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Business News/ Opinion / Taking charge at the G-20

Taking charge at the G-20

The recent summit showed the potential for Indian leadership at a time when the US is abdicating

US President Donald Trump. Photo: AFPPremium
US President Donald Trump. Photo: AFP

Coming on the heels of Prime Minister Narendra Modi’s recent visits to Tel Aviv and Washington, DC was the G-20 summit in Hamburg, Germany. Much of the media attention on the two-day summit focused on US President Donald Trump, his bilateral meetings with key heads of state, and whether the Trump administration would use the meeting to push a narrower agenda for globalization where protectionism and parochialism, not partnership, is emphasized. 

The resultant communique revealed that current US policy runs against the consensus among G-20 countries, particularly in areas like trade and climate change. The communique called for new trade deals to be reciprocal and non-discriminatory, swiftly dispensing with now seemingly archaic notions of trade liberalization. The US aside, the other 19 countries affirmed the importance of climate change, declaring the Paris Agreement as “irreversible". More broadly, the summit signalled that countries like India—deeply reliant on an open international economy to further growth and development objectives—must find a way to work with Trump bilaterally where mutual interests converge, and around him multilaterally to address shared challenges like trade protectionism, climate change, terrorism and migration.

What do the Hamburg meeting and the broader international context in which it was held portend? The summit made headlines for proceedings that took place outside the official meetings. The scale of protests and violence pointed to a palpable and growing public discontent with globalization. International politics around economic growth and security are being localized in a virulent way. The apparent gulf between matters discussed at the global level and their relevance for citizens across countries has seemingly widened. 

Going ahead, it is difficult to see how the G-20 can continue to serve as a forum to address concerns affecting the international economy, for these issues are not solely economic any more. The G-20 should move to focus more on, if not mitigate, deep underlying chasms in the international economy that threaten global stability. For instance, issues pertaining to education, skills and unemployment; weaknesses in reviving manufacturing, the rise of digitization and automation that suppress economic demand and accelerate economic dislocations, the resultant patterns of forced migration that generate racial and ethnic resentment and sustain macroeconomic imbalances, all continue to be given short shrift. It may be unreasonable to expect the G-20 to meaningfully tackle these issues since the forum was conceived as an informal consensus-sharing mechanism on salient global economic issues. Not discussing them, however, will ensure such problems fester, which will only accentuate differences between leading economies, leaving them to be addressed at some point. 

India has a clear interest in and opportunity to refocus the G-20 agenda. The interest is driven by the reality that India’s rise has been largely driven by closer engagement with the global economy. Globalization has become a sine qua non. Multilateral engagement on economic and financial issues has become a clear priority. India also experiences, in varying degrees, some of the problems highlighted above—unemployment (particularly amongst its youth); bottlenecks in manufacturing; and dislocations generated by potential restrictions on India’s skilled workforce abroad, and from increased automation in the technology and services industries. 

Moreover, there now exist constituencies in India that have a material stake in an open international economy and who would generally be supportive of a more vocal India raising such matters in global economic circles. In fact, in 2015, India exported $276 billion worth of goods and services, with industries like petroleum, automobiles, machinery and biochemicals leading the list. Despite a negative trade balance (since imports exceeded exports), there is no evidence to suggest that insular economic policies are on the anvil. The political economy is rapidly evolving. 

Second, there is a clear opportunity in that Indian officials seem well-equipped to play an agenda-setting role at the G-20. Indian representatives have worked to gather support at previous G-20 summits on issues that affect India—governance reforms at the International Monetary Fund, tax evasion and information-sharing arrangements. There is scope to build on this and raise issues that are more political than just technical in nature. 

India’s actions at the G-20 summit suggest that this is possible. In Hamburg, the Indian delegation worked to secure G-20 support to release a separate, stand-alone statement on terrorism, particularly focused on cutting off funds to militant groups. Modi himself led the effort. From their initial reticence a few years ago to let the G-20 consider climate change, India now used the summit to openly acknowledge the need to implement the Paris Agreement. Should the Indian economy slide further or experience sudden disturbances, there is no reason to believe that India, under the Modi government, might not be more assertive in raising other relevant issues at future G-20 summits. This way, multilateral engagement could serve to complement the government’s robust economic diplomacy with other countries. 

Karthik Nachiappan does research focusing on India’s multilateral behaviour.

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Updated: 20 Jul 2017, 06:34 AM IST
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