What lies ahead for India and the world in the 2020s?

Hindustan Times, May 14, 2017, Analysis, co-authored by Ashok Malik

Original link is here

With tectonic and technological challenges causing disruptions, the neat correlation of a big economy with big power that bears big responsibilities is under scrutiny

2020s

The Black Tesla Model S electric car at a Tesla supercharger charging station. Superchargers are free connectors that charge Model S in minutes. Tesla and Uber (and Ola in India) are current and future providers of public transport networks without which cities will be unable to do business. (Getty Images)


At the cusp of the 2020s, what are the markers of change in the international system? The challenges are tectonic and technological and causing four major disruptions. First, the neat correlation of a big economy with big power that bears big responsibilities is under scrutiny. After World War II, the globe’s largest economies were also its ultimate security guarantors, institution incubators and norm shapers. Today, the economic and domestic political capital of a great power with a per capita income of US$40,000 is just not replicable by an emerging power with a per capita income of US$10,000.

The latter faces inequities and developmental gaps at home, and its generosity will perforce be constricted. Populist politics will anyway make it harder for any power – old or emerging – to be an unremitting provider of global public goods. To add to that, the largest economies of this century will also be among the weakest societies – a new paradigm.

Second, there is a creeping capture of provision of public goods and services by business corporations and large transnational philanthropic entities. For example, the developing world’s public health agenda is being influenced by a Bill and Melinda Gates Foundation, in some cases to a greater degree than by the World Health Organisation.

The Trump administration’s resolve to cut US funding for development programmes that support abortion services is being supplanted by large American charities and philanthropic institutions that see the right to choose as central to women’s health and empowerment. Such processes will curb the autonomy – or excesses – of national governments seeking to achieve politically desirable goals.

In the economic sphere too the concept of public goods and private provision – and of where the state, as the traditional provider of public goods, comes into this dynamic – has to be considered afresh. In most societies Internet and data services comprise a public utility being delivered by private corporations. Tesla and Uber (and Ola in India) are current and future providers of public transport networks without which cities will be unable to do business. Yet they are also networks over which the government – or even traditional pressure groups such as trade unions – have only nominal control.

The devolution of a “public goods provider” role has in turn generated thinking on quasi-government obligations among futuristic corporations. That is why suggestions of an income tax to be paid by robots have come from the founder of Microsoft; or why the chief executive of Tesla – its driverless cars will disrupt driver communities – has urged governments to institute a universal basic income.

Third, there is an uneasy but imminent transition in industrial production from human-intensive to machine-driven ecosystems. The early 21st century will see the maturing and possible commodification of a menu of new technologies – artificial intelligence and robotics, 3D manufacturing and custom-made biological and pharmaceutical products, lethal autonomous weapons and driverless cars.

This will pose conundrums. The moral question of how a driverless car will decide between hitting a jaywalker and swerving and damaging the car has often been debated. The answer is both simple – save the human life – and complex. At which angle should the car swerve? Just enough to save the jaywalker or more than enough? If the driverless car is in Dublin, is the decision taken by the Irish government, the car’s original code writers in California or a software programmer in Hyderabad to whom maintenance is outsourced?

If different national jurisdictions have different fine print on something that should be so apparent – prioritising a human life – how will it affect insurance and investment decisions, including transnational ones, in relation to infrastructure that lies within damage-causing distance of a driverless car while it is attempting to evade a jaywalker? The sociology and economy of the machine will determine a specialised discipline in 21st century diplomacy and trade negotiations. Already the large cyber-attack has displaced the nuclear-tipped missile as the proximate threat.

Finally, technology is blurring national boundaries just as politics is tightening them. Innovation and capital have impinged upon the domain of the state at a juncture when statism, nativism, identity and nationalism are making a comeback. As such, while the nation-state will remain the fundamental unit of reckoning in the international system, it will have to engage with, almost Brownian-motion like, other units and stakeholders in a fluid medium where disorder may have both permanence and legitimacy. On its part, geopolitics will have to reconcile to 50 shades of grey, a departure from the black-white binary that framed the Anglo-Saxon ethic.

Ashok Malik and Samir Saran are with the Observer Research Foundation

Wahhabism, meet Han-ism: CPEC betokens China’s search for lebensraum in Pakistan and Pakistan occupied Kashmir

Times of India, May 12, 2017

Original link is here

Wahhabism, meet Han-ism: CPEC betokens China’s search for lebensraum in Pakistan and Pakistan occupied Kashmir

With Beijing elevating the One Belt, One Road (OBOR) initiative’s political visibility through a heads of government summit this week, India needs to craft a sharper policy position. Over the past two years, New Delhi waited and watched as China sought political buy-in from Asian powers for OBOR. India subtly communicated to China that a trans-regional project of this magnitude required wider consultation.

