In the wrong league?

India's OECD-influenced G20 presidency reeks of Western inclination, and has come at the cost of detachment with more crucial developing world groupings like G77 — leaving a gap which China is more than eager to fill

In the wrong league?

India has taken over the presidency of the G-20 for 2023 from Indonesia where the G20 summit was held in November 2022. After India, Brazil will take over the presidency of the G20, followed by South Africa in 2025. As per a report by 'Reuters', during its term, India will hold more than 200 meetings across some 50 cities, involving ministers, officials and civil society members, leading up to a summit in the capital New Delhi in September 2023. The presidency of the G20 is rotational. The previous presidents of the G20 have been the USA, the UK, Canada, South Korea, France, Mexico, Russia, Australia, Turkey, China, Germany, Argentina, Japan, Saudi Arabia, Italy and Indonesia.

The Indian government has launched its year of the G-20 presidency on December 1 with some splendor, and 100 monuments — from Kashmir to Kanyakumari — lit up with India's G20 logo symbolizing the motto 'Vasudhaiva Kutumbakam', or 'one earth, one family, one future'. 'The Hindu' has reminded us that in 2008, the first G20 summit-level meeting in the US was held during a moment of crisis for the world's financial systems. In 2022, the task for the Indian Prime Minister and his team would be equally crucial, given the lasting effects of the Russian war in Ukraine, western sanctions on energy, economic downturns, pandemic worries and climate change issues that have been testing the foundations of globalization and an interconnected global economy.

According to the experts, the two major challenges before India as the president of the G20 are to: (i) show a new way, out of the problems the world is facing and; (ii) reintroduce globalization, which had been gradually replaced, by countries going its own way through nationalism, reported 'Times of India'.

G20: A forum of developed and emerging economies

The Group of 20, also called the G20, is a group of finance ministers and central bank governors from 19 of the world's largest economies, including those of many developing nations, along with the European Union. Formed in 1999, the G20 promotes global economic growth, international trade and regulation of financial markets. As the G20 is a forum, not a legislative body, its agreements and decisions have no legal impact, but they do influence countries' policies and global cooperation.

The G20 includes all members of the Group of Seven (G7), a forum of the European Union and the seven of the world's largest developed economies: France, Germany, Italy, Japan, the United States, the United Kingdom, and Canada. In addition to these 8, the other 12 members of the G20 are: Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa, South Korea and Turkey.

The G20 also has many common members with the 38-member Organization for Economic Co-operation and Development (OECD) — an international organization that works to build better policies for 'better lives'. OECD provides a unique forum and knowledge hub for data and analysis, exchange of experiences, best-practice sharing, and advice on public policies and international standard-setting. OECD members are countries which describe themselves as committed to democracy and the market economy, providing a platform to compare policy experiences, seek answers to common problems, identify good practices and coordinate domestic and international policies of its members. In 2021, after long negotiations at the OECD, participating countries agreed to an outline for new tax rules — the Global Tax Deal. In a historic agreement, announced in Paris under the aegis of OECD, 130 countries (out of the 139 involved in talks), including India, endorsed the OECD/G20 Inclusive Framework Tax Deal.

The majority of OECD members are high-income economies with a very high Human Development Index (HDI), and are regarded as developed countries. The founding members of OECD are: Austria, Belgium, Canada, Denmark, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, the United Kingdom, the United States. Later, other 18 member countries joined the OECD. These are: Japan, Finland, Australia, New Zealand, Poland, Hungary, the Czech Republic, Slovakia, Mexico, South Korea, Estonia, Latvia, Lithuania, Romania, Bulgaria, Colombia and Costa-Rica. Actually, OECD is an extended EU which also includes, among others, USA, Canada, Japan, Australia, Turkey, South Korea, Mexico, Columbia, and Costa Rica.

In the figure, the common members of both OECD and G20 are: the G7, the EU (baring a few countries), the USA, Canada, Australia, Japan, Mexico, South-Korea and Turkey. The major additions to the G20 are: Brazil, Russia, India, China, South Africa, Saudi Arabia, and Argentina (BRICS+2) besides Indonesia.

In short, the G20 can be described as an extended OECD with BRICS+2 and Indonesia as new members. Put simply, the G20 is a forum of developed and emerging economies of the world.

Incidentally, seven prominent members of the G20, namely, India, Brazil, Argentina, Indonesia, Saudi Arabia, South Africa and China are also members of the G77. The Group of 77 is a coalition of 134 developing countries, designed to promote its members' collective economic interests and create an enhanced joint negotiating capacity in the United Nations. The group was founded on June 15, 1964, by 77 non-aligned nations in the 'Joint Declaration of the Seventy-Seven Countries' issued at the United Nations Conference on Trade and Development (UNCTAD).

In 1971, the G24, where India is also a member, was established by the G77 as one of its chapters to help coordinate the positions of developing countries on international monetary and development finance issues as well as to ensure that their interests are adequately represented in negotiations on international monetary matters. Recently, the developing countries under the G24 grouping have objected to the proposal of making sovereign commitments to not introduce any future digital services tax like an equalization levy. Under Pillar One of the Global Tax Deal, all signing countries are required to withdraw their existing digital services taxes and other unilateral measures with respect to all companies and also commit not to introduce any new unilateral measures in the interim period. These countries refused to make a sovereign commitment on future digital services tax.

