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History

The Economic Challenges of the 1970s

Beginning in the early 1970s, Western countries suffered a series of economic crises. These crises included:

• The collapse of the Bretton Woods system in 1971 (this system had regulated the value of nations’ currencies by fixing them to the US dollar)
• The first oil crisis (which saw a quadruple in oil prices in as many months)
• A broad recession across most western economies and a rise in unemployment

The Library Group

In 1973, the United States formed an informal and private group to discuss these economic challenges and to co-ordinate efforts. This group was known as the Library Group as the meetings were held in the White House library. The group consisted of the top government finance officials from the United States, West Germany, France, Japan and the United Kingdom.

The Group of Six (G6)

In 1975, the President of France began pushing for meetings that would include the heads-of-state of major industrial nations. The meetings would be informal and annual, and their purpose was to overcome bureaucratic conflict and economic nationalism.

The first meeting took place in Rambouillet, France, in November 1975. The meeting included the heads-of-state of France, Italy, Japan, the United Kingdom, the United States and West Germany. The groups became know as the Group of Six (G6). The content of their meeting was limited to economic and monetary concerns related to the oil crisis of the 1970s.

The Group of Seven (G7)

During the latter half of the 1970s, the G6 grew in membership and the issues it addressed.

• In 1976, the Group of Seven (G7) replaced the G6 when Canada joined the six original nations at the meeting held in San Juan, Puerto Rico.
• In 1977, the Group of Seven Plus One (G7+1) was formed when the European Community (now the European Union) was granted limited status at the meeting in London.
• In 1978, the G7 began dealing with political issues for the first time with their Statement on Air Hijacking.

The Group of Seven Finance Ministers and Central Bank Governors

In 1986, the G7 established the Group of Seven Finance Ministers and Central Bank Governors. The purpose of the group was to facilitate better co-ordination between the finance ministers and bank governors of the member nations, and with the International Monetary Fund (IMF). The European Union was not included in this new group.

Early Soviet and Russian Participation in the G7

With the changes in the Soviet Union at the end of the 1980s, the G7 began building a relationship with that nation.

• In 1991, Soviet President Mikhail Gorbachev met with the G7 at the summit in London.
• With the fall of the Soviet Union, Russian President Boris Yeltis attended G7 summit meetings in a limited (but increasing) capacity.
• In 1993, the G7 announced a $43 billion assistance package for Russia.

The Political Eight (P8)

At the Naples summit in 1994, the Political Eight (P8) was established. The P8 consisted of the foreign ministers of the G7 and Russia. The purpose of the group was to increase co-operation between members in political and security issues. The P8 was to meet at the conclusion of each G7 summit.

The Group of Eight (G8)

Reflecting the new post-Cold War situation, the push to make Russia a full participant began at the 1997 Denver Summit of Eight. At the 1998 Birmingham Summit, Russia’s membership became official and the G7 was replaced with the Group of Eight (G8). However, Russia’s contribution to the G8 summit remained less than significant.

Reforms of the Birmingham Summit

At the 1993 Tokyo Summit, it became apparent that the summits were overly bureaucratic and ceremonial, and were lacking in real substance. At the 1998 Birmingham Summit, UK Prime Minister Tony Blair introduced several reforms to overcome these problems. These reforms included:

• The “leaders-only” format, with foreign and finance ministers meeting separately in advance. This allowed ministers and leaders to accomplish more in the limited time of a summit.
• The introduction of a “private retreat” on the second day of the summit, with the heads-of-state meeting informally without aids and reporters. This allowed leaders to cut through the ceremony of a summit and engage in substantive face-to-face discussion.

Increased Participation of the European Union in the G8

With the launching of the euro (the European Union's new currency) and the creation of the European Central Bank, the EU has increased its participation in in G7 economic and financial meetings. However, the EU does not participate in political meetings.

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This page was last modified: August 10, 2007