Aurelia Butler

Fumio Kishida visited Kyiv in March, a very rare example of a Japanese leader visiting a war zone © Sergei Chuzavkov/AFP via Getty ImagesBack in 2016, when Fumio Kishida, then Japan’s foreign minister, took his G7 counterparts to the A-Bomb Dome in Hiroshima, he believed “this would be the first step towards the abolishment of nuclear weapons”.But, seven years later, as he returns to his family’s home city to chair the G7 summit as prime minister, his dream of a world without nuclear weapons appears more distant than ever.Since last year’s invasion of Ukraine, Russian president Vladimir Putin has made repeated threats about using nuclear weapons, while the growing arsenals of China and North Korea have underscored the continuing need for the US nuclear umbrella that helps to protect its allies including Japan.“I do feel that the path towards a world without nuclear weapons has become even tougher than before,” Kishida admitted in a group interview last month. But he added that it was Japan’s responsibility as the only country to have ever suffered atomic bombings to “continue raising the banner of our ideals” to achieve the goal of nuclear abolishment.

The G7 summit in 2016 was marked by a visit to the A-Bomb Dome in Hiroshima © Jonathan Ernst/AFP via Getty Images

However, with Kishida’s family roots in Hiroshima, where, on August 6 1945, at least 80,000 people died when the US became the first and only country to launch a nuclear attack, disarmament remains at the heart of his political career. Consequently, the topic is expected to feature prominently as leaders of the world’s most advanced economies gather this weekend.The G7 countries — among which the US, France and the UK have nuclear arms — have already come under criticism after a meeting of foreign ministers last month failed to present new steps to eliminate nuclear weapons. Whether the main summit can deliver more concrete ideas will be closely watched, including by those in the host city of Hiroshima.“We hope that [the G7] will be able to firmly outline a direction for the ultimate goal towards a world without nuclear weapons that does not rely on deterrence,” says Kazumi Matsui, mayor of Hiroshima city.

The A-Bomb Dome monument in Hiroshima © Yasuyoshi Chiba/AFP via Getty Images

But the summit comes as G7 members are divided on a host of other key issues, ranging from tougher sanctions against Russia, to the US-China dispute, climate strategy, economic coercion, dealings with the Global South, and the rapid development of artificial intelligence.And for Kishida, the stakes are high — both at home and internationally.Since Russia launched its full-scale invasion of Ukraine in February 2022, the Japanese prime minister has repeatedly warned that it “might be east Asia tomorrow”. He has ended Tokyo’s decade-long courtship of Moscow and rolled out tough sanctions, while pushing through a significant rise in defence spending. In March, he made a surprise trip to Kyiv — the last G7 leader to do so, but a very rare example of a Japanese leader visiting a war zone.

The war in Ukraine is high on the summit’s agenda © Carlos Barria/Reuters

Analysts say the G7 summit will now demonstrate whether Kishida has been successful in underscoring the risk of a potential conflict in Taiwan, and in laying the groundwork for a unified response if China follows through on its threat to take it by force.“Any unilateral attempt to change the status quo by force must not be tolerated anywhere in the world. In addition, security in Europe and security in the Indo-Pacific are inseparable,” Yoshimasa Hayashi, Japan’s foreign minister, said in a written interview with the Financial Times. “At the G7 Hiroshima summit, we intend to . . . demonstrate G7’s determination to uphold the free and open international order based on the rule of law.”Concerns had emerged over Europe’s stance on the issue after French president Emmanuel Macron, while on a trip to China last month, warned Europe should not get “caught up in crises that are not ours”.Following an international backlash, Macron has since explained that he supported the status quo over Taiwan and wanted Europe to present a united front against China.

