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16 June 2021

With Greg Earl

G7 revival

The leaders of the world’s old economic powers held their first Group of Seven summit in two years on the weekend.

The issues covered in their 14,000-word communiqué ranged from COVID-19 to the challenge of China, from climate change to infrastructure renewal, from economic stimulus to fair trade and human rights.

The communiqué stands in contrast with the terse 250-word statement issued when the G7 last met in 2019, during the Trump era, and is a measure of how US president Joe Biden’s election has changed the tone of international relations.

The G7 was created in the 1970s, when its members’ economies accounted for 70 per cent of the world’s economic output. They now account for about 45 per cent of this output and were supplanted in the early 2000s by the major economies of the Group of Twenty, which includes Australia and large developing countries such as China and Brazil.

At the weekend’s meeting, British prime minister Boris Johnson, the host, declared that “the West is back”, suggesting that the summit was all about the G7 reclaiming its former peak global role, this time by positioning itself as a democratic power. The G7 may also expand to include several additional countries, including Australia.

But if the G7 is to transform into a mooted Democracy 11, it will need to put substantial resources behind its political rhetoric. Otherwise, it will run up against the reality that its members no longer have the global economic clout they used to command.


Ending COVID-19

The rise of China has been a consistent theme during the diplomatic events led by Biden in Europe this week.

The G7 promised to provide one billion vaccine doses to developing countries in a bid to overtake China’s vaccine exports and donations. But health experts said the G7’s plan lacked detail and fell 10 billion doses short of what was needed to curb the pandemic globally.

The G7 also called for a second inquiry – “timely, transparent, expert-led and science-based” – into the origins of COVID-19, with full participation from China.

While an inquiry is needed to head off another pandemic, it puts the G7 in a difficult position: it is caught between the need to press for China’s participation in the inquiry and the more urgent priority of cooperating with China, to some extent, on distributing vaccines.


Climate change

The G7 has committed to a “green industrial revolution”, which would see a ban on new government financing for coal-generated power. The group also reaffirmed its pledge to contribute US$100 billion a year to support developing countries to cut carbon emissions. By doing so it hopes to achieve global net-zero emissions by 2050 “at the latest”.

These measures threatened to isolate Scott Morrison at the G7 summit, which he attended as a guest. His government has failed to agree on a time frame for Australia to reach net zero.

But the G7’s communiqué did not specify a deadline for countries to “transition away” from coal use, leaving some wriggle room for coal exporters such as Australia. And only Germany and Canada committed to making new financial contributions to the US$100 billion assistance pledge. The planned assistance, which was first agreed to a decade ago, was meant to be in place by 2020, but the G7 remains short on the details.

Providing support to developing countries will be key to achieving a successful outcome at the United Nations’ Glasgow Climate Change Conference in November.

 


Competing with China

Western countries will launch a combined bid to rival China’s Belt and Road Initiative (BRI) infrastructure plan. This is one of the main economic initiatives to come out of the G7 summit, along with the minimum global tax on multinationals.

With a catchy acronym, B3W, the Build Back Better World initiative promises to deliver projects that are better planned, environmentally friendlier and less debt-burdened than China’s.

Developing countries would benefit from an alternate source of financing for infrastructure, particularly if the B3W’s funding and operating arrangements are more transparent.

But G7 officials have in effect conceded that China is more advanced in this area, describing the G7’s initiative as the “green belt and road”. The officials also appear to have overlooked the fact that the United States, Japan and Australia have already implemented similar plans over the past four years, with the Trilateral Partnership for Infrastructure Investment, the Blue Dot Network and the Pacific “step-up”.

The G7’s plans underline how important infrastructure is to geopolitical competition, but competing with China will require more than a new name.


Future summits

By inviting Scott Morrison to attend its recent summit, the G7 acknowledged Australia’s global standing. The leaders of India, South Korea and South Africa – fellow democracies – were also invited.

While Morrison used the opportunity to talk up Australia’s resilience on China and to express his government’s caution on climate change measures, the most memorable part of his visit may be his unexpected tripartite meeting with Biden and Johnson.

Opinions differ as to whether the three-leader meeting marked a diplomatic slight from Biden, with whom Morrison expected a one-on-one meeting, or recognition of Morrison as part of a revived anglosphere on the part of Johnson, who was negotiating his first post-Brexit trade deal with Australia.

Being on the inside rather than the outside is nearly always a better position in these diplomatic events, but the meeting – and the speculation it gave rise to – may send mixed signals to Australia’s home region.

Next year, the global diplomatic caravan will travel to Indonesia, which will host the once ascendant G20. In 2022, Australia will have to balance its new Democracy 11 ambitions with its old G20 enthusiasm.

For a modern Australian leader, the new benchmark for a successful summit appearance might be a similar tripartite meeting with the Indonesian president, Joko Widodo, and another important regional leader – perhaps even China’s president, Xi Jinping.


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Australia should steer the United States off a values-based Indo-Pacific strategy

“Despite the intuitive appeal of rallying the world’s democracies to check China’s power, this agenda can only unite a narrow coalition in the region. Unlike Western Europe in the 1950s, Indo-Pacific political systems are diverse, with few liberal democracies in the mix.” Susannah Patton & Ashley Townshend, THE INTERPRETER (LOWY INSTITUTE)

The ambitions and reality of the Quad

“Even as the Quad’s cooperative efforts extend across an increasing number of sectors, the likelihood that it will overstretch and overpromise remains.” Huong Le Thu & Sarah Teo,The Strategist (ASPI)

China’s fight against climate change and environmental degradation

“More than 60 per cent of BRI-specific energy financing has gone toward non-renewable resources. Greenhouse gas emissions in more than a dozen BRI countries have soared.” Lindsay Maizland, Council on Foreign Relations

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China’s new anti-foreign sanctions law sends a chill through the business community

“Organisations with a foot in both the United States and China may face a tough choice going forward: by complying with American sanctions on China, they face the possibility of tough sanctions in China as a penalty for doing so.” Emily Feng, NPR

New great game rages in post-coup Myanmar

“Economically and financially, the country is on the verge of collapse, driving out many of the Western investors who entered the country in hopes of a democratic transition. But there are growing signs that China sees opportunity in Myanmar’s crisis.” Bertil Lintner, Asia Times

Free from Australian Foreign Affairs

The Fix: “How Australia can shape the G20 agenda”

“The G20 has tried to encourage cooperation between the established powers of the G7 and the emerging powers of China, India and others, especially through measures to combat protectionism. This has been crucial to Australia’s interests as an open economy. Right now, the G20 needs to step up again. COVID-19 is a health crisis that is also an exogenous shock to the global economy, hitting supply and demand simultaneously.” Susan Harris Rimmer,CONTINUE READING

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