Five languages, but seven countries.
What words have you picked up while reporting at the G7, Steve?
I speak fluently French, Italian, all kinds of languages, so very few.
No that’s a lie. Experiences rather than words,
I’ve got to be honest with you Silvia.
The G7, or Group of Seven, is an organization made up
of the world’s quote “most influential” and “advanced” economies.
Every year, the leaders of the United States, United Kingdom,
Canada, France, Germany, Italy and Japan gather in a fancy location to talk global affairs.
But how did this group come together and what do they do?
To learn more, I caught up with CNBC anchor Steve Sedgwick.
Steve has interviewed countless international leaders, including at the G7 summits.
A lot of issues being discussed, some they don’t seem to want to discuss
and others I’m not sure that they’re going to get anywhere on as well.
2009, where I went to the G7 meeting in a place called L'Aquila in Abruzzo in Italy,
which was held by Silvio Berlusconni, which was originally supposed to be in Sardinia,
then we had devastating earthquakes in Italy so he moved it to L'Aquila
so there I was on the edge of an earthquake zone with military and fire personnel everywhere,
on the outskirts of a G-meeting. That was extraordinary.
The G7 originates from an informal meeting of finance ministers from the U.S., West Germany, France and the U.K.
Held in the White House’s library, they became known as the “Library Group.”
The G number is something almost not worth getting worked up about, because it started off as a G4.
Then it became G5 with Japan coming on board, then Italy G6.
In 1975, they made it official. France and Germany invited the heads of government
for the six nations to the Chateau de Rambouillet, 30 miles southwest of Paris, for a meeting.
The next year, Canada joined the Group, rounding it out to what we now know as the G7.
This was a coordinated response from some of the biggest nations on the planet
to what were enormous macroeconomic challenges. We had a devastating oil shock
and of course a huge recession and inflation problems in the 70s.
While the group’s focus started with the economy, it wasn’t long before its scope extended
to include foreign policy and security.
Williamsburg in 1983, Bonne in 1985, at these key summits,
security and energy security, these were specifically mentioned,
and you have got to look at what was going on in the world at that time.
You had this devastating war at the center of the Middle East
between two of the largest oil players in the world: i.e. Iran and Iraq.
You had the Soviet invasion of Afghanistan in the 80s as well.
So there were a whole lot of geopolitical tensions, with the backdrop of course of the Cold War,
where security and economic policy, they very, very severely overlapped.
Following the dissolution of the Soviet Union in 1991,
Russia regularly attended G7 meetings. It officially became a member of the group in 1998,
forming the G8. But the relationship was short-lived.
I remember that very, very well. In 2014, I was down in Ukraine
and that was the reason why Russia got booted out,
because of the annexation of Crimea and the invasion of that part of Ukraine.
The rest of the group boycotted Russia’s G8 meeting in Sochi that year, meeting in Brussels instead.
Do you think that the G7 will ever be the G8 again?
Not with Russia for the foreseeable future,
the antagonism between the West and Russia is just too great at the moment,
but could it be a G8 with another party? Quite possibly.
What Steve is hinting at here is the notable absence of some major economies from the group, and he’s not alone.
There are plenty of questions about who should be in the group moving forward.
One study suggests that by 2050, six of the seven
largest economies in the world will be countries currently outside the G7,
including the rapidly growing nations of China, India and Brazil.
If these growth projections prove right, we could see a transformation
in either the composition of the G7, or its relevance.
The G7 did partially address these concerns by creating the G20 in 1999.
The G7 finance ministers decided that they needed more people at the table to discuss the economic crisis at the time.
Do you think it couldn’t work just with the seven? Why did they need more people at the table?
Absolutely, it couldn’t work as well because despite the fact that even to this day
the original seven members, plus Russia, represent a vast amount of global wealth,
a vast amount of global GDP, look at where the crises were.
We had a hedge fund collapse for a start, which had global ramifications,
we had a Russian financial crisis in the late 1990s, we had the east Asia crisis
plus you had a Mexican Peso crisis. So all of these crises had roots
in different parts of the world, and it just wasn’t feasible
for the G7 to approach this, and start telling China, India, East Asian countries
what they should be doing without their participation as well.
So absolutely. That’s how the G20 was born.
This group became even more prominent during the financial crisis of 2008,
when the U.S. suggested the G20 should include heads of state too.
The leaders have met in this format, in addition to the G7, every year since 2010.
Today, the G20 is comprised of 19 countries and the European Union.
It accounts for 80% of global GDP and 60% of the world population.
Meanwhile, the G7 accounts for 40% of global GDP and a tenth of the world’s population.
So, based on that, would you say that the G20
has become more important and perhaps more efficient than the G7?
Yes and no, there you go, there’s my clear answer.
London, April 2009 which was just the finest moment for the G20
when the big powers including Saudi, China, India, stepped up
and said we will have a big global coordinated response.
That said, I don’t think the G20 has had such a fine moment in the following 12 years,
and I am not sure that coordination has always seemed possible amongst 20 countries
with 20 different interests as well. So whilst the G7 is perhaps too small
to make these global decisions, one could argue
the efficiency of the G20 is just not there because you’ve got too many disparate interests.
And of course now we have transpacific antagonism between China and the U.S.,
has that devalued the common purpose of the G20? So, it’s a very nuanced situation.
So, the G7 talks through some of the world’s biggest challenges, but have they actually achieved anything?
The group’s response to that question would be: absolutely.
It takes credit for being behind the Muskoka Initiative, which reduced maternal and infant mortality
and the Global Fund to Fight AIDS, Tuberculosis and Malaria.
It also says it supported the implementation of the Paris Climate Deal,
which renewed carbon emission reduction targets in many parts of the world.
At the end of each meeting, the group signs a communique, which outlines their joint commitments.
It was not so long ago we saw the G7 reach an agreement over a common statement
and then the then U.S. president Donald Trump decided to revoke his signature essentially.
A communique, a common statement, the grand piece at the end of these meetings.
What's it worth sometimes? Sometimes they are so watered down, Silvia,
that you wonder what’s the worth of it. And so I do actually have
a lot of common understanding with Donald Trump on this issue,
very often you have a bland statement with grand protestations which potentially
tie the members into situations that aren’t necessarily in their national interest.
I have seen communiques in the past where I know for a fact there have been
transgressors on currency issues, where people have really wanted to name names,
but they refused to name names because they don’t want to upset anyone as well.
So the statement at the end of it is very often watered down and actually very meaningless.
So, what is next for the G7?
Now, this is very interesting because don't forget that the G7 doesn't have a secretariat.
It doesn't have a big ongoing body to talk about these issues on a multi-year basis.
And so the G7 is very much about the agenda of the day and the agenda of the host government as well.
If Brazil does join the G7, do you want to know a few words in Portuguese, just in case?
Absolutely, yeah!
I mean Portuguese is a big gulf in my knowledge, so fire away Silvia.
I will just teach you two very simple ones. ‘Obrigado’ for ‘thank you’ and ‘por favor’ for ‘please’.
Por favor, that sounds like many other Latin languages I think, I think I can get that one.
And the first one again?
Obrigado.
Very good. There you go!