Context

Amid the worldwide pandemic and global economic slowdown, the United States President has called for expansion of G-7 to G-11 by including India, Russia, South Korea and Australia.

Background of G-7

• The G-7 or ‘Group of Seven’ are Canada, France, Germany, Italy, Japan, the United Kingdom and the United States.
• It is an intergovernmental organisation that was formed in 1975 by the top economies of the time as an informal forum to discuss pressing world issues.
• Canada joined the group in 1976, and the European Union began attending in 1977.
• Initially it was formed as an effort by the US and its allies to discuss economic issues but the G-7 forum has deliberated about several challenges over the decades, such as the oil crashes of the 1970s, the economic changeover of ex-Soviet bloc nations, and many pressing issues such as financial crises, terrorism, arms control, and drug trafficking.
• The G-7 was known as the ‘G-8’ for several years after the original seven were joined by Russia in 1997. The Group returned to being called G-7 after Russia was expelled as a member in 2014 following the latter’s annexation of the Crimea region of Ukraine.
• The G-7 nations meet at annual summits that are presided over by leaders of member countries on a rotational basis.
• The groundwork for the summit, including matters to be discussed and follow-up meetings, is done by the “sherpas”, who are generally personal representatives or members of diplomatic staff such as ambassadors.

Importance of G-7 to India

• The proposed G-11 grouping would recognize India’s place among the wealthiest nations in the world and recognize its global voice.
• A permanent seat at the G-7 would go a long way towards solidifying India’s commitment in establishing itself as a key manufacturing destination in the coming years.
• It would be in India’s interests to adopt a foreign policy stance premised on multilateralism over isolation, to counter-balance the military power-divide between itself and China.
• India could view a greater strategic alliance with the world’s most economically prominent democracies as a key opportunity to fuel further growth, especially at the current juncture.
• It could turn out to be a useful platform for India to further intensify its links with these countries to revive its economic growth after the COVID-19 pandemic and lessen economic dependence on China.

Importance of India to G-7

• Not all countries of G-7 are advanced and developed and India which is both a military and economic giant can easily become a part of the group.
• China has become an arch-rival of United States and many other countries, especially after the coronavirus outbreak. Having India and others in the G7 is Trump’s way of countering the rising influence of China on the world stage.
• Both United States and China are fighting a trade war for a long time and have imposed tariffs on imports on various goods and calling India to join the G-7 would help bringing the global economy back on its feet.
• India’s GDP (in PPP terms) is more than the member nations of G-7 like Japan, Germany, United Kingdom and France and the expansion of the group is necessary to be called for.
• There is large percentage of India’s diaspora that lives in the member nations of G-7 and provides significant contribution towards the economic activity around the globe.
• The last two decades has experienced a dramatic shift in the economic fulcrum from the Atlantic to the Pacific, characterised by the rise of India and China.
• Although India has much to do with regard to improving its performance across numerous Human Development Index metrics, it is worth noting that it has managed to drag approximately 160 million people out of the grips of poverty over the last decade.
• Ranking ninth among the world’s top economies in 2010, India is now firmly planted in fifth ahead of five G-7 members in Germany, France, the United Kingdom, Canada and Italy.
• India’s economy is also going down due to the effects of the pandemic but the government has introduced a series of measures which are geared towards making India a lucrative and safe proposition for foreign investors.

Challenges before India in joining G-7

• The government needs to weigh the proposed benefits against some of the factors that are still unclear.
• The US President can invite any country as a special guest to G-7 annual summit but including a country permanently to the group will require assent from other members of the G-7.
• The US Presidential election is going to be conducted in November 2020 and the date of annual summit of G-7 is still unclear.
• India must also take its objectives into account by participating in a grouping which seems destined to fuel a new cold war between the United States and China.
• An assessment of the effectiveness of the G-7 as a multilateral forum so far is necessary, given the deep divergences among members on issues such as climate change, security contributions, Iran, etc.

Why G-7 require its expansion?

• The United States President reiterated that G-7 is very outdated group of countries and requires expansion.
• The G-7 does not have a formal constitution or a fixed headquarters.
• The decisions taken by leaders during annual summits are non-binding on the members.
• The rise of India, China, and Brazil over the past few decades has reduced the G-7’s relevance, whose share in global GDP has now fallen to around 40%.
• The G-20 or Group-20 is a larger group which includes all the members of G-7 and the G-20 was formed in 1999, in response to a felt need to bring more countries on board to address global economic concerns.

Concerns associated for India in joining G-7

• It appears very tempting as India would be placed in the same league as the developed countries and will join the privileged elite club but the current move from US is not generosity but a compulsion for the West.
• India is already a member of G-20, a body responsible for global governance. The G-7 was expanded to the G-20 when the West realised after repeated recessions that the global financial governance was not possible without including countries such as China, India, Turkey, South Africa, Australia and so on.
• The current United States’ push for a new organisation is an attempt to isolate China and split the G-20 which is responsible for 90 per cent of financial governance.
• The issues of global governance cannot be resolved by excluding countries like China and Russia which exert high influence on their neighbouring countries.
• The New Cold War between the US and China looms large over international politics and the US may try to use international institutions dominated by it and its allies to tighten screws around China.

Way Forward

• There is an urgent need for democracies and rules-based regimes that believe in fair trade and respect for intellectual property rights to come together and it may be time for India to play tough against China.
• G-11 would be a way for the United States to bring together its traditional allies to discuss how to manage China’s future.
• India has maintained that it is seeking a de-escalation of conflict at the LAC as its highest priority, but, nevertheless, it may currently be within its strategic interests to re-enforce its association with the global hegemony.
• It is better for India to wait and watch for the time being as one is not certain whether Trump will come back to power after the present term.

Source: The Hindu