Syllabus: GS-2: Bilateral, regional and global groupings and agreements involving India and\/or affecting India\u2019s interests.<\/p><\/blockquote>\n
Context: <\/b><\/strong>The next G7 summit scheduled in Washington DC has been postponed by the U.S. President.<\/p>\nWhat is G7?<\/b><\/strong><\/p>\n\n- It is an informal group of advanced economies to discuss world issues.<\/li>\n
- <\/b>Emergence: <\/b><\/strong>As a restricted club of the rich democracies in the early 1970s.<\/b><\/li>\n
- After the 1973 Arab-Israeli War, the OPEC imposed embargo against Canada, Japan, the Netherlands, and the United States by the OPEC which led to the quadrupling of oil prices.<\/li>\n
- <\/b>Informal discussion: <\/b><\/strong>The OPEC actions shocked the economies around the world. The French President invited the Finance Ministers of five of the most developed members of the OECD- the US, Germany, Japan, Italy and the UK for an informal discussion on global issues.<\/li>\n
- <\/b>Transformation into G7 Summit: <\/b><\/strong>In the next year by the heads of government with the inclusion of Canada (1976) and the European Commission\/Community (later Union) attending as a non-enumerated member.<\/li>\n
- <\/b>G7 TO G8: <\/b><\/strong>With the inclusion of Russia on the initiative of the U.S. President and British PM in 1998. This ended with Russia\u2019s expulsion following the annexation of Crimea in 2014.<\/li>\n<\/ul>\n
The limitations of G7:<\/b><\/strong><\/p>\n\n- <\/b>Failure to address global challenges: <\/b><\/strong>The G7 failed to address the economic crisis of 2007-08 which led to the rise of the G20. Infact, the G20 has provided a degree of confidence by promoting open markets and stimulus<\/li>\n
- <\/b>Failure in dealing with contemporary issues: <\/b><\/strong>It failed in dealing with issues such as the COVID-19 pandemic, climate change, the challenge of the Daesh.<\/li>\n
- <\/b>Failure to reach a consensus: <\/b><\/strong>Though, it had announced its members would phase out all fossil fuels and subsidies but has not announced any plan of action to do so.<\/li>\n<\/ul>\n
Fact:<\/b><\/strong>\u00a0The G7 countries account for 59% of historic global CO2 emissions (\u201cfrom 1850 to 2010\u201d) and their coal fired plants emit \u201ctwice more CO2 than those of the entire African continent\u201d.<\/p>\n\n- <\/b>Rise of IS: <\/b><\/strong>Three of the G7 countries were among the top 10 countries contributing volunteers to Daesh, which had between 22,000-30,000 foreign fighters just two years ago.<\/li>\n<\/ul>\n
With the failures of G7, there are certain economic circumstances which have changed in the current world.<\/p>\n
Changed Economic circumstances:<\/b><\/strong><\/p>\n\n- <\/b>Share in global GDP: <\/b><\/strong>\n
\n- When constituted, the G7 countries accounted for close to two-thirds of global GDP.<\/li>\n
- But, according to the 2017 report of the accountancy firm, PwC, \u201cThe World in 2050\u201d, they now account for less than a third of global GDP on a purchasing power parity (PPP) basis and less than half on market exchange rates (MER) basis.<\/li>\n<\/ul>\n<\/li>\n
- <\/b>Emerging economies: <\/b><\/strong>\n
\n- The seven largest emerging economies (E7, or \u201cEmerging 7\u201d) comprising Brazil, China, India, Indonesia, Mexico, Russia and Turkey account for over a third of global GDP on PPP terms and over a quarter on MER basis.<\/li>\n
- India\u2019s economy is already the third largest in the world in PPP terms.<\/li>\n<\/ul>\n<\/li>\n
- <\/b>Future of economies: <\/b><\/strong>\n
\n- By 2050, the PwC Report predicts, six of the seven of the world\u2019s best performing economies will be China, India, the US, Indonesia, Brazil and Russia.<\/li>\n
- It projects that India\u2019s GDP will increase to $17 trillion in 2030 and $42 trillion in 2050 in PPP terms, in second place after China.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n
With changed economic circumstances, there are talks of expansion of G7.<\/p>\n
Talks of expansion of G7:<\/b><\/strong><\/p>\n\n- <\/b>Outdated: <\/b><\/strong>The US President declared that the G7 is a no longer properly represented the current world.<\/li>\n
- <\/b>Alternative: <\/b><\/strong>He asked for a G10 or G11 instead with the inclusion of India, South Korea, Australia and possibly Russia or including the Five Eyes countries (an intelligence alliance comprising Australia, Canada, New Zealand, the UK and the US).<\/li>\n
- <\/b>Future of China: <\/b><\/strong>The US is involved in a crisis with China over COVID-19. India has attended several G7 summits earlier as a special invitee for its outreach sessions.<\/li>\n<\/ul>\n
The COVID-19 once again shows the limitations of G7 in handling core world issues. So, there is a need for a new institution to tackle world issues.<\/p>\n
Need for a new institution:<\/b><\/strong><\/p>\n\n- <\/b>The world is in a state of disorder: <\/b><\/strong>The global economy has stalled over the COVID-19. Nations need ability and resilience to cope with the current crisis with the revival of multilateralism. Existing international institutions have proven themselves unequal to world issues.<\/li>\n
- <\/b>Need of new mechanism: <\/b><\/strong>It would be ideal to include in it the seven future leading economies. Such as the 2005 ad hoc experiment by the UK PM in bringing together the G7 and the BRICS countries.<\/li>\n
- <\/b>Observing international law: <\/b><\/strong>The new mechanism should focus more on it and prevent the retreat from liberal values on which public goods are established.<\/li>\n
- <\/b>Immediate Challenge: <\/b><\/strong>\n
\n- Global public health and the revival of growth and trade in a sustainable way.<\/li>\n
- To ensure effective implementation of the 1975 Biological Weapons Convention and the prevention of any possible cheating by its state parties by the possible creation of new microorganisms or viruses by using recombinant technologies.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n
Way Forward<\/b><\/strong><\/p>\nWith the world in disorder, a new mechanism will have value only if it focuses on key global issues.<\/p>\n