When Beijing chose to sidestep this request, India articulated concerns – at the highest level, no less – regarding its own sovereign claim on those regions of Jammu & Kashmir that the China-Pakistan Economic Corridor (CPEC) would traverse.

China’s wanton disregard for Indian sensitivities suggests the debate on OBOR’s economic potential is now academic. There cannot be any serious discussion on India joining or not joining OBOR unless New Delhi feels its political sovereignty – the very basis of governance – is respected by the project. Far from this, CPEC (the life and soul of OBOR) threatens India’s territorial integrity in a manner unseen since 1962.

China, through its economic corridor with Pakistan, has proposed a dramatic redrawing of demographic and geographic boundaries. It is undertaking an unabashed, confrontational and neo-colonial smash and grab in south Asia.

It is capturing key real estate in the wider region. Beijing is building islands in South China Sea, contesting territorial claims of neighbours in the East China Sea, and even aspires for greater control of the Malacca Straits. It has bankrolled its way to political supremacy in central Asia. It now seeks to build overtly economic but covertly military facilities and bases through the CPEC route – in Gwadar but also Gilgit-Baltistan.

Islamabad is willing to offer such stations in return for Beijing’s protection and money. The most obvious attempt is to engineer a political solution to the Kashmir dispute by changing “facts on the ground”.

If China managed to do this in the South China Sea by constructing entire islands in disputed waters, CPEC will create permanent or semi-permanent projects that will change the nature of the economy and society in Gilgit-Baltistan. The region will be swamped by Chinese and Punjabis who will exploit its location and pillage its civilisation for common benefit.

Not only would CPEC run roughshod over the sacred Panchsheel principle of “mutual respect”, it would also destroy any chance of a peaceful settlement of the Kashmir dispute. In effect, Pakistan and China are suggesting that it is conceivable Jammu & Kashmir (and Gilgit-Baltistan and presumably Ladakh) can be segregated into separate units that merit unique economic, political and military engagement.

CPEC also triggers concern that economic concessions by Pakistan will lead to ceding of territory, for which the 1963 Sino-Pakistani agreement is a precedent. Ironically, China’s involvement in economic activities in contested territories goes against the grain of its own policy on FTAs between Taiwan and third parties.

By investing in CPEC, the UK and EU are complicit in this design. In effect, European money is being used by China to limit Western political leverage in Asia, and assist Pakistan to continue to sponsor anti-India radicalism.

China’s hardline approach in Xinjiang province offers a clue to what CPEC could do to Gilgit-Baltistan. The 2000 census said while the native Uyghur Muslim population in Xinjiang remained the largest ethnic group at 48%, Han Chinese made up 40%. This was an astonishing turnaround from the overwhelming 90% majority Uyghurs enjoyed in the 1950s.

Han Chinese are said to dominate the province today, as they are economically better off and awarded the best jobs and highest positions. Uyghur culture and customs have been suppressed. There are restrictions on fasting during Ramzan, Muslim baby names are labelled “extremist” and even the length of beards is regulated.

Is Gilgit-Baltistan the next frontier for such demographic re-engineering? In 1974, Pakistan abolished a rule that prevented non-locals from buying land in Gilgit-Baltistan. This Shia-dominated region saw rampant Sunni expansionism and settlement of people from all over Pakistan. “As of January 2001, the old population ratio of 1:4 (non-locals to locals) had been transformed to 3:4,” suggests the South Asia Intelligence Review.

CPEC will make Gilgit-Baltistan the meeting ground for a volatile osmosis of two supremacist projects: Wahhabism and Han-ism. Both aim for complete social domination of communities. This would not only alter the region’s demographic composition but also reduce Gilgit-Baltistan to a tinderbox of ethnic, religious and sectarian conflict, with grave security consequences for south and central Asia.

And finally China’s brazen disregard for concerns of sovereignty cuts to the heart of its bilateral relationship with India, which had long been premised on respect for principles of non-intervention, territorial integrity and peaceful resolution of disputes. If that basis no longer holds, Indian policy makers must seriously revisit the benefits of joining China-led multilateral initiatives. Some would even question the political viability of Brics going forward.

CPEC will create domestic pressures on India to incubate sub-conventional support for oppressed peoples in Gilgit, Tibet, Xinjiang and Inner Mongolia. It could intervene more directly in highlighting such issues in Balochistan, another CPEC waystation. While India’s $2.5 trillion economy brings limitations to any response, these steps will act as a benchmark for the future.

