At Home In the World

BY THE TIME INDIA’S PRESIDENCY OF THE GROUP OF 20 (G20) ends, it would have been host to 220 meetings across 60 cities in 28 states. Over one lakh delegates from more than 100 nations would have sampled the country’s culture and, more importantly, its vibrant economy.

The key message of the group’s importance was highlighted by Prime Min­ister Narendra Modi in a recent interview to the Press Trust of India (PTI) when he said, “India’s G20 presidency has also sowed the seeds of confidence in the countries of the so-called Third World. They are gaining greater confidence to shape the direction of the world in the coming years on many issues such as cli­mate change and global institutional reforms.” He added, “We will move faster towards a more representative and inclusive order where every voice is heard.”

India’s presidency of G20 came at a time of multiple crises in the world. Two, in particular, have upset the global political equilibrium beyond repair. One, the increasingly irreversible polarisation between the West—led by the US—and China; and two, the continuing war between Russia and Ukraine that has exacted a heavy toll on multiple nations in the world, especially those in Africa.

The big question is: Can one more group in an ever-increasing alphabet soup of groupings make a difference? Today the world has BRICS, the Shanghai Cooperation Organisation (SCO), the Quad, G7, and many more such groups. What difference can G20 make?

The answer: A lot. G20 was forged at the height of a global economic crisis in 1999 and was formed at the initiative of the then German Finance Minister Hans Eichel who realised the need to include emerging economies like India and China in fora for global economic coordination. Back then, India was nowhere near what it is today in its economic standing among nation-states. But its potential was clear even then. The message was clear: while the world was ‘run’ by G7, it was increasingly unrepresentative as other countries had gained economic strength and had equal, if not greater, stake in the global system.

In these 24 years the nature of crises in the world has changed. In the late 1990s, crises were due to market failures and required closer cooperation between different countries to prevent the ‘contagion’ from spreading. Today, these crises are a ‘blend’ of economic and political factors and the global system is a high-maintenance one that requires constant coordination.

While G20 is the ideal forum—it is non-ideological and in­cludes the US, China, Russia and all the key stakeholders in the global system—there are countries that are out to scuttle this system. It is an open secret that China, through the BRICS and SCO groups, wants to create a parallel system to challenge the West. The expansion of BRICS to include countries like Iran is clearly a Chinese gambit against the West. India sees through that game clearly. The absence of China’s President Xi Jinping from the Delhi summit, is a clear marker of that challenge. Rus­sia, a country otherwise friendly towards India, is now another holdout in the new concert of nations.

This does not affect India or the finale of its G20 presidency. To be sure there may be hiccups in the final declaration of the grouping as there were in Indonesia last year when Russia threw a wrench when it came to mentioning Ukraine in the final statement. India, always sensitive to Russian concerns, has tried hard to patch things and arrive at some form of consensus.

But one thing is clear: the last decade has witnessed an up­heaval in the global system that has not been seen since 1945. This has accelerated in the past five years as China has tried to jostle its way up. It is in this state of disequilibrium that ‘mid­dling’ countries have tried to find their space in the global sys­tem. India is at the very top of that list.

BEYOND ISSUES OF representation and getting the collective voice of the Global South heard lies a stark choice for many countries: how to navigate the increas­ing divide between the US and China and their respec­tive allies and partners. This is not a simple ideological choice between ‘freedom’ and ‘development’ as the US and China, re­spectively, would like to frame it.

Two examples illustrate the difficult choices faced by de­veloping countries of the South. Take the issue of climate fi­nancing, something that is a matter of life and death for island nations and countries hit hard by climate change, for example, Bangladesh. At the Paris climate summit in 2015, developed countries pledged a sum of $100 billion per annum for climate financing, a goal that has not been met. Money has flowed but is nowhere near what is required.

China, in contrast, has a very different approach. It does not ask questions, it just asks the country in question to sign a contract and take the money. This way, countries starved of development funding have seen vast sums for infrastructure and other projects. There are no firm estimates for how much China has spent on its Belt and Road Initiative (BRI) since it was launched in 2013 and figures vary from $1 trillion to as much as $8 trillion. Western aid is a pale shadow of these numbers.

But there’s a catch. How do countries like Sri Lanka, Nepal, Sudan, Ethiopia, let alone Pakistan, pay back the vast sums bor­rowed from China? It is one thing to get money from China but an altogether different one to invest it in economically viable projects, generate enough surpluses, and then pay back China. Chinese contracts are often opaque and the interest charged is much higher than under multilateral lending.

To give nearby examples, consider the money given for proj­ects in Sri Lanka and Nepal. The Sri Lankan case is well-known. The sums involved were so large that ultimately Colombo had to practically hand over the strategic Hambantota port to a Chi­nese operator on a 99-year lease, which was as good as handing it to the Chinese government. The island nation was in no posi­tion to bear the Chinese debt. In a difficult turn of events, the country defaulted on its debt obligations in 2022.

