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Chance of a century

The Pittsburgh summit has given India a chance to be part of the world’s most exclusive economic club. But it’ll call for fine balancing, as India has a foot in both poor and rich sides of the development debate, writes Pramit Pal Chaudhuri.

india Updated: Sep 27, 2009 23:54 IST
Pramit Pal Chaudhuri

The signs in the stars were not propitious for the Group of 20 Summit in Pittsburgh to be a history-turning moment. The host was disinterested. As a Washington lobbyist close to the Obama administration admitted before the summit, “Barack Obama doesn’t want to be seen as being overly concerned about international affairs at this point. He’s all ‘summited out’ right now.”

Yet, by simply stating twice in its final communiqué that henceforth the G-20 would be the “premier” body for international economic decision-making, the leaders who met made sure Pittsburgh has a place in history books.

The initial reaction in emerging economies like India has been quiet satisfaction. It was the geopolitical equivalent of a coming of age. The West had agreed to this, said Singh, because it had come to understand that in this day and age the
“burden of decision-making” in a globalised economy was too much even for them.

Unlike the last major addition to this club, Russia, this expansion was not a sop to a sinking county. This was the real thing: a recognition that the rise of Asia and Brazil and South Africa indicated a genuine shift in global power.

“The G-20 is a classic example of an idea whose time has come. It reflects realities and broadens the scope of economic cooperation,” said Ashley Wills, South Asian advisor for WilmerHale and ex-US diplomat who served in the subcontinent.

But while the raw Gross Domestic Product (GDP) and trade figures may seem to make the addition of these 12 new economies a no-brainer, it isn’t that simple. The G-8 worked in a large part because its various members share a common history, culture and agenda. They meet together at many other levels. This is not yet true for the dozen wannabees. Can beef-eating Argentina and the Land of the Holy Cow really see eye to eye? C. Uday Bhaskar, director of the National Maritime Foundation, is sceptical: “The geo-political repercussions of the G-20 potentially becoming as effective as the G-8 are significant — but it is unlikely that such a transmutation will take place consensually.”

The G-20 is clearly a road under construction. “This was a transitional summit, migrating from one G to the other,” said the Obama advisor. “The administration doesn’t have a construct of whether this will work.” Dan Twining, former policy planner with the US State Department, also said this a “proving ground”.

Desi beat
The magnifying glasses will be out when it comes to India. As an emerging economy, India has a foot in both rich and poor sides of the development debate. Free trade in services will assist software sector, but free trade in agriculture could devastate its marginal farmers.

The country’s negotiators fiercely resist any attempt to give the G-20 a major role in climate change talks. “We have a constituency for our position in the poorer countries who are outside the G-20. We will lose them if we let an elite group like the G-20 take over the issue,” said an Indian official, who did not want to be named.

India also has a tradition of being a fierce protector of what it perceives as its sovereignty, much more than, say, China. “India is not accustomed to playing in today’s big leagues,” said Teresa Schaffer, South Asia expert with the Center for Strategic and International Studies.

Good signs
The present crisis has given India a good starting hand. Unlike China, India doesn’t figure in the great US concern of rebalancing the distorted global fiscal scenario.

It is under fire over the Doha round and climate change but has good company in both positions, including China and others.

It also has Manmohan Singh who has an outsized influence in the G-20 because of his sobriety and economic knowhow. Obama is known to have taken a shine to him. “Look at the cast of leaders Obama has met — not an impressive lot. Most are vain or aggressive.

Some of them have flat out lied to him. Then here’s a well-spoken man who presents India’s position not in a bombastic or threatening way but calmly, resolutely and confidently,” said Wills.

The stakes
Getting a chance to redo an international system happens only when there is a World War or a Great Depression. India is looking at such a window of opportunity right now. Pittsburgh was the first time the incumbents at the high table of economic power voluntarily agreed to accommodate more seats. But the seats can be taken away. “India has as much of a role as it is prepared to take,” said Schaffer. “If India gears up for a major contribution — thinking ahead about priorities and so on — it can be a major player.” The sky is the limit if India is prepared to make tough decisions. Said Wills, “Think of it: the rupee as a world reserve currency in just a few years.”