With the “green shoots” of global recovery being seen here and there, Prime Minister Manmohan Singh goes to this week’s G20 summit at Pittsburgh in full knowledge that Western talk of an “exit” from the group’s inclusive, expansionary agenda is aimed at aborting the drive for reform of the international financial system.
If all that the West wanted was to return to business as usual, it might have had its way. But Europe, and to a lesser extent the U.S., want to build on the success of the G20 forum to further other agendas such as getting developing countries like India to shoulder a disproportionate share of the responsibility to tackle global climate change.
On guard
In the run-up to Pittsburgh, this chatter about wider issues has served to put India and others on guard.
The first post-crisis summit of the G20 was held in Washington last November and saw the announcement of a joint action plan. At London this April, the projected stimulus package was upped to $1.1 trillion, a commitment against protectionism was made, and the first, half-hearted reform measures adopted such as the expansion of the Financial Stability Board and the Basel Committee on Banking Supervision.
Payback time
For countries like India and China — which have done much to help reflate the global economy by not allowing their domestic growth rates to flag — Pittsburgh is meant to be payback time, a forum where institutional reform of the International Monetary Fund and World Bank is discussed and acted upon. Europe, which today only accounts for 25 per cent of the world economy, has a 40 per cent voting share in the IMF. India and China weigh in at around 3 and 2 per cent respectively.
The situation in the World Bank is only marginally better. The issue, say economists, is not simply one of equity. Rather, they see a link between the unrepresentative character of these institutions and their failure to play their mandated role as global watchdogs of the financial and economic system. One of the lessons from the 2008 meltdown, therefore, was to reform both the structure and mandate of these bodies and not just to reflate the global economy.
But now that the stimulus effects are visible, Europe’s willingness to reduce its vote share and America’s appetite for reforming the international finance game have noticeably reduced. Instead, there is talk of the G20 evolving a common position on climate change so that the forthcoming Copenhagen summit can deliver an appropriate outcome.
At the London meeting of G20 finance ministers, Brazil, Russia, India and China (BRIC) said this task really belonged to the U.N. process, the Framework Convention on Climate Change.
But at Pittsburgh, there is no reason for the BRIC countries to be diffident, so long as they do not dilute their stand that the advanced industrialised countries are the ones who must make deep emission cuts in order to save the planet from catastrophic environmental change.
Good forum
Indeed, since it is essentially the same group of countries whose long-term and short-term recklessness has fouled both the global financial and atmospheric commons, Pittsburgh is as good a forum as any to emphasise the twin burden that Europe and the U.S. must discharge, and that the question of reforming the international financial institutions cannot be sidestepped at any cost.
