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World Leaders Prepare for G7 Summit Even As Fears Over Global Economy Increases

The economic fears are rooted in the trade war between the United States and China

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G7 Summit
Security concerns will also be high on the agenda. North Korea has resumed its ballistic missile tests. Pixabay

The G-7 host, Emmanuel Macron,  has made fighting inequality the theme for the annual meeting of the seven industrialized nations, which opens Saturday in the French seaside resort of Biarritz with the leaders of the United States, France, Britain, Germany, Italy, Japan and Canada in attendance.

The French president has invited leaders from several other countries, including six African nations, to take part in the annual discussion of major global challenges. But analysts say any grand ambitions for the summit will likely be stymied by pressing economic concerns.

Most worrisome are recent indicators from both sides of the Atlantic of slowing economic growth and a possible global recession.

Earlier this month, government bond yields in both the United States and Germany were briefly higher for two-year than 10-year bonds, a sign that investors see significant risks ahead, says economist Jasper Lawler of the London Capital Group.

“Particularly in the U.S., it’s actually been a very reliable signal to point towards a recession.”

Adding the investors’ fears, the usual fiscal tools to tackle a recession might not be available.

“We don’t have that usual fallback from central banks of cutting interest rates because they already have, and they are already at rock bottom levels,” says Lawler.

G7 Summit
Summit host France is determined to not let economics overshadow its own agenda. Pixabay

The economic fears are rooted in the trade war between the United States and China, which has resulted in both countries imposing tariffs on hundreds of billions of dollars’ worth of imports. Europe is suffering additional headwinds, says economist Lawler.

“The trade war, but also just the auto sector, the transition from using diesel cars to electronic vehicles. It’s a period of uncertainty that’s unduly affecting Europe.”

Summit host France is determined to not let economics overshadow its own agenda — and top of the list is climate change, says John Kirton of the G-7 Research Group at the University of Toronto.

“It’s driven by the scary science which is unfolding every day, but more importantly by the historic heat waves that have afflicted Europe, including France.”

U.S. President Donald Trump left last year’s G-7 summit in Canada early, before the leaders had discussed climate change, and later disavowed the final communiqué. This year France is determined to keep the United States on board, says Kirton.

“President Macron I think has structured his agenda to allow Donald Trump to be at his best. Gender equality — the president has been very good at that, it’s at the top of the French list. Education — yes, and also health. It’s the president of the United States that’s been pushing the G-7 to try to get it to deal with the opioid crisis.”

G7 Summit
U.S. President Donald Trump left last year’s G-7 summit in Canada early, before the leaders had discussed climate change, and later disavowed the final communiqué. Pixabay

Security concerns will also be high on the agenda. North Korea has resumed its ballistic missile tests.

Meanwhile the standoff between Iran and the West has escalated over the seizure of a British-flagged oil tanker in the Persian Gulf, which followed the detention of an Iranian vessel in Gibraltar.

Burgeoning anti-government protests in Russia and Hong Kong also pose questions for the G-7, says Kirton.

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“Have we seen the tide [change], where authoritarian leaders in various degrees are no longer in control? It may not be the way of the future. In fact, if that’s the case, then how can the G-7 activate its distinctive foundational issue: to promote democracy?” Kirton asked.

Meanwhile British Prime Minister Boris Johnson will meet Trump at the G-7 for the first time in his new role. Both leaders are hoping for a rapid trade deal amid signs of a steep economic downturn in Britain as it edges closer to crashing out of the European Union with no deal at the end of October. (VOA)

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Advance Of Summit, NATO Pacify Trump

NATO also plans to consider a Franco-German proposal

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Flags of NATO member countries
Flags of NATO member countries are seen at the Alliance headquarters in Brussels, Belgium. VOA

As Britain prepares for the NATO leaders’ meeting outside London December 3-4, the alliance said Thursday it had agreed to redistribute costs and cut the U.S. contribution to its central budget.

NATO’s central budget is relatively small at around $2.5 billion a year, mostly covering headquarters operations and staff, and different than its defense budget. U.S. President Donald Trump often complains of inequitable burden-sharing, with only nine of the 29 member countries meeting the 2%  of gross domestic product target for the alliance’s defense spending.

Regarding the central budget, “The U.S. will pay less, Germany will pay more, so now the U.S. and Germany will pay the same,” NATO Secretary-General Jens Stoltenberg said in Paris Thursday.

The United States currently pays about 22% of NATO’s central budget. Beginning 2021, both U.S. and Germany will contribute about 16%.

NATO also plans to consider a Franco-German proposal to create a working group of “respected figures” to discuss reform in the alliance and address concerns about its future.

The announcement to reduce the American contribution is seen as a move to placate Trump, who has considered withdrawing from the alliance but has since taken credit for its promised reforms.