For now, India may resist the race to the bottom, ie confront violations of sovereignty with proportionate counter-violations. But policy planners in Beijing should not test India’s ability to impose Himalayan hurdles on the belt and road.

DISCLAIMER : Views expressed above are the author’s own.

A global agenda for digital economies

The G20 must foster linkages between traditional financial institutions, first-generation Internet users and the informal sources of their livelihood

Livemint, May 3, 2017

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The G20 is responsible for ensuring that digital supply chains are not fragmented in this era of ‘de-globalization’. Photo: Reuters

Last month, Germany convened the first-ever G20 “digital ministers” meeting, indicating how the future of connected societies and economies is now firmly at the top of the global agenda. In the run- up to the ministerial meeting, a T20 task force comprising think tanks and academia, of which this author was co-chair, was constituted to offer recommendations that would strengthen digital economies and manage the “digitalization” of traditional sectors. A prominent concern outlined by this group related to the threat to global financial systems because of greater interconnectivity and the creation of novel, untested architectures to manage payment processes. No country is more affected by the weaknesses in digital payments systems, global and domestic, than India, which is tackling the twin challenge of Internet adoption and expansive digitalization.

The future of global financial systems is tied to the security of the digital networks that sustain them. A recent report by UK-based insurance company Hiscox suggests cyberattacks cost the global economy nearly $450 billion. Whether in platforms like the UN group of governmental experts on information security, or through traditional trade agreements, the international community has struggled to offer a collective response to threats faced by the digital economy. The G20 digital ministers meeting is, therefore, a step in the right direction to give this issue the political visibility it needs.

The meeting resulted in the creation of a working group on the digital economy to articulate rules of operation for businesses, governments and users transacting on the Internet. The larger mandate of this working group is the creation of a strategy for securing the global digital economy. India should contribute to the working group’s findings, as its digital economy is qualitatively and quantitatively different from those of the advanced industrialized nations.

The working group will have to address concerns around security, digital access and international trade. Cybersecurity, traditionally understood, has come to mean the integrity of platforms, digital networks and devices. But the G20 should assess whether cybersecurity is a business objective or a means towards the larger goal of promoting digital access and financial inclusion. Should it be the latter, any ecosystem design should ensure affordability and affordable security for users at the bottom of the pyramid. The working group should also articulate policies for the digital economy that can be emulated in developing countries outside the G20. And finally, the G20 is responsible for ensuring that digital supply chains are not fragmented in this era of “de-globalization”. This is a real threat, and as the recent communique from the G20 finance ministers’ meeting suggests, the group was unable to defend the virtues of an open trading system.

The availability of digital infrastructure is not the holy grail for emerging markets. Even if the last user in the developing world were to be provided affordable and uninterrupted Internet access—a challenge in itself—her digital consumption would ride on the skills available, cybersecurity awareness, and the level of inclusion offered by technological platforms developed in advanced economies. Scholars Urvashi Aneja and Vidisha Mishra at the Observer Research Foundation make the case for a G20-wide “digital skills upliftment strategy” that can improve labour participation and competitive capacities for women and marginalized communities.

Yet another concern that the working group should address is the impact of “digitalization” on traditional industrial sectors. Here too, India like others in the developing world, is in the cross hairs of pervasive automation and the use of “intelligent” technologies. Automation will affect manufacturing jobs, and economists like Ester Faia suggest that it poses a risk to the service sector as well. Faia’s analysis, submitted as a working paper to the T20 group, also shows that the financial services sector, considered a safe haven in times of economic transition, has a 90% probability of automation in certain countries. A services-driven economy like India, therefore, must manage this disruptive transition and potential loss of jobs effectively.

How the shift to automated supply chains will affect the country’s urban demographic is also a question worthy of the Indian policymakers’ attention. For instance, as industrial supply chains become digitized, highly skilled jobs have clustered around certain urban centres with a technological focus—San Francisco, Phoenix and Munich, to name a few. Similarly, traditional manufacturing centres like Detroit and Liverpool have seen jobs plummet because of automation. Unpredictable employment trends alongside the current problems of unplanned urbanization will challenge economies within and outside the G20. This in turn will give rise to new domestic political dynamics that may sometimes clash with the G20’s stated objective of promoting globalization.

How can the G20 manage the tailwinds of such disruptive automation and “digitalization”? Carl Frey of the Oxford Martin School suggests that this disruption should be countered by policies that enable urban mobility and create a wide social safety net, such as one for national relocation support. There are discussions in India and in Silicon Valley about providing a universal basic income to manage this new dynamic. But can conservative financial institutions that thrive on old notions of risk as it relates to lending and banking adapt to such policies? The G20, through national and transnational policies, has always engaged with the formal economy. Its best shot at managing disruptive digital forces may ironically lie in embracing the informal sector via technology. Digital platforms will allow governments to provide social benefits to constituencies that formal financial instruments have been traditionally blind to, provided the G20 fosters linkages between the trifecta of traditional financial institutions, first-generation Internet users and the informal sources of their livelihood.

