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From G7 To G8:
Evolution, Role and Documentation of a Unique Institution
Peter I. Hajnal
Columbia International Affairs Online
April 1998
Origins of the G7 Summit
The G7/G8 Summit takes its origin from several major events in the early 1970s that had a profound effect on the world economic system:
"the collapse of the Bretton Woods monetary system" based on fixed exchange rates and on the United States dollar's convertibility into gold. The two Bretton Woods institutions, the International Monetary Fund (IMF) and the World Bank, tried to set up the necessary reforms, but were not successful in this effort; 12
the first enlargement of the European Community, with Britain, Denmark and Ireland joining the original six members;
the first oil crisis, when the Organization of the Petroleum Exporting Countries (OPEC) placed an embargo on oil supplies following the October 1973 Yom Kippur war. Western countries disagreed about how to respond to the embargo and to the sharp price increases;
the 1974 economic recession in Organisation for Economic Co-operation and Development (OECD) countries, in which inflation and unemployment rates rose sharply.
With all these developments, "the traditional organs of international co-operation were no longer able to reconcile the differences among the leading Western powers or to give them a sense of common purpose. " 13
It was in this evolving context that the finance ministers of the United States, Germany, Britain and France, meeting on 25 March 1973 in the White House library, became known as the Library Group. Later joined by Japan, the group met periodically for a number of years and came to be known as the Group of Five finance ministers (G5). The governors of the central banks of the Five sometimes joined the finance ministers at these meetings. Some two years after the initial get-together of the Library Group,
thirty-five heads of state and government gathered in Helsinki to sign the Final Act of the Conference on Security and Co-operation in Europe. The leaders of the four Western powers met for lunch at the British Embassy in Helsinki on 31 July, together with their foreign ministers. Those present were Gerald Ford and Henry Kissinger; Valery Giscard d'Estaing and Jean Sauvagnargues; Helmut Schmidt and Hans-Dietrich Genscher; Harold Wilson and James Callaghan. They discussed President Giscard's proposal that they should meet later that year, together with Japan, to address economic and monetary problems. This was the genesis of the summits. 14
Notes:
Note 12: Robert D. Putnam and Nicholas Bayne, Hanging Together: Cooperation and Conflict in the Seven-Power Summits, rev. ed. (Cambridge, Mass.: Harvard University Press, 1987), 25. Back.
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