Group of Seven shows West can still lead

Andrew Hammond

The Group of Seven, widely written off as anachronism in the 2020s, was created in the instability of the 1970s to monitor developments in the world economy. Yet at the recent summit in Italy, Western leaders delivered a series of big geopolitical deals that shows the body can still deliver when it matters.

Top of the agenda was Ukraine, where the most eye-catching announcement was a $50 billion G7 loan to Kyiv. This uses profits from $300 billion in frozen Russian assets in the West to boost funding for Ukraine, a move that Moscow has condemned.

A number of other security deals were made with Kyiv, the standout of which is a 10-year bilateral agreement with the United States — seen in the West as a potential transition point for Ukraine on the road to joining NATO. This includes commitments for prolonged aid encompassing areas such as military training, the sharing of intelligence and economic assistance.

There were also broader efforts at the summit to woo the Global South on Ukraine. Italian Prime Minister Giorgia Meloni invited a range of key emerging market leaders, including Argentina's President Javier Milei, Brazil's President Luiz Inacio Lula da Silva, Turkish President Recep Erdogan, UAE President Mohamed bin Zayed Al Nahyan, Indian Prime Minister Narendra Modi and South Africa President Cyril Ramaphosa.

Outside Ukraine, there was significant focus on Israel, too, with the G7 giving strong public backing to the ceasefire deal outlined by U.S. President Joe Biden and calls on Hamas to accept it. This calls for an immediate ceasefire in Gaza, the release of all hostages, plus a significant and sustained increase in humanitarian assistance for distribution throughout Gaza.

China was in the spotlight, too, with the G7 issuing its starkest-ever warning yet to Beijing over its support for Russia and threatening more sanctions if Beijing keeps transferring defense-related materials. The communique reads, "We call on China to cease the transfer of dual-use materials, including weapons components and equipment, that are inputs for Russia's defence sector."

There was also significant pushback against Beijing's trillion-dollar Belt and Road infrastructure scheme. The G7's alternative Partnership for Global Infrastructure and Investment scheme was reaffirmed.

These Western-backed schemes include support for the Lobito Corridor in Africa (which stretches from Democratic Republic of the Congo and Zambia to the Atlantic Ocean via Angola's Port of Lobito); the Luzon Corridor in Asia (strongly supported by Japan which will support connectivity between Subic Bay, Clark, Manila and Batangas in the Philippines); and the India-Middle East-Europe Economic Corridor.

Meloni also put a special focus on Africa at the event to promote European energy security. The goal is to turn Italy into a major hub distributing energy from Africa to Europe.

While many international sceptics doubted this week's G7 would produce meaningful outcomes in Italy, the agreements reached — including on Ukraine — may prove significant. This should not be too surprising, as the Western club has previously been at its best in times of crisis, tackling the big issues of the day.

It was founded in 1975 in the aftermath of geopolitical and economic shocks when Washington had pulled out of the Gold Standard. This underlines that it is fit for purpose for turbulent times like today.

Back then, U.S. President Richard Nixon had resigned and there was a clear and imminent danger of currency wars. The G7 stepped up to the plate, however, playing a key role in the management of the most important exchange rates. It also brought Japan into the Western policy-making community and a similar far-sighted approach is needed today to try to get greater alignment with leaders of the Global South.

So the body has a proven record of delivering, and it can potentially play a significant role again now. This is especially urgent given the paralysis of the Group of 20 right now with splits between the West and Russia, China and the two nations' allies.

At the same time, the recent Italian summit may also be noteworthy as it is potentially the last of Biden's presidency. At the back of the mind of the leaders has been the jarring possibility that next year's event could see the return of former U.S. President Donald Trump.

From 2017 to 2021, Trump's presence prompted the worst divisions ever within the G7. This reached its nadir in 2018 at the Canadian summit, which saw an unprecedented failure to agree on an end-of-summit communique.

This personal animosity on display between Trump and other leaders provided political atmospherics for wider policy splits. Trump, for instance, called on the first day of that summit for Russia to be allowed to rejoin the group (the G8), as was the case from 1997 to 2013. Yet other G7 leaders dismissed this and instead called for a "rapid and unified" response to Moscow's malign international interference.

Taken together, however, the Italian summit has provided a key moment for Western leaders to double down on the big strategic questions facing the world. At a time when the G20 has become less effective, the G7 has assumed new relevance and has greater potential to set the global agenda again.

Andrew Hammond is an associate at LSE IDEAS at the London School of Economics.