G7 summit: World’s top donors to mark shift from traditional development

The leaders of the G7 countries are convening this week in the lakeside French resort of Evian-les-Bains, a stone’s throw away from one of the world’s top UN hubs, as the aid sector there grapples with its deepest funding crisis to date. All combined, the exclusive club covers about three-quarters of development aid. Global aid spending was slashed last year by nearly a quarter – G7 members the US, Germany, France, the UK and Japan making up about 96 per cent of that drop. 

US president Donald Trump, whose administration led the gutting and has rejected the international solidarity approach, will be in the room. What they decide – or don’t – this week may shape the future of international development.

From ‘aid-dependency’ to partnerships

France, which holds the G7 presidency this year, has made “reducing global economic imbalance” its priority – a return to the original spirit of Rambouillet, the French town where the first summit was held in 1975. But don’t expect major financial commitments like in the past. Rather than new cash, a change of model is on the table. A communiqué signed by G7 development ministers in April states the goal is to “end aid-dependency” and “build a reformed development system based on mutually beneficial partnerships” – powered by private capital and domestic resources rather than traditional aid.

Gilles Carbonnier, professor of development economics at the Geneva Graduate Institute, has been following the meetings from afar. “This is among those G7 summits that are dealing with north-south relationships in a prominent manner,” he says, where the historic narrative of wealthy countries handing out money to poor countries is seen as out of touch.

But the path towards those mutual benefits, warns Céline Kauffmann, chief programmes officer at the policy research institute IDDRI, which co-leads the Think 7 – the official G7 engagement group for think tanks – “remains nebulous”. “Given the power play, and discussions underway in the G7,” she writes in a blog post, “it is likely that the emphasis (will) be put on supporting donor countries’ own objectives, as illustrated by the comeback of tied aid.”

Health signals a hard pivot. Following devastating aid cuts – particularly in Africa, where health budgets were heavily reliant on the US – the G7 proposes a framework for “health sovereignty financing and self-reliance” where development banks and private capital take the lead over institutions like the World Health Organization.

To tax or not to tax

One key pillar of this shift, G7 documents show, is domestic resource mobilisation – boosting countries’ ability to finance their own development. But the wealthy economies don’t exactly see eye to eye with their developing counterparts on how to get there. “You have a big push, especially from African countries, to negotiate a new global tax treaty under the UN to adopt fairer global tax rules that would help developing countries mobilise domestic resources,” says Carbonnier. “It would help curb illicit financial flows and tax base erosion and aggressive tax optimisation, especially from international companies.”

But G7 countries have stopped short of endorsing the convention – the US walked out of negotiations last year – favouring instead a softer approach involving technical assistance for tax reform and budget management. “They prefer to have tax matters at the Organisation for Economic Cooperation and Development (OECD), where they have more control, rather than at the UN where it’s one country, one vote,” says Carbonnier.

Kenya, one of the convention’s leading proponents – whose president, William Ruto, has been invited to Evian by French president Emmanuel Macron – is likely to raise the issue at the summit.

The US outlier

The US foreign policy pivot complicates the picture. Washington withdrew last year from the landmark OECD agreement on a 15 per cent global minimum corporate tax and has aggressively rejected any mention of the Sustainable Development Goals in internationally agreed documents. Climate change, which Trump has called a hoax, appears absent from ministerial documents produced so far in the run-up to Evian, though financing nature and protection of oceans have made their way in. 

Macron is unlikely to push for ambitious language that Washington won’t sign, marking a stark departure from previous G7 editions that produced prominent initiatives on climate finance, clean energy and fossil fuel subsidies – whether those materialised is another story. 

Perhaps the most potential lies in infrastructure investment, according to Carbonnier – building on a $600 billion investment plan launched in 2022, France is pushing a new approach to so-called economic corridors linking strategic supply chains from developing countries to G7 nations, with access to critical minerals at the core.

“The proposal is portrayed as a counter-narrative to China’s Belt and Road Initiative,” says Carbonnier – though the sum pales in comparison to the trillions Beijing has already invested in ports and roads. “This will certainly be a major aspect that will be discussed and negotiated, and potentially have a concrete outcome to be boasted about at Evian against the background of a declining ODA,” Carbonnier says.

For developing nations, that may be their silver lining. “If China, the US and Europe compete for infrastructure investment, host countries in Africa and elsewhere have more leeway to negotiate better terms,” says Carbonnier. 

UN sidelined

Where does that leave the dozens of organisations just across the lake that have until now been the backbone of development aid? There is no indication that UN secretary general António Guterres, World Health Organization chief Tedros Adhanom Ghebreyesus or any other UN leader will be at Evian like in previous summits. Instead, Sam Altman, CEO of OpenAI – the company behind ChatGPT – will attend the leaders’ summit to hold “leader-level conversations” on online safety and AI risks. It’s a rare seat at the table for a business leader. 

“If you look at both domestic resource mobilisation and infrastructure investment, the major actors are rather the World Bank, regional development banks and bilateral ones like Agence Française de Développement and the US Development Finance Corporation,” says Carbonnier.

“It will be interesting to see also how the French presidency navigates this, trying to still get the UN meaningfully involved and focus on preserving, let alone strengthening, the multilateral system.”

With war in Ukraine and the Middle East dominating the agenda – and Trump, Volodymyr Zelensky and Gulf leaders expected in Evian –, the crucial question of the future of aid risks being overshadowed entirely.