G7 leaders set to deal with past failures

Barack Obama relaxes on a bench, his arms stretched out comfortably along its wooden back. In the distance, clouds hide the snowcapped peaks of the Bavarian mountains. In front of him, gesturing confidently in her red blazer, stands the chancellor of  Germany. 

The famous image of Angela Merkel and the former US president, snapped in 2015 when both were still in power and when Germany last hosted the annual Group of Seven gathering, stirs up a longing for what can feel like a simpler time. The world was not being pummeled by a pandemic, record-high inflation and a war on European soil.

But the idyllic photo distracts from the groundwork that was already being laid back then for the situation the globe finds itself in today. The last G7 summit hosted at the exclusive Schloss Elmau hotel in southern state of Bavaria took place just a year after Russia annexed Ukraine's Crimean Peninsula in 2014.

The move prompted Germany, France, Italy, Japan, the United States, the United Kingdom and Canada — the other members of what was then the G8 — to expel Russia, a fellow member since 1997. Otherwise, there was little meaningful action in response.

Seven years later, the leaders of seven of the world's top industrial powers are gathering once again at a luxury hideout in the German Alps as Russia's military razes Ukrainian cities to the ground.

Pressing questions on Russia

Nearly all topics on this year's agenda lead back to Kyiv. Even as the fighting rages on, leaders are already looking forward, with plans to discuss Ukraine's potential entry into the EU and how to rebuild the country once the war ends.

"The scale of the destruction is enormous," German Chancellor Olaf Scholz said in a statement on Wednesday. Billions of euros in funding have already been mobilized, he said. "But we will need many more billions of euros and dollars for reconstruction — and that will take years. That can only be done with combined forces."

Even more pressing will be the matter of sharpening sanctions against Russia, and containing the potential fallout. In March, the EU announced a plan to reduce its significant dependence on Russian gas by two-thirds by the end of the year. Of its own accord, Russia has already cut off gas flows to some member states, for reasons, it says, both technical and political.

"How can we replace the 158 billion cubic meters of gas that Europe needs, and the gas that Asia imports from Russia? In the medium or long term, but also, to the extent possible, in the short term?" German government sources said at a briefing about the summit. "[…] This question will play a huge role."

Energy price cap on the table

Even with this major shift in global energy policy taking place, for now Russia remains a key energy exporter to the globe. The position is providing Moscow's war machine with access to ample cash. G7 participants will be searching for ways to disrupt this model, hoping to create more pressure to end the war.

A price cap on Russian oil is one idea that will be tossed around. US Treasury Secretary Janet Yellen has suggested a mechanism that would restrict or ban insurance or financing for Russian oil shipments above a certain amount.

"[This move] would push down the price of Russian oil and depress Putin's revenues, while allowing more oil supply to reach the global market," Yellen told reporters in Toronto on Monday.

Such a mechanism would require international buy-in for the price cap to hold, something G7 participants will be assessing at the summit.

Mounting pressure to act on food security, climate

Governments are eager to act on the high cost of energy, which is contributing to painfully high inflation in many countries and threatening economic growth.

"Since the last G7 summit, growth has seen a clear downward revision and inflation has been revised upward," said the German government sources.

The high cost of consumer goods has been made worse due to the fact that shipments of vital food commodities have been blocked due to the war in Ukraine. Global food security, in particular getting good shipments out of the war-ravaged country, are set to play a "very, very big role" at the G7, according to the sources.

The topic is of particular importance for the developing economies and emerging market nations, like this year's guest attendants, Senegal, South Africa, India, Indonesia and Argentina. With a motto like "Progress towards an equitable world," the pressure is there for leaders to also deliver on topics like food security and climate change, which disproportionately affect the developing world and which have fallen by the wayside amid the war in Ukraine.

Photographers will be eager to snap the image that will define this Elmau summit. But this year, rather than a photo, it might just be the video footage that has become standard to see anywhere global leaders are gathered: the supersized specter of an exhausted leader in army greens, flanked by a blue and yellow flag, begging the world to act.