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Europe Daily Bulletin No. 12311
EXTERNAL ACTION / G7

A summit under tension in Biarritz

The 45th edition of the G7 summit, which is being held in Biarritz from Saturday 24 to Monday 26 August, promises to be particularly tense, as the issues between the seven major industrialised powers (Germany, Canada, France, the United States, Italy, Japan and the United Kingdom), or more specifically US President Donald Trump and his partners, are numerous: Iran, trade relations, the taxation of digital giants, and climate change.

For the first time, the Heads of State or Government will start the summit without having in hand a draft version of a communiqué prepared by the ‘sherpas’, according to a senior European official.

Instead, the leaders will adopt a series of thematic statements. However, the possibility that the Seven could agree to a joint statement is not ruled out, it was reported on Thursday, August 22.

This unprecedented approach is being taken by the French Presidency, Emmanuel Macron thus hoping to avoid the diplomatic disappointment of the Charlevoix summit, where Mr Trump had rejected the final communiqué a posteriori (see EUROPE 12038A15).

Another unprecedented event: the President of the European Commission, Jean-Claude Juncker, will not attend the summit due to health reasons (see EUROPE 12310/26). The European Union will therefore be represented by the President of the European Council, Donald Tusk.

The thorny question of Iran

It is in this atypical context that the leaders will start their summit on Saturday with an informal dinner on foreign and security policy. The main topic of discussion will be Iran, a stumbling block between the United States and other G7 members. The discussion should focus on the tensions in the Strait of Hormuz, but also on the Iranian nuclear deal, which the United States has left, while Iran has exceeded the authorised uranium limits.

"The Iran question divides the G7, but there is a huge paradox. I am convinced that the United States, the E3, the EU, but also Canada and Japan have the same objective. They do not want Iran to become a nuclear power and they are all concerned about Iran's non-constructive role in the region". It is the means used to achieve this that are not the same, summarised a senior European official, for whom tensions on the ground or between the United States and Iran are counterproductive. On Friday, the French President will meet with Iranian Foreign Minister Mohammad Javad Zarif.

G7 members are also expected to discuss Ukraine a few days after the meeting between the French President and Russian President Vladimir Putin, which, at the end, Mr Macron called for a summit in ‘Normandy’ format to be held "in the coming weeks" with German Chancellor Angela Merkel and the new Ukrainian President Volodymyr Zelensky.

According to a senior European official, Mr Tusk was also scheduled to meet with Mr Zelensky ahead of the G7 summit. Ukraine is an important issue for the G7, as it was due to Russia's illegal annexation of Crimea that Russia was excluded from the G8 in 2014.

While the US President positioned himself, on 21 August, for Russia's return to the club, the senior European official said that such a return would not be without conditions. "The EU remains firmly convinced that the reasons for Russia's exclusion in 2014 (...) are still valid today", the official explained. "Russia's unconditional re-invitation to G7 meetings will be counterproductive, a sign of weakness", the diplomat added, claiming that there were other formats for meeting leaders who do not share the EU's values in terms of respect for the rule of law, such as the G20.

Libya, Syria, the Middle East, North Korea and Venezuela are also expected to be discussed by G7 leaders.

Global economy, international taxation and GAFAs

On Sunday morning, the leaders will meet to gauge the pulse of the international economic situation.

Discussions could be heated due to ongoing trade tensions between the United States and China. But also, to a lesser extent, between Washington and the European Union, in particular France, which has adopted its "GAFA tax" aimed at American digital giants among others.

Thus, at France's invitation, the leaders will examine the reform of international taxation. The objective: to reach an agreement in the G7 to pave the way for a comprehensive agreement at the Organisation for Economic Co-operation and Development (OECD) level by the end of 2020 (see EUROPE 12272/3).

A consensus had already been reached at the G7 'Finance' meeting held in Chantilly in mid-July (see EUROPE 12299/10). Finance ministers - including US Treasury Secretary Steven Mnuchin - had agreed in principle on the two pillars of the reform (see EUROPE 12298/7). It remains to be seen whether US President, Donald Trump, will follow the advice of the US Secretary of the Treasury.

This subject therefore constitutes a "potential tension", acknowledged this European official in Brussels on Thursday.

From the EU's point of view, the objective remains to reach an international solution, but it will not hesitate to resume work on its proposal for a European Digital Services Tax (see EUROPE 12212/6) if no progress is made.

WTO in question. On Sunday morning, the leaders will follow up on the Osaka G20 commitments to modernise the World Trade Organisation (WTO) (see EUROPE 12285/8), in particular on dispute settlement.

