A G7 gaffe around indispensable India

After keeping India out of the G7 summit, Canada has relented or rather made to toe the line of other members, to extend an invitation. As belated wisdom dawns on the G7 secretariat in Canada, the stage is set for New Delhi to play a critical role in shaping the G7 agenda in the emerging geo-economic scenario.

G7 was originally initiated by the then US Treasury Secretary George Shultz in 1970 to address currency turbulence. The international monetary system witnessed major turmoil in the 1970s due to the near breakdown of the Bretton Woods agreement, the ‘Nixon shock’ of abandoning the gold standard, leading to the adoption of a floating exchange rate. The International Monetary Fund (IMF) had achieved a significant milestone in 1958-1959 when 14 European countries made their currencies convertible. But in just ten years after the US suspended the convertibility of the dollar, foreign governments could no longer exchange their dollars for gold, thus ending the run on the dollar. The IMF made a massive course correction and brought in the developing economies of the South to participate in the growth story of the North.

After 55 tumultuous years, the global economic situation appears to be mirroring the 1970s. There are new challenges for the supremacy of the US dollar as the sole currency of exchange. The BRICS summit at Kazan, Russia, in 2024, discussed the need for a global alternate currency for international trade settlements. The European Union (EU) prefers to settle trade transactions in Euro while India has rupee trade agreements with a growing number of countries. The volatility of the global currency market remains a concern for international financial institutions which anyway appear to have lost their significance in the wake of regional trade bodies.

Another important feature of the current geo-economics is the phenomenal growth of some of the hitherto underdeveloped countries classified as the Global South. This economic transformation has catapulted India and China to the high table of the developed countries’ club relegating former frontrunners of the North. The North-South and East-West divides of the post-colonial era have paled into insignificance and become irrelevant in the current geopolitical and geo-economic narratives.

The Fireside Club of six which became G7 with the inclusion of Canada admitted Russia as the eighth member in 1997 and suspended it after Moscow annexed Crimea in 2013. The geopolitical undertones of the G7, displayed here, appear to continue, albeit in a subtle form. Canada tried to play this very same political card while denying an invitation to India. It made a miscalculation by treating G7 as its domestic issue and wanted to keep India out mainly to please its domestic anti-India constituency which is anyway shrinking. The other original six members realised the futility of keeping India out and coerced Canada to extend an invitation to Prime Minister Narendra Modi.

Canada, as the host, has also to include other areas of much greater global interest. In the past three decades, several important issues have been added to the G7 agenda such as gender equality, sustainable development, and global warming. The 2022 summit in Germany resolved to establish a climate club to support the effective implementation of the Paris Agreement, and at the Hiroshima summit in 2023, the G7 leaders strongly reaffirmed their commitment to phase out fossil fuels. India, as part of these meetings, contributed immensely to these resolutions and their implementation.

It was the Donald Trump-led G1 of the G7 that refused to approve the agreements, saying global warming was a “hoax”, in the 2018 summit in Canada during his first term. He also chastised the host and then Canadian Prime Minister Justin Trudeau. While the rest of the G7 members disagreed, Trump made a forceful demand for the readmission of Russia in G7. Little wonder that except probably Canada and the US, the other members expect New Delhi to play a positive and balancing role this time.

After the successful conduct of G20 as its president and including the African Union representing 55 African countries as a member, India has emerged as the leader of the developing economies and the Global South. Besides offering an opportunity to normalise the India-Canada relationship that Trudeau unwisely disturbed, Prime Minister Modi will have to present India, the fourth largest global economy, as a country ready to work for global peace and prosperity and contribute towards cementing the fundamentals and core principles of the emerging world order within a multilateral framework.