Samir Saran is vice-president at the Observer Research Foundation and was co-chair of the T-20 task force on the digital economy.


Telcos should train their sights on the application for data

18 April, 2017, Economic Times

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Long at the margins of the telecom and internet revolutions, India is today moving towards pole position on data consumption. The recently released Boston Consulting Group-The Indus Entrepreneurs (BCG-TiE) report on India’s internet economy suggests the country is the ‘second highest’ in terms of mobile internet adoption, clocking at 391 million users.

India’s digital economy is expected to double its value to $250 billion, and contribute to 7.5% of the GDP in three years. The projected data consumption per average user: 7-10 GB a month by 2020. Contrast this to the findings of the 2016 Ericsson Mobility Report that suggested data usage in India is slated to increase five-fold by 2021, rising to 1.4 GB per active smartphone. The five to seven times difference in projected data consumption between the 2016 Ericsson and the 2017 BCG-TiE one can be attributed to a disruptive intervention and a data-hungry consumer.

Jio, Reliance Industries Ltd’s technology startup, provided that disruptive intervention. It is perhaps the most influential driver behind the new numbers, which are, however, only the tip of the iceberg. There are deeper transformations that await the digital sector.

Three such transformations will prompt traditional telecom companies to compete and create new revenue streams that can’t rely on connectivity alone:

* The Death of Voice: Telecom companies should acknowledge the reality that traditional voice-based communication is now a market utility, not a luxury. ‘Voice-based’ communication companies will be pressed to invest in new infrastructure and ecosystems that meet the demand for videos and data-driven apps.

In practice, this means investing in infrastructure, and a new cadre of experts who can not only build platforms but respond agilely to disruptive innovation. Unless they can create this new technology ecosystem, they will perish.

* An Internet of People: Unprecedented data connectivity in the hands of half-a-billion (and growing) Indians will create an ‘Internet of People’, with each user signifying multiple opportunities to generate value for the platform economy. GoI’s flagship Digital India programme is, perhaps, the biggest public sector effort in the world to create such an ecosystem.

The ‘Internet of People’, in turn, gives rise to a major challenge: will the innovations for Indians be created and hosted in India? Or will the biggest platforms all be based abroad, leaving little room for the Indian platform economy to grow? As custodians of data, Indian businesses should build capacities for Big Data analytics, create tailored services and products for local consumers in local languages and, in the process, generate employment, unleash entrepreneurial spirits, and catalyse technology-driven social transformation. So, the individual is the biggest driver of India’s platform economy.

Policies for the Platform Economy: As India moves to a $10 trillion GDP by the early 2030s, the fuel of choice will be ‘bits and bytes’. If data is indeed the new oil, how is India prepared to secure this valued commodity? Regulatory questions around cyber security and data protection, as these relate to civilian networks in India, remain woefully unaddressed.

Policy debates in this space have been ‘principle-heavy’, seeking a golden median for regulation — say, for encryption or net neutrality — that can be emulated nationally. Instead, digital economy regulation should be ‘function-heavy’, prescribing rules of conduct for businesses and governments based on the end uses that data is deployed for.

The three-way contract between the user, service provider and app provider will determine questions like: who shares access to data? Can service providers innovate as nimbly as small startups providing applications on their platforms? How should applications be priced? And should this be reflected in data tariffs?

Jio is only one example of the disruption that is set to reverberate across the digital sector in India. That a company like Reliance can bring its considerable resources to bear on a digital enterprise definitely sets Jio apart from others. But the reality is that its digital infrastructure will generate little to no value for Jio, its nearest competitor or the next entrant into this sector. Innovation at the top, at the level of the platform, will expand the digital economy pie in India.

Already, Jio has emerged as a big contributor to Facebook’s latest quarterly revenues from Asia. How can Indian platforms avail the same benefits? It is crucial that India’s businesses, entrepreneurs and regulators train their sights on the application of data, rather than the tubes that deliver them to consumers.

The writer is vice-president, Observer Research Foundation. He has worked with Reliance Industries Ltd since 1994

 

Currents of disruption: Not just a new world order, but a new world

the interpreter, 7th April, 2017

Original link is  here

It has become a cliché to contend that the first half of the 21st century is different from the second half of the 20th, or that the 20 years after the end of the Cold War are no guide to the two decades that lie ahead of us. While past experiences are somewhat comparable, distinctly different contexts diminish their utility as tools for navigation. As such, how does one respond to what is unfolding at the cusp of the 2020s and what exactly are the markers of change in the international system that should define responses, solutions and statecraft?

