G7’s grandstanding can’t conceal its confusion and delusions about Russia

In the quest for economic security, India should present itself as a viable option.

Giorgia Meloni was the standout leader at this week’s G7 summit in Apulia, Italy — her incinerating stare at French president Emmanuel Macron burned the internet while the “team #Melodi” meme with PM Modi went viral.

But the summit of the world’s top industrialised economies felt burnt out, tired almost. Joe Biden was pictured wandering off. Rishi Sunak, Justin Trudeau, Fumio Kishida, Macron, Olaf Scholz are all struggling with abysmal approval ratings, many expected to lose their next elections, and therefore all on politically shaky ground. Ursula von der Leyen may retain her seat and Meloni is the only one with actual political cache.

The “outreach” group, which featured, among others, PM Modi, fresh off a sobering election, and the Pope, who dwelt on the opportunities and challenges of AI – felt a lot more real.

Skewed From an Asian Lens

The G7 is a primarily Euro-Atlantic alliance, with a dash of Asia. That means its worldview is skewed – viewed from the Asian perspective.

The Apulia summit ticked off several boxes – climate, Indo-Pacific, Africa, women and diversity, restructuring multilateral development banks etc.

The main emphasis was on Ukraine and Russia, making the G-7 summit a prelude to the Ukraine peace summit that followed soon after. Ukraine was provided $50 billion, “leveraging the extraordinary revenues of the immobilized Russian sovereign assets”, in a sense, the first such action, which will have consequences down the road.

Anything But Peace at Burgenstock

The peace summit at Burgenstock, Switzerland, showed peace remains far from everyone’s minds. About 90 countries including India were present in some capacity. But without the other principal actor, Russia, in the room, it became clear that the exercise was confined to bringing other countries to Ukraine’s side.

The next summit may be held in Saudi Arabia where Zelensky paid a flying visit just the other day. It was no surprise that the Global South, including India, UAE, South Africa and Brazil, among others, found themselves unable to sign on to the final communique at the peace summit, particularly in the absence of Russia in the room.

Modi met Zelensky separately at the G-7 summit earlier and pushed “dialogue and diplomacy” – important because both were missing at the G-7 or the peace summit approach to the war. The head of the Indian delegation at the peace meeting, Pavan Kapoor, secretary, MEA clarified the Indian position: “We continue to believe that such a peace requires bringing together all stakeholders and a sincere and practical engagement between the two parties to the conflict. … In our view, only those options acceptable to both the parties can lead to abiding peace.”

Versailles is History

The West continues to labour in the belief that peace would resemble something like Versailles, to be “imposed” on a beaten Russia. It won’t. Now that China has made itself the principal backer of Russia, the chances of Russia accepting anything sub-optimal are lower.

In any case, most of the Global South believes Russia has the upper hand in the war currently. What is clear, however, is that the West don’t see a path forward on the road they are in at present. A rethink is in order because the prevalent narrative has raced ahead of reality -- but leadership is lacking.

China And Secondary Sanctions

China was the other target at the G-7 summit, now that the West, led by the US, firmly believes China is actively supporting and assisting Russia’s war effort. Western economic sanctions will be expanded to include Chinese entities and companies. The communique said, “We will continue taking measures against actors in China and third countries that materially support Russia’s war machine, including financial institutions, consistent with our legal systems, and other entities in China that facilitate Russia’s acquisition of items for its defence industrial base.” We should expect that as the war grinds on without any path to a negotiated peace, other countries and other companies could be brought under the ambit of Western sanctions.

A hygiene check by Indian companies of their activities may be in order, therefore.

The G-7 summit came right after the EU imposed tariff restrictions on China’s exports of EVs to Europe. However, the amounts being very modest, Chinese companies have already agreed to absorb the tax or partly pass it on to European consumers – they reckon they will still remain competitive.

As a matter of fact, one of the tougher takeaways from the recent European parliament elections has been the comprehensive trouncing of Green parties – it says only one thing, that the cost of green transition is high even for the wealthy European. China, which is now an established green tech superpower, may find it easier to enter the European market, especially if European countries want to meet their green goals.

A big part of the G-7 summit was devoted to the US-China – and now, slowly, the West-China – rivalry. If Russia was mentioned 61 times, China featured 29 times in the final document. If nothing else the language is becoming sharper from both ends. As a scoop in the FT detailed this week, President Xi Jinping believes the West is trying to goad China into attacking Taiwan, but that he would “not take the bait”.

India Needs to Seize Opportunities

Viewed from the Indian lens, there are some obvious challenges, but also some crazy opportunities. In the quest for economic security, supply chain resilience and China+1 strategies, India should present itself as a viable option. Some key steps have been taken in the last government. The current government should now shake off their post-election shock and get down to work – getting manufacturing right will be critical for a whole number of reasons.

The action will shift across the Atlantic to the US elections in November. The liberal West is terrified at the prospect of Donald Trump back in the White House. Certainly, many equations will change. I don’t think all of those changes will be unwelcome in India. A carpe diem foreign policy could work.