OECD sets the agenda

The official website of OECD claims that OECD participates in all G20 meetings at the highest political level (leaders, ministers, sherpas, finance deputies) as well as at the technical level (Working Groups), and contributes to virtually all of the Group's strands of work and most G20 working groups with data, analytical reports, policy recommendations and standards. The G20 and OECD members together represent 85 per cent of global GDP, 75 per cent of international trade and two-thirds of the world's population. OECD believes that because of its size and strategic importance, the G20 has a crucial role in setting the path for the future of global economic growth.

According to OECD document, it contributes to all stages of preparation of G20 Summits, namely:

* Helping define the agenda by developing narratives;

* Providing policy options by preparing evidence-based analysis and reports;

* Forging consensus across the membership around presidency's priorities;

* Strengthening the global governance by setting global standard on key issues;

* Ensuring that legacies and commitments from previous presidencies are monitored and delivered.

The OECD website also claims that under the supervision of the OECD Sherpa to the G20, the Global Governance and Sherpa Unit of OECD play an essential role in coordinating and ensuring coherence and relevance to all the Organization's contributions to the G20. The OECD Secretary-General participates at the highest political level, while the OECD Chief Economist represents the OECD at Finance Deputies' meetings.

Though India is the official president of the G20 summit in 2023, it appears that the OECD secretariat sets the agenda and runs the show from the backstage.

India, China and G77

India, once the leader of the non-aligned movement, is one of the founding members of G77. But at present, India's engagements are more with the developed nations of the G20 than the developing countries of the G77.

In an article, columnist Shastri Ramachandran has alleged that the Government of India has no clear-cut stand and approach when it comes to campaigning for positions in the United Nations, including specialized agencies of the world body and formations such as the Group of 77 (G77), reported 'The Citizen'. On the question of India's stand on the G77, India's former UN Under-Secretary General, Shashi Tharoor, said that once the Government of India had attached a great deal of importance to the G77, a body which India often led at the UN as the 'global trade union of developing countries'. However, as the "G20 grew in importance, there has inevitably been some diminishing of the prominence given to the G77." Apparently, it is clear that India is now abandoning G77 — its long-trusted ally.

Ostensible America was upset with the policy of non-alignment, which had been the basis of Indian foreign policy since independence. America's Biden administration wanted India to break away from the world-famous policy of non-alignment. Not only this, America also wanted India to distance itself from Russia, which stands by India in every crisis.

Newspaper reports suggest that the USA administration has put pressure on India to "move away" from its long-term history of non-alignment G77 partnership with Russia. It is reported that the Deputy Secretary of State Wendy Sherman told members of the powerful House Foreign Affairs Committee during a Congressional hearing that America shares a very critical relationship with India. "They are the largest democracy in the world. We have a strong defence relationship with them. They are part of the Quad, with Australia and Japan, and we are moving forward on many achievements that are critical to Indo-Pacific prosperity and security," she said. "We, obviously, would prefer that India move away from their long-term history of non-alignment G77 partnership with Russia," Sherman said in response to a question from Congressman Tim Burchett, as reported by 'The Wire'.

While India is dithering on G77, China, whose aim is to promote collective economic interests of the members and to have a bigger say in the world organization, has aligned itself with the group. Pakistan assumed the chairmanship of Group of 77 and China for 2022.

Though the Group of 77 lists China as one of its members, it does not consider itself to be a member. As a result, official statements of the G77 are delivered in the name of the Group of 77 and China or G77+China. Nevertheless, the Chinese government provides consistent political support to the G77 and has made financial contributions to the Group since 1994.

China's Permanent Representative to the United Nations Zhang Jun said in September 2022 that China would continue to unswervingly support the Group of 77 (G77), to accelerate the

implementation of the sustainable development goals (SDG 2030) and achieve mutual development and prosperity. During the 46th 'G77 and China' ministerial meeting in New York, Zhang said cooperation and solidarity from both sides were needed more than ever, as risks and challenges such as COVID-19, geographical conflict, climate change and food and energy crisis, were intertwined. Being one of the developing countries, Zhang said China would welcome the G77 members to positively engage in the Global Development Initiative (GDI) cooperation and join the Group of Friends of the GDI, together seeking and building a global development community, reported 'CGTN'.


Apparently, India has moved closer to the OECD camp ditching its old allies in G77. China has emerged as the leader of the developing south.

On Russia also, India has diluted its previous stand on remaining neutral on the Russia-Ukraine war. Though rupee-ruble trade has been agreed between India and Russia, large Indian lenders are reluctant to process direct rupee trade transactions with Russia months after the mechanism was put in place for fear of becoming the target of sanctions by the United States and Europe over the invasion of Ukraine. Lenders with more exposure to the

international financial system, and in particular the dollar, are worried their businesses could be disrupted if targeted by sanctions, reports 'Reuters'. In the Bali declaration of the G20, India echoed the western perspective of the Russia-Ukraine war and was appreciated by the USA and its allies. In a statement dated November 18, 2022, the White House said, India played an essential role in negotiating the Bali Declaration of the just concluded G20 Summit in Indonesia. It applauded PM Narendra Modi for saying that 'today's era must not be of war'.

OECD and the developed world set the agenda for the G20. As an alternative to deep engagement with the developed forums like G7, G20 and OECD which always dictate terms and insist on linking trade negotiation with binding labour and environment standards, India must explore the possibility of strengthening the Global System of Trade Preferences (GSTP) among developing countries and enter into some mutually beneficial long term trade relations with G77 nations.

In the latest Human Development Report 2022, India ranked 131 among 188 countries. With a poor HDI score of 0.645 India is a misfit in G20 forum

Views expressed are personal

Next Story
Share it