It is possible to see this change in narrow and symbolic terms, say by re-configuration of the UN Security Council or by accepting the arrival of Asian candidates to the upper echelons of the Bretton Woods institutions. Other emblems of change would be the entry of India into an expanded Group of Seven as the eighth liberal democracy in that club of industrial economies, or new ocean politics resulting from the growing capacity of Chinese and to a lesser degree Indian naval power in an Indo-Pacific system hitherto underwritten by American maritime dominance.

Several such examples can be given and speculated upon. While some may well be realised and have a compounding impact on politics and society, these would still amount to narrow tactical shifts and to the reimagining of existing frameworks to incorporate rising powers. They would not, by themselves, be considered a clean-sheet redesign of the global order or sufficiently grasp the currents of disruption that lie just below the surface.

The challenges are tectonic and technological. When and if they are spent, they will leave us with not merely a new world order but a new world, the order for which is beyond the realms of current-day perception.

It would be safe to say that the next decade is likely to see the death of many institutions and arrangements that have hitherto been considered central to managing global affairs. At what stage will we begin to shape successor arrangements? And will these retain the agency of the state, or dissipate the powers of governance to big corporations, non-monolithic cultures and an individual’s sense of moral conduct?

Sweeping change, induced mostly by technology, will not just pose questions for the institutional matrices of the early 21st century, but also test the relevance of the very hierarchies of international relations of the past half-century. There is a fundamental mismatch between institutional arrangements currently in place to manage crises or ‘keep the peace’ and the disruptive tendencies that do not respect the state’s seal of sovereignty.

Four such disruptive developments are worth noting. The first and most salient concerns the very nature of power. The neat correlation of a big economy with big power that bears big responsibilities is under severe scrutiny. In the post-war epoch and in the period after the Cold War, the world’s largest economies were also its ultimate security guarantors. This was, for instance, the logic for creating the permanent membership of the Security Council in 1945. In turn, it was the big powers and, after 1990, the lone superpower that incubated the multilateral order and institutions that constituted the sinews of international cooperation, commerce and well-being.

The un-Enlightenment

The roots of this sense of occidental responsibility go deeper than merely the twin world wars of the 20th century. They can be located in the Eurocentric construct that flowed out of the Enlightenment, an 18th century phenomenon that revolutionised Western civilisation but had mixed consequences for the rest of the planet. It promoted both worldwide commerce and colonialism, leaving its imprint on the hierarchy of 20th and early 21st century geopolitics.

The ensuing sense of obligation – almost a noblesse oblige on a global scale – led to great powers and large economies playing an interventionist role in distant societies and informing developmental assistance in the manner of an intercontinental social responsibility charter. They took on global developmental leadership and were the largest contributors to the international provision of public goods, thereby defining the ethic of great-power behaviour.

The emerging powers of the early 21st century are different. For one, they have smaller capacities and political appetites. The economic and domestic political capital of a great power with a per capita income of US$40,000 is just not replicable by an emerging power with a per capita income of US$10,000. The latter faces enormous inequities and developmental gaps at home, and its generosity will perforce be constricted by domestic exigencies. Further, populist politics will make it harder for any power – old or emerging – to be an unremitting provider of global public goods.

Moreover, one of the new powers, China, is neither evangelical or expeditionary but transactional. China does not have a political model and an ideological or civilisational template to export or scale up. China is also culturally comfortable with shades of grey; the Anglo-Saxon quest for absolute, determinist clarity does not obsess Beijing.

China can live with long-term disorder. It can sublimate the moral inconsistency of being authoritarian at home and liberal abroad; or protectionist at home but seeking an open global trading system. Representing a society that is itself in transition, Beijing does not consider itself as default global peace-keeper or net security provider in the manner in which the expression has so long been understood.

Thus, India’s role as the liberal democracy with the fastest-rising contribution to global developmental assistance, as well as a net security provider in the coming decades, will be crucial. Along with Japan, it is the only exemplar of democratic and transparent traditions among the major powers of Asia. In years to come it is more likely to act in a manner that approximates the international obligations of actors such as the US. Yet it cannot do it alone, and its capacities are limited. The liberal world, including traditional powers that now increasingly looking inward, must guard against their efforts being crowded out by large, targeted and self-serving assistance from non-democratic political traditions to the north of India.

