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G7: America is back, but summit may widen global polarisation

·6 min read

Leaders of the world’s most industrialised nations meet on Friday at the English seaside town of Carbis Bay for the G7 summit. The US returns with President Joe Biden hoping to move on from the Trump era, but critics warn of the danger of increased global division on tax, trade and climate change.

The G7 leaders have already promised to share Covid-19 shots with less developed nations, with charities warning the current situation is leading to "vaccine apartheid".

EU members have themselves agreed to donate at least 100 million doses by the end of 2021 -- with France and Germany each committing to providing 30 million.

French President Emmanuel Macron issued his own call for pharma groups producing vaccines to donate 10 percent of their production to poor nations.

US President Joe Biden on Thursday saluted a "historic" moment in the fight against the pandemic after Washington announced its donation of 500 million jabs to 92 poor and lower-middle-income nations.

Since the last meeting of the G7 two years ago, the coronavirus pandemic has killed more than 3.7 million people and gravely damaged the global economy.

A planned G7 meeting in the United States last year was postponed, then cancelled by Donald Trump.

Now, along with the promise of millions of vaccine shots, US President Joe Biden brings the message that "America is Back". British Prime Minister Boris Johnson will welcome Biden and the leaders of France, Germany, Italy, Japan and Canada to the beach resort in southwest England, where pandemic recovery will top the agenda.

Declaration of Rambouillet

The 1973 oil crisis provided the seeds for what is now the G7. The idea was initiated by then French President Valéry Giscard d’Estaing and his West German counterpart, Chancellor Helmut Schmidt.

The first summit took place at the height of the cold war, in 1975, in Rambouillet, just south of Paris, and brought together the heads of state and government of France, West Germany, the USA, Japan, the United Kingdom and Italy.

That inaugural summit formulated the cornerstone Declaration of Rambouillet. The central aim of the bloc is to provide, in the words of the G7-website of France's Foreign Ministry, "an informal forum to coordinate economic and financial policies free of any specific protocol." In other words, the G7 is a high-level talk shop intended to smoothen the "regulation of globalisation".

The initial "G6" grew into the "G7" when Canada joined in 1976. Between 1998 and 2014, the group even became the "G8" when Russia joined, but after the Russian takeover of Crimea, the other seven decided to continue without Moscow.

Global corporate tax reform

At this year's G7 meeting, apart from the pandemic, probably the most important issue on the agenda is a proposal for a minimum 15 percent tax on multinational companies, agreed by G7 finance ministers last week. G7 leaders lauded the result as "an historic step" but watchdog groups were quick to criticise the plan. "It would bring in additional revenues each year of something like $275 billion," admits Alex Cobham, Chief Executive of the London-based Tax Justice Network (TJN).

TJN estimates that globally, revenue losses from both corporate and individual tax abuses represent $427 billion yearly.

"That drains public revenues pretty much in every country of the world, except for a few havens, that really exploit everyone else," Cobham told RFI. "It is a bigger share of current tax revenues for lower income countries, the very countries that most need those revenues, in order to invest in their public services," he says.

Not a done deal

In fact, because the country which is home to the headquarters of a multinational will take the major share of the tax on profits, G7 countries will take more than 60 percent of the revenues, while other, poorer countries where the multinationals also have operations, are likely to miss out.

The G7 tax plan is not a done deal. First, the proposals will have to get agreement by the G20, the group of the world's 20 major economies, due to hold a summit in Rome at the end of October. These include China, India, South Africa, Russia and other regional power houses that may not agree to the G7 tax plan.

And the ultimate hurdle may be the US itself: "It means US Congress has to vote on it," says Alex Alexandroff, Director of the Global Summitry Project, at the Munk School of Global Affairs and Public Policy. "In the last few days, various congressmen and senators came out saying that this was anti-competitive with respect to American business. This is tough stuff."

Climate goals

Another major topic on the G7 agenda will be climate change. In spite of strong commitments by individual countries, critics think there's still a long way to go before goals, set by the Paris Climate conference, will be reached.

The report Cleaning up their act? by Tearfund, the International Institute for Sustainable Development (IISD) and the Oversease Development Institute (ODI) found that G7 countries have "committed more than $189 billion to support coal, oil and gas," while clean forms of energy have received only $147 billion.

Moreover, "environmental deregulations adopted in favour of the fossil fuel industry are inconsistent with the steep decline in emissions needed to limit global warming to 1.5°C and with G7 countries’ own net-zero targets."

"They all have enhanced their targets, but despite all this, they keep on propping up the fossil fuel industry," Lucille Dufour of the IISD, one of the authors of the report, told RFI, pointing out that "France is not a champion of green recovery". The report also sees other G7 countries putting more effort into saving the fossil fuel sector than protecting the environment.

Alliance of democracies?

Tax and climate apart, the G7 with Washington back at the table gives a signal to Russia and China. After attending the G7 meeting, Joe Biden will meet Nato leaders in Brussels, go to a joint US-EU summit aimed at repairing ties undermined by Donald Trump. Biden is scheduled to meet Russia's President Vladimir Putin in Switzerland on 16 June.

Unlike his predecessor, Biden sees Russia as a major adversary, and worries about Moscow's "willingness to continue cybercrime activity, problems with respect to the Ukraine," and interference in American elections. "Biden will present (himself) very forcefully with respect to Putin," says Alexandroff. "Russia is a major competitor.

"The real issue there is that the current administration is very keen to say, not only are we back, but we're promoting democratic values, certainly within the G7," says Alexandroff.

"But, one does then encounter the reality, that the world is a bigger place than that. And if you're really going to move the yardsticks on global governance, then the focus has to be on the G20, where you have the major and significant actors, not just the original G7," he says.