represent 40% of the global GDP and 10% of the world’s population.
- From1998 to 2014, it was the G8 that included Russia. However, post the Crimean crisis, Russia was expelled from the group.
- In 2014, Russia carried out armed aggression on Ukraine and ceded the Crimean Peninsula from it.
Current Scenario of G7 countries
- The recent summit of G7 is going on in Cornwall, England from 11-13th June as the UK is holding the G7 presidency for 2021. It will witness a hybrid of physical and virtual participation.
- India, Australia, South Korea, and South Africa are invited as guest countries for the Summit.
- The theme of this year’s summit is ‘Build Back Better’ and the focus would be on 4 priority areas:
- Leading the global recovery from coronavirus while strengthening resilience against future pandemics;
- Promoting future prosperity by championing free and fair trade;
- Tackling climate change and preserving the planet’s biodiversity;
- Championing shared values and open societies
- This holistic vision will help in developing the Cornwall Consensus that will displace the “Washington consensus.
- At the end of the summit, the UK will publish a document called a communiqué which will outline what has been agreed upon during the meeting.
Significance of G7 countries
- The major purpose of the G-7 is to discuss and sometimes act to help resolve global problems, with a special focus on economic issues.
- In response to mounting concern over money laundering, the Financial Action Task Force was established by the G-7 group in Paris in 1989.
- It became more relevant in the 1980s when it started discussing issues related to foreign policy and security as well.
- In recent years, G7 leaders have met to formulate common responses to challenges encompassing counterterrorism, development, education, health, human rights, and climate change.
- In 1997, the G7 countries agreed to provide $300 million in order to contain the effects of the reactor meltdown in Chernobyl.
- Then, in 2002, members decided to launch a coordinated response to fight the threat of AIDS, Tuberculosis, and Malaria. This led to the formation of the Global Fund, an innovative financing mechanism that has disbursed more than $45 billion in aid.
- In 2015, members launched the Global Apollo Program. It was designed to tackle climate change through clean energy research and development.
- The programme calls for developed nations to commit to spending 0.02% of their GDP on tackling climate change from 2015 to 2025. This would mean spending $150 billion over a 10-year period.
- It is considered to be the second most important grouping after the UNSC which can effectively deal with global issues.
Issues with G7 countries
- Disregards the interest of smaller nations: Several countries and individuals still perceive the G7 as an exclusive, closed group that blatantly exercises its power over other nations. The collective power of the group is so huge that it creates a disproportionate impact on other nations.
- For instance, the 1985 Plaza Accords had major ramifications for global currency markets as they brutally impacted exchange rates of various currencies.
- Shortcomings of Washington Consensus: The grouping has mainly focused on realising the Washington consensus. It is a collective term used for 10 economic policy prescriptions to promote a free-market economy. It was promoted for crisis-wracked developing countries. However:
- It puts ruthless conditions on the global South countries that undermine their economic sovereignty.
- Furthermore, it ignores environmental and social considerations for economic growth. The mere focus placed on global good like health enhanced the vulnerability of smaller nations against the pandemic.
- It enhanced the economic inequality within and among the countries.
- The East Asian crisis in the late 1990s and the global recession of 2008–09 were further reminders that increased deregulation would only result in financial instability.
- A tussle between the members: The US relationship with Germany and Canada deteriorated during the trump era.
- He criticised Germany for its trade surplus and threatened to block the US import of German cars.
- Further, the U.S refused to endorse the official G7 statement of the 2018 summit as Trump got offended by the Canadian PM’s comments during a news conference.
- Failed in tackling Global problems: G7 accounts for 59% of historical CO2 emissions and pledged to phase out fossil fuels. Yet there is no visible progress of the same, and they currently account for twice the CO2 emission than African continent.
- In terms of terrorism, ISIS has thousands of fighters from G7 countries.
- The West Asian crisis in Syria, Yemen, Iraq led to a migrant exodus towards the European nations. G7 nations failed in addressing this migrant crisis, leading to deaths and inhumane statelessness for millions.
- Outdated Group: The group no longer reflects the modern-day geopolitical realities. Many incumbent members like Italy and Canada possess less economic and political power in comparison to nonmembers like India and China.
- Non-Binding nature: Unlike other bodies such as NATO, the G7 has no legal existence or a permanent secretariat. Further, the meeting commitments are non-binding in nature.
- All decisions and commitments made at G7 meetings need to be ratified independently by governing bodies of member states.
- The grouping needs expansion to reflect the current geopolitical reality. It can be converted to G 11 with the inclusion of India, Australia, South Korea, and Russia.
- The G7 countries should expeditiously fulfill their commitment to supply one billion doses of Covid vaccines to poor and middle-income countries.
- The doses would be supplied as part of a campaign to “vaccinate the world” by the end of 2022.
- The grouping requires a G7 charter and a permanent secretariat for the organisation. It must realise that global interdependence cannot be managed without global public goods.
- A consensus should be formed over the Global Minimum Corporate Tax by the head of states. The consensus of 15% Global Minimum Corporate Tax was developed in a recent meeting of G7 country’s finance ministers.
- India should actively participate in the talks, especially the ones related to global vaccine delivery as it is both – a major manufacturer and consumer of vaccines.
The grouping should become more representative in nature and emerging economies like India and South Korea must be made a part of the group. The new principles and policies of the group should reflect a global outlook rather than merely focusing on the myopic interests of the developed world. This would result in prudent tackling of global problems like climate change and the Covid-19 pandemic.