Special Ep. - Can the G7 survive a fragmented world?

In this special edition of the Hinrich Foundation’s podcast on global trade, the Association of Foreign Press Correspondents-USA sits down with Peter Draper to examine the G7’s evolution and whether it can remain relevant amid China’s rise, the growing influence of the G20, and internal divisions that are eroding the cohesion underpinning its role in global economic governance.

The Group of Seven (G7) has been at the apex of global economic governance for more than 50 years, emerging in the aftermath of the breakdown of the Bretton Woods system and the oil shocks of the 1970s to manage the economic fallout through shared approaches. Over time, it broadened into a mechanism for crisis management and coordination among advanced economies. Behind the scenes, extensive preparatory work sets the stage for informal, leader-to-leader exchanges where sensitive trade-offs can be negotiated away from public scrutiny and framed in ways that remain politically viable at home. 

Today, however, the conditions that sustained this approach are shifting. The rise of China, the emergence of BRICS, and the growing weight of the Group of 20 have diluted the group’s relative influence, while domestic populist pressures — particularly in the United States — are straining its cohesion. The result is a more uncertain role for the G7 in an increasingly fragmented global order.

Tune in to this podcast as Peter Draper, Professor and Executive Director of the Institute for International Trade at the University of Adelaide, joins the Association of Foreign Press Correspondents-USA to unpack the G7’s evolution and its future in a more contested global landscape. The podcast draws on insights from The Elgar Companion to the G7, which he co-edited with Andreas Freytag and recently discussed at a Hinrich Foundation book talk.

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Here is an excerpt from their conversation: 

Roseanne Gerin: Russia's entry into what became the G8 in 1998 and its removal in 2014 shaped the group's identity. How did those decisions alter the G7’s sense of purpose? 

Peter Draper: If anything, I think it reinforced to G7 leaders that their longstanding cooperation had been successful. The moment Russia joined the G7 was actually a moment of triumph for the G7. If you go back to the initial motivations behind the establishment of the G7, this was a grouping of like-minded Western leaders, all liberal Western democracies, coming together to buttress the liberal international economic order, the creation of which the United States had sponsored in the aftermath of the Second World War, but other allies had supported as well. And so for the 20-odd years prior to Russia acceding to the G7, the contest had been between this Western liberal international economic order and the Soviet bloc — the primary contest. And now, with Russia joining the G7, that contest was over, the West had won, Western liberal economic arrangements were the way of the future, and Russia and the communist bloc would be incorporated into those. And that was the G7's primary task in those first 10 years or so of Russia's membership was to incorporate the Soviet bloc — or the former Soviet bloc — into Western economic institutions. And then, of course, things got somewhere as President [Vladimir] Putin came to power in Russia and started to change the geopolitical calculus. And there's a very interesting chapter on Russia's participation in what became known briefly as the G8 and the kinds of Russian resentments that built up. So, for example, President Putin and his cabinet long felt that they were just appendages to a G7 conversation, that it didn't have any real influence on the G7's deliberations, and that contributed to broader Russian resentment, according to Natalya Volchkova, the author of that paper. 

Roseanne Gerin: One contributor to the volume describes the G7 as being in a permanent state of structural transformation. Do you agree? What forces have driven that evolution? 

Peter Draper: Yes, I think that is largely true, but within broad bands of historical times. So the period between 1975 to 1989 was largely a period of post-Bretton Woods, post-global oil crisis stagflation episode adjustment and management. And within that, managing the final phases of the competition with the Soviet bloc, I think the period roughly from 1990 up until Russia joins the G7 is one of consolidation and then ultimately expansion of Western liberal arrangements. And then with the Russia phase along comes the rise of China as well, the creation of the BRICS. Also, by the way, in the aftermath of the Asian financial crisis, the creation of initially the G20 [Group of 20] finance ministers. And then the next big punctuation mark is the 2007–2008 global financial crisis when the G20 heads-of-state process was initiated. So, yes, constant evolution in response to geopolitical developments, obviously the fall of the Soviet Union, the rise of China, but also the rise of the rest, hence the creation of the G20, and punctuated by a series of different financial crises that had to be managed along the way. So constant flux almost, but within broad chunks of historical time that had some coherence, I would say. 

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