Nevertheless, the escalating dispute between the US and China has left many economies — including Germany and Japan — wrestling to work out a strategy that allows them to straddle both markets, even as concerns mount about Beijing’s military ambitions.As a result, many G7 members are reluctant to name China at the summit in the context economic coercion — even as they discuss economic security measures such as strengthening supply chains to reduce reliance on Beijing.Beyond the international consequences, a successful outcome for the G7 meeting would be likely to increase the chances of Kishida calling a snap election as early as the summer, to solidify his leadership. His term as head of the ruling Liberal Democratic party runs until September 2024.While the prime minister has struggled to make his mark on domestic economic policies, his approval rating has improved in recent months on the back of his foreign policy successes including a rapprochement with South Korea.With the world even more deeply divided following the global energy and food crisis sparked by the war in Ukraine, Kishida’s diplomatic skills will be tested. “China’s support for Russia in the war has driven a significant shift in European threat perceptions, and a re-evaluation of relations with Beijing, but there is still something of a gap,” says Christopher Johnstone, Japan chair at the CSIS think-tank and a former Pentagon official. “A key measure of success for Kishida at the G7 will be whether the leaders are able to deliver a strong and unified message on China, including related to Taiwan and economic coercion.” More

Smiles all round: G7 leaders meet at a Nato summit in 2022 © Henry Nicholls/Getty ImagesTowards the end of the acute phase of the global financial crisis in 2009, the Group of Seven appeared dead as an economic and political bloc. Representing only 35 per cent of the global economy, the then IMF head joked it was the “late G7”.The plan was for France to perform the coup de grâce when it chaired the G7 and G20 in 2011. From that point on, the G20 would be the “premier forum for international economic co-operation” and decisions of global importance would no longer be taken by a small and unrepresentative club of just seven industrial countries.The plan never materialised. Through the 2010s, G7 finance ministers of the US, Japan, Germany, France, UK, Italy and Canada met regularly with little consequence. National leaders met at a G8 level until 2014, when Russia was expelled for its annexation of Crimea, part of Ukraine’s sovereign territory. When Donald Trump was US president, the summits were occasionally spectacular failures.In 2018, he left early, refused to sign up to a communique praising the “rules-based” system of global trade and called the host, Canadian prime minister Justin Trudeau, “dishonest and weak”.

The G7 meeting in 2018 ended in acrimony © Jesco Denzel/Bundesregierung/Getty Images

But the 2020s have been different. President Joe Biden’s administration has taken a shine to the G7 — not as the forum to thrash out global solutions, given it now represents only 30 per cent of global GDP — but as a body of like-minded advanced economies that are able to agree a united front. And this reappraisal has come at a time when the G20’s relevance in economic affairs has dwindled, with the body, including China, Russia and the US, unable to agree on much of substance.Professor Eswar Prasad at Cornell University says: “In a rapidly fragmenting geopolitical order, the G7 represents a largely unified but now far from dominant block of countries with similar economic and political values”.“Ironically, the dysfunctionality of the G20 and the open rancour among its members have led to the G7 regaining some of its relevance.”

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The first indication of the renewed relevance of the G7 came early in the Biden presidency when his Treasury secretary, Janet Yellen, decided to cede some ground in some parts of international tax negotiations in order to achieve a US prize of a global minimum corporate tax rate.She came to London to a G7 finance ministers’ meeting in June 2021 with a proposal to stop a race to the bottom of global corporate tax rates alongside a radical move to allow all countries to collect some tax from foreign multinationals doing business in their countries. Securing what all sides said was a “historic agreement”, the G7’s actions proved to be the catalyst for a later global agreement among 136 countries.In 2022, the G7 cemented its newfound relevance for western nations by acting as the forum to calibrate and set sanctions on Russia following its invasion of Ukraine.

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By September, the bloc had agreed a price cap on Russian oil — aiming to allow the oil to flow and to keep global prices down, while depriving Moscow of significant revenues from fuel.This was imposed in December last year at a price of $60 a barrel with subsequent caps on petrol, diesel and other fuel oils effective from February this year. In an assessment of the sanctions, Elina Ribakova, senior fellow at the Peterson Institute for International Economics, says that the G7’s actions, seeking to limit flows of money to Russia from oil exports, were “a smart thing to do” although there were huge incentives for Russia and shipping companies to seek to circumvent the price cap.Noting the lack of officials or procedures to enforce the cap, Ribakova adds, “it’s novel, but the G7 is trying to implement economic statecraft without an institutional set-up,” suggesting the cap was likely to get increasingly leaky. Those concerns, however, did not invalidate the overall effect of the G7 and EU’s sanctions, she says. Other measures and sanctions would intensify the squeeze on Moscow’s finances: “Russia’s economic challenges will only worsen as the war continues with no end in sight”.

