Success of India’s G-20 presidency doesn’t depend on Ukraine outcome but what happens in India.
Earlier last week, the “failure” of the G-20 Foreign Ministers to issue a communique or a statement was more a comment on the state of power play in the world than on the host, India. The current scenario reminded one of the title of a book that was prescribed to undergraduate students of International Relations in the UK a quarter of a century ago: United Nations, Divided World (second edition, OUP, 1993). That book, edited by Adam Roberts, then a star Professor of International Relations at Oxford along with NYU’s eminent International Law expert, Benedict Kingsbury was a stock taking of the United Nations, the challenges and possibilities. How little has changed, at least on the surface, in terms of the continued failure of global collective action.
Today, the UN is perhaps more irrelevant than in the 1990s. Though, even then, its success at ensuring collective security for the world, its prime purpose, was questionable. In 1994, the UN and the world had watched silently as the genocide in Rwanda took place. Many small and big wars, civil and between countries have been a perennial feature. Now, as the world faces the most consequential war of the 21st century in Ukraine, collective action is absent. The war aside, even its detrimental effects in terms of higher fuel prices and soaring food prices have not been met with a concerted international response. The multilateral pillars for economic management, such as the IMF, World Bank and WTO have also reached a point of stagnation, a change from the 1990s when they still retained considerable influence. The divided world doesn’t seem to want to find common ground.
Perhaps this was inevitable as the US and its Western allies, the pre-eminent powers for two and half decades after the fall of Communism, were met by the rise of China in particular but also India. There are genuinely different views of the world which cannot be overridden by one dominant ideology on account of its overwhelming economic superiority. The churn will continue and international relations will remain unsettled for a period of time.
While uncertainty and the lack of collective action has its downsides, it also presents opportunities. India is in a good position to capitalize. It is not in the superpower league of the US and China. So, it has more flexibility in its international relations, something the Government has deftly used to the country’s advantage in the ongoing Russia-Ukraine war. It has managed to greatly soften the economic impact of high oil prices by purchasing discounted oil from Russia at rates below the cap imposed by the West.
Of course, some may believe that the clouds of war are a dampener to India’s G-20 presidency, its biggest moment in recent international relations. But it is not. While some may be looking towards India to broker an end to the war in Ukraine, that is not the main purpose of its G-20 presidency. The G-20 countries comprise more than 80% of the global economy. And remember that only a handful of the 20 are engaged in the highest level of global power politics. However, each of the 20 has serious economic interests. Countries are looking for sources of growth, destinations for investment and markets for their goods and services. The multilateral system may not be opening doors but bilateral/regional routes for integration are thriving.
India is the world’s fastest growing economy and, in a matter of a few years, will be the third largest economy in the world. The G-20 is India’s coming out party. Other emerging countries have used mega sporting events to announce their potential to the outside world: think of the Seoul Olympics in 1988, the Beijing Olympics in 2008, the football World Cup in South Africa in 2010 or the Rio de Janeiro Olympics in 2016. After the fiasco of the Commonwealth Games in Delhi in 2010, a mid-sized “regional” event at best, there was no question of a mega sporting even so soon. The G-20 may not bring masses of ordinary people to India but it will bring people who matter to the economy: government leaders, business leaders and influences from think tanks and media. They will get to see, firsthand, the enormous strides India has taken. They will travel through modern airports, on brand new expressways/highways, perhaps travel on Vande Bharat trains, stay in modernizing cities (not just Delhi, Mumbai, Bengaluru, Hyderabad but also 50 others) in top class hotels and meet energetic entrepreneurs many of whom are a part of the third largest startup ecosystem of the world. They will be able to see India’s reality rather than rely on media accounts which are not always objective on the state of affairs.
India is strongly positioned to be an engine of growth for the world economy just like China was for the last three decades. For that to materialize, it needs a confluence of good policies at home and a flood of investment from the rest of the world. There are early signs of that confluence beginning to happen. If the G-20 presidency can lead to constructive conversations on what global investors can do for India and decisive policymaking on what India can do for global investors, it will have been a 100% success.
The author is Chief Economist, Vedanta.