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  • Five languages, but seven countries.

  • What words have you picked up while reporting at the G7, Steve?

  • I speak fluently French, Italian, all kinds of languages, so very few.

  • No that's a lie. Experiences rather than words,

  • I've got to be honest with you Silvia.

  • The G7, or Group of Seven, is an organization made up

  • of the world's quotemost influentialandadvancedeconomies.

  • Every year, the leaders of the United States, United Kingdom,

  • Canada, France, Germany, Italy and Japan gather in a fancy location to talk global affairs.

  • But how did this group come together and what do they do?

  • To learn more, I caught up with CNBC anchor Steve Sedgwick.

  • Steve has interviewed countless international leaders, including at the G7 summits.

  • A lot of issues being discussed, some they don't seem to want to discuss

  • and others I'm not sure that they're going to get anywhere on as well.

  • 2009, where I went to the G7 meeting in a place called L'Aquila in Abruzzo in Italy,

  • which was held by Silvio Berlusconni, which was originally supposed to be in Sardinia,

  • then we had devastating earthquakes in Italy so he moved it to L'Aquila

  • so there I was on the edge of an earthquake zone with military and fire personnel everywhere,

  • on the outskirts of a G-meeting. That was extraordinary.

  • The G7 originates from an informal meeting of finance ministers from the U.S., West Germany, France and the U.K.

  • Held in the White House's library, they became known as theLibrary Group.”

  • The G number is something almost not worth getting worked up about, because it started off as a G4.

  • Then it became G5 with Japan coming on board, then Italy G6.

  • In 1975, they made it official. France and Germany invited the heads of government

  • for the six nations to the Chateau de Rambouillet, 30 miles southwest of Paris, for a meeting.

  • The next year, Canada joined the Group, rounding it out to what we now know as the G7.

  • This was a coordinated response from some of the biggest nations on the planet

  • to what were enormous macroeconomic challenges. We had a devastating oil shock

  • and of course a huge recession and inflation problems in the 70s.

  • While the group's focus started with the economy, it wasn't long before its scope extended

  • to include foreign policy and security.

  • Williamsburg in 1983, Bonne in 1985, at these key summits,

  • security and energy security, these were specifically mentioned,

  • and you have got to look at what was going on in the world at that time.

  • You had this devastating war at the center of the Middle East

  • between two of the largest oil players in the world: i.e. Iran and Iraq.

  • You had the Soviet invasion of Afghanistan in the 80s as well.

  • So there were a whole lot of geopolitical tensions, with the backdrop of course of the Cold War,

  • where security and economic policy, they very, very severely overlapped.

  • Following the dissolution of the Soviet Union in 1991,

  • Russia regularly attended G7 meetings. It officially became a member of the group in 1998,

  • forming the G8. But the relationship was short-lived.

  • I remember that very, very well. In 2014, I was down in Ukraine

  • and that was the reason why Russia got booted out,

  • because of the annexation of Crimea and the invasion of that part of Ukraine.

  • The rest of the group boycotted Russia's G8 meeting in Sochi that year, meeting in Brussels instead.

  • Do you think that the G7 will ever be the G8 again?

  • Not with Russia for the foreseeable future,

  • the antagonism between the West and Russia is just too great at the moment,

  • but could it be a G8 with another party? Quite possibly.

  • What Steve is hinting at here is the notable absence of some major economies from the group, and he's not alone.

  • There are plenty of questions about who should be in the group moving forward.

  • One study suggests that by 2050, six of the seven

  • largest economies in the world will be countries currently outside the G7,

  • including the rapidly growing nations of China, India and Brazil.

  • If these growth projections prove right, we could see a transformation

  • in either the composition of the G7, or its relevance.

  • The G7 did partially address these concerns by creating the G20 in 1999.

  • The G7 finance ministers decided that they needed more people at the table to discuss the economic crisis at the time.

  • Do you think it couldn't work just with the seven? Why did they need more people at the table?

