The Cornwall G7 Conference — Editorial 1

The G7 conference in Cornwall ended on 13th June.  The main purpose of the conference was to re-establish the US as the leader of the largest capitalist economies – US, Canada, Japan, UK, Germany, France and Italy.  30 years ago the US was the undisputed leader of the capitalist world and became the undisputed military superpower when the Soviet Union collapsed in 1989.  From this position of supreme power the US attempted to impose its hegemony on the rest of the world, mainly through military means but also through economic means.

This culminated in the destruction of functioning states in Iraq, Libya, Afghanistan and Syria and the deaths of over 1 million people.  Russia might also have ceased to exist as a functioning state had Vladimir Putin not come to power.  Putin not only halted the disintegration of Russia but also returned Russia to the position of a military superpower.  It took two decades to achieve that.  

When Britain and the US set out in 2011 to destroy the functioning state of Libya,  Putin could only watch in dismay.  By 2015, however, he felt strong enough to intervene to stop the destruction of Syria.  It was an intervention fraught with risk on Putin’s part.  There were times when it looked like it might fail.  But today, the existence of the Syrian state looks increasingly secure.

The US appears to be reducing its involvement in the Middle East and Afghanistan.  It will have withdrawn from Afghanistan by September 2021 and continues to reduce its troop numbers in Iraq.  The US relationship with Iran had completely deteriorated under Trump.  It now seems likely that the US will return to a more functional relationship with Iran.

In short, the US is in a retreat and regroup phase.  It realizes that its interventions have been unsuccessful and indeed have caused its usual allies to question its competence.  Doubts about the ability of the US to lead the West became particularly strong under the leadership of Trump.  That moment has passed, for now, but it has left its allies with a long lasting sense of wariness about US leadership.

The world has again become multipolar.  The US and China are both military and economic poles.  Russia remains mainly a military pole.  Europe can be seen as an economic pole which is reluctant to get involved in military adventures.  Turkey may be developing as a military pole.  Russia appears to have supported and nurtured that development of Turkey as a Middle Eastern pole.

The G7 summit in Carbis bay Cornwall was in some ways a meeting of the defeated, of those who had participated in the attempt to create a unipolar world.  That possibility is, at least temporarily, removed from the world geopolitical scene.  The purpose of the G7 summit was to identify how to deal with the new multipolar world.  On this there does not appear to have been strong agreement.  

If Biden is to be believed, the US sees China as the biggest threat to its continued economic pre-eminence, while the other G7 participants are more prepared to have a working relationship with China.  There is little that the US can do about this since in its new leadership role is based on listening more carefully to the views of its allies.  The Nord Stream 2 gas pipeline is a case in point here.  Trump had attempted to stop its completion with the use of economic sanctions against companies that worked on the pipeline.  Germany saw this as an unwarranted interference with its economic decisions which it saw as entirely Germany’s business.  Biden has now waived those sanctions in deference to Germany’s wish to be able to make whatever commercial decisions that it thinks are in Germany’s national interest.

After the G7 summit ended Biden went to Geneva for a meeting with Putin.  That meeting was further evidence that a new multipolar world was emerging from the chaos of the last 30 years.  In Geneva, the US and Russia, the two strongest military poles, met to establish better working relationships.  It was agreed that ambassadors would be re-exchanged.  Arms control and cyber security issues also seem to have been important topics of conversation.  Biden may well also have been attempting to drive a wedge between Russia and China but it is highly unlikely that Putin would have allowed himself to be manipulated in this regard.

This new multipolar world is to be welcomed.  It would not be too amiss to hold that a new cold war is on the cards despite Biden’s claims to the contrary.  It is unlikely that the US will take the defeat of its attempts to create a unipolar world hegemony lightly.  

The main pre-occupation of the G7 summit was the emerging multipolar world order.  However, nation state economic policies were also discussed.  Biden is reported as urging the G7 governments to spend without being overly concerned with inflation possibilities and national debt.  America is a hugely divided country and Biden senses that he must act boldly in the economic sphere if he is to prevent Trump reappearing as the Republican candidate in 3 years’ time.  

While the UK is not as divided as America, it remains unlikely that people would tolerate a return to anything like the austerity of the Osborne era.  Divisions are already emerging in the Tory ranks on the issue.  Sunak sees the level of national debt as a problem but does not favour raising taxes.  We expect he will propose cuts in government services.  We suspect that Johnson’s inclination will be to oppose any such cuts.  It is not clear who would win in a Tory Party dispute over spending cuts.

Therein lies Labour’s opportunity.  Labour should strenuously oppose any cuts in government services rather than attempt to appear economically responsible.  Indeed, if there is unemployment and low inflation, the responsible action of a currency issuing state is to increase government spending without reference to the national debt.  This is well understood by the new shadow chancellor, Rachel Reeves.  If she argues strongly against government spending cuts there is a chance that Labour may recover some of those red wall seats.

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