One has to wish the G-20 luck as time is ticking amidst the demographic time bomb in the Global South.
Tokyo: POST-WORLD WAR PEACE SPAWNED MANY INSTITUTIONS
Most international agencies in existence today were created after World War II, thus constructed by the victorious allies, notably the US, UK, and the erstwhile USSR, nearly 80 years ago. Later, as their economies remarkably recovered from the devastation of the War, Japan, Germany, the rest of Europe and still later, the People’s Republic of China (PRC) also became significant in the “global” system. India was very prominent on decolonization & anti-apartheid since the 1950s and was a founding member or soon thereafter of most international agencies. PRC has been very successful in snagging key positions in the UN system disproportionate to their financial contributions. Ironically, today, PRC may be the greatest impediment to India gaining ground in the current international system, because PRC holds a P-5 veto in the UN Security Council (UNSC), that was insisted upon by the Indian government in a Gandhian maneuver of excluding itself from the P-5 UNSC, something probably no other nation would do, and a question never answered as to why? Foolhardy or magnificently self-sacrificing, history will be the final arbiter.
While raw numbers favor the global South organized often as the G-77 group of non-aligned nations,
there is almost no area where they dominate except in passing resolutions in the General Assembly of the UN that are often never implemented.
IMPOSSIBILITY OF MEANINGFUL REFORM IN MULTILATERALS
Many bureaucrats who have never themselves served on the staff of multilaterals either in a short-term or long-term capacity, are gung-ho about “reforming” multilaterals. They appear to be convinced after attending ethereal meetings with the global glitterati. In other words, they have not had the privilege of being told as some were by a former multimillionaire World Bank President, who was a friend of then-President Bill Clinton, in response to suggestions for reform: “if you are so smart, why aren’t you rich?” Bureaucrats would be well advised to invest some time in understanding what others before them have attempted. Many have long since entered their graves while reform continues to be elusive. The fact that pliable countries can be induced to speak out for the status-quo (couched in reform rhetoric) by interested government bureaucrats or multilateral staff, some of whom are among the most deviously intelligent one can encounter anywhere, means that “reform” desired by one or a group of countries can easily be stymied by others. One such example of a legislator who tried for reform to accomplish greater accountability who also had real power over the purse strings of the leading financier government, the late US Senator Tom Coburn, chairman of a key subcommittee, even flew to New York to lecture the then Chief-of-Staff of the UN Secretary General. He had real clout on this matter as he had a very good personal relationship as well with then-President Obama (a friendship dubbed as an “Odd-Couple” bromance). That Chief-of-Staff today heads the foundation of an oligarch, and life goes on as before. Meanwhile, the UN Security Council (UNSC) has disgraced itself as totally incapable of even brokering a semblance of peace in the tragic Russia-Ukraine war, where ordinary people in much of Ukraine have had to survive with no power or running water in the bitter cold of winter.
HISTORY OF G-20
The Current members of the G-20 are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, South Korea, Japan, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom, the United States, and the European Union. The G-20 as a complement to the older G7 originated when Paul Martin, then Finance Minister of Canada who later became Prime Minister, was convinced how anomalous the G7 had become even in the early 1990s—with China and India growing rapidly in demographic and economic strength, and with Canada only having the population of Kerala, despite having a huge, nearly 10 million square kilometers landmass (the far North however is uninhabitable), Martin felt that the G7 hardly represented the world’s leading economic powers anymore. He, therefore, suggested, as early as 1994 during one of the periodic financial crises that hit Mexico, that there ought to be a broader grouping of countries set up in parallel. It did not find support from the G7 Finance Ministers at the time. Later, after the Asian financial crisis of 1997, Martin spoke to Larry Summers, his US counterpart in the last phase of the Bill Clinton administration. Summers had previously been the Chief Economist of the World Bank and instinctively knew that Martin was right and wholeheartedly agreed. Paul Martin himself had been a shipping company CEO before entering Canadian politics, and understood trade, finance and globalization. Therefore, the G-20 at Finance Ministers level took shape with Gordon Brown, their UK equivalent, also backing the move. For many years, G-20 met only at the level of Finance Ministers and Central Bank Governors.
