June 22, 2010Pax Indicageopolitics

The G-20 opportunity

India must use the G-20 to present the UN, the World Bank and the IMF with a simple choice: reform or face irrelevance

This is an unedited draft of my Pax Indica column for Yahoo! (2010-2011)

There is a case for reforming the set of international organisations created by the victors of one of the bloodiest wars of the last century. The United Nations, the World Bank and the International Monetary Fund are all manifestations of a distribution of global power that existed around the time when Dilip Kumar and Raj Kapoor were screen idols. Times have changed. Yet those who won that old war have a veto over present day issues at the UN Security Council. Even after tweaking voting rights to give others a bigger say, the US and Europe still divide up the top jobs at the World Bank and the IMF between themselves.

Even before the collapse of Lehman Brothers in September 2008 precipitated the current global economic downturn it was clear that the effective global governance required changes to be made to these international organisations. The expansion of the UN Security Council, however, was stalled by a combination of attempts by existing permanent members to keep out new entrants, and by countries who had no chance of getting in themselves but feared the consequences of letting their rivals acquire veto power. It is not merely about how powerful you are. It’s about how powerful you are compared to others. So China isn’t going to be happy seeing India and Japan become its peers, and Pakistan is terrified of India acquiring a seat at any high table.

Because of these push-pull dynamics, it’s going to be a hard slog to fix the institutions that are supposed to fix the world’s problems. For countries like India, Japan, Brazil and South Africa that see themselves as deserving of a bigger role in international decision-making, this is frustrating. Now, thanks to the global economic downturn though, there is another route: if you can’t fix them, use something else. That something else” is the G-20, a grouping of 20 countries that includes South Korea, Indonesia, Saudi Arabia, Turkey and Mexico.

Sanjaya Baru credits Nikolas Sarkozy and Manmohan Singh as being the architects of the G-20. Well, that makes it even more important for India to invest in making this grouping the most credible institution of global governance. Its first task, of course, is to see through what brought it into being — one of pulling the world economy out of the hole it is in. This is something that should be particularly suited to the man under India’s most famous blue turban. Singh’s word should have added credibility because of the manner in which the Reserve Bank of India, under the leadership of Y Venugopal Reddy, prudently managed India’s banking and financial system.

The Indian prime minister is playing to his personal strengths and is backed by RBIs exemplary track record. So he should use the upcoming G-20 summit not only to assert India’s thought leadership in global macro-economic management. More importantly, he should also signal India’s commitment to making G-20 the place where the world’s most important decisions are made.

There is a possibility that the G-20 will end up being mainly a forum for finance ministers and central bank governors. While this might suit countries like China, Britain and the United States, such a minimalistic outcome is not in India’s interests. New Delhi must push for increasing the ambit of the G-20 to cover a widening list of international issues — from economics to trade, from the environment to international security. This would shock many, not least in India, who will argue that there are existing platforms to discuss these issues. That may be so. But what’s wrong with giving these existing platforms some competition?

India must use the G-20 to present the UN, the World Bank and the IMF with a simple choice: reform or face irrelevance. India has little to lose and everything to gain. If the G-20 becomes the most powerful high table, then what happens to UN Security Council reform does not matter much. If the G-20 fizzles out, then New Delhi can continue with its campaign for a permanent seat. It makes sense, therefore, for India to make an determined push to make G-20 successful.

What does that entail? Deep co-ordination between the Finance, Commerce, External Affairs and Defence ministries, in the form of a G-20 secretariat. Singh is setting up one, albeit without a Defence component. He should reconsider the decision to leave out the security dimension.

There is, apparently, no space for the officials who are to handle India’s G-20 work! In all of Delhi, New and Old, they couldn’t house the G-20 secretariat. Remember the old ditty about the horse shoe nail?

A secretariat — even one that has its own buildings — needs a sufficient number of staff equipped with specialist knowledge across several domains. This is a much harder problem to solve than merely finding office space. It might be possible to pluck officials from various ministries and put them under one roof. It is much harder to make them work together. What will be really dreadful is if another Group of Ministers (GoM) is set up to handle the case.

Finally, it would be a mistake for New Delhi to assume that all the answers lie within the G-20 secretariat and the ministries. Involving think-tanks, as the finance ministry sought to do, is a good idea. As is the idea of getting former G-8 sherpas (senior officials who do the grunt work for summits) coach the G-20 team.

There are many more Pax Indica columns here

Like Groucho Marx who didn’t want to belong to any club that would accept him as a member, there is something aspirational about getting into the coolest clubs, universities or corporations, and in India’s case, the UN Security Council. But why waste time and energy trying to get into something that would rather go belly-up than accept you as a member, when you already belong to a club that, with some effort on your part, can be the most powerful club in town?

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