Is the G7 important? Does it make a difference for India? A quick 7-step guide to the 7-country summit
- Is the G7 the club of the biggest economies?
The G7 was the club of the richest countries in the 1970s – the United States, Japan, Germany, Great Britain, France, Italy and Canada. But now the seven largest economies would include China and India, and exclude Italy and Canada.
- So why is the composition of the G7 not changing?
Because the G7 in its current form is the heart of the geopolitical alliance led by the Americans. The G7 is a club that America is comfortable with. Russia was once invited as the 1st of the G7 + 1 gatherings, but was abandoned after the annexation of Crimea in 2014.
- Is the G7 as influential as before?
Yes and no. He has America, so he packs a punch. But meaningful global economic coordination should involve countries beyond the G7. After the onset of the global financial crisis, President George W Bush called on the leaders of the 20 largest economies at the end of 2008 to begin the ongoing G20 process. The G7 will present its point of view to the G20 and the decisions of the G20 will guide the work of global agencies such as the IMF and the WTO, and alphabet soup of institutions that set the rules of the global financial system: BIS, FSB , FATF, IOSCO.
- Is India really important to the G7?
Yes. Because of China. India was invited, as well as Australia, South Korea and South Africa. In the Indo-Pacific, the four-member Quad – the United States, Japan, Australia and India – holds the key to peace in the region. In this game, India is the key: it shares a large land border with China and bears the brunt of China’s expansionist ambitions, India is also the largest economy in Asia after China and Japan . The G7 has seen a lot of harsh words about China, especially from the United States.
- So what did the G7 do?
- Taxation of multinationals – The G7 finance ministers have decided to work for a change in the corporate tax regime: each country must adopt a minimum corporate tax rate of 15% and each country must have the right to tax the profits that a global company derives from it. In return, countries like India and France are waiving their digital business tax.
- Vax the poor – Of the 2.33 billion doses of vaccine delivered worldwide, only 0.3% went to the poorest countries. How to manufacture and deliver vaccines to the whole world is a challenge. India and South Africa had offered to give up intellectual property rights to Covid vaccines, much to the concern of pharmaceutical companies. The United States is in favor, the EU is not.
- Invest to recover – Economic recovery from the pandemic, thanks to sustained liquidity and budgetary support, was another theme. A global infrastructure campaign that would offer developing countries an alternative to the debt trap that China presents through its Belt and Road initiative. China has invested billions in associated loans, with fine print stating that failure to service the loan would transfer the financed asset to Chinese ownership, such as with the Port of Hambantota in Sri Lanka.
- Defend democracy – The warning against authoritarian regimes was another part of the agenda. As part of this, China was urged to end its human rights abuses in its Muslim enclave of Xinjiang, and Russia was urged to take action against cybercriminals based there.
- Has the G7 done enough?
Not on vaccines. The world needs 11 to 13 billion doses of vaccines. The G7 has pledged 2 billion in all. There was no decision to give up IPRs on vaccines, so that pharmaceutical companies in developing countries could replicate Pfizer-type vaccines. This is the big disappointment.
- Can India replace what the G7 did not do?
Yes. India is well positioned to mass manufacture vaccines and fill the global deficit. It is expected to offer its vaccine expertise to the world and reverse engineer to select vaccines and their ingredients in the country. It is expected to invite biotech leaders around the world to create startups, give them seed capital, pre-purchase commitments and legal isolation from pharmaceutical companies in the developed world, which will cry foul.
The opinions expressed above are those of the author.
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