The Group of Seven (G7) - Authors: Zachary Laub, Online Writer/Editor, and James McBride, Online Writer/Editor, Economics

Introduction

The Group of Seven (G7) is an informal bloc of industrialized democracies--the United States, Canada, France, Germany, Italy, Japan, and the United Kingdom--that meets annually to discuss issues such as global economic governance, international security, and energy policy. Proponents say the forum's small and relatively homogenous membership promotes collective decision making, but critics note that it often lacks follow through and excludes important emerging powers.

Russia belonged to the forum from 1998 through 2014--then the Group of Eight (G8)--but was suspended after its annexation of Crimea in March of that year. With tensions over Ukraine deepening, concerns over the eurozone's economic future growing, and the larger G20 serving as an alternative forum, the future of the G7 bloc is unclear.

Membership

France, West Germany, Italy, Japan, the United Kingdom, and the United States formed the Group of Six in 1975 (Canada joined the following year) to provide a venue for the non-Communist powers to address pressing economic concerns, which at the time included inflation and a recession sparked by the OPEC oil embargo. Cold War politics invariably entered the group's agenda.

The European Union has participated fully in the G7 since 1981 as a "nonenumerated" member. It is represented by the presidents of the European Council, which represents the EU member states' leaders, and the European Commission, the EU's executive body. There is no formal criteria for membership, but participants are all developed democracies. The aggregate GDP of G7 member states makes up nearly 50 percent of the global economy.

Unlike the United Nations or NATO, the G7 is not a formal institution with a charter and a secretariat. Instead, the presidency, which rotates annually among member states, is responsible for setting the agenda and arranging logistics. Ministers and envoys, known as sherpas, hammer out policy initiatives at meetings that precede the annual summit of national leaders.

The Russian Outlier

Russia formally joined the group in 1998 after partially participating in prior years' summits. U.S. president Bill Clinton thought that admitting Russia to the exclusive club would lend the country international prestige and encourage its first post-Soviet leader, Boris Yeltsin, to consolidate democratic gains and hew more closely to the West. Clinton also believed that membership would help mollify Russia as the NATO security alliance opened its doors to former Soviet satellites in Eastern Europe.

But Clinton's decision to include Russia drew pushback from within the G7. Among the detractors, the U.S. Treasury and other finance ministries were wary of coordinating global economic policy with Russia, which at the time had a relatively small economy and large public debt. Indeed, the ministerial track for finance continued to meet as the G7, even as leaders and foreign ministers convened as the G8.

Russia's backsliding toward authoritarianism under President Vladimir Putin made starker the disjunction between Moscow and the other members, as did its foreign policy. At the 2013 summit in Northern Ireland, Russia's patronage of Syrian president Bashar al-Assad in the midst of the Syrian civil war stood in marked contrast to the position of the other member states. Putin resisted other members' demands that the summit's communiqué call for Assad to leave office.

Russia held the G8 presidency for the first time in 2006 and once again in 2014, though effectively only for a few weeks, as Moscow's annexation of Crimea in March 2014 drew swift censure from its peers. "We will suspend our participation in the G8 until Russia changes course and the environment comes back to where the G8 is able to have a meaningful discussion," the G7 leaders said in a joint statement.

The decision of the seven other members to pull out of the planned 2014 summit in Sochi, Russia, and meet instead as a reconstituted G7 in Brussels was little more than a symbolic diplomatic step, many analysts say. The measure is "basically a reprimand saying you're not in our club, you don't meet certain standards of international behavior, much less domestic behavior," says CFR Senior Fellow Stewart Patrick.

Worsening Relations

As the conflict between Ukraine's military and Russian-backed rebel forces in eastern Ukraine has intensified, the United States and Europe have ratcheted up sanctions in an effort to further isolate Russia. In April 2014 G7 leaders met to coordinate sanctions against Russia, although members diverged on how far to go and which entities to target. The EU, which has deep economic ties to Russia, imposed penalties on a number of state officials and pro-Russia separatist leaders, but did not initially join the United States in sanctioning several prominent Russian businessmen, including Igor Sechin, chairman of the state-owned oil firm Rosneft.

As Russia fell into a deep recession in 2015, G7 leaders tied the lifting of sanctions to the successful implementation of the Minsk accords.

The political calculus shifted in July 2014, when Malaysia Airlines Flight MH17 crashed in eastern Ukraine, apparently hit by antiaircraft missiles fired by the Russia-backed rebels. The death of all 298 passengers hardened the EU's position against Russia, and on July 30, the G7 announced an expanded set of sanctions. "Regrettably however, Russia has not changed course," the leaders' statement read, "We believe it is essential to demonstrate to the Russian leadership that it must stop its support for the separatists in eastern Ukraine."

In September 2014, the United States and the EU again tightened sanctions on Russia, including restrictions on major Russian financial, energy, and arms enterprises. As Russia fell into a deep recession in 2015, G7 leaders tied the lifting of sanctions to the successful implementation of the Minsk accords, a peace plan that called for a cease-fire and a withdrawal of heavy weaponry from eastern Ukraine.

