On Tuesday 19 May, the Finance Ministers and central bankers of the G7 countries, meeting with the European Commissioner for Economy, Valdis Dombroskis, the President of the European Central Bank, Christine Lagarde, and the President of the Eurogroup, Kiriakos Pierrakakis, agreed to “closely monitor (...), with the support of International Organisations”, the effects of the conflict in the Middle East on global growth and financial market conditions.
“We remain committed to (...) cooperate in our policy responses, that should be temporary, targeted and fiscally responsible to protect growth, support economic security, and enhance resilience”, said the Ministers of the world’s major economies in a joint declaration finalised at midday on Tuesday.
With US President Donald Trump announcing on Monday that he had abandoned a new attack on Iran, which he said should have taken place on Tuesday, and an inflationary scenario linked to the persistent surge in oil prices shaking up the bond market at the same time, the G7 Finance Group stressed the need to reopen the Strait of Hormuz.
“Everyone agrees that the absolute priority is to restore the flow of trade. We call for the reopening of the sea lanes and a lasting resolution to the conflict”, declared the French Minister for the Economy, Roland Lescure, at a press conference.
“The G7 is united in calling for the reopening of the Strait and an end to hostilities”, said Canadian Finance Minister François-Philippe Champagne, while almost 1,500 ships are blocked by the Iranian Islamic regime in the Persian Gulf.
Faced with such a situation, the G7 Finance Ministers agreed on the “importance of strengthening the resilience” of their economies “through supply chain diversification”.
In addition, the meeting – held exceptionally on Tuesday in the presence of Ministers and central bankers from India, Brazil, South Korea, and Kenya – was also aimed at deepening “mutually beneficial” international partnerships, securing access to critical minerals and, more broadly, aligning policies to promote balanced growth.
“Countries with large and persistent external deficits should undertake policies that include supporting domestic savings and fiscal consolidation. Countries with large and persistent external surpluses should strengthen domestic sources of growth: (...) such growth policies could include increasing investment; removing barriers to higher productivity; reducing market distortions; improving social safety nets; lifting constraints on private demand growth; and avoiding distortive policies with negative spillovers to other countries”, the Ministers noted in their declaration.
“On the one hand, China is accumulating an excessive surplus that is growing every day; on the other, the United States is experiencing a major deficit; and Europe, for its part, is not investing sufficiently”, Roland Lescure noted before the press.
“This situation undermines our citizens’ confidence in globalisation and in our own model. This is not good news for any country, including those outside the G7”, he declared.
EU disagreement over US exemption from sanctions on Russian oil. While Washington decided for the second time on Monday to extend for 30 days its exemption from sanctions on Russian oil stored at sea in order to ease the pressure on the hydrocarbons market, a contrario the European Commissioner for Economy, Valdis Dombrovskis, felt that it was necessary to maintain a strong sanctions regime on Russia.
“Our message was clear that now is not the time to ease sanctions against Russia. Unfortunately, Russia is profiting from this war in Iran and is enjoying windfall revenues”, he told a small group of journalists on Tuesday afternoon, including Agence Europe.
In addition, the Commissioner once again called on the G7 countries to mobilise in support of Ukraine, while the European Commission finalises the contours of the €90 billion loan to Kyiv with a view to disbursement in mid-June.
Critical minerals. The Ministers agreed to strengthen their cooperation to secure and diversify supply chains for critical minerals, building in particular on the G7 Alliance for Critical Minerals launched under the Canadian Presidency and on the RISE (‘Resilient and Inclusive Supply-chain Enhancement’) partnership initiated under the Japanese Presidency in 2023, in order to mobilise more public and private investment and reduce strategic dependencies.
See the G7 declaration on the state of the world economy: https://aeur.eu/f/lyv
See the communiqué on Ukraine, supply chain diversification, and partnerships: https://aeur.eu/f/lyw
And guidelines aimed at strengthening the mobilisation of domestic public resources in partner countries: https://aeur.eu/f/lyx (Original version in French by Bernard Denuit)