Yellen’s words on multilateralism hint of G20 trouble | Mint

Yellen’s words on multilateralism hint of G20 trouble

Yellen confirmed that the US will retain its veto power over the World Bank.
Yellen confirmed that the US will retain its veto power over the World Bank.

Summary

It should be India’s mission to ensure that this group’s agenda doesn’t stay dominated by the G7

India’s sherpa Amitabh Kant led the discussions of G20 negotiators in Hampi last week to produce a draft Leader’s Declaration for the upcoming G20 Leaders’ Summit in September. To be held in Pragati Maidan, the summit will be the grand finale of India’s Presidency. Prime Minister Narendra Modi is expecting to host US President Joe Biden, and, it is being speculated, President Vladimir Putin, which, if it happens, would open up the possibility for the two sides to come face-to-face first time since Russia invaded Ukraine in February 2022. Ceasefire and peace are the ideal outcomes, of course. Putin’s attendance would be no less. In a less-than-ideal world, India would settle for a Leader’s Declaration, something every G20 summit has resulted in. It would be unprecedented in the group’s history if none comes out of the New Delhi Summit.

A challenge in getting everyone to agree is references to Ukraine. Russia and China, after disassociating from the language on Ukraine agreed to in Bali, want to block any reference to it. The G20 grouping, they say, should remain focused on economic and development issues. Kant said in Hampi that Ukraine is not a priority for the outcomes that India is pressing for during its presidency, as the war is not a creation of developing or emerging countries. The official statement on progress over drafting the New Delhi Leaders’ Declaration is silent on Ukraine. But, on Sunday, US Treasury Secretary Janet Yellen told a press conference in Gandhinagar, where Finance Minister Nirmala Sitharaman is hosting a G20 ministerial of her counterparts, that Ukraine will be one of the four focus areas for the week. Yellen pledged support to the Global South, and in the same breath also put a dampener on Sitharaman’s announcement in the February summit in Bangalore about an agenda for an overhaul of multilateral institutions that will in coming years lend billions of dollars to poor countries to help them tackle poverty, climate change and development. Few are satisfied with how the US-controlled World Bank has been going about doing this since it began operations in 1946. More so as the institution is used as an instrument of geopolitics by the US. The World Bank itself has put out several reports saying it needs to improve. This has been an ongoing discussion during past G20 presidencies, and recommendations on how to do this have been called from experts.

On Sunday, Yellen seemed to shoot down the main recommendation submitted under India’s presidency, asking for the World Bank’s shareholders to put in more capital to increase support for poor countries, even before India made it public. Now is not the time for it, and the US would rather have the World Bank reform itself first, she said, taking no one by surprise. Indian negotiators expected this. It’s no secret that rich countries led by the US do not want to put in the money needed to solve crises that they have partly caused. Nor do they want to accept funding from China, fearing that doing so will give Beijing a bigger say in the World Bank, and, therefore, more importance on the world stage.

India must insist on the need for institutions that the non-rich world can have say in, and demand that they get more play—the sort of stuff World Bank types shrug off saying that World Bank’s biggest borrower is not a G7 country but India, which, albeit true, isn’t out of generosity or love for the country. It’s just good business sense, as India has a great record on repaying loans.

But Yellen confirmed that the US will retain its veto power over the World Bank, sidelining rising rival economic challengers like China and India. It will continue to use multilateral institutions like the World Bank and International Monetary Fund to preserve its hegemonic power over global finance, its architecture, and to control how the world will fight the crises of climate, poverty and development. In this scheme of things, poor countries incur more debt so that the burden of meeting climate goals is lower for everybody, including rich countries. The World Bank will be the main mediator of the billions of dollars to be spent and raised, now also from private companies, as the recent words of Ajay Banga, an India-born American who is now the Bank’s president, indicate.

India is also exploring the inclusion of the African Union (AU) as a member of the G20. The AU is not very supportive of the G7 on Ukraine and may find that G20 membership isn’t going to be smoothly available anytime soon. Perhaps negotiators will come up with nice-sounding diplomatic terms that will ensure that the AU will go on getting invited to future summits, as it already does, but with no say in G20 declarations.

What does India want its G20 presidency legacy to be? It’s not clear what India wants from the New Delhi declaration. There are suggestions that the legacy of India’s term must be restored trust in multilateralism. If our negotiators succeed in excluding Ukraine from the New Delhi Leader Declaration, India’s presidency will be remembered as a resounding success. It will signal that the G7 isn’t calling the shots, given how a pushback on Ukraine won the day.

However, the G7 does seem to be driving the agenda, as always. South Korea, the first non-G7 country to hold the G20 presidency, had held preparatory consultations with other member countries and nationally before setting the agenda. India could have done the same to shape an agenda within the G20’s of tangible deliverables for its national development goals.

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