India ‘indispensable partner’ in US friend-shoring strategy: Yellen

‘Friend-shoring’ is a US strategy that realigns trade and economic ties so that supply chains remain intact in the event of war or unforeseen events, like pandemics.

The United States considers India an ‘indispensable partner’ in its strategy to diversify away from countries that present geopolitical and security risks, the US Treasury Secretary Janet Yellen said on Sunday.

Speaking on the sidelines of the G20 meeting of Finance Ministers and Central Bank Governors (FMCBG) in Gandhinagar, Yellen also said that she will use the platform to ‘redouble’ the US and allies’ support for Ukraine in its defence against Russia.

“Friend-shoring is an important foundation for our push to increasing the resilience of our supply chains, and we see India as an indispensable partner in that. I will use this trip to deepen what is already a very significant relationship,” Yellen said. She added that during her tenure as the head of the US Treasury, she has visited India more than any other country.

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‘Friend-shoring’ is a strategy deployed by the US to focus its trade and economic ties more on those nations that it feels will not upset the geopolitical balance so that supply chains remain intact in the event of war or other unforeseen events, like pandemics.

“Another key priority this week is to redouble our support for Ukraine as it continues to defend itself against Russia’s illegal and unprovoked attack. Ending this war is first and foremost a moral imperative. But it’s also the single best thing we can do for the global economy,” Yellen said.

Yellen’s comments come at a time when many members, including India, believe that the stand-off over the war between G7 and Russia-China is taking the G20’s focus away from more important developmental issues like climate finance, financial inclusion, taxation, debt distress in poorer nations, and reforms in multilateral institutions like the International Monetary Fund and World Bank.

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On the issue of debt, Yellen said that creditors like China and the multilateral institutions need to find ways to speed up the resolution process for countries like Ghana and Sri Lanka.

“Today, over half of all low-income countries are near or in debt distress, double the share of those that were in this situation in 2015. When countries find themselves in debt distress, it is hard for them to fund or attract important public and private investments. I will continue to push for full and timely participation of all bilateral official creditors on pending debt-restructuring cases,” Yellen said.

On the issue of multilateral institutions, Yellen said that the World Bank should create a mechanism to allocate additional resources to countries that seek Bank financing to combat global challenges. “We need the whole system to become more effective and efficient… We should build better banks, not just bigger ones.”

Yellen’s latest India trip comes on the heels of a visit to Beijing last week, where she held meetings with the Chinese leadership. Yellen said on Sunday that while the US-China relationship is on a ‘surer footing’, the de-escalation of the tariffs placed on the world’s second-largest economy is still somewhat premature.