Later this week Prime Minister Manmohan Singh will join the heads of 19 other countries and a regional grouping to participate in the deliberations of the so-called Group of Twenty (G-20) countries, in Pittsburgh, US. From all available indications, the meeting will be much more than just a tête-à-tête.
The outcome of the deliberations will, to a large extent, not only determine whether these countries, with diverse interests and economic stature, can continue to think as a collective, but will also set the contours of the ongoing global negotiations to hammer out new trade and climate deals. The latter has a sense of immediacy since the date for the climate change discussions have been set for early December in Copenhagen and at the moment the key interlocutors are merely posturing.
From India’s point of view there is one additional factor underlying G-20—it is a key to its long cherished ambitions for a more dominant role at the global level. G-20 is the first forum of which India has been an active and key participant from the very beginning, having for long been used to looking from the outside into the inside when it came to a seat on the high table in key multilateral forums such as the United Nations Security Council and regional trade groupings.
The G-20 forum of finance ministers and central bank governors was established in 1999 with the intent of creating a regular dialogue with a constant set of influential partners. These are a mix of developed countries and emerging economies, such as Brazil, China and India. On an ex-officio basis, the head of the International Monetary Fund as well as the World Bank also participate in the deliberations. The clout of this group comes from the fact that together they account for around 90% of global gross national product, 80% of world trade and two-thirds of the world’s population.
The legitimacy of the body has grown exponentially in the wake of the unprecedented economic crisis triggered by the financial sector meltdown. And since India and China, which account for about $4 trillion of global economic output, escaped relatively unscathed from the crisis, their status at the high table got a leg-up.
However, with growing evidence that the worst is behind the world—and some quarters assiduously promoting the “green shoots” argument—there are growing concerns that most members of G-20 would retreat to a business-as-usual stance. If indeed this does happen then it will be a return to status quo, something that is strategically not appealing to India—especially since it is still in the waiting list for other groupings, with key insiders such as China strongly opposing its entry.
As a result, India has a vested interest in keeping the grouping alive. But it should be careful about what it wishes for or at least guard against being led into a trap. Especially since the developed world’s desire to keep the grouping alive is premised on entirely different reasons, most of which are not altruistic. The developed countries, unlike in the past, haven’t had it easy at either the United Nations Framework Convention on Climate Change (UNFCC) talks or the World Trade Organization (WTO) negotiations. The moral hazard of bulldozing their point of view is far less at G-20 as opposed to other multilateral forums, which have a large number of impoverished countries on board.
A visiting dignitary from the older and powerful block of Group of Seven (G-7) countries recently disclosed that most developed countries were keen to continue with the G-20 formulation. It is not surprising, therefore, that there are efforts to load the G-20 agenda with fresh items such as trade and climate change. Once these countries arrive at a broad understanding, it will become infinitely easier to thrash out a consensus at WTO and UNFCC.
That is precisely why India has to be careful. Being part of the high table comes at a price—other members will not take kindly to obstructionist tactics. It is easier for it to be isolated and it will not have the leverage of the poor countries to use to its advantage. Neither will the camaraderie of developing nations hold true at G-20. This is all the more true because the Chinese, who have already spun an alliance of convenience with the US, have the cunning habit of running with the hares and hunting with the hounds. (See what China is doing to India in its own backyard in the subcontinent by increasing its naval presence in the Indian Ocean, steadily striking commercial and political deals with Sri Lanka and Nepal to add to its already established equations with a dangerous and near basketcase neighbour such as Pakistan.)
Not surprising, therefore, that India has been assiduously going in for an image makeover in the last few months. By hosting a mini-ministerial of WTO this month, it signalled that it was not obstructing more forward movement on trade negotiations. Similarly, it unilaterally announced its intent to put in place emission standards even while it argued that it was not altering its negotiating stance, suggesting in the process that its principle was not a fig leaf to shy away from commitments to curb global warming.
On the face of it, therefore, the government seems to have a game plan. But like they say all plans are good till the battle begins.
Anil Padmanabhan is a deputy managing editor of Mint and writes every week on the intersection of politics and economics. Comments are welcome at firstname.lastname@example.org