  • Absolutely, it couldn't work as well because despite the fact that even to this day

  • the original seven members, plus Russia, represent a vast amount of global wealth,

  • a vast amount of global GDP, look at where the crises were.

  • We had a hedge fund collapse for a start, which had global ramifications,

  • we had a Russian financial crisis in the late 1990s, we had the east Asia crisis

  • plus you had a Mexican Peso crisis. So all of these crises had roots

  • in different parts of the world, and it just wasn't feasible

  • for the G7 to approach this, and start telling China, India, East Asian countries

  • what they should be doing without their participation as well.

  • So absolutely. That's how the G20 was born.

  • This group became even more prominent during the financial crisis of 2008,

  • when the U.S. suggested the G20 should include heads of state too.

  • The leaders have met in this format, in addition to the G7, every year since 2010.

  • Today, the G20 is comprised of 19 countries and the European Union.

  • It accounts for 80% of global GDP and 60% of the world population.

  • Meanwhile, the G7 accounts for 40% of global GDP and a tenth of the world's population.

  • So, based on that, would you say that the G20

  • has become more important and perhaps more efficient than the G7?

  • Yes and no, there you go, there's my clear answer.

  • London, April 2009 which was just the finest moment for the G20

  • when the big powers including Saudi, China, India, stepped up

  • and said we will have a big global coordinated response.

  • That said, I don't think the G20 has had such a fine moment in the following 12 years,

  • and I am not sure that coordination has always seemed possible amongst 20 countries

  • with 20 different interests as well. So whilst the G7 is perhaps too small

  • to make these global decisions, one could argue

  • the efficiency of the G20 is just not there because you've got too many disparate interests.

  • And of course now we have transpacific antagonism between China and the U.S.,

  • has that devalued the common purpose of the G20? So, it's a very nuanced situation.

  • So, the G7 talks through some of the world's biggest challenges, but have they actually achieved anything?

  • The group's response to that question would be: absolutely.

  • It takes credit for being behind the Muskoka Initiative, which reduced maternal and infant mortality

  • and the Global Fund to Fight AIDS, Tuberculosis and Malaria.

  • It also says it supported the implementation of the Paris Climate Deal,

  • which renewed carbon emission reduction targets in many parts of the world.

  • At the end of each meeting, the group signs a communique, which outlines their joint commitments.

  • It was not so long ago we saw the G7 reach an agreement over a common statement

  • and then the then U.S. president Donald Trump decided to revoke his signature essentially.

  • A communique, a common statement, the grand piece at the end of these meetings.

  • What's it worth sometimes? Sometimes they are so watered down, Silvia,

  • that you wonder what's the worth of it. And so I do actually have

  • a lot of common understanding with Donald Trump on this issue,

  • very often you have a bland statement with grand protestations which potentially

  • tie the members into situations that aren't necessarily in their national interest.

  • I have seen communiques in the past where I know for a fact there have been

  • transgressors on currency issues, where people have really wanted to name names,

  • but they refused to name names because they don't want to upset anyone as well.

  • So the statement at the end of it is very often watered down and actually very meaningless.

  • So, what is next for the G7?

  • Now, this is very interesting because don't forget that the G7 doesn't have a secretariat.

  • It doesn't have a big ongoing body to talk about these issues on a multi-year basis.

  • And so the G7 is very much about the agenda of the day and the agenda of the host government as well.

  • If Brazil does join the G7, do you want to know a few words in Portuguese, just in case?

  • Absolutely, yeah!

  • I mean Portuguese is a big gulf in my knowledge, so fire away Silvia.

  • I will just teach you two very simple ones. 'Obrigado' for 'thank you' and 'por favor' for 'please'.

  • Por favor, that sounds like many other Latin languages I think, I think I can get that one.

  • And the first one again?

  • Obrigado.

  • Obrigado.

  • Very good. There you go!

Five languages, but seven countries.

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What is the G7? | CNBC Explains

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    Summer posted on 2021/06/10
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