Changing order

FIRST EDIT


The most important outcome of the summit meeting of the Group of 20 countries held in Pittsburgh, the US, was its own self-designation as the premier forum for international economic consultation and co-operation. The G20 supersedes G8, which was a club of developed countries, and even with the co-option of BRIC countries, could not speak for the entire world. G20 is a wider forum which represents 90 per cent of the world’s population and 85 per cent its GDP.  Emerging countries like India and China will have greater say in its deliberations and decisions and this represents the ongoing shift in world economic power. Along with the proposal for a mechanism for peer review of the policies of member countries  and a five per cent shift in the IMF quota share, and hence of voting rights, to developing countries, the G20’s new role can give the emerging countries more power to influence the course of world economy in the coming years. There is some apprehension that it may be more vulnerable to US pressure because it is less compact than the expanded G8, but this seems to be misplaced.

Greater democratisation of financial institutions like the IMF and the World Bank has been a longstanding demand of developing countries and the decisions at the G20 summit may mark the beginning of the process. India and China will be the main beneficiaries of these changes. The peer review arrangement can help to avert situations like the global meltdown that resulted from the West’s unregulated and uninhibited economic policies. The decision to continue the trillion dollar stimulus package, agreed upon in the last two G20 meetings, is an acknowledgement of the need to be still cautious about the world economy, which has started showing signs of a turnaround but is not out of the woods yet.

India has reasons to be happy with the deliberations and the outcome of the summit, where Prime Minister Manmohan Singh’s personal authority reinforced India’s rising economic power. India can be said to have gained not only from the acceptance of some of its positions but also from the absence of any recommendation to cut fuel subsidies and reference to absolute emission cuts. It had opposed both. However, the West’s handling of climate change issues at Copenhagen  and trade issues in the Doha round will be the immediate tests of its commitment to a new world order, in spite of the good atmospherics at Pittsburgh.

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