5.3: G7, G20, G77
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The G7 has annual summits of the big democracies to discuss and work together on economics, energy, security and nuclear proliferation. Having regular meetings allows for more effective coordination. However, the G7 is increasingly overshadowed by the G20.
The G20, which includes the G7 plus many Newly Industrialized Countries (NICs), constitutes 85% of world economy. Including rising countries such as China, India, Brazil, Mexico, Indonesia, Turkey and South Korea, they push for lower tariffs on their exports and other economic reforms. After the loss of credibility of the U.S. model of financial deregulation and free trade in the 2008 global financial crash, the G20 countries took the lead and recovered faster. As the G20 eclipses the G7, that where the protestors go.
The G77’s members (the poor countries) have expanded their numbers to more than 130. They are pushing for debt forgiveness, more foreign aid, more trade, lower tariffs on their exports, and an end to farm subsidies in the rich countries that encourage more production and push down world prices for agricultural goods. A few loans were forgiven and some aid increased (Bush 2 doubled aid to Africa), but there have been few results on trade.
The Organization of Petroleum Exporting Countries includes the Arab oil producers plus Venezuela, Nigeria and Indonesia. (Russia and the U.S., major producers, do not belong.) After taking their oil back from Western companies, they control 40% of world oil reserves and try to influence prices by adjusting their production levels. When OPEC started in 1960, they were generally poor and poorly paid for their oil. However, their boycott of Israel’s allies during the 1973 Arab-Israeli War quadrupled world oil prices and greatly increased their income and influence.
OPEC meets periodically to decide on production quotas, with the aim of keeping prices stable and as high as possible without causing an economic recession (which would decrease demand). However, increasing demand for oil from China and other developing countries and declining production in many producing countries meant that prices rose to $100 a barrel in 2008, far above their stated goal. OPEC didn’t mind – they were making more money. But the high prices supported increased fracking and sideways drilling in the U.S., which increased production 60%. High prices also caused less consumption and an economic slowdown in China and other economies and more use of renewable energy, so that the price of oil fell to as low as $30 in 2016. OPEC and other big oil producers like Russia took big hits in their incomes. Saudi Arabia and others refused to cut production, determined to maintain their market share. Until recently the Saudis and the rest of OPEC, along with Russia, pledged to restrict production and oil prices rose to $60 a barrel. However, the Saudis and the Russians fell out over the proper response to the coronavirus, and the Saudis massively increased production, causing a drop in prices.