Finance ministers from the G7 are meeting in Paris for two days to try to bridge their positions in the face of the economic repercussions of the conflict in the Middle East and to break free from dependence on critical Chinese minerals.
“We will show that multilateralism is useful and that it works,” said French Economy and Finance Minister Roland Lescure to journalists on Monday morning.
With a month to go before the G7 summit in Evian (June 15-17), France aims to maintain the course of dialogue as geopolitical and trade tensions escalate and undermine international relations, even with the invisible American ally under Donald Trump.
Trump, who again threatened Iran with annihilation on Sunday, hints at a potential resumption of strikes and the end of the fragile truce in effect since April 8.
“We are facing major challenges, the war in the Middle East, obviously, the unsustainable multilateral imbalances, the issues of rare earths, critical materials, and development aid,” detailed Roland Lescure.
“The way global growth is happening today is clearly unsustainable,” he added.
In a statement, German Finance Minister Lars Klingbeil emphasized that “the G7 is the appropriate framework for discussing these urgent issues with the United States and the other G7 countries.”
At the top of the agenda for the G7 finance ministers: the economic consequences of the war and the blocking of the Strait of Hormuz by Iran, essential for the transportation of hydrocarbons and fertilizers, with prices skyrocketing.
As a result of this situation, the International Monetary Fund (IMF) expects slower global growth and higher inflation in 2026.
The head of the International Energy Agency (IEA), Fatih Birol, warned Monday that there are still “several weeks” of commercial oil stocks but they are declining “very rapidly.”
A new release of strategic stocks, like in March, is not on the agenda according to Roland Lescure. However, he was willing to “discuss” it if necessary in the near future.
These inflationary fears have led to a strong selling movement of government debt securities in recent days, resulting in an increase in sovereign debt interest rates.
Upon arrival at the G7 Finance meeting, European Central Bank President Christine Lagarde expressed her constant concern saying, “We can do a lot to calm the markets and instill a positive dynamic.”
Regarding inflation, IMF Managing Director Kristalina Georgieva urged not to take “measures that would worsen the situation.”
To mitigate the rise in oil prices, Washington had paused sanctions on Russian oil until May 16, related to the war in Ukraine. However, European Commissioner for the Economy Valdis Dombrovskis emphasized the need to maintain and enforce sanctions against Russia.
In addition to discussing these urgent issues, the ministers will also try to resolve disagreements over international trade marked by American customs tariffs and Chinese industrial overcapacities while securing their supplies of critical minerals.
Against a backdrop of trade, geopolitical, and financial tensions, a common recognition of the situation would be considered a significant advancement by the French presidency.
There is also a focus on combating terrorism financing after the G7 meeting with Iran in sight. Scott Bessent, the American representative, called on all partners to comply with sanctions to combat illicit financing and to return money to the Iranian people.
This G7 meeting, which also includes central bank governors from the member countries, comes a few days after Donald Trump’s visit to Beijing, without any major announcements.
Photo credits: Julien De Rosa, Josephine Gruwe-Court.