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John Kirton, director of the G7 research group at Toronto university, says these actions and others showed that the G7 was able to produce robust conclusions to summits that were useful for the world at a time when “the G20 is missing in action”.“This year, what we’ve seen so far, empirically, is that the G7 is on the road back to life on everything — on macroeconomics, security, Russia’s war in Ukraine and energy,” Kirton says, adding that his group’s research showed that member states generally implemented and complied with agreements struck at G7 summits.The Hiroshima summit will take the G7 into a further new area for 2023, though. In finance ministers’ meetings so far this year, the ministers have focused on building economic resilience and security, trying to define a world of “de-risking” from China — reducing dependencies on critical elements of supply chains, rather than “decoupling” and casting the country into the economic wilderness.The finance ministers concluded in April that, “in this endeavour, we will stand firm to protect our shared values, while preserving economic efficiency by upholding the free, fair and rules-based multilateral system and international co-operation”. That will be a considerable challenge in 2023. More

In the months leading up to the G7 summit in Hiroshima, the US, EU and Japan cautiously united behind a policy towards China that rules out a full decoupling of trade between them — as the world’s most advanced nations — and Asia’s largest economy.But how the G7 will strike the right balance between national security and economic interests remains a challenge that is likely to weigh heavily during the summit meeting. The gathering will also be joined by leaders of developing countries including India, Indonesia, Vietnam, Brazil and the Indian Ocean island-nation of the Comoros.“What Japan intends to do, rather than decoupling from China, is to strategically identify areas where collaboration is possible and areas where risks should be avoided,” said Yoshimasa Hayashi, Japan’s foreign minister, in a written interview with the Financial Times. “The Japanese government will continue to encourage co-operation in the economic field in a manner that contributes to the national interest of Japan as a whole.”This so-called de-risking strategy is an approach first put forward by European Commission president Ursula von der Leyen in March, when she called for “new defensive tools” for sectors such as quantum computing and artificial intelligence. Since then, UK and Japanese officials have started adopting that same phrase, while the US is emphasising that its China policy is focused on “de-risking”.

At the summit, in addition to tackling Beijing’s military ambitions and the risk of a conflict over Taiwan, prime minister Fumio Kishida will aim to project G7 unity in addressing economic security, generally. But a pillar of that initiative involves how the member countries can collectively deter other nations — notably China — from using economic pressure to try to force individual governments into political concessions.“All of the G7 countries do not have a hardline approach on China but they can agree on where they need to protect themselves against China and the newest element [to that debate] is how they need to respond against economic coercion,” says Ryo Sahashi, associate professor of international politics at the University of Tokyo.Sahashi says it is unlikely that the G7 members would agree on new economic security tools, such as export controls or an anti-coercion instrument, at the Hiroshima summit, but he adds that “maintaining the momentum” to work together on this issue would still be important.The US, the EU and Japan agree on the importance of economic security and the need for the so-called “like-minded countries” to collaborate to protect critical technologies, intellectual property, and supply chains.However, the approach taken by each country has been different, influenced largely by the extent of its reliance on the Chinese economy.The Biden administration has pursued the most aggressive path to decoupling China from the US in cutting-edge technologies, while Europe and Japan have taken a more selective approach given the deep ties and intricate supply chains they have established in China.Tokyo also feels more vulnerable to Beijing’s retaliation if the G7 pushes too far, having experienced a cut-off of rare earth mineral supplies in 2010 and the arrest of 17 of its nationals in China since the country passed a counter-espionage law in 2014. China has already criticised the G7’s focus on economic coercion, saying that it was the victim of economic bullying by the US.“China knows very well that Europe tends to see the economy before national security in their relations with China, so China is likely to attempt to split Europe using its economic strength,” suggests Nobukatsu Kanehara, former assistant chief cabinet secretary during the administration of late prime minister Shinzo Abe.“In Japan’s case, Taiwan is right in front of their eyes so Japan feels decoupling of cutting-edge semiconductor technology is inevitable, but it still needs to find a balance since full decoupling is impossible,” he explains.The US last year introduced sweeping export controls that would severely complicate efforts by Chinese companies to develop cutting-edge technologies with military applications. Washington is now seeking the support of its allies as it finalises a new outbound investment-screening mechanism aimed at China.Brussels is also examining the creation of its own mechanism for scrutinising overseas investment by EU companies in a small range of sensitive technologies that could enhance rivals’ military capabilities. But officials are unlikely to agree to “a shared mechanism” with the US.

