G7 summit kicks off under shadow of war in Ukraine and risk of stagflation

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SCHLOSS ELMAU, Germany, June 26 (Reuters) – German Chancellor Olaf Scholz hosts leaders of wealthy Group of Seven democracies on Sunday for a three-day summit in the Bavarian Alps overshadowed by the war in Ukraine and its far-reaching aftermath. energy shortages to a food crisis.

The summit is taking place against a darker backdrop than last year when leaders from Britain, Canada, France, Germany, Italy, Japan and the United States met for the first time since before the COVID-19 pandemic and pledged to build back better.

Soaring global energy and food prices hit economic growth following Russia’s invasion of Ukraine.

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The United Nations warned on Friday of an “unprecedented global hunger crisis”. Read more

Climate change, an increasingly assertive China and the rise of authoritarianism will also be on the agenda.

G7 leaders should seek to show a united front in supporting Ukraine for as long as needed and ratchet up the pressure on the Kremlin – although they will want to avoid sanctions that could fuel inflation and exacerbate the cost crisis. life that affects their own people.

“The main message of the G7 will be unity and coordination of action… This is the main message, that even in difficult times… we remain true to our alliance,” an official from the G7 said. EU.

The G7 partners are close to agreeing to ban gold imports from Russia, a source familiar with the matter told Reuters. A German government source later said the leaders were having “really constructive” conversations about a possible price cap on Russian oil imports. Read more

G7 leaders are also expected to discuss options for tackling rising energy prices and replacing Russian oil and gas imports.

The summit takes place in the castle resort of Schloss Elmau at the foot of Germany’s highest mountain, the Zugspitze – the same location as when the country last hosted the G7 annual meeting in 2015. , Russian aggression against Ukraine topped the agenda a year after Moscow invaded Crimea.

The summit is also a chance for Scholz to capitalize on being the host by showing more assertive leadership on the Ukraine crisis.

The Chancellor promised a revolution in German foreign and defense policy after the invasion of Russia in February, promising to reinforce the army with a fund of 100 billion euros and to send weapons to Ukraine.

But critics have since accused him of dragging his feet and sending mixed messages by warning that Russia may perceive NATO as a war party and pointing out the risk of nuclear war.

The G7 was founded in 1975 as a forum for wealthier nations to discuss crises such as the OPEC oil embargo.

It became the G8 after Russia’s admission six years after the fall of the Soviet Union. But Moscow was suspended in 2014 after annexing Crimea to Ukraine.

GLOBAL PARTNERS

This year, Scholz has invited as partner countries Senegal, currently president of the African Union, Argentina, currently head of the Community of Latin American and Caribbean States, as well as Indonesia and India. , the current and future hosts of the G20 group of major industrial nations. , as well as South Africa.

“The summit must not only send the message that NATO and the G7 are more united than ever, but also that the world’s democracies are uniting against Putin’s imperialism, just as they are in the fight against hunger. and poverty,” Scholz told the German parliament this week.

Many countries in the South are worried about the collateral damage of Western sanctions.

An EU official said the G7 countries would make it clear to partner countries that the food price spikes hitting them were the result of Russia’s actions and that there were no sanctions targeting the countries. foodstuffs. It was also a mistake to regard the war in Ukraine as a local affair.

“It’s more than that. It’s challenging the order, the post-World War II order,” the official said.

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Reporting by Sarah Marsh Additional reporting by Philip Blenkinsop Editing by Peter Graff

Our standards: The Thomson Reuters Trust Principles.

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