Public goods, private provision

The second development concerns the supply of public goods by large transnational corporations. This is not the first time the private sector has assisted in ‘development’, but the current scenario is unlike any other moment in history. As a result of both technology and the diminution of resources available to governments and public institutions, the early 21st century is seeing a creeping capture of the provision of public goods and services by business corporations and large transnational philanthropic entities.

The developing world’s public health agenda, for example, is being influenced by a Bill and Melinda Gates Foundation, in some cases to a greater degree than by the World Health Organisation. The Trump Administration’s resolve to cut US funding for development programs that make allowance for abortion is being supplanted by large American charities and philanthropic institutions that see the right to choose as central to women’s health and empowerment. Such processes will curb the autonomy – and in some cases the excesses – of the state and of national governments seeking to achieve politically desirable goals.

The purpose here is not to make a value judgement; it is only to stress that the power landscape has become that much more diffused.

In the economic sphere too the concept of public goods and private provision – and of where the state, as the traditional provider of public goods, comes into this dynamic – has to be considered afresh. In most societies the internet and data services comprise a public utility being delivered by private corporations. Tesla and Uber (and Ola in India) are current and future providers of public transport networks without which cities will be unable to do business. But they are also networks over which the government – or even traditional political pressure groups such as trade unions – have only nominal control.

Even so, when there are interruptions to data services or public transport or changes to the nature of jobs and labour markets following disruptions by, for instance, app-based intermediation, aggregation and similar technologies, the state will still remain answerable to its citizen.

Large industrial businesses and shared-economy behemoths are conscious of their impact on both markets and communities. That is why suggestions of an income tax to be paid by robots have come from the founder of Microsoft, or why the chief executive of Tesla has urged governments to institute a universal basic income. The devolution of a ‘public goods provider’ role has in turn generated thinking on quasi-government obligations among futuristic corporations.

In the next 20-odd years, as creation of value and haemorrhaging of jobs carry on in parallel, as wealth generation and concerns over access to the essentials of life occur simultaneously, the 20th century thrust towards inequity mitigation will be subsumed by one centred on inequity management. Conflicts of countries will take second place to conflicts of interests, both between and more so within societies and nation states. How will the international system address these conundrums?

Ghost in the machine

The third development is the uneasy but imminent transition in industrial production from human-intensive to machine-driven ecosystems. The early 21st century is the age of the Fourth Industrial Revolution. For a world still coming to grips with the Third Industrial Revolution and the digital possibilities it continues to throw up, the dramatic change in the lifetime of a single human generation cannot even be fathomed.

In a sense we are all guessing, some intelligently and some wildly. This is the period that will see the maturing and possible commodification of a menu of new technologies – artificial intelligence and robotics, 3D manufacturing and custom-made biological and pharmaceutical products, lethal autonomous weapons and driverless cars.

Take an example. The moral question of how a driverless car will decide between hitting a jaywalker and swerving and damaging the car has often been debated. The answer is both simple – save the human life – and complex: the modalities of saving that life will have social, economic and technological imperatives and implications. At which angle should the car swerve? Just enough to save the jaywalker or more than enough to save the jaywalker and maintain even more distance between car and human? That extra distance swerved will have costs. It could mean collision with an object such as an electric pole, a water hydrant, or a data distribution point. Who decides on what the driverless car must do and the angle at which it should swerve?

If the driverless car is in Dublin, is the decision taken by the Irish government, the car’s original code writers in California or a software programmer in Hyderabad to whom maintenance is outsourced? Which jurisdiction’s laws, regulations and normative principles will prevail? If different national jurisdictions have different regulations and fine print on something that should be so apparent – prioritising a human life – how will it affect insurance and investment decisions, including transnational ones, in relation to infrastructure that lies within damage-causing distance of a driverless car while it is attempting to evade a jaywalker?

It is inevitable and entirely realistic that the sociology and economy of the machine will determine a specialised discipline in 21st century diplomacy and trade negotiations. Already the large cyber-attack has displaced the nuclear-tipped missile as the proximate threat. This is, however, only the beginning as the human-machine equation is interrogated, and as predatory machines take jobs, rights and ultimately agency from humans.

It is also worth pondering whether automation will free up human resources for political violence. Automation and the widespread use of machines, it is believed, will enhance productivity, but the linear assumption that human beings will use their free time for ‘good’ is historically inaccurate. Industrial revolutions have brought with them great conflict. Just as technology will drive the creation of norms, it may also deepen old fault lines between states (and often within states, thought that is another debate).

Old Westphalia, new social contract

Finally, the role of the state itself requires re-examination. Technology is blurring national boundaries just at the time politics is defining them rigidly. Innovation and capital have impinged upon the domain of the state at a juncture when statism, nativism, identity and nationalism are in the midst of a comeback. They have emerged at their strongest after a quarter-century of being pushed to the margins by globalisation and its attendant forces.

