Get 40% Off
⚠ Earnings Alert! Which stocks are poised to surge?
See the stocks on our ProPicks radar. These strategies gained 19.7% year-to-date.
Unlock full list

G7 or G5? Trump and Johnson add unpredictability to French summit

Published 08/21/2019, 08:26 AM
Updated 08/21/2019, 08:26 AM
© Reuters. A general view shows the beach and the Hotel du Palais summit venue ahead of the G7 Summit in the French coastal resort of Biarritz

By John Irish and Marine Pennetier

PARIS (Reuters) - Brexit Britain's overtures to U.S. President Donald Trump risk further complicating the search for common ground this weekend at a Group of Seven summit already clouded by transatlantic rifts over trade, Iran and climate change.

The summit host, President Emmanuel Macron of France, has set the bar low for Biarritz to avoid a repeat of the fiasco last year when Trump threw Canada's G7 summit into disarray by leaving early, scotching the final communique.

Macron, an ardent europhile and staunch defender of multilateralism, will count on incremental advances in areas where a united front can be presented, with the meeting, which runs from Saturday to Monday, officially focusing on the broad theme of reducing inequality.

On hot-button issues, they will, when necessary, have to agree to disagree.

"We have to adapt formats. There will be no final communique, but coalitions, commitments and follow-ups," Macron said. "We must assume that, on one subject or another, a member of the club might not sign up."

The G7 groups the United States, France, Britain, Japan, Germany, Italy and Canada, and the European Union also attends. Macron has also invited the leaders of Australia, Burkina Faso, Chile, Egypt, India, Senegal, Rwanda and South Africa, in order to widen the debate on inequality.

TOUGH TOPICS

But the tougher discussions lie elsewhere. The Sino-U.S. trade war has spurred fears of a global economic slump; European powers are struggling to defuse tensions between Washington and Tehran; and Trump has shown little enthusiasm for France's push for a universal tax on digital multinationals such as Google (NASDAQ:GOOGL) and Amazon (NASDAQ:AMZN), and turned his back on efforts in Europe and around the globe to limit carbon emissions to slow climate change.

The crisis in Kashmir and street protests in Hong Kong may also be touched on during the talks in France's Atlantic coast surfing capital, where some 13,000 police will be drafted in to prevent any violent anti-globalization demonstrations.

"There's no doubt that we will discuss how trade frictions could affect the global economy," a Japanese government official said. "But it is difficult to deliver messages to the outside, since a communique won’t be issued."

Strained relations between the United States and its top allies mean that where once they were in agreement, they now seek the lowest common denominator.

"It won't be productive to push something that someone -- whether it's America or some other country -- would not agree to do," the Japanese official added.

Moreover, Italy's prime minister resigned on Tuesday, Canada is heading for an election, German Chancellor Angela Merkel's influence on the world stage is waning ahead of her departure, and Britain is probably on the verge of either leaving the EU or a snap election.

POLITICAL NITROGLYCERINE

One unknown is where British Prime Minister Boris Johnson will position himself, making his debut on the global stage at a summit that will lay bare new realities as Britain's influence in Europe collapses and its dependency on the United States grows.

With less than three months to go before the United Kingdom is due to leave the EU - with or without a divorce deal, according to Johnson - his government has sought to cozy up to Trump's White House with a view to future trade deals.

Francois Heisbourg of the International Institute for Strategic Studies said the combination of two personalities "not well-known for their self-control" was "political nitroglycerine".

He said it might be entertaining, "but if it actually gets in the way of more substantive proceedings, that would be another story".

While Johnson will want to avoid crossing a volatile Trump and putting trade ties at risk, analysts say, he will also be wary of alienating himself from other leaders who have a more multilateral approach to world politics.

One French diplomat who declined to be named said Paris was curious to see how the Trump-Johnson dynamic played out in Biarritz:

© Reuters. A general view shows the beach and the Hotel du Palais summit venue ahead of the G7 Summit in the French coastal resort of Biarritz

"Even with Brexit in the background, we still have the sense that the British reflex when it comes to international crises is to turn to us and the Germans first."

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.