Meanwhile, Japan has unveiled curbs on the export of 23 kinds of technology as part of a deal reached with the US and the Netherlands in March. In both Europe and Japan, though, the measures are not targeted against a single country.Rahm Emanuel, the US ambassador to Tokyo, has argued that a response to Beijing’s economic coercion needs to “be collective and must be led by the United States”, but Tokyo still prefers to use the World Trade Organization as a mechanism to resolve disputes.“The difficulty about economic security is that countries are both collaborators and rivals,” observes Kazuto Suzuki, professor at the University of Tokyo. “If US companies suffer, it’s an opportunity for Germany, France and Japan. That is why the thinking of the US, EU and Japan will be different and it will be difficult to reach a consensus on how aggressively they will use export controls against China.” More

The writer is prime minister of JapanWhen I visited Ukraine in March and met President Zelenskyy, I expressed to him my commitment to maintaining the unwavering unity of the G7 for strict sanctions against Russia and our robust support for his country. At my invitation, he will participate in discussions at the G7 summit in Hiroshima this weekend.Japan has pledged $7.6bn in assistance for Ukraine. Some people might wonder why a geographically distant country is so committed. This is because Russia’s aggression against Ukraine is not only a matter of European security, but also a challenge to the free and open international order based on the rule of law. Today’s Ukraine may be tomorrow’s east Asia. We are determined to uphold the rule of law, firmly rejecting the rule of force.The world faces a complex set of crises today, including climate change, the pandemic and geopolitical crises. At the G7 summit, I and my counterparts will discuss regional situations such as Ukraine and the Indo-Pacific, including east Asia, notably China and North Korea. We will also discuss the global economy, including food and energy security; economic resilience and economic security; nuclear disarmament and non-proliferation; digital technologies; and global issues such as climate change, health and development.As a holder of the G7 presidency, Japan would like to take the lead in responding to these multiple crises. While each member’s interests may vary in addressing these challenges, the G7 is determined to respond in a united manner to any challenge to the existing international order based on the rule of law that we depend on, wherever it occurs. This unwavering determination is the most important message of this G7 Hiroshima Summit.The Indo-Pacific region is expected to be the centre of gravity for the international community in the future, with the promise of the most dynamic economic growth and innovation. That said, it also faces emerging challenges that affect the international community as a whole, including unilateral attempts to change the status quo by force, non-market practices and economic coercion, as well as the issue of how economic growth can be compatible with climate change.In March this year, the UK announced the Integrated Review Refresh of its security, defence, development and foreign policies, and its accession negotiations on the Comprehensive and Progressive Agreement for Trans-Pacific Partnership reached substantial conclusion. By demonstrating its commitment to the Indo-Pacific region, the UK shows that it fully recognises that peace and prosperity there are in its own interests. This permanent engagement with this region is strategically and geopolitically astute. It is encouraging that the UK is looking decades into the future and making its investments from a long-term perspective.This is not merely in terms of securing its economic interests such as trade, or safeguarding supply chains for semiconductors and critical resources. International co-operation on global issues, which support the national interests of the UK and Europe as a whole, require efforts that transcend regional boundaries.At the same time, addressing the challenges that the world is facing today requires the efforts of the entire international community, including the so-called Global South. As the G7, we would like to strengthen our outreach. That is why I recently visited Egypt, Ghana, Kenya and Mozambique, and have invited Australia, Brazil, Comoros, the Cook Islands, India, Indonesia, the Republic of Korea, and Vietnam to the Hiroshima Summit for discussions.Whether it is about the situation in Ukraine or climate change, it is important to let the so-called Global South decide to deepen co-operation with the G7 by choice, not by imposition, if we are to gain ­co-operation from the entire international community. The key is that the international community, including the G7, firmly responds with unity to situations like Ukraine wherever they occur. Moreover, it is also important that the G7 shows solidarity with, and helps to shoulder the burden of, vulnerable countries.From this perspective, I presented a new plan for a Free and Open Indo-Pacific when I visited India in March. I announced support for the growth and economic resilience of the Indo-Pacific countries through establishing a free and fair economic order, strengthening connectivity, including through infrastructure development, and ensuring maritime peace and stability. Through dialogue with other countries, we hope to lead the international community away from fragmentation and towards co-operation.The G7 Summit that is to be held in Hiroshima has special significance. For 77 years since the atomic bombings of Hiroshima and Nagasaki, humanity has not used nuclear weapons. We must never neglect this historic achievement.Nuclear weapons must never be used again, and irresponsible nuclear rhetoric, including threats of nuclear weapons such as those made by Russia, is never acceptable. There is no better place than Hiroshima to send the message of moving towards “a world without nuclear weapons”. I look forward to deepening discussions with the G7 leaders to promote realistic and practical efforts in this regard.It is critical that the G7 takes the initiative when the world faces a complex set of crises. Japan is determined to exercise leadership while it holds the G7 Presidency, and co-operation from each member of the G7 is indispensable. More

