Vol. XLII No. 24 June 17, 2018

‘Civil war in G7’: The Free for All in Quebec

Nilotpal Basu

THE allegations and counter allegations were flying thick and fast! The summit of the G-7 in Quebec in Canada saw these fireworks. This was not an abrupt development; but the magnitude of spat was mind boggling. German Chancellor Angela Merkel’s office released a photo of multiple leaders appearing to confront a displeased Trump. Trump’s national security adviser John Bolton, used the image in his own Twit criticising foreign leaders observed, “Just another #G7 where other countries expect America will always be their bank. The President made it clear today. No more.”

The half jocular suggestion by the French President Macron that G-7 may become the G-6 with repeated disagreements between the United States and its closest allies, writing the obituary of the group would be absolutely premature. But nevertheless, nature of differences did reflect deeper profound processes at work.


The buildup can be traced to President Trump’s drive towards reconfiguring the ground rules of trade and tariff policies that defined the consensus across the G-7 in the course of evolution of ‘rule based’ trade and the functioning of the WTO. This constituted the ground for ‘muting’ of interimperialist contradictions between these developed capitalist economies; particularly, as it dealt with developing and poor nations. But apparently, the protracted operation of the neoliberal trajectory had run its course and would be difficult to sustain. After the global financial meltdown, it became all the more obvious.

The Obama administration marked time; but the reckoning could not be postponed indefinitely. Two contrasting approaches marked the response to this deepening crisis which affected the vast majority of working people. One was articulated by Bernie Sanders calling for a paradigm shift with emphasis on public investment driven augmenting of demand through large social spending. The other was the ultra right wing populism of Donald Trump, which without upsetting the basic neoliberal framework would focus on creating jobs while going hammer and tongs against immigrants, minorities and outsourcing and, consequently relocating of jobs outside the US. Thus the slogan “America first” articulating this priority.

Observers like Yanis Varoufakis have observed that 17 months into his presidency, Trump has concluded since the 2008 collapse of Wall Street, and despite the subsequent re-floating of the financial sector, Wall Street and the US domestic economy can no longer do what they were doing before 2008; absorbing net exports of European and Asian factories through a trade surplus financed by an equivalent influx of US-bound foreign profits. This failure is the underlying cause of the current global economic and political instability. This is what played out in Quebec. 

Varoufakis goes on, “Further, unlike in the 1970s, Europe’s decade of mishandling the euro crisis has resulted in the disunited Franco-German establishment on the run – with xenophobic, anti-European nationalists taking over governments.”

“Trump, therefore, thinks if US can no longer stabilise global capitalism, he might as well abandon existing multilateral conventions and build a new global order with US as its centerpiece and all other powers its accessories.”

The corollary is an arrangement of bilateral deals to ensure US as the largest partner in each, facilitating domination through divide and rule, replacing the existing multilateral arrangement. The buildup has consisted of sharp unilateral escalation of tariff rates by the US with other powers having refused to capitulate and initiating retaliatory Tariffs against US imports.


So, Trump had threatened to enact stiff penalties if other countries did not agree to dramatically reduce or end tariffs on American goods. “Well, if they retaliate, they're making a mistake,” and added “We're like the piggy bank that everybody is robbing. And that ends.” He further went on to say US paid "close to the entire cost of NATO" to help protect countries that "rip us off on trade".

The other side was equally strident! Angela Merkel went on German TV to denounce Trump's stance. "We won't let ourselves be ripped off again and again. We will then act too," she said in reference to US import tariffs. Macron said international co-operation could not be "dictated by fits of anger and throwaway remarks".

UK Prime Minister Theresa May told that she wanted to pay "a particular tribute" to Trudeau for his leadership and skilful chairing adding that it was "a difficult summit with, at times, some very candid discussions" and that the UK would honour its commitments in the joint communiqué.

Of course, the host Canadian PM Justin Trudeau’s press conference after the Summit was used by Trump to walk out of the joint communiqué. During a news conference, Trudeau had reasserted his opposition to US tariffs on steel and aluminum, and vowed to press ahead with retaliatory moves on July 1.

Trump was stinging, “Based on Justin’s false statements at his news conference, and the fact that Canada is charging massive Tariffs to our US farmers, workers and companies, I have instructed our US Reps not to endorse the Communiqué as we look at Tariffs on automobiles flooding the US Market”!

But this strong arm twisting by US is backed by the substantial economic momentum domestically. With stepped up expenditure on social programmes, the federal government is running the largest budget deficit in America’s history. But, with less than 4 per cent unemployment, inflation under control and the stock market still buoyant, the dollar hegemony and selling off its stock of accumulated assets to the private sector, the administration feels the impact of burgeoning deficit could be absorbed without a run.

We will have to see how this eventually plays out. But one thing is for sure the comforting consensus is out.


The CPI (M) in its 22nd Party Congress in Hyderabad had concluded: "During this period, the cohesion of the imperialist camp and the muting of the inter-imperialist contradictions that we had noted in the 21st Congress, under the impact of this prolonged crisis of neoliberalism, got weakened, with new conflict points and contradictions emerging between imperialist centres." This now stands vindicated.