Time for a New G7?
By: Dave Miller
Following Russia’s annexation of Crimea, the G8 suspended Russia’s membership and cancelled the planned Sochi summit. Soon thereafter, Russia signed a $400 billion natural gas deal with China and began looking to price trade in renminbi. While the oil deal had been in the works for years, the timing underscores the G7’s waning influence and calls into question its static membership in a dynamic world.
For starters, the G7 no longer encompasses the seven largest economic powers—China, the second-largest economy in real GDP, being the most obvious omission. Proponents counter that the G7 countries still make up nearly half of the world’s total output. Yet IMF data show that the G7’s proportion of the global economy has steadily slipped since the mid-1980s. Moreover, according to the Stockholm International Peace Research Institute (SIPRI), G7 defense expenditures as a proportion of global military spending has declined steadily since SIPRI began collecting data in 1988 and now stands at only 53 percent. And removing the United States from consideration paints a vastly different picture, as it accounts for a whopping 70 percent of the G7’s military spending. The next highest spending G7 country (France), actually ranks only fifth globally in expenditures.
The G7’s future is even more troubling. According to Standard Chartered Bank, the combined GDP of Brazil, Russia, India, and China will outpace that of the G7 by 2030. While these projections may prove rosy for emerging markets, the trajectory seems clear. Even if the United States maintains its economic and military lead, it will find itself in a much more competitive international arena. Rising powers such as China and India must be addressed and incorporated peacefully into security and economic regimes. Yet, if the United States prevents access to exclusive decisionmaking bodies such as the G7, it risks pushing them together into alternate, possibly more adversarial, regimes.
Perhaps the G7 is still a useful, if not ideal, international framework. Since it began as an ad hoc organization, one possible solution is adopting a flexible structure. Membership could rotate every four years based on real GDP, military/defense spending, or another metric. In any case, China deserves a seat at the table. Otherwise, policymakers must accept the limitations of the G7 construct if they hope to implement policies with a truly global impact.