The G20 was born to safeguard the global economy, in a unipolar world, from contagious risks following the 1997 financial crisis.
It took the shape of the premier forum for economic collaboration after the 2008 meltdown that saw the US looking up to China for help.
As of 2023, the year of the Indian presidency, both the context and content of G20 have changed substantially. This is evident in the absence of the Chinese President Xi Jinping, and Russian President Vladimir Putin, at the Delhi summit this weekend.
The power balance in the world has been changing for some time. The Ukraine crisis and the emergence of the Russia-China alliance have solidified this transformation. Putin wasn’t there in the Bali G20 meet as well, and Xi seems out to prove that China is a rival power to the US in Asia.
Clearly, politics has overtaken the economic agendas of G20 and it's now a divided house.
In this context, India had a tall task of bringing the forum back on track in 2023. The job was easier said than done.
Both Russia and China were consistent in blocking consensus — on issues as diverse and apolitical as ‘lifestyle for the environment’ or ‘women-led development’ — at ministerial meetings.
China even objected to India’s slogan of ‘Vasudhaiva Kutumbakam’ — a Sanskrit phrase meaning ‘the world is one family’ — on the ground that Sanskrit was not an official language.
The politics behind it are easy to understand. China uses civilisation as a political tool in promoting the Belt and Road Initiative or claiming foreign land as its own. It doesn’t want to share the glory of a civilisational nation with India.
Indian Goals Achieved?
Having said so, the world didn’t seem to have a better choice than India to take the cooperation agendas ahead. Politically, India’s non-aligned stance in the Russia-Ukraine war is its biggest asset in reaching out to either party.
Russian President Putin has lauded Indian Prime Minister Narendra Modi’s role at the Shanghai Cooperation (SCO) Summit earlier this year in the presence of Xi. India also went against the West in buying crude oil from Russia even as the Ukraine crisis raged on.
And while Russia backed India’s proposals on climate change, promotion of millets, and digital transformation at the SCO, many similar proposals were blocked at the G20.
Economically, there was perhaps no better alternative to a fast-growing India vis-a-vis a crisis-ridden China and the West. The country’s recent successes in space technology and its achievements in digital transformation and physical infrastructure creation has further vindicated the choice of India hosting the current round of the G20 summit.
Delhi wanted to use the opportunity to showcase India as a future superpower and make Indians believe they should now aspire to change the status of the nation from an ‘Asian major’ to a ‘world leader’.
The largely insulated Indian media was introduced to world affairs, courtesy of the series of meetings across the country.
It is a matter of debate if the world has seen a more inclusive G20, where every state of a vast country, big or small, got the opportunity to showcase itself to the world.
That caused its own repercussions as well. Pakistan and China had their problems with India holding G20 meetings in Jammu and Kashmir and Arunachal Pradesh. That was along expected lines.
The Real Gains
However, it can be argued that the most tangible benefits of the G20 Summit for India will come from the bilateral meets that will be held on the sidelines. There has been consensus building within the country for reducing dependence on Russia for arms and for joining hands with the US for access to technology and investments in the strategic sectors.
The over-dependence on Russia for arms hasn’t augured well for India. It created a lobby within the defence sector that favoured imports and helped the Leftist-socialist forces to build anti-US perceptions.
The Left almost caused the Congress-led UPA government to collapse in 2008 over the India-US nuclear deal, a deal which was in Delhi’s favour.
More importantly, with the US sanctions on Russia, Moscow can no longer access the services of Western technology firms. Also, with China joining hands with Russia, India must not remain dependent on the Axis for arms.
Diversification was necessary. And, India is pursuing that in the best possible manner, as is evident with the US Congress approval to GE Aerospace for entering a joint venture with India’s Hindustan Aeronautics Limited (HAL) to produce fighter jet engines. The deal involves the transfer of technology.
The gains will come through import replacement, fast expansion of air force capacity, reduced cost, economic value addition and the wide possibility of private sector participation and export of defence hardware.
Prime Minister Modi and US President Joe Biden are expected to take these agendas forward during the bilateral meeting, parallel to the G20 Summit. India will also hold a bilateral with France, another key technology player.
MDBs A Casualty
To cut a long story short, the unprecedented focus of the Modi government, over the last decade, on improving the country’s core efficiency and the recent developments in world politics created an opportunity for India to up its stake in the world economy, and Delhi grabbed it with both hands.
The results are showing on the economic front through the arrival of Apples and GEs of the world. It is likely that this will open the floodgates to global investment. Space missions will further boost the image.
However, in this new world where the WTO (World Trade Organisation) trade architecture is challenged by tariff walls and free trade pacts, gains will mostly come through bilateral relationships. Multilateralism, as is promoted by G20, is surely a victim.
It will have its impacts on multilateral development banks (MDB) and source of finance though. The US sanction on Russia has hit the New Development Bank (formerly BRICS Bank).
BRICS and Asian Infrastructure Investment Bank (AIIB) — both headquartered in China — each sponsored nearly $9-10 billion worth of projects in India. Delhi is an equal partner in New Development Bank and the second-largest shareholder in AIIB.
Given the geopolitical tension and global scrutiny on AIIB, it is questionable if India can invite more investments from the bank with China being the largest shareholder. It means the West must open their purse strings. But can they or will they?
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