For India, Singh-Obama meet may overshadow G20
Much is at stake in Prime Minister Manmohan Singh’s visit to London to participate in a summit of G20 (Group of 20) nations on April 2. And kick-starting the world economy (as well as India’s) will probably be priority No. 2 in a summit that hopes to fix the global downturn. The more important meeting will probably be with US President Barack Obama the same evening.india Updated: Mar 31, 2009 01:27 IST
Much is at stake in Prime Minister Manmohan Singh’s visit to London to participate in a summit of G20 (Group of 20) nations on April 2. And kick-starting the world economy (as well as India’s) will probably be priority No. 2 in a summit that hopes to fix the global downturn. The more important meeting will probably be with US President Barack Obama the same evening.
Of course, the two leaders will discuss the world economic crisis. But the bigger issue for the India-US relationship would possibly be regional — Pakistan and Afghanistan in particular and South Asia in general. They will also discuss “more open disclosures, easier access to this information, particularly if it is linked to illegal activities by Swiss Banks”, said foreign secretary Shivshankar Menon.
“The issue is broader,” he said. Setting new rules for tax havens is something that G20 nations are likely to converge on in the summit.
“The new ‘rules of the road’ for Caribbean and other tax havens will be included in a communique issued by G20,” the Wall Street Journal reported.
The creation of G20 as an informal group in 1999 followed the Asian financial crisis. This week will either see the group mature through the release of a “declaration document” or get countries that comprise 90 per cent of world GDP and 80 per cent of world trade to look inwards.
Backed by his trusted “sherpa” Planning Commission deputy chairman Montek Singh Ahluwalia and his team of liberal economists, the Indian agenda has not been clearly defined so far. “We were very involved in the preparatory process, that’s why you have this impression,” Menon said.
For a country that hopes to stay on the high table of finance and play a decisive role in the construction of a new global regulatory architecture, not having a stated position is unexpected. But speaking to government officials and industry captains, if there’s one overarching Indian stance, it is to fight protectionist tendencies.
“We are against protectionism,” Menon said. “We would like to see a very strong statement coming out of G20 against protectionism.”
The big negotiation issue here is Obama’s calls on making outsourcing less attractive by removing tax credits companies get, “buy American”, and lend to American companies. “Even giving a bailout to auto companies is some form of protectionism,” an industry official said. “This beggar-thy-neighbour policy results in retaliation and falling trade.”
Closing the Doha round is the other Indian priority. The attempt here is to ensure that India is not seen to be a hindrance to Doha. “We don’t think we are protectionist,” Menon said. “Each country will define protectionism in its own way.”
Finally, creating a blueprint for a global regulatory framework that brings in transparency and disclosures to complex financial products such as hedge funds and credit derivatives. What India seeks is to “strengthen national regulation along global principles”.
All of which are medium- to long-term fixes. What about the immediate crisis? “With the preparatory process, the details are out of the way,” Menon said. “At this summit, we will look at the big issues.”
It is the details where the G20 is divided into four clear groups: the US-UK-IMF combine, continental Europe, emerging economies and China. For now, India seems to be standing like a solitary reaper.