Here, the EU's position will be to "defend" multilateralism against its detractors, including the current resident of the White House.

G7 Partnership with Africa. G7 leaders are expected to endorse a new peer partnership framework called for by President Macron for the sustainable economic development of the continent.

To this end, the representatives of Burkina Faso (current Chair of the G5 Sahel), Senegal (current Chair of the New Partnership for Africa's Development), Egypt, Rwanda and South Africa (respectively past, present and future Chair of the African Union) and international organisations (IMF, OECD, UN, World Bank) will join the discussion on Sunday afternoon.

A declaration should be adopted, focusing on the following priorities: - promote women's entrepreneurship; - digital transformation; - transparency of public procurement.

"It will not be a G7 document, but a joint document of the G7, African countries represented in Biarritz and the AU", said a senior EU official, in response to a journalist asking if there will be an opportunity to hear from African representatives.

Donald Tusk will be able, on behalf of the EU, to support an African Development Bank initiative, called AFAWA ("Affirmative Finance Action for Women in Africa"), to help African banks support the businesses of 100,000 women.

An action plan for the Sahel should also be endorsed, with a view to improving development and security cooperation with this African region, which is a strategic priority for the EU. Concerned by the deteriorating security situation, the EU continues to support the G5 Sahel Joint Force, with €138 million recently announced (see EUROPE 12293/13).

 "We will also support a French initiative to develop education in the Sahel and a Franco-German initiative to better coordinate contributions to improving the defence of the G5 Sahel countries. The eradication of terrorism in the Sahel is a fundamental issue for security in Europe", stressed the senior official.

Fight against inequalities and for the empowerment of women. The subject will be discussed on Sunday at lunch by G7 leaders with international organisations. The French Presidency would like each participant to make pledges on all areas of work. The EU will play its part.

With regard to gender equality, which should be the subject of a declaration, the EU will build on the commitment made by the future President of the European Commission, Ursula von der Leyen, on introducing binding pay gap transparency measures (see EUROPE 12298/18).

The EU will announce a major contribution to the replenishment of the Global Fund to Fight AIDS, Tuberculosis and Malaria (the so-called "poverty diseases") and will support the creation of an international fund for survivors of conflict-related sexual violence, following an initiative by the 2018 Nobel Peace Prize winner, Congolese doctor Denis Mukwege (see EUROPE 12146/19).

Climate, biodiversity and oceans. On the morning of Monday, 26 August, G7 leaders, African countries and international organisations are expected to discuss key environmental issues.

In the area of climate, the objective will be to prepare for the Climate Action Summit convened on 23 September in New York by UN Secretary-General António Guterres. This will formulate expectations.

Given the divergent positions of G7 members towards the Paris Agreement, and even within the EU, on climate neutrality by 2050, no declaration is foreseen at this stage.

Nevertheless, "it would be good to focus on a positive agenda. We hope that the G7 will be an important element of preparation for the September summit", said a senior European official. For this official, even if a European agreement on climate neutrality is not reached in New York (see EUROPE 12294/3), it is nevertheless "possible this year".

G7 leaders and their partners will follow up on the Ocean Plastics Charter, adopted last year in Canada. They are also expected to endorse the Metz Charter on Biodiversity, adopted by the G7 Environment Group last May in Metz, which is likely to be signed by Fiji, Gabon, Mexico and Norway.

Disinformation and artificial intelligence. The summit will end on Monday early in the afternoon, with a working lunch on digital transformations.

It will discuss in particular the question of fake news, which threatens the proper functioning of democracies, and the rise of artificial intelligence.

Brexit. The Brexit issue is not on the summit agenda, but it will also keep European leaders busy.

British Prime Minister Boris Johnson, who rejects the agreement reached between the EU and the United Kingdom to avoid the return of a physical border to the island of Ireland, met with the German Chancellor and the French President ahead of the summit (see EUROPE 12310/1, see other news).

Mr Tusk will meet with Mr Johnson on Sunday. It is expected that the British Prime Minister will present him with more details on the alternative solutions being considered by his government.

But expectations are low on the EU side, we are told, as the British government is expected to present a detailed plan only by the end of September.

A European source indicated that the outcome of the discussions on Brexit could have an impact on the decision to approve, or not, a joint communiqué.

Counter-summit. In parallel, an alterglobalisation and peaceful counter-summit will be held a short distance from the G7 in Hendaye, aimed at proposing alternatives to the "wild" capitalism that the G7 embodies in the eyes of the organisers, the G7 EZ! platform. (Original version in French by Pascal Hansens with Camille-Cerise Gessant, Marion Fontana and Aminata Niang)

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