Two subjects will likely preoccupy the G7 heads of state when they meet starting 26 June: the war in Ukraine and the related spikes in commodity prices worldwide. The leaders need to show that they will address the economic woes as well as other crises.
What’s new? The leaders of the Group of Seven, or G7, are meeting in Germany from 26 to 28 June to discuss Russia’s war in Ukraine and its reverberations in the world economy.
Why does it matter? The club of Western powers will – and should – display unity in opposing Russian aggression. It is equally urgent for them to communicate determination to address the global commodity price and other economic shocks related to the war.
What should be done? While reaffirming their support for Ukraine, G7 leaders should use economic and aid tools to help countries most threatened by the commodities crisis. They should also dedicate time to some of the world’s other pressing crises and push for action to manage climate change’s impact on international peace and security.
From 26 to 28 June, German Chancellor Olaf Scholz will host his counterparts from the Group of Seven industrialised nations (Canada, France, Italy, Japan, the United Kingdom and United States) in the Bavarian castle of Schloss Elmau for their annual summit. Two overlapping challenges will dominate discussions among the G7. The first is what to do about Russia’s war in Ukraine. The second concerns the grim state of the global economy, rocked not just by war but also the COVID-19 pandemic. Spiralling food and fuel costs threaten to worsen the humanitarian plight of people caught up in existing crises, spark unrest and instability in other poorer nations, and drive political upheaval in the G7 countries themselves.
While the G7 leaders will doubtless take Russia to task over its aggression in Ukraine, they must also signal to the rest of the world that they care about other crises, particularly the widespread economic woes. Many governments in Africa, Asia and Latin America have condemned Russia’s assault on Ukraine. But they also express concern that the U.S. and its allies are exacerbating the economic crisis through their use of sanctions against Moscow. Western officials deny such accusations, and certainly Russia, through its invasion and occupation of part of Ukraine, is primarily responsible for the war’s ramifications. But sanctions have contributed to the cascade of global shocks. G7 leaders need to show that they are listening to other states’ concerns and can respond effectively. They should also make clear that although Ukraine is consuming attention in Western capitals, efforts to resolve other conflicts and mitigate the suffering they cause, notably through the G7’s financial muscle, remain on their agendas.
Although the G7 has no doubt lost some of its capacity to shape global economic affairs in recent decades, it remains influential. Its members’ share of global GDP has lost ground from the 44 per cent they commanded in 2000, but they still controlled 31 per cent as of 2020. G7 members also hold over two fifths of voting rights at both the World Bank and International Monetary Fund (IMF), and they play an even bigger role in funding international humanitarian operations. The group’s members and the European Commission covered 70 per cent of the World Food Programme (WFP)’s almost $10 billion budget in 2021, whereas China provided less than 1 per cent of the WFP’s funding.
Given this still significant financial and political clout, the G7 should:
Complement their expressions of support for Ukraine and condemnation of Russia with clear signals that they will act to deliver essential financial aid to poor and middle-income countries, most vulnerable to economic shocks, while doing whatever they can to get more grain and other commodities, of which there are shortages, to global markets.
In Afghanistan, take steps to reverse the country’s economic collapse and alleviate a mounting humanitarian disaster, notably by redoubling efforts to reach agreement with the Taliban on getting the Afghan central bank working again.
In Lebanon, push the country’s elites to make needed reforms so that the IMF can start restoring a broken financial system and stop the state falling apart.
In Ethiopia, offer economic inducements to nudge the federal authorities and Tigrayan rebels toward a sustainable ceasefire.
In Haiti, support rebuilding the rule of law by developing new capabilities to counter the influence of powerful gangs.
In Sri Lanka, press the government to meet the criteria for an IMF bailout package to spare the country even worse suffering amid an unprecedented economic meltdown and a severe political crisis.
Finally, the G7 should turn to a global issue championed by Germany but now overshadowed by the Ukraine crisis: the impact of climate change on international peace and security. G7 leaders have already recognised how changing weather patterns, sea-level rises and other effects of climate change can aggravate dangers of conflict, but they need to help forge a broader international consensus, including at the COP27 summit in October, on how to manage those risks.