T K Arun
What should India get out of its G20 presidency, apart, of course, from countless dos all over the country to remind people, with their pomp, posters and streams of visitors from abroad, of India’s global leadership role?
In our current interconnected, interdependent world, coordination of national policies and actions is a must, to ensure mutual interaction results in productive coherence for the world at large rather than conflict. This calls for global platforms where leaders of the countries that matter can get together and agree on some things. G20 is the most important and most representative of such platforms.
Vital matters for India’s Presidency to count
It must make progress on some vital matters for India’s presidency to count:
➤Finding a non-yuan substitute for the dollar to settle cross-border payments that do not involve an American counterparty.
➤Averting a debt crisis by shaming China into restructuring its loans to the poor world.
➤Finding a negotiated settlement to end the war in Ukraine to spare the world continuing pain from high food and energy prices and high, growth-killing interest rates to combat inflation.
➤Facilitating global migration to ease demographic pressures — of worker shortage in the rich world and surplus workers in the global south — in countries at different stages of the demographic transition.
➤Coordinating pandemic preparedness across nations.
➤Bridging the digital divide across and within nations.
➤Fixing the dysfunctional World Trade Organisation (WTO).
➤Finding solutions to the challenges of transparency in financial reporting, corporate governance and efficient project execution.
➤To match ballooning financial savings in the rich world with high-return real investment opportunities in developing countries.
Of course, expecting to reach tangible solutions to all these problems in one year would be irrational. But the point is to focus attention where it must be focused and to create enough momentum behind each agenda item to keep them all going even when the presidency moves on to Brazil in 2024 and South Africa in 2025, both receptive to ideas from India.
➤On the climate front, the challenge is to shift the focus from emission reduction to carbon dioxide removal (CDR) as the urgent and only viable solution to achieving the Paris Agreement goal of preventing the average global surface temperature from rising 1. 5° C above preindustrial levels. The world has already warmed by 1. 1° C. And the remaining carbon budget to reach additional warming of 0. 4° C is just 500 gigatonnes, which will be used up in less than a decade of growth, however Herculean the emission reductions developing countries achieve.
CO2 must be removed from the air to achieve net negative emissions, year after year. And the rich world must bear the bulk of the responsibility for it. After all, they put the bulk of the 2,400 Gt of the global warming gas into the atmosphere in the first place.
And they are the best placed to invest in technologies that would make CO2 mined from the air the starting block for creating petrochemicals and synthetic fuels, apart from graphene and carbon fibre. CDR should become a byproduct of profitable economic activity, just as emissions were the byproduct of profitable economic activity in the past.
That the US government has weaponised the dollar, with its threat to cut off from New York’s dollar pipelines all those who violate its sanctions and secondary sanctions, and that the world needs to move out from the dollar hegemony imposed on it in the Bretton Woods agreement of 1944 is by now conventional wisdom. But there is no agreement on what would take its place. China is hoping its yuan will be the next dollar, with oil traders willing to talk of the petroyuan.
Any alternative to the dollar would be welcome. But the renminbi is far from the ideal substitute. Ideally, the New Bank sponsored by BRICS —Brazil, Russia, India, China and South Africa grouping — should create a new stablecoin, a cryptocurrency that maintains its value against the International Monetary Fund’s (IMF) unit of account, the special drawing right (SDR).
➤Of late, Saudi Arabia has freed itself from American apron strings. It made peace with Iran, and is settling the war in Yemen. And, much to US’ chagrin, has re-inducted Syria into the Arab League. If Saudi Arabia wants to, Opec (Organisation of the Petroleum Exporting Countries) can begin denominating oil and gas in the new stablecoin. Brazil and other commodity exporters can follow suit. Cross-border remittances in stablecoins over the blockchain would be fast, cheap and simple. Mexico should be more than interested in that prospect.
➤Chinese foot-dragging over restructuring its huge loans to the developing world stands in the way of IMF and the Paris Club of rich world creditors finding a solution to the impending debt crisis that threatens to repeat in a number of countries what the world has already witnessed in Sri Lanka and Pakistan.
IMF has put together a huge war chest for post-pandemic distress relief but cannot start lending to poor countries that owe money to China without Beijing agreeing to postpone receiving interest and repayment instalments on its loans to these countries. Otherwise, IMF would simply be funnelling relief money to China.
The question is, is India making use of its G20 presidency to advance developing world interests? Or does it focus only on some far narrower goals?
This article was first published in The Economic Times as Is India making use of its G20 Presidency to advance developing world interests? on May 9, 2023.
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