WASHINGTON (Reuters) – President Joe Biden and Republican U.S. House Speaker Kevin McCarthy have voiced growing confidence about striking a debt-ceiling deal to avoid a catastrophic default, but they could be tripped up by last-minute opposition from the hardline House Freedom Caucus. The small but powerful Republican faction warned this week that they could try to block any agreement to raise the $31.4 trillion debt ceiling from passing the House of Representatives, if the accord does not contain “robust” federal spending cuts. “If the president thinks that there’s just going to be some acclamation like – ‘Oh, great, yeah! We’ll do whatever just to get a deal!’ – that’s insane, right? We need something that’s going to work,” said Representative Chip Roy, a prominent Freedom Caucus member.   While there are many variables at play, opposition from the Freedom Caucus could, at a minimum, slow down passage of a bill at a time when the economy can ill afford it, given the Treasury Department’s warning that the federal government could be unable to pay all its bills as soon as June 1.Market optimism about a potential deal has helped U.S. stocks rise over the past two days. Senate Majority Leader Chuck Schumer seemed to share that optimism on Thursday. He said negotiations were making progress and gave senators 24-hours notice to return to Washington for a possible vote on a deal next week.But the upbeat view could be spoiled if negotiations bog down. Freedom Caucus members are demanding greater spending austerity than some Democrats will accept. “It’s important that it be a robust deal. Something tepid won’t do,” said Representative Dan Bishop, a Freedom Caucus member.The caucus issued its official position on Thursday, urging the Democratic-led Senate to enact the Republican debt-ceiling bill that passed the House in April, which would pare discretionary spending to fiscal year 2022 levels and cap future annual growth at 1%. ‘NO MORE DISCUSSION’Official positions require support from at least 80% of the group’s membership, which includes at least 37 lawmakers, according to a Reuters tally. Republicans hold a narrow 222-213 majority in the House of Representatives. “There should be no further discussion until the Senate passes the legislation,” the Freedom Caucus statement said. In a tweet, the group added: “No more discussion on watering it down. Period.”Freedom Caucus member Bob Good is one of several hardliners who say they stand ready to oppose bipartisan legislation that fails to meet their goals, despite the risk of a default that could cripple the U.S. economy and unsettle global financial markets.Good said he believes that Biden and Democrats would adopt the House bill if faced with default, because default would result in a far greater drop in spending for programs Democrats support.But the prospect of an agreement that could include tougher work requirements and spending cuts for food aid recipients has led to growing frustration among Democrats. This has prompted a group of senators to urge Biden to try to use an untested legal theory to invoke the 14th Amendment to the U.S. Constitution and raise the debt ceiling without Congress. While a bipartisan deal could still pass despite Freedom Caucus opposition, a split within the Democratic caucus over the right approach could give the faction greater sway in a debt-ceiling vote, especially if the group adopted a formal position that led members to vote en bloc. With default looming, McCarthy could then be forced to risk his own speakership by relying on Democrats to help increase the debt ceiling. Members of the Freedom Caucus made McCarthy endure 15 floor votes before being elected to the top House post in January and stood aside only after he agreed to their demands, including a rule allowing a single lawmaker to call for his ouster. “What we went through back in January was a reflection of Republican voters across the country and their frustration with the Republican Party not delivering,” Good said. More

