Paris (France) (AFP) – Finance chiefs from the G7 industrialised nations gather in Paris on Monday for two days of talks aimed at forging a united front as the Middle East war roils economic prospects worldwide. France, which currently chairs the rotating presidency of the Group of Seven, faces the tricky task of keeping dialogue open as trade feuds spurred by US President Donald Trump’s tariff blitz compound geopolitical tensions. Reducing reliance on China’s vast holdings of rare earths — crucial for the AI boom that has underpinned economic growth in recent years — is also at the top of the agenda.
“The way the global economy has developed over the past 10 years now is clearly not sustainable,” French Finance Minister Roland Lescure told journalists last week. He noted in particular the surging US budget deficit, a lack of technological innovation in Europe, and China’s efforts to counter slumping consumer spending and industrial over-capacity that has pushed its companies to elbow into overseas markets. “Multilateralism can work,” Lescure said, but “these discussions are not easy — I’m not going to tell you that we agree on everything, including obviously with our American friends”.
Trump’s combative, transactional approach to dealing with allies and rivals alike has unnerved G7 leaders as they grapple with the threat of both stagnant growth and surging inflation stemming from the war in the Middle East. A final press conference by the finance chiefs is set for midday Tuesday. German Finance Minister Lars Klingbeil said the G7 was “the right framework” for talking to the United States about ending the Iran war. “This war is massively damaging economic development. That is why everything must be done to bring the war to a permanent end, to stabilise the region again, and to ensure free shipping lanes through the Strait of Hormuz,” he said in a statement.
Even a shared recognition of the challenges would be considered a victory for the French government, which is hoping to issue two joint statements after the discussions. Finance ministers from Kenya, Brazil, India and South Korea have also been invited for talks on Tuesday to lay the groundwork for the G7 summit meeting in Evian, France, on June 15-17. The talks come days after Trump’s trip to Beijing for talks with President Xi Jinping failed to provide a clear breakthrough on easing tariffs or ending the war in the Middle East.
China has been making inroads in much of the G7 nations’ backyards, and is increasingly willing to play hardball on trade as a key supplier of both raw materials and inexpensive finished goods. “Up to now, the problem of macroeconomic imbalances was addressed… with regards to global financial stability,” said Pierre Jaillet, a researcher at France’s Institute for International and Strategic Affairs (IRIS). But now officials are looking “through the optic of economic security: trade surpluses or deficits can reflect vulnerabilities or dependencies, in particular with critical minerals or energy,” and the risk of supply chain disruptions, Jaillet told AFP.
The G7 goal is to “ensure that we don’t depend on any one country — China, without naming names — for our rare earth supplies,” Lescure said. And oil and gas security has become even more crucial with the Middle East war. “We must do for critical materials what we did with energy in the 1970s,” and find common cause for dealing with any crisis.
France is hoping to create a “common toolbox” to combat market disruptions to key raw materials, Lescure said, via strategic trade deals or interventionist measures such as price floors, quotas or tariffs. It also wants to promote “multilateral projects” among countries to develop their own extraction and refining capabilities, such as a French-Japanese factory to produce and recycle rare earths and magnets and other minerals under construction in southwest France. The French state has invested 106 million euros ($124 million) in the project, which aims to provide all of France’s needs by 2030. Using financial aid to strike deals in developing countries that encourage private investments is also a way forward, Lescure said.
© 2024 AFP
