- Is G7 the club of biggest economies?
No. G7 used to be the club of richest countries in 1970s – the US, Japan, Germany, Britain, France, Italy and Canada. But now the seven biggest economies would include China and India, and exclude Italy and Canada.
- So why doesn’t G7 composition change?
Because G7 in current form is the heart of the American-led geopolitical alliance. G7 is about a club America is comfortable with. Russia used to be invited as the 1 in G7+1 gatherings, but got dropped after it annexed Crimea in 2014.
- Is G7 as influential as before?
Yes and no. It has America, so it’s got punch. But meaningful global economic coordination would have to involve nations beyond G7. After the Global Financial Crisis commenced, President George W Bush called, late in 2008, the heads of the largest 20 economies, to begin the G20 process, which continues. G7 will present its views to G20 and G20’s decisions will guide the working of global agencies such as the IMF and the WTO, and an alphabet soup of institutions that set rules for the global financial system: BIS, FSB, FATF, IOSCO.
- Is India really important to G7?
Yes. Because of China. India was invited, along with Australia, South Korea and South Africa. In the Indo-Pacific, the four-member Quad – the US, Japan, Australia and India – holds the key to peace in the region. In this game, India is key: It shares a large land border with China and bears the direct brunt of China’s expansionist ambitions, India is also Asia’s largest economy after China and Japan. G7 saw plenty of tough words on China, especially from the US.
- So, what did G7 do?
- Tax MNCs – G7 finance ministers decided to work for a regime change in corporate tax: Every country to adopt a minimum corporate tax rate of 15% and every country to get the right to tax the profits a global firm generates from it. In return, countries like India and France give up their tax on digital companies.
- Vax the Poor – Of the 2.33 billion vaccine doses delivered worldwide, only 0.3% have gone to the poorest nations. How to manufacture and deliver vaccines for the entire world is a challenge. India and South Africa had proposed waiving intellectual property rights on Covid vaccines, much to the alarm of pharma companies. The US is in favour, the EU is not.
- Invest to Recover – Economic recovery from the pandemic, through sustained liquidity and fiscal support, was another theme. A global infrastructure drive that would offer developing countries an alternative to walking into the debt trap that China presents via its Belt and Road Initiative. China has put billions into associated loans, with covenants in small print that say that failure to service the loan would transfer the financed asset to Chinese ownership, as with Sri Lanka’s Hambantota port.
- Defend Democracy – Warning authoritarian regimes was another part of the agenda. Under this, China has been called upon to stop its human rights violations in its Muslim enclave of Xinjiang, and Russia has been asked to take action against cyber criminals based there.
- Did G7 do enough?
Not on vaccines. The world needs 11-13 billion vaccine doses. G7 has promised, in all, 2 billion. There was no decision to waive IPR on vaccines, so that developing world pharma could replicate Pfizer type vaccines. This is the big disappointment.
- Can India fill in where G7 didn’t?
Yes. India is well-placed to mass-manufacture vaccines and make good the global deficit. It should offer its vaccine knowhow to the world, and reverse engineer select vaccines and their ingredients in the country. It should invite biotech leaders from around the world to set up startups, give them seed capital, pre-purchase commitments and legal insulation from developed-world pharma companies, which will cry foul.
Views expressed above are the author’s own.
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