Explained: This G7 Summit is the most volatile one yet; here's why

A top Iranian official paid an unannounced visit Sunday to the G7 summit and headed straight to the buildings where leaders of the world's major democracies have been debating how to handle the country's nuclear ambitions. This is how dramatic and volatile this year's G7 summit is.

What is the G7?

The Group of Seven (G7) is an international and intergovernmental economic organisation formed by seven of the largest and advanced (according to the International Monetary Fund) economies in the world. The high-profile members are Canada, France, Germany, Italy, Japan, the United Kingdom and the United States of America. The leaders of these countries meet once a year, hosted by the country holding G7 presidency - this year the lot fell on France and her current leader, Emmanuel Macron.

The G7 summits were started to 'discuss matter of economic importance' but now the agenda for the summits has grown to include finding solutions to global challenges with economic impact. The theme for this summit is combating inequality. In a different move, France this year invited non-member countries, with a particular focus on African nations, to the summit itself and other preparatory meetings.

The G7 summit traditionally includes the heads of Britain, France, Germany, Japan, Canada and Italy as well as a representative of the 28-country EU.

Iran's surprise invitation and the USA

France's surprise invitation of Iranian Foreign Minister Mohammad Javad Zarif was a high-stakes gamble for Macron, the host of the Group of Seven gathering in Biarritz. Zarif's plane left Tehran on Sunday morning and touched down a few hours later at the Biarritz airport, which has been closed since Friday to all flights unrelated to the official G-7 delegations.

This comes close to when the tensions between Iran and the US soared in the months of June and July with Trump saying he came as close as 10 minutes before calling off a retaliatory strike, after a US drone was reportedly shot down by Iran. The tensions have been simmering at the brim throughout these past few months.

Zarif, who faces US sanctions, had been scheduled to go to Asia as part of a tour to seek support for Iran amid the American campaign against it.

Then why invite Iran?

European leaders have struggled to calm a deepening confrontation between Iran and the United States since Trump pulled his country out of Iran's internationally brokered 2015 nuclear deal and reimposed sanctions on the Iranian economy.

Earlier on Sunday at the summit, Trump appeared to brush aside French efforts to mediate with Iran, saying that while he was happy for Paris to reach out to Tehran to defuse tensions he would carry on with his own initiatives.

Macron, who has taken the lead in trying to defuse tensions, feared a collapse of the nuclear deal could set the Middle East ablaze. The aim was to discuss plans to ease the crisis, including reducing some U.S. sanctions or providing Iran with an economic compensation mechanism.

Macron said he believes the other leaders vested him with powers to deal directly with Iran at the dinner on Saturday.

What did the G7 leaders say?

As expected, Donald Trump distanced himself from the move and the White House said he was not forewarned by France that Iran's foreign minister would meet a French delegation.

Asked if he had signed off on a statement that Macron intends to give on behalf of the G7 on Iran, Trump said: “I haven’t discussed this. No I haven’t,” he told reporters, adding that Macron and Japanese Prime Minister Shinzo Abe were free to talk to Iran.

“We’ll do our own outreach, but, you know, I can’t stop people from talking. If they want to talk, they can talk.”

A top French official said "we operate on our own terms" but noted that Macron and Trump met for two hours yesterday and discussed Iran at length, as well as at the group dinner with other leaders.

German Chancellor Angela Merkel, however, rode to Macron’s rescue. She espoused the French line that it is a meeting of two foreign ministers and therefore not part of the G-7. She told reporters that every attempt to solve the crisis in Iran was welcome. She later said she only knew Zarif was coming a short time before he arrived.

Will Trump meet Zarif?

No, officials close to the situation told media. They reportedly said the Americans in Biarritz will not meet with Zarif, and that France "is working in full transparency with the U.S. and in full transparency with European partners."

China and Trump

European leaders pressured Trump to back off what he describes as a historic, all-or-nothing struggle to shift China from decades of rampant intellectual property theft and other unfair trade practices.

Trump is also embroiled in threats of a trade war with France and the European Union.

The latest to voice concern was British Prime Minister Boris Johnson, who told Trump at a Sunday breakfast meeting that "we don't like tariffs on the whole".

"We are in favour of trade peace," he said.

On Saturday, Macron called the trade tensions "bad for everyone".

"We have to achieve some form of de-escalation, stabilise things, and avoid this trade war that is taking place all over," he said.

Despite clear signs to the contrary, Trump insisted that there was no friction among his close allies.

"I think they respect the trade war. It has to happen," Trump told reporters.

Tariffs and "big" deals, says Trump

Trump is using the G7 to showcase what he says if the flip side of his tariff diplomacy: big trade deals.

He and Japanese Prime Minister Shinzo Abe announced an agreement in principle on what Trump said was "billions and billions of dollars" of trade.

They hope to sign the deal, covering industry, digital and agricultural sectors, in September. Trump also dangled the prospect of deal that was "bigger than we've ever had" with Britain.

Trump: A tense dinner about Russia, N.Korea

Trump described the leaders' dinner on Saturday as "very, very good" and blamed the media for anything that implied otherwise. But it seemed from other accounts that the previous night's dinner had been difficult, with a clear divide between him and the rest of the G7. The US-China trade war, but also fires in the Amazon and the Iranian nuclear crisis, were on the menu.

A European Union source is describing the leaders' dinner as "quite tense" as leaders disagreed with Trump over issues including how to deal with Russia.

The person speaking on condition of anonymity due to lack of authorisation to talk publicly said that Trump, who has proposed inviting Russia back to the G7 summit, took the position that Russia was a major power that needed to be included in discussions. Analysts reported that this might also hint that Trump may invite Putin to the summit in 2020, when America is set to host it.

Other participants said the G7 was the wrong format for Russia's inclusion since it is a group of democracies.

The difference from Saturday's dinner carried over into Sunday's session on trade with Trump favoring his tariff-backed push against China and other acknowledging China as a systemic problem but favoring a multilateral approach.

During a brief discussion of digital taxation Trump did not repeat his threat to tax French wine in response to a French move to tax internet companies who do billions in business there but are taxed elsewhere, a move Trump has said is aimed at U.S. firms.

What next

The backdrop is particularly worrying this year, with the U.S. economy slowing and Germany and Italy close to recession. Adding to trade worries, Trump doubled down Sunday on his hard line against China after sowing confusion with statements that he might be willing to soften a trade war G7 partners fear threatens the world economy.

Meanwhile, Britain is due to leave the EU in October, and there is no agreement on how it should happen, raising the possibility of a disorderly exit that could wreak havoc for business in Europe.

Johnson said Britain and Europe needed to prepare for that, saying the prospect of a Brexit deal was "touch and go."

Typically, the G7 summit ends with a final statement signed by all the participants. However, that will be skipped this year, Macron had announced, in order to avoid disagreements over content and language.

- Agencies