The G8 is a group of the world’s largest, most powerful free market economies. Membership is by invitation only. The national leaders of the G8 member nations meet once each year to discuss political and economic issues and to adopt common policies and actions on those issues.

The G8 is not a democratic institution. Decisions are a result of negotiations and consensus. Economic power and influence determines the outcome of negotiations rather than formal voting. So, despite the fact that each member is a sovereign and democratic state, it is economic clout that is most important at G8 meetings, not the electoral mandate of any of the government leaders attending.

Membership in the G8 is currently restricted to: Britain, Canada, France, Italy, Germany, Japan, Russia and the United States. However, the decisions made at these meetings are so critical to the world’s other nations that the President of the European Commission, and the leaders of the World Bank, International Monetary Fund (IMF), World Trade Organization (WTO) and United Nations (UN) attend as observers only.

Where did the G8 come from? The origins of the G8 lie in the early 1960’s, when the finance ministers and central bank governors from the U.S. and nine European countries began meeting as the G10 to make to cooperate on international financial issues. In 1971, United States was facing a balance of payments crisis and runaway inflation because of the Vietnam War. That year, the U.S. removed the dollar from the gold standard - triggering a rapid increase in unregulated international finance.

Two years later, the OPEC nations and international oil corporations created massive global inflationary pressures and a balance of payments crisis with sudden, extreme increases in the price of oil.The Americans tried to use the G10 to help resolve the situation – but were increasingly frustrated by European dominance of the group. The European response was quite divergent from American wishes – but with obstruction from the European countries, there was little the U.S. could do to advance its agenda.

The American response was to create in 1973 an informal group of only the three largest European economies (Germany, France and Britain) with Japan and the U.S. – the so-called G5. Italy was added in 1975 – but following that the Americans, fearing yet another group dominated by Europeans, insisted upon the inclusion of Canada in 1976. This alignment, known as the G7, remained constant until the full inclusion of Russia in 1998 – giving us today’s G8.

The summit meetings held by the G8 each year are now restricted to national leaders only. Finance and Foreign ministers meet separately prior to the summits – and Trade, Labour and Environment ministers may also meet prior to the summit.