Far from the raging energy prices, the innocent victims in a supermarket in Ukraine or the volatile financial markets, the leaders of the world’s seven leading economies have gathered in the last three days at Almao Castle – high in the Bavarian Alps – to discuss appropriate responses.
The G7 has long been unrepresentative of the world’s largest economies – China and India have overtaken most of its members – but seeks to share common democratic values and be a significant global force. British Prime Minister Boris Johnson may have meant to joke when he said at the beginning of the debate that “we need to show our muscles” in relation to Putin, but this was in fact the essence of the meeting – an attempt to present Western unity and power, supported by representatives of developing countries.
In this respect, the results in the field are quite dismal. They were reflected, among other things, in the fact that US President Joe Biden did not even attend the traditional press briefing at the end of the summit today (Tuesday), on the grounds that he had to leave the place for the NATO summit in Madrid “due to the weather”.
Commitment to Ukraine is eroding, economic threats are growing
In fact, the West has demonstrated its greatest commitment to Ukraine and against Russia at the beginning of the war – but now it is eroding. Germany is not supplying significant weapons to Ukraine and is trembling for fear of a complete halt to Russian gas flow in the coming months. Italy is in a similar situation. Both countries face real risk of recession and Italy even at risk of a new debt crisis, due to changing monetary conditions. Britain is struggling with a more severe economic crisis than the two of them, and Prime Minister Johnson is in real political danger. Canada is struggling to increase its defense spending according to NATO requirements, and Japan is under economic threat as well.
Therefore, the summit summary statement and the statements of the leaders at the press conferences this afternoon were mostly content with firm promises to “keep working” on an appropriate response to Russia. Many ideas came up on the negotiating table, but no significant step was adopted.
This is the case with one of the most promising issues on the agenda – setting an international price cap for oil, which will reduce Russia’s revenues from fossil fuel exports. The leaders contented themselves with the decision to “continue to discuss the mechanism” and “urgently examine ways to reduce energy prices.” The idea was to use the power of the West in the field of marine insurance to bend the hand of buyers from around the world to purchase roofing oil. In terms of natural gas, Germany and Italy can do so in a government decision, due to their centrality as customers. But the issue has not been decided. “We will continue to discuss these steps urgently,” the summary said.
Another issue on which the discussions focused, and which also did not make much progress, is the field of grain exports. Ukraine is struggling to export the grains it has been short and has accumulated in recent months, despite the war. This will also alleviate the global food crisis, especially in the Middle East, but at this stage is experiencing significant difficulties. Russia imposes a naval blockade on the port of Odessa used for export, and all ideas for export via Romania or trucks to Western Europe have not materialized so far. Also on this issue, the G7 leaders have promised to explore options for resolution in the future. When British Prime Minister Johnson was asked if the summit “found a solution to the problem”, he replied: “We are working on it. We are all working on it”. The only significant commitment in this area was to help underprivileged countries with $ 4.5 billion to support the population’s diet.
While there have been commitments to rebuild Ukraine in the style of a “Marshall Plan” when the war ends, it is unclear if and when the war will end at all, and how such a plan will be funded. New sanctions have also been imposed on the transfer of components to the Russian defense industry, but they are a continuation of the previous policy. If the world was waiting for new steps that would take a significant economic toll on Russia, then the current G7 summit ended in disappointment.
One concrete policy change has actually been recorded, in the field of energy. Contrary to the G7 commitment last year to completely halt investment in fossil fuel production projects, the current summit concludes a glorious U-turn, stating that due to exceptional circumstances – investment in natural gas projects should be allowed “temporarily”. Leading the pressure to change policy – in contrast to previous climate commitments – is Germany, which is working, among other things, on developing a new gas supply from the Middle East (including Israel) and Senegal.
Attention is now shifting to the NATO summit in Madrid, which will begin tonight and last until Tuesday. And in the more distant future, to the G20 summit to be held in November on the Indonesian island of Bali. Russian President Vladimir Putin has promised to attend.