Some of the world’s largest chipmakers have agreed to invest billions of dollars in Japan as developed economies seek to reduce their dependency on Taiwan’s semiconductor industry amid rising tension between the west and China.Japanese prime minister Fumio Kishida met the heads of leading western chipmakers, including Taiwan Semiconductor Manufacturing, South Korea’s Samsung Electronics and Intel and Micron of the US, in Tokyo ahead of the G7 summit that begins tomorrow in Hiroshima.Semiconductors, which are integral to modern technology, have emerged as an area of intense focus for the US and its allies since Russia’s invasion of Ukraine. Taiwan is at the centre of the global chipmaking industry but is at risk of a possible invasion by China, which sees it as part of its territory.According to experts, Taiwan makes 65 per cent of the world’s semiconductors and almost 90 per cent of the most advanced chips. Here’s what else I’m watching in the days ahead:G7 summit: The gathering of world leaders will open in Hiroshima today.Japan inflation: April consumer price index inflation rate figures are due today.FT US Weekend Festival: It’s not too late to register to join Saturday’s US FT Weekend Festival online or in person. Register to hear from leading FT journalists in conversation with Hillary Rodham Clinton, Jamie Lee Curtis, Salman Rushdie and more. Who will win the US-China tech war? Join leading FT journalists and a Nikkei Asia colleague for a subscriber-exclusive webinar on May 25 at 12:30pm BST and put your questions to the panel: James Kynge, Eleanor Olcott, Ed Luce, Cheng Ting-Fang, moderated by Geoff Dyer.Five more top stories1. Carl Icahn admitted he was wrong to bet that the market would crash after the ill-fated trade cost his firm nearly $9bn over roughly six years. The activist investor lost about $1.8bn in 2017 on hedging positions that would have paid out if asset prices had tumbled before losing a further $7bn between 2018 and the first quarter of this year, according to a Financial Times analysis. Read the full story here.2. G7 countries are preparing new sanctions against Russia, covering ships, aircraft, individuals and diamonds, officials say, as they seek to increase economic pressure on the Kremlin. The plan to curtail imports of diamonds from Russia targets one of Moscow’s few remaining export industries still relatively unscathed by western sanctions.3. TikTok is facing its first ban by a US state over national security concerns after Montana’s governor signed a bill prohibiting downloads of the Chinese-owned social media app. The bill, signed by state governor Greg Gianforte yesterday, takes effect in January.Artificial intelligence: Turing Award winner Yoshua Bengio warns of a “danger to political systems, to democracy, to the very nature of truth” from advanced artificial intelligence systems such as OpenAI’s GPT. Read more from his interview with the FT.4. Alibaba is planning a massive shake-up of its tech empire as it prepares to list its logistics and grocery businesses within the next 18 months and spin off its cloud division. Read more from Alibaba’s first financial results since the tech giant announced plans to split into six businesses.5. Indian tycoon Gautam Adani has invited bankers on a three-day trip next month to tour his conglomerate’s prized assets and restore confidence after a short seller accused his group of accounting fraud and stock price manipulation. Here’s what’s on the agenda. How well did you keep up with the news this week? Take our quiz. Big Read

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The FT’s Chris Giles looks at why economists at central banks around the world have underestimated the scale and persistence of inflation.Take a break from the newsFT writers nominate their favourite home-from-home hotels, from a former lakeside camp for the Rockefellers to a 19th century ryokan in Japan.Additional contributions by Gordon Smith and Gary Jones More