Supporting growth and jobs remains the top priority for the world’s leading industrialised nations, their leaders said following a two-day summit in Brussels that ended today (5 June). They also stated that the use of energy supplies as a means of political coercion or as a threat to security is unacceptable.
On the second day of their summit, the leaders of the USA, Germany, France, UK, Italy, Canada and Japan, as well as the presidents of the European Council and Commission, concentrated on issues such as the global economy, energy and climate and development. The first day was dedicated to the response to the Ukraine crisis.
The final communiqué underscored that over the last year, the global economy had strengthened, but risks remained.
“Advanced economies are recovering, but continued and sustained growth is needed to bring down unemployment, particularly among young people and the long-term unemployed,” the leaders said.
Speaking to the press following the summit, Council President Herman van Rompuy said that despite the Ukraine crisis, leaders were able to cover a number of other global issues, making it a “full agenda” summit.
He gave the good news of a 2% EU GDP increase, driven by domestic demand, and the bad news; that unemployment remained far too high. He added that between 2013 and 2015 there would be 1.5 million fewer unemployed people than before.
“Employment is growing, but only by slightly more than 1% in the period 2013-2015,” he said.
Praise to ECB
The solution is to remove impediments to growth, one of them being the credit shortage. The European Central Bank (ECB) was dealing with the problem of low inflation, which he said was a handicap especially for the economies with a high private and public debt.
The same issues were highlighted by the French President François Hollande in his statement to the press.
“We are no longer in crisis. There is still stagnation in a certain number of countries. There is even a slowdown in the growth that was particularly vigorous in emerging countries. For several months, there have already been encouraging signs from the United States,” he said.
He said the European economy was still in a state of hesitation, which is why the G7 wanted to stimulate growth and jobs. This was even more important, since investments in new technologies and in energy transitions will be costly, Hollande added.
According to the French President, growth would be stronger if driven by domestic demand in the countries with a commercial surplus. Growth will be stronger if the rate exchange policies would be better balanced and monetary policies would take into account the risk of deflation which is noticeable in many parts of the world, including in Europe, he argued.
The role of central banks is crucial, said Hollande, who saluted the ECB which brought down today (5 June) interest rates to boost growth and avoid deflation.
Discussing the Transatlantic Trade and Investment Partnership, the French President said negotiations were viable if based on reciprocity and on high standards, which he said should be a reference for all commercial relations.
Paris climate conference 2015
Turning to energy and climate, Hollande said that, for his country, it was very important to have the backing of the G7 to work towards the success of the climate conference at the end of 2015 in Paris. US President Barack Obama has already made strong statements for reducing the use of coal in the operation of power plants in the USA and for reducing greenhouse emissions, he said.
The EU has already mobilised and will make it a priority at the October EU summit, said Hollande, adding that China could also contribute to the success of this conference.
About 40% of greenhouse gas emissions come from the US, the world’s second biggest emitter, and China, which tops the pollution table.
The G7 final document underlines the leaders’ strong determination to adopt in 2015 “a global agreement – a new protocol, another legal instrument or an agreed outcome with legal force under the convention applicable to all parties – that is ambitious, inclusive and reflects changing global circumstances.” They also decided to communicate their national contributions “well in advance” of the Paris conference.
Energy security ‘not contradictory’ to climate targets
Energy security was highlighted in the press conference US President Barack Obama held together with UK Prime Minister David Cameron. The situation in Ukraine showed the need for concerted action in this field, he said.
“At the G7, we agreed to help Ukraine reduce its energy risks, to include diversifying of supplies. We are going to help countries in Central and Eastern Europe strengthen their energy security as well,” Obama said.
Leaders fell short of answering on how achieving greater energy independence was compatible with the goal they had set themselves of lowering energy prices to improve the European Union’s industrial competitiveness.
Just as Van Rompuy did in a separate press conference, Hollande argued that energy security was not contradictory with climate change. The issue is how to make energy a source of economic growth through transition to alternative sources, which contributes to climate goals, the French President said.
EU leaders adopted a set of measures to develop emergency energy plans for winter 2014-2015 at a regional level in Europe. One of the measures is to promote a more integrated Liquefied Natural Gas (LNG) market, including through new supplies. However, as Commission President José Manuel Barroso said, it is hardly possible to expect an increase of supply of LNG from the USA in the short term.
On development, the G7 leaders committed to work for an ambitious and universal post-2015 agenda, backed by measurable goals. That agenda should complete unfinished business of the Millennium Development Goals and should be centred on people and focused on the eradication of extreme poverty, promoting development and on balancing the environmental, economic and social dimensions of sustainable development, including climate change.
Hollande insisted that the existing development funds should be fully mobilised. Africa is a continent of the future, he argued, adding that France has been saying this all the time and that the world should realise it. The world has the duty to help it to have good conditions for development and to prevent it from being hit by natural or sanitary disasters, he said.
In the same context, Hollande said that the fight against inequalities was a priority France wanted to bring to G7.