G7 Overcomes Internal Wrangling And 'Irrelevance' Barbs To Strike US$50 Billion Deal To Support Ukraine

Author: Gregory Stiles

(MENAFN- The Conversation) In the 26 months since Russia invaded Ukraine in February 2022, the west has been riven with disagreement about how much – and what – support it will provide for Volodymyr Zelensky's government. There are two main reasons for this. One is Russia's deep integration in the global economy, particularly when it comes to energy supplies. The other is the fear of escalation into a wider conflict.

Nonetheless, at its recent meeting in Puglia in southern Italy, leaders of the Group of Seven nations (the G7) agreed a deal to use frozen Russian central bank assets to fund a US$50 billion (£40 billion) loan to Kyiv to help fund its defence and reconstruction. Russia currently has US$350 billion of assets frozen in the western banking system earning annual interest of about US$3 billion. The deal envisages using this to back a US$50 billion loan to Kyiv.

It's a contentious move and one which many were reluctant to endorse while at the same time insisting that the rule of law must be respected. It is expected to take months to settle on the final details of how the loan will be structured. But it's a strong message from some of the world's most powerful economies – both of support for Ukraine and that the G7 itself remains a key decision-making body in a fast-changing world order.

The G7 is often dismissed as little more than a talking shop or a cosy photo opportunity for western leaders. It is criticised for a failure to reflect changing international power dynamics and the rise of China and the global south. But what began as a fireside chat of six leaders in a Parisian château in November 1975 has proved to be surprisingly resilient, outlasting many other mechanisms of global governance.

In the absence of concrete membership criteria, the G7 has evolved over time from the original six of France, the US, the UK, West Germany, Japan and Italy to include Canada (the European Union is an“eighth member”. Article 3 of the G7's Rambouillet declaration in 1975 spells out the core mission of its members as leaders of“open, democratic societ[ies] dedicated to individual liberty and social advancement. The growth and stability of our economies will help the entire industrial world and developing countries to prosper.”

While the G7's limited membership has been criticised over the decades, member countries have responded by seeking to balance the effectiveness of a smaller grouping with the legitimacy derived from a more representative, although at times unwieldy, membership. Summit hosts in any given year have invited regional powers and, international organisations to participate – this year, for example, invited guests included Pope Francis, the King of Jordan as well as the leaders of Ukraine, India, Brazil, Argentina, Turkey, the United Arab Emirates, Kenya, Algeria, Tunisia and Mauritania, which holds the presidency of the African Union.

A mechanism called the Heiligendamm process was established in the mid-to-late 2000s with the aim of formalising engagement with the rising powers of Brazil, China, India, Mexico and South Africa into a G8(+5) – including at that stage, Russia as a member of the G8. More recently, Australia and South Korea have been mooted as potential new members.

But a key complicating factor is that of likemindedness. The G7 has managed to accommodate fellow democratic liberal democracies but struggled when these shared values were stretched – as they were over Russia's membership . Russia was expelled from the group – which resumed the title of G7 – after its annexation of Crimea in 2014.

A shared viewpoint on the world also underlines the importance of interpersonal relationships in reinforcing what Italy's prime minister, Giorgia Meloni, called the “container of values” – by which she means the bedrock of the G7's vision of a rules-based international order.

This consensus has been challenged in the past – for example, Donald Trump shocked fellow members when he unilaterally withdrew the US from the joint declaration at the 2018 Quebec Summit over US tariffs, calling host leader Justin Trudeau“very dishonest and weak”. This year, the distrust between Meloni and the French president, Emmanuel Macron, was all too plain to see over issues such as abortion .

G7 summits have been a magnet for protest over recent years and the 2024 summit in Puglia was no exception. EPA-EFE/Ciro Fusco

And yet, the G7 currently sits in a good place in defending its shared viewpoint on what constitutes international order. This has been particularly obvious over Russia's invasion of Ukraine, which prompted the group to implement a global oil price cap in an attempt to stymie Russia's war economy.

In Puglia, the G7 went even further with leaders announcing increased sanctions on companies trading with Russia that support its war efforts . There was a particular focus on the role of Chinese support in supplying technical equipment and technology that are vital to Russia's military industrial sector.

'Lame duck' leadership?

It's not so much a lack of unanimity in the G7, but the unwillingness of the rest of the world to follow its lead on issues such as sanctions (many countries are still keen to buy vast amounts of cheap Russian oil ) that is the problem. It has undermined the G7's clout in recent years and made it hard to envisage an expanded summit based on similar values.

Meanwhile, member countries have their own issues, not least in the continuity of leadership and leadership styles. The recent Puglia summit involved several“lame duck leaders” and may well prove to be the last to involve Biden, Macron, Trudeau, Rishi Sunak and Japan's prime minister Fumio Kishida, who all face elections later this year. And, of course, the rest of the G7 is waiting with bated breath for the US election in November which may hand another term to the summit's disrupter-in-chief , Donald Trump.

This means that any set of shared values at the heart of the G7 are unlikely to remain the same by next year. The age-old question of the G7's limited membership – its “original sin” – is also unlikely to go away any time soon. This could have serious repercussions – both for Ukraine itself and what appears to be the one global group of countries that seems determined to stand together against revisionist world powers.

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