When Paul Martin became Canada’s Prime Minister, he lobbied then US President George W. Bush to enhance the grouping to the level of heads of government. Bush initially dithered, unsure if such a grouping was needed and whether it might dilute the value of the G7 (which it undoubtedly has), but when the 2008 global financial crisis hit, Bush agreed to have the G-20 elevated to heads of government level, which he himself hosted in Washington, D.C. in November 2008. Together, the nations of the G-20 account for around 80 percent of global economic output, nearly 75 percent of global exports, and about 60 percent of the world’s population. It was originally constructed to be a grouping of the top 20 economies. When first designed, Nigeria was to have been a member, but for an inexplicable reason, it did not join and was replaced by the European Union as the 20th member. This has also led to the demand this year from AU Chairman Macky Sall, President of Senegal, and G7 Chair Fumio Kishida, Prime Minister of Japan, for the African Union (AU) to become a Member of the G-20. Perhaps if all regional groupings such as EU, AU, ASEAN etc. are kept as observers (as for example the IMF is), a country like Nigeria could be admitted and the nomenclature of G-20 could be preserved. If not, the G-20 will become the G24 or so. India, holding the current one-year Presidency of the G-20, will have to take the lead in bringing consensus.
TIME FOR NEW INSTITUTIONS
Under the leadership of Prime Minister Narendra Modi and then-President François Hollande of France, a non-UN “international agency”—the International Solar Alliance—was created with headquarters on the outskirts of New Delhi. This is essentially a “coalition of the willing” and having no obligation of attempting to make every country on earth a member. It might well be an acceptable model for the future. Similarly, without any distinct organizational structure, the “International Day of Yoga” that India championed with PM Modi’s leadership might be yet another which emphasizes India’s soft power to new generations of yoga practitioners.
The core needs of today for teeming millions of youth is employment. The serious economic problems causing unemployment, hunger and feeling of hopelessness need to be combatted. There is no agency or organization skilled in getting investment capital or even entrepreneurship loans rapidly to large numbers of young people. Staid organizations such as the UN Industrial Development Organization (UNIDO) are hardly capable of scratching the surface of these urgent priorities, needs and problems.
One reason why India’s foreign exchange situation remains comfortable is the annual $100 billion remittances being sent back to relatives and friends by expatriate Indians working in the Middle East, West and East Asia, Europe, and North America. But those remittances may not be permanent flows given that over generations, the bonds with the “motherland” may weaken, or economic crisis in the host countries might result in belt-tightening by the expatriates themselves. There is no organized effort to tap those remittances as investment capital when they are otherwise being spent for consumer goods, some essential but much of it squandered resources as if there were no tomorrow.
If investment schemes are perceived to be potential scams or the business climate and taxation (including alleged tax-terrorism) make it inhospitable, those resources cannot flow into productive investment that can directly impact the young semi-skilled or skilled job-aspirant or “tiny” entrepreneur — a terminology coined by the late Industry Minister George Fernandes.
India has demonstrated special expertise on digital, including cost-effective delivery models such as in payment systems and in digital health, something that hardly existed in its present miniaturized computing power form in the post-World War era, and therefore it is one segment of today’s society missing from the work plans of most intl. agencies, except in somewhat rudimentary form. It would be a natural area for India to focus on given its broad software prowess, hardware design excellence, and extensive success as both worker bees and managerial leaders in the digital revolution of the 21st century. But then, this expertise, especially the wealth creation aspect, again resides broadly in civil society even if governments have contributed to the financing and development of the Internet and IoT economies, including the India Stack.
A key problem in India remains that there is no easy way for government to tap the ingenuity and initiative of civil society within which actual entrepreneurship is occurring. The elite civil service is highly suspicious of expertise from civil society and appears to regard it as a threat. Other columnists in this newspaper have reported on how lateral entrants to government positions have been dealt with despite the support of successive Prime Ministers for such programs. And why do India’s uber-rich make large tax-free donations to already well-funded major US universities, while not setting up venture funds in sufficient size, reach and numbers to enable financing for the millions of potential tiny entrepreneurs?
One has to wish the G-20 luck as time is ticking amidst the demographic time bomb in the Global South. The urgent needs of the worldwide unemployed or minimally employed, whether educated or otherwise, deserves no less. This is the key challenge that the G-20 will have to face, now and into the future. New institutions and initiatives are therefore in order, designed appropriately and thoughtfully for this century.
Dr Sunil Chacko holds degrees in medicine (Kerala), public health (Harvard) and an MBA (Columbia). He was Assistant Director of Harvard University’s Intl. Commission on Health Research, served in the Executive Office of the World Bank Group, and has been a faculty member in the US, Canada, Japan and India.