Leadership from the Group of Seven (G7) is needed more than ever as the pandemic continues to devastate economies and as we begin to grapple with the many legacies this global crisis will leave in its wake. Given the increased need for G7 leadership at this time, it is notable that the next meeting is being postponed to September, if it will be held at all.
However, the delayed meeting could be considered a benefit, given the divisions that currently exist and the potential to do lasting damage to the informal block of industrialized countries (which represent close to 50 percent of the global economy by most calculations).
President Trump has recently said that the G7 “doesn’t represent what’s going on in the world”. This assertion is correct, but it misses the larger point. G7 membership was always intended for like-minded countries, which is why Canadian Prime Minister Justin Trudeau recently stated that “inviting Russia is a non-starter.” Indeed, Russia was expelled from the group over the annexation of Crimea, and Russia’s most recent efforts at electoral interference and disinformation campaigns have all but secured their status as “non-like-minded”.
This line of reasoning caused former Canadian Prime Minister Paul Martin and Treasury Secretary Larry Summers to create a bigger table in the form of the Group of Twenty (G20) – where divergent perspectives could be discussed at the highest level of government between the world’s most populous, powerful, and economically important countries.
The current issue is that the G7 is no longer a club for the like-minded. The past two meetings have put on full display the major differences of G7 leaders on important global topics such as climate change and immigration.
Nevertheless, there remains scope for like-minded cooperation. The G7 represent a powerful economic force, and that force will be required to lift not only the economies of member countries, but global economies as well. Although China and its massive fiscal response in the aftermath of the Great Financial Crisis helped to boost commodity prices and global demand, China can’t play the same role now given its large financial vulnerabilities (and the incumbent politics of dealing with China).
We all want to reopen our economies, get firms running, and people back to work safely. The largest beneficial impact will come through coordinated fiscal action against the background of low interest rates, and COVID-19 vaccine development. Clearly, the technical expertise within G7 countries make them a natural leader for such development, considering that until an effective treatment is found, the world will likely face multiple waves of the virus.
All G7 countries have recognized and implemented, perhaps belatedly in some, large fiscal stimulus packages. With interest rates low, and expected to remain low, fiscal stimulus is extremely powerful. One key lesson gained from the Great Financial Crisis is not to pull back stimulus too early, especially with the possibility of multiple waves of COVID-19.
The impact of these policies will be further enhanced by keeping trade barriers low. As regions move in and out pandemic peaks, we must ensure that resources and trade flow where they are needed most, which in itself will boost demand. A clear statement by the G7 on the need to reduce trade barriers is essential – barriers will backfire and make a difficult situation on access to needed medical equipment worse.
The G7 should agree to a reexamination of the World Health Organization (WHO). A review of the WHO is simply good governance post-pandemic. This analysis will help us to better prepare for subsequent events. Such a review is reasonable to complete, just as the Financial Stability Board (FSB) was set up to boost the resilience of the financial sector following the Great Financial Crisis. It is now very clear that we need the same amount of attention paid to global health and the complicated interactions in the global healthcare system.
Meanwhile, the pandemic has revealed the need for trustworthy information and the role that digital social media platforms play in moderating content and amplifying information. The WHO has titled the brazen display and targeted mis and disinformation around COVID-19 an “infodemic”. It is but the latest example of how information can be misused on social media platforms. Canada and France announced their Partnership on Artificial Intelligence “to promote a vision of human-centric artificial intelligence grounded in human rights, inclusion, diversity, innovation and economic growth”. This is an area that should be pursued by the G7 where there are common values, with a focus on human rights and democracy. CIGI has proposed the creation of a Digital Stability Board – the equivalent of the FSB – for the digital world.
In summary, if the G7 is at a standstill then it is time for the G20 to act, just as it did during the Great Financial Crisis. When it comes to crisis management, the G7’s record so far just isn’t good.