G7 in Elmau

Written by Dr. Isabelle Zirden, Dr. Björn Weber and Kira Nübel
SEC Newgate Germany

Since January 1 2022, Germany holds the presidency of the G7, an informal association of Western industrialised nations, for the seventh time. At the end of June, Germany hosted a meeting at Schloss Elmau, located in the rural idyll of Upper Bavaria. Here, topics that, however, do not seem idyllic at all, were discussed; namely the war in Ukraine, but also the climate crisis and global pandemic. According to German Chancellor Olaf Scholz, the meeting "is intended to send out a joint signal of strong democracies that are aware of their global responsibility". At least the motto to which Germany has committed itself at the beginning of the year gives cause for hope. It is "Progress for a just world." How Germany envisions a just world can be seen in the 5 points it considers the priorities of its presidency: "A Sustainable Planet", "Economic Stability and Transformation", "A Healthy Life", "Investing in a Better Future", "A Strong Together". However, it remains to be seen to what extent the set goal of the G7 summit in Elmau in 2022 can be fulfilled, and what headwind can be expected from demonstrations by numerous summit opponents. At the 2017 G20 summit in Hamburg, there were peaceful demonstrations as well as numerous riots and criminal acts, including arson and looting.

New government in Germany since September

The G7 meeting is taking place in the first year of the newly elected government, which has only been in office since September 2021. Traditionally, newly elected governments in Germany are given a 100-day grace period, but there was no time for that this year: after intense debates on pandemic policy and a potential vaccination requirement, the war in Ukraine followed, with Germany obviously struggling with its role as an arms supplier. Nevertheless, Chancellor Scholz recently announced a "turnaround" and promised 100 billion in investments in the Bundeswehr. Currently, inflation and energy supply are heating up the minds of citizens; Germany is still largely dependent on Russian gas and Federal Minister of Economics Robert Habeck is now trying to end this dependency and has to argue with his own party - the Greens - to do so. This is also the reason for the current dispute about the "fuel rebate" of the liberal party, from which mineral oil companies would now enrich themselves - at the expense of the citizens. The new government's record is thus mixed, but despite all the criticism from the press, it is also viewed with goodwill; leading media such as SPIEGEL praised in particular the Economics Minister Habeck mentioned at the beginning, but also the Foreign Minister Baerbock.

International trade: the end of globalisation?

The issue of international trade is also causing concern in the German economy. The World Economic Forum in Davos had already announced the end of globalisation, said Patrick Bernau of the Frankfurter Allgemeine Zeitung. German companies like Volkswagen also announced that they would invest more in America - and American companies like Facebook that they would invest more in Europe. The new magic word is "friendshoring": people no longer trade globally, but prefer to do so only with friendly countries. A search for new forms of international cooperation is now beginning, the supply chains will not work for a while yet, comments Benjamin Dierks from Deutschlandfunk. So, it is not for nothing that Chancellor Scholz warns against de-globalisation, saying it would be fatal. Instead, the Chancellor emphasised international solidarity and the importance of a multipolar world and said in Davos: "You can rely on Germany!”