G7 summit opens in the shadow of the Ukraine war, the risk of stagnant inflation According to Reuters

By Sarah Marsh and Philip Blenkinsop

SCHLOSS ELMAU, Germany (Reuters) – German Chancellor Olaf Scholz welcomes the leaders of the Group of Seven wealthy democracies on Sunday to attend a three-day summit in the war-covered Bavaria Alps in Ukraine and its far-reaching consequences, from energy shortages to a food crisis.

The summit comes against a backdrop of more gloom than last year when the leaders of Britain, Canada, France, Germany, Italy, Japan and the United States met for the first time since before the COVID-19 pandemic and vowed to Build back better.

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

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

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

G7 leaders are expected to seek to show a united front on supporting Ukraine in times of need and putting pressure on the Kremlin – although they will want to avoid potentially crippling sanctions. inflation and exacerbated the cost-of-living crisis that affected them. private person.

“The key message from the G7 will be solidarity and coordinated action… That’s the key message, that even through difficult times… we stick to our alliance,” he said. an EU official said.

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

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

The summit took place at the Schloss Elmau resort castle at the foot of Germany’s tallest mountain, Zugspitze – the same site when the country hosted the last G7 annual meeting in 2015. Then, the invasion. Russia’s strategy towards Ukraine has dominated the agenda. a year after Moscow invaded Crimea.

The summit is also an opportunity for Scholz to capitalize on the host role by demonstrating more assertive leadership over the Ukraine crisis.

The chancellor vowed to launch a revolution in German foreign and defense policy after the Russian invasion in February, promising to support the army with a fund of 100 billion euros and to send weapons to Ukraine.

However, critics have since accused him of dragging his feet and sending mixed messages by warning that Russia could see NATO as a belligerent and highlighting the risk of nuclear war. core.

The G7 was established in 1975 as a forum for the wealthiest countries to discuss crises such as the OPEC oil embargo.

It became the G8 after Russia was admitted six years after the collapse of the Soviet Union. But Moscow was suspended in 2014 after annexing Crimea from Ukraine.

GLOBAL PARTNER

This year, Scholz 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, countries. current and next host of the Group of 20 major industrialized 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 come together to fight Putin’s imperialism just as they did during the meeting. fight against poverty,” Scholz told the Germans. parliament this week.

Many countries in the global south are concerned about collateral damage from Western sanctions.

An EU official said the G7 countries will impress their partner countries that the spike in food prices for them is the result of Russia’s actions and that there are no food-specific sanctions. It is also a mistake to treat the Ukraine war as a local issue.

“It’s more than this. It’s questioning the order, the order after the Second World War,” the official said.