Of all the major international covenants and formational paradigms, the Treaty of Westphalia (1648) has proved the most resilient. At 270 years, it is much older than the UN or the Nuclear Non-Proliferation Treaty or the World Trade Organisation. Even so, it salience and the essential persuasiveness of its conflation of territoriality, ethnicity and religion continues to keep a significant proportion of global public opinion engaged.

Having said that, the early 21st century will entail an updating of the Westphalian charter and the state’s mandate. A new social contract between state and citizen is upon us; the old binary of left and right, of a socialist state and a liberal government, no longer holds. While democratic instincts have sharpened in the infancy of the 21st century, with technology, including social media, as a force multiplier, so have the average household’s economic and income anxieties. As such, while government is expected to intervene as a pillar of economic reassurance, there is a trenchant reaction to any state attempt to tailor cultural choices, undermine privacy or intrude into the home of the citizen.

This duality, where the government is acknowledged to have an economic role but where the state is expected to be almost libertarian when it comes to social freedoms (for natives and citizens at least), has no 20th century precedent. It calls on the state to be the guarantor of security and delivery, even if the state is not entirely responsible for delivery of public goods and services, and even if those public goods and services, not to speak of security threats to them, originate an ocean away, in the jurisdiction of an alien state.

The nation-state will remain the fundamental unit of reckoning in the international system, but it will have to reckon, almost Brownian-motion-like, with other units and stakeholders in a fluid medium where disorder may have both permanence and legitimacy. It will also have to adapt to the truism that technology creates its own normative landscape and its own morality, and that this is the epoch of not just unprecedented production of technology but the almost monopolistic production of that technology by private and transnational corporations. Whether the state will be relegated to a secondary player on developmental concerns is an open question, but global governance institutions must be flexible enough to accommodate new and rising actors, state and non-state.

In particular, these institutions must tackle the problem of technology-driven determinism. Whether it is a Universal Basic Income or ‘Robot Tax’, social programs being promoted by the Silicon Valley’s capitalist class script a new narrative of man, machine, and provision of pubic goods. These schemes are no longer beholden to the social contract between the state and citizen, and they provide no alternative to their unquestioned belief that technology will improve living standards across the board. Global governance institutions, tempered by political realities as well as a rich history of successful and failed experiments at sustainable development, can intervene and lend new purpose to the provision of public goods by private actors.

Epilogue/Prologue

In March 2017, the finance ministers of the G20 countries met in Germany and were compelled to upgrade their 20th century hardware with a contemporary operating system. The G20, for the first time in the decade of the institution’s existence, acquiesced to the American call to drop promotion of free trade from its agenda. This was a marked shift for a collective with the explicit aim of rescuing and restating the imperatives of globalisation. Not for a long time, and not since the fall of the Soviet Union certainly, has the international system legitimised the divorce of domestic growth and prosperity from global commerce and economic integration.

In one telling moment, old and new notions of the Westphalian architecture, of the unwillingness of the West – the so-called ‘white world’ – to continue to bear the burden of welfare of the global deprived, to free itself from colonial guilt that shaped the post-war Western ethic and quest for universalisation of economic organising principles, developmental norms and humanitarian ideals, were all interrogated. In one telling moment, a Hobbesian existence was rationalised and there a shrugging off of the inevitability of a Lockean end state. In one telling moment, the future arrived to shake history by the scruff of its neck.

India as a leading power: Shaping the Development Narrative at Home and Abroad

April 07, 2017, Narendra Modi’s Website

Original link is here

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If the modest success of the Millennium Development Goals (MDGs) had at its core the remarkable story of China lifting its people from poverty and mass deprivation to the cusp of a middle-income society, the Sustainable Development Goals 2030 (SDGs) agreed by the global community in 2015 will essentially be the narrative of India doing the same in a very different world and context. The SDGs will only be met when India moves its 270 odd million citizens from abject poverty to an existence that a country aspiring to be a great power must offer. A space where the “ease of living” is as central to the ethos of the nation as the “ease of doing business”. Where national security is first and foremost predicated on India’s human security and on its zeal for combating hunger, disease, malnutrition, child mortality and its determination to provide maternal care and child care for all.

The SDG equation is quite simple. If India fails to meet the SDGs, the global SDGs will fail. If India succeeds, as it must, the global community succeeds and India has an “India Model” that will become a blueprint for large parts of the world to emulate. This is what “great powers” do: they provide solutions and roadmaps for others. India as a leading power must take this challenge and deliver on it, for its own sake and for helping achieve the global ambition of a better world.