“In 2016, only four allies spent 2%  of GDP on defense,” a senior administration official told reporters Friday, adding that there are now nine countries, including the U.S.,  meeting the 2% target, with 18 expected to do so by 2024.

“This is tremendous progress, and I think it is due to the president’s diplomatic work,” he said.

 U.S. forces from Syria, a move Trump made without consulting NATO
A convoy of U.S. vehicle is seen after withdrawing from northern Syria, on the outskirts of Dohuk, Iraq. VOA

Internal strife

Leaders of the 29 member states will attempt a show of unity during the summit but the alliance is facing questioning about its relevance and unity, particularly after the October withdrawal of U.S. forces from Syria, a move Trump made without consulting NATO.

“It’s exactly in the wake of that decision that you had [French] President [Emmanuel] Macron say what he said about the alliance being ‘brain-dead’ and referencing the lack of American leadership in the sense of leading in a community and not just going out on your own,” said Gary Schmitt, a NATO analyst with the American Enterprise Institute.

U.S. troops’ withdrawal from Syria prompted Turkey to launch an offensive against Kurdish YPG militia in northern Syria. The move spurred Macron to vent his frustration over what French diplomats say is NATO’s lack of coordination at a political level, and triggered fear among allies that the assault will undermine the battle against Islamic State militants.

Meanwhile, a simmering war between Russia and Ukraine has become the backdrop of Trump’s impeachment, with the American president allegedly having withheld hundreds of millions of dollars of military aid to pressure the Ukrainian government to announce an investigation of former Vice President Joe Biden, a Democratic presidential candidate running against Trump. Kyiv needs the aid to counter Moscow’s aggression.

The two conflicts in Europe’s eastern and southern flank further complicate Washington’s already-strained relations with other NATO members. Meanwhile, despite American efforts to reassure European leaders of Washington’s continuing commitment, anxiety about U.S. neglect of NATO under Trump persists, said Hans Kundnani, Senior Research Fellow in the Europe Program at Chatham House.

Ukrainian President Volodymyr Zelenskiy, welcomes NATO Secretary General Jens Stoltenberg
Ukrainian President Volodymyr Zelenskiy, left, welcomes NATO Secretary General Jens Stoltenberg during their meeting in Kyiv, Ukraine. VOA

Kundnani noted a series of American officials who have come to reassure Europeans not to take Trump’s tweets too seriously and focus on what is happening on the ground, particularly the military reinforcement of NATO’s eastern flank. Still, Kundnani said that in the last year Europeans have started to realize it’s “not really good enough” and they’re now facing the “reality of the of the crisis in NATO.”

“Some of them are hoping that Trump will be out of office in in a year’s time but the real fear is that Trump wins a second term,” said Kundnani, adding that some Europeans are hoping that “U.S. gradual withdrawal from Europe” might “snap back to the status quo ante if Trump is not re-elected.”

Diverging European responses

“The upcoming celebration of NATO’s 70th anniversary will be marked by important divisions within the alliance — not just across the Atlantic, but also within Europe,” said Karen Donfried, president of the German Marshall Fund of the United States.

In Paris, the view is “strategic autonomy,” said Donfried, with many in France concluding that Washington’s security guarantee can no longer be relied on. Warsaw is promoting “strategic embrace”  developing close bilateral relationship with Trump to guarantee its own security, while Berlin is advocating “strategic patience.”

Germany in the middle is a little bit divided between the “Atlanticists” and the “post-Atlanticists,”   Kundani said, adding that “Europeans are very much arguing” about these approaches.

Donfried said that against this backdrop, NATO allies are approaching the London summit with a sense of foreboding, knowing that they carry the responsibility to articulate alliance’s common purpose and ongoing relevance.

“If they don’t, [Russian President Vladimir] Putin will be raising a glass in Moscow to the fraught state of the alliance at 70,” she said.

Another summit goal for most European leaders, is to simply avoid a Trump flare-up, like those that have happened in past meetings.

NATO meetings
President Donald Trump meets with British Prime Minister Boris Johnson at the United Nations General Assembly, New York. VOA

Many have discovered this can be achieved through flattery. “They can talk about all the things that they’ve done and very smartly suggest that President Trump has generated the kind of pressure to make those things happen,” Schmitt said.

“They can actually praise President Trump, even though this is very hard for them to do because of the personality clashes.”

Many will be watching Trump’s encounters with Macron, including their bilateral meeting, as well as with British Prime Minister Boris Johnson. Johnson has pleaded for Trump to stay out of the upcoming British election during his London trip.

The senior administration official said that Trump is “aware of this” and “absolutely cognizant of not wading into other countries’ elections.”

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Other potential clashes are simmering too. Turkish President Tayyip Erdogan said Friday that Emmanuel Macron’s NATO “brain-death” warning reflects a “sick and shallow” understanding, telling the French president “you should check whether you are brain dead.”

The French foreign ministry has summoned Turkey’s ambassador to Paris to protest the statement. (VOA)