However, the Minsk agreement has been largely ignored, and Russia announced sanctions of its own against eighty-nine European officials in May 2015. Still, some prominent European business leaders argue that continuing to isolate Russia does more harm than good.

Reviving the G7

For many observers, the crisis in Ukraine reconfirmed Russia's standing as an outlier in the group. "The G8 never really made sense," says James Goldgeier, dean of American University's School of International Service. The political expedient Clinton sought in Russia's relations with the West did not pay off, and alternative forums, including the UN Security Council, for Western contact with Russia existed all along, he says.

"The G8 never really made sense."--James Goldgeier, American University

The reconstituted G7 will likely be better poised to facilitate collective action, experts say. Without Russia, the group is more "like-minded and capable," says Patrick, with both common interests and common values. But while suspending Russia may have improved the G7's ability to speak with one voice, many analysts note that voice is not as influential as it once was. "As new players have emerged in recent decades, the global power balance has shifted, leaving the G7 representative of a smaller piece of the pie. Any organization that does not include China, for example, is not truly global," wrote Ian Bremmer, president of the Eurasia Group, in March 2014.

The G8 often garnered criticism for its failure to deliver on ambitious commitments, particularly with respect to development assistance. Civil society organizations drew attention to noncompliance and a lack of transparency, and since 2010, members have published an annual accountability report. Meanwhile, various nongovernmental organizations do scorekeeping of their own. Whether the revived G7 improves on the G8's record remains to be seen.

For the near future, including the June 2015 summit in Bavaria, the G7's agenda remains focused on the mitigating the crisis in Ukraine and promoting economic recovery, especially for eurozone countries that have seen persistent low growth, high unemployment, and the threat of deflation. Splits remain between countries like Germany and Canada, which want economic policy to focus on reducing budget deficits and implementing structural reforms--the philosophy known as "austerity"--and others,including the United States, that want countries to use a "full toolkit" of fiscal and monetary policies to revive growth and domestic demand.

Meanwhile, hanging over the G7's proceedings is the ongoing threat that Greece could default on its debt obligations, which could mean exiting the eurozone and potentially sparking an EU-wide financial crisis in the process.

Rise of the G20

Many analysts believe the power and prestige of the Group of Twenty (G20), a forum of finance ministers and central bank governors from nineteen of the world's largest countries plus the European Union, has surpassed that of the G7. Emerging powers such as China, Brazil, India, Mexico, and South Africa, whose absence from the G8 was often noted, all belong to the G20. (Russia remains a member of the G20, which, Patrick says, "is much more where they belong.")

U.S. President Barack Obama seemed to affirm this in 2011, calling the G20 the "premier forum for global economic coordination." Many observers note that the forum was most effective during the financial crisis. (G20 leaders first met in Washington in 2008 after the fall of Lehman Brothers.)

"The Washington summit in 2008 and the London summit in 2009 did much to avert a new great depression," writes the Brookings Institution's Thomas Wright. "Unprecedented cooperation between the world's largest economies provided liquidity that limited the contagion of the banking crisis, kept markets open and prevented countries from resorting to protectionism, and provided a stimulus that cushioned the drop in growth."

But as that sense of urgency subsided, multilateral consensus was harder to come by. "We are now living in a G-Zero world, one in which no single country or bloc of countries has the political and economic leverage--or the will--to drive a truly international agenda," wrote Bremmer and economist Nouriel Roubini in Foreign Affairs in 2011.

For the time being, the G20 seems unlikely to replicate its preeminence in economic governance in the realm of international security. Mexico hosted the first meeting of G20 foreign ministers in February 2012, but that appears to have been a one-off event. At the November 2014 G20 summit, hosted by Australia, leaders adopted a plan to boost their economies by a collective 2.1 percent, a target seen as highly ambitious given the poor performance of the European and Russian economies. The next meeting, to be held in Turkey in November 2015, will also focus on the global economic recovery.

Smaller Is Often Better

Some global governance experts assert that Russia's fallout with the G7 is a belated recognition that smaller international forums comprising like-minded states are preferable over larger, more diverse groupings. "When it comes down to the choice of doing 'global and ineffectual,' or 'limited with coherent leadership,' the latter is the lesser of two evils. We need to learn that lesson, both in terms of how we organize coalitions of countries with aligned interests and ideals, and in terms of how we brace for global shocks," wrote Bremmer.

Some global governance experts assert that Russia's fallout with the G7 is a belated recognition that smaller international forums comprised of like-minded states are often preferable over larger, more diverse groupings.

Rather than a "G-Zero" world, CFR's Patrick foresees a "G-x world"--one of "multi-multilateralism"--where states adopt an ad hoc approach to collective action, "coalescing in a bewildering array of issue-specific and sometimes transient bodies depending on their situational interests, shared values, and relevant capabilities." For Patrick, the reconstituted G7 serves as one such useful forum among many.