India's clumsy balancing act
Disillusioned with the G8, India is considering a Brazilian proposal to constitute a G5 of southern nations. Yet its participation in north-south trade negotiations (as part of the G4) has left it in an awkward position in relation to other potential southern partners, writes Praful Bidwai.NEW DELHI - India, which was invited to the Group of Eight summit at Heiligendamm, Germany, as one of five "outreach" nations from the global South, is disillusioned with the countries of the North. It is toying with a proposal by another "outreach" member, Brazil, to constitute a new select group that meets independently of the G8. This coalition is likely to be called the Group of Five and include China, Mexico and South Africa in addition to India and Brazil. Before a meeting of the heads of government of the five, their foreign ministers are planning to meet in New York in September to coordinate their positions on issues of common interest. However, while it pursues this engagement with the other four large, fast-growing Southern economies, India is also participating in important trade negotiations in a North-South grouping, the G4, which also includes the United States, the European Union and Brazil. The G4 talks, held last week in Potsdam, Germany, within the framework of the World Trade Organization's (WTO's) agenda, have just broken down. But there are moves to restart them later in the year. India remains committed to them. "India will be doing an awkward balancing act between these divergent groupings," said Kamal Mitra Chenoy, a professor at the School of International Studies at Jawaharlal Nehru University. "It is not clear how high a priority India will accord to each of the different groupings and reconcile divergent mutual interests. "One can only hope that India does not fall between two or three different stools," said Chenoy. "A mishap could derail the larger developing-country agenda on trade and reform of the global economic order." The G4 talks came in for sharp criticism from Southern farmers' organizations, and from strongly pro-South governments such as Venezuela's. India's disappointment with the G8 summit arises because Prime Minister Manmohan Singh sensed, according to Indian officials, that the G8 industrialized countries were trying to impose a glass ceiling on the five nations and were "patronizing" toward them. Manmohan said: "We were not active participants in the G8 processes. In fact, the G8 communique was issued even before our meeting. [In the future] we should get a chance to discuss issues of our concerns so that our point of view can be reflected in [the G8's] thought processes." He told G8 leaders: "We have come here not as petitioners but as partners in an equitable, just and fair management of the global community of nations, which we accept as reality in the globalized world." This did not evoke a positive response. India also had a country-specific reason to be unhappy with the G8 resolution pertaining to climate change and nuclear non-proliferation, one that differs from New Delhi's stance. The resolution asked India to "facilitate a more forthcoming approach towards nuclear cooperation in a manner that enhances and reinforces the global non-proliferation regime". "Evidently, some of Singh's advisers have an exaggerated image of India's importance as an 'emerging' economic power," said Chenoy. "They seem to believe India has already 'arrived' and should have been invited to the G8 summit as an equal partner. But despite its recent GDP [gross domestic product] growth, India's economy remains puny in relation to the United States' or Japan's." In absolute GDP terms, India accounts for about 2% of the global economy, and is much smaller than the tiniest of G8 Western European economies such as Italy and France, let alone Germany or Japan, which are three or four times as bit. The US economy is 13 times as large. India stands divided between ambition and reality, between its past as a strong adherent of North-South equality and South-South cooperation, and its likely future as an economic power. The current drive to explore the G5 grouping is a hangover from India's past championship of Southern causes and an expression of its pique with the G8. Yet it is doubtful whether the G5 can form a stable, coherent bloc. "Each one of the G5 economies is disproportionately dependent on the West, especially the US," said Dinesh Abrol of the National Working Group on WTO and Related Issues, based in New Delhi. "They also do not command much system-shaping power. Unless they reorganize their economies and develop strong relations with one another, and other Southern countries, they cannot get out of their present weak situation." Economists describe this situation as a hub-and-spokes relationship: each Southern country is like a spoke in the wheel, at the center of which lies the North-dominated center. This is a fundamentally unequal or asymmetrical relationship. The G5 countries also differ a great deal in the composition of their economies, and their strengths and weaknesses. Their past attempts to evolve common positions on such issues as debt, migration, trade, and reform of the United Nations, the World Bank and the International Monetary Fund were not always successful. Some of the differences became apparent at the G4 talks at Potsdam. S P Shukla, India's former chief negotiator in world trade talks, commented: "The G4 seems like a shrunken version of the Group of 'Five Interested Parties' [including Australia], which reached partial agreements on trade issues in Geneva under the Doha Round of WTO talks three years ago." The agreements, pertaining to a reduction in farm subsidies by the North, on liberalized trade in services, and on the South giving Non-Agricultural Market Access (NAMA) to Northern industrial goods, attracted criticism, especially from smaller Southern countries and the least developed economies. "These countries have little to export and much to lose from agreeing to NAMA, which can wipe out their economies," said Shukla. The Potsdam G4 talks failed to produce clarity on whether the Doha Round of trade negotiations is likely to be concluded after faltering several times. Many Southern countries would be happy to see no agreement rather than one involving a bad compromise. But the United States and the EU are pushing for a deal. In return for token reductions in farm subsidies, they demand major cuts in duties on manufactured goods. Some Southern governments have expressed reservations about future G4 talks. Prominent among them was Venezuela, which said it would work with developing countries on a statement expressing objections to such "private talks". "We are concerned that they might agree on a deal among themselves," Venezuelan Ambassador Oscar Carvallo said. "The issues of developing countries need to be addressed, not just the interests of a few members." Similarly, an international union of small farmers, La Via Campesina, has described the G4 as an "illegitimate" forum. If an anti-G4 campaign builds up, India will find itself in an unenviable situation. But there are few signs that it will move toward harmonizing its relations with the rest of the global South and stop vacillating.