G7, G20 and Formats of International Coordination

G7 (Group of Seven)

History and Composition

The G6 was founded in 1975 by the leaders of the USA, United Kingdom, Germany, France, Italy, and Japan—as a forum to coordinate economic policy after the oil shock of 1973. Canada joined in 1976, creating the G7. Russia participated from 1998–2014, creating the G8 (excluded after Crimea).

Composition of the G7: USA, United Kingdom, Germany, France, Italy, Japan, Canada + the EU as a full-fledged participant.

Format and Operations

G7 Summit—an annual meeting of the heads of state/government. Rotating presidency (2025—Canada, 2024—Italy).

“Sherpas”: Personal representatives of the leaders, preparing the summit. Real coordination of positions is done months before the meeting.

G7 Finance Ministers: A separate track—the finance ministers meet independently of the leaders.

Significant G7 Decisions

Plaza Accord (1985): G5 (without Canada and Italy) coordinated interventions on currency markets to lower the dollar’s exchange rate → successfully corrected imbalances.

Aid to Ukraine: Since 2022, the G7 has been the main platform for coordinating military, financial, and humanitarian assistance to Ukraine.

Oil Price Cap (2022): G7 + Australia introduced a price cap on Russian oil ($60/barrel)—an unprecedented instrument.

Global Minimum Corporate Tax (2021): G7 Finance Ministers reached a fundamental agreement on a minimum 15% rate → later approved by the G20 and 137 OECD countries.

Limitations of the G7: Represents only ~46% of global GDP and <12% of the world’s population. Does not have a permanent secretariat or binding enforcement mechanisms. Decisions are political commitments, not legally binding treaties.

G20 (Group of Twenty)

Composition and Creation

The G20 was founded in 1999 as a forum for finance ministers and central bank governors. After the 2008 crisis—it was elevated to the level of heads of state.

Composition: G7 + China, Russia, Brazil, India, South Africa, Australia, Mexico, Argentina, Indonesia, South Korea, Saudi Arabia, Turkey, EU. 85% of global GDP, 75% of global trade, 2/3 of the world’s population.

Significance of the G20

Crisis of 2008: The G20 became the central platform for a coordinated global response:

• Coordinated easing of monetary and fiscal policy
• Agreement on reform of financial sector regulation (Basel III)
• Rejection of protectionism (political commitment)
• IMF reform

Global Financial Safety Net: The G20 promoted the strengthening of the multi-layered system of financial support—IMF resources, central bank swap lines, regional mechanisms.

G20 Initiatives for Business:

• BEPS (Base Erosion and Profit Shifting): the G20 tasked the OECD with developing measures against aggressive tax planning by multinational corporations
• Global 15% minimum tax
• Digital economy development
• Climate agenda (coordination of NDC—nationally determined contributions)

Saudi Arabia, UAE, and the G20

Saudi Arabia has been a member of the G20 since its foundation. Chaired in 2020 (the first MENA country in this role).

The UAE is not a member of the G20, but is regularly invited as a “guest country”. Dubai hosted COP28 (2023)—the largest climate conference.

Other Formats of International Coordination

OECD (Organization for Economic Co-operation and Development): 37 member countries (wealthy democracies). Develops standards in the fields of taxation, regulation, and corporate governance. Accession to the OECD signifies a country’s “international handshake”.

FATF (Financial Action Task Force): 39 jurisdictions. Develops AML/CFT standards (see Module 3). The FATF “blacklist” and “greylist” are politically significant signals.

Basel Committee on Banking Supervision: Standards for the prudential regulation of banks (Basel I, II, III, IV). A technical body, but with enormous influence on the global financial system.

BIS (Bank for International Settlements): “The central banks’ bank”, based in Basel. Platform for central bank coordination and research in the field of financial stability.