Nepal is another example of Chinese ‘largesse’. Often, the country tries to ‘strike a balance’ between India and China and seeks to extract the maximum benefits from both. This is a well-known strategy and many countries, including India at a similar stage of development, have tried. But in Nepal’s case, sufficient thought was not devoted to the consequences of bor­rowing from China. The projects selected for investment—air­ports and hydropower projects—were built with the assump­tion that they would generate traffic and trade in power. The Pokhara International Airport and the Gautam Buddha Inter­national Airport at Bhairahawa are yet to see any traffic even as Nepal has borrowed $291 million in loans on them. Similarly, India is reluctant to evacuate power from Nepalese power proj­ects such as the Upper Tamakoshi Power Project as it suspects they have been built with Chinese money. Nepal, in turn, is suf­fering heartburn at India not buying power from these projects or allowing flights or overflight rights from the two airports. It was a neat ‘developmental pitch’ on China’s part to Nepal but the latter did not think through the consequences and as­sumed that India would buy power and allow flights from these Chinese-financed projects. How Kathmandu would pay back these loans remains an open question.

THESE QUESTIONS OF debt traps at Chinese hands are a live issue in key groupings of nations, including G20. On the eve of the Delhi summit, Prime Minister Modi was asked this question by PTI in the interview. He gave a thoughtful answer: “First, countries that are going through debt crisis or have gone through it, have begun to give greater impor­tance to financial discipline. Second, others who have seen some countries facing tough times due to the debt crisis are conscious of avoiding the same missteps.”

He went on to add, “Our G20 presidency has placed a sig­nificant emphasis on addressing the global challenges posed by debt vulnerabilities, especially for nations in the Global South.”

The implication is clear: there is no such thing as a free lunch, especially with loans from China. The message from India is equally clear: debt is indeed a problem that needs to be addressed but the essence of national independence lies in taking deci­sions carefully.

At the same time, the absence of leadership from the West is glaring. A large number of countries do not see the West as a benign actor in the international system. The example of financing to mitigate climate change is well known. But there is another, ideological dimension, one that many countries—includ­ing India—resent greatly: Western hectoring—or lecturing, depending on your perspective—on democ­racy and human rights. India—the world’s most populous democra­cy—has been subjected to a constant barrage of negative commentary from the Western press, civil society and think-tanks for its “democratic backsliding”. This, after 70 years of elections, smooth changes of govern­ment, and many other accomplish­ments absent from a large number of nations. Predictably, this has led to countries exploring their options at a time of intense fragmentation. Some have navigated the system successfully while others have stumbled as exempli­fied by Sri Lanka and—without realising it—Pakistan. This has led to a touch of envy in the West. The Economist described the top 25 such nations in a recent issue as the T25 or the “Transac­tional 25”. These countries, The Economist reckons, are “ruthless” in pursuing their economic interests. Two examples are cited frequently: India and Brazil. India’s purchases of large quanti­ties of oil from Russia, at times on significant discounts have caused heartburn in Western capitals. Similarly, the tit-for-tat sessions of retaliatory tariffs between the US and China have opened the Chinese market for Brazilian agricultural exports. Here, the Western double standard becomes apparent: the use of the Carbon Border Adjustment Mechanism by the Europe­an Union (EU) is claimed to be a positive feature to “solve” the climate change problem, never mind the fact that it is a thinly disguised protectionist measure that only helps European com­panies. There are other examples as well.

The Indian approach to the problem lies somewhere in the spectrum between the Western and Chinese ones and is different. Unlike China, India does not offer ‘unconditional’ aid and later goes on to extract its pound of flesh. Neither does it deliver empty lectures to countries starved of financial and other help. In Sri Lanka, India has carefully helped its neighbour during its period of financial hardship. In Afghanistan, before the Taliban took over, India, at great risk to its engineers and other personnel, built key pieces of Afghan infrastructure like highways and dams. In­dia is limited by what is financially feasible for it. It makes up for this absence of spending largesse with goodwill.

Can G20 and India’s role in highlighting a “human-centric” approach change all this? A lot de­pends on how countries approach these problems. A purely instru­mental approach—The Economist’s T25—will work for a while but after some time the room for manoeu­vring will cease to exist. A purely ideological one—embodied by the West and China—won’t work ei­ther. India’s pragmatic way—what Modi describes as “human-centric”, includes a mix of responsibility in making choices and, at the same time, just giving that extra bit of help to developing countries, the kind that makes all the difference—can work. Countries in Africa, a conti­nent with a special and empathetic place in India’s scheme of things, look for such options. If the African Union (AU) gets to be a member of G20, maybe things can change for the better.

 

ChinaEmmanuel MacronG20 SummitgeopoliticsJoe BidenNarendra Modiworld leadersXi Jinping