India’s position as a provider of global public goods will flow from its ability to reconcile its own structural inadequacies. India as a leading power will have to be a source of both ideas and solutions and of financial resources for global development. The latter capacity is inevitable as the economy will grow and its development partnership programme will expand. The former requires political leadership and institutional reinvention. The global need for Indian leadership is significant. The transformation of India will take place in a decade in which the traditional underwriters of this domain are hesitant, and in some cases shirking their obligations. This is increasingly a world where flow of capital and beneficial trade for the developing world is a memory of the past. The US, EU and other members of OECD are all exhibiting fatigue in carrying the burden of this responsibility and India must step up.

PM Modi’s Leadership

Prime Minister Modi from his early days in office has stressed this aspect of India’s growth and the urgency to eliminate poverty by creating decent employment and strengthening social programmes. Initiatives like Make in India, Digital India, Swachh Bharat Abhiyan, Skill India, Smart Cities, Start Up India, Beti Bachao Beti Padhao Yojana (BBBP), Deendayal Upadhyaya Gram Jyoti Yojana, Mission Indradhanush and Ujjwala Yojana will play a significant role in this narrative of Indian transformation.

Two recent statements, by the chief ministers of Uttar Pradesh and Haryana, have offered a sliver of optimism that the leadership at the Centre may be emulated in states that have traditionally been among the worst performing geographies on social indices. The first was when Chief Minister (CM) Shri Manohar Lal Khattar announced that the sex ratio at birth in Haryana, which was around the 850 mark in 2015, had improved to 938 in 2016. This is significant given that the sex ratio at birth in Haryana was between 762 and 860 in the preceding decade. What made the difference was the BBBP, launched in Haryana by the PM. It triggered multi-sectoral action to protect the girl child. It is commendable that Haryana also managed to improve its level of registration of births from 76% in 2000 to 100% by 2011. This enabled the government to actively track the sex ratio on a monthly basis at the district and sub-district levels, rather than wait for the decadal census or similar surveys.

The other important statement was issued by the newly elected UP CM, Yogi Adityanath, who has promised to hold the District Magistrate (DM) and Chief Medical Officers (CMO) accountable for deaths resulting from malnutrition or preventable disease in their districts. UP is the most populous state in India, representing one-sixth of the total population. If it were a country, it would be the fifth most populous in the world. While India is home to 270 million of the world’s 767 million poor, 60 million or more live in UP. UP also accounts for one-third of the total maternal deaths in India, with over 14,500 maternal deaths per year. Most of UP’s health and nutrition indicators lag behind the Indian average by a big margin. CM Adityanath’s proposal to develop an accountability framework is something India must grab irrespective of ideological biases.

Placed together, these announcements by the two CMs touched two significant aspects of the political economy of change. Firstly, the power of multi-sectoral action based on data and, secondly, the imperative of accountability. These two have responded to the PM’s call and perhaps now is an opportune time to enlist others and place human security at the top of the country’s priority list. It is indeed time to make high politics and high economics serve the most sacred of constitutional rights: the right to life.

What Can Be Done?

Haryana and Uttar Pradesh have made health and gender priority areas. This remarkable step by two major states whose success in these areas will determine India’s and in turn the world’s success as we approach 2030, needs to be amplified and mainstreamed. The Union government must consider helping create yearly SDG report cards that track these two and other SDGs at the district level (and below). Each of these performance papers must be championed and owned by Members of Parliament, legislators, DMs, CMOs and other officials tasked with managing the specific locality.

Rather than fall into the time-old trap of pan-Indian solutions, it is necessary to have contextual inputs to solve pressing problems in specific locations. India needs to be disaggregated at least to the district level to resolve some of our key challenges. Haryana’s success and Yogi Adityanath’s intervention provide an opportunity to start a nation-wide battle to offer the right to life and right to dignity to all, and to realise our demographic dividend in the process. Five steps are crucial and must be accorded utmost importance and attention.

  1. Need for health champions among our political entrepreneurs: The latest Mann Ki Baat, right after the release of the National Health Policy 2017, where the PM talked about mental health as well as maternal and child health sends a very positive signal. Hopefully, for the first time in post-Independence India, we have a PM who may actually want to become a health champion in the league of Aneurin Bevan, Lyndon Johnson, Otto van Bismarck and Tommy Douglas. Given the size of our country and the scale of our challenges, we need many such health champions. It is important all politicians and those with the capacity to help in this endeavour devise their specific contributions.
  1. Need for inter-sectoral action and joint-up governance: Learning from successful initiatives like BBBP, there is a need to enable inter-sectoral and inter-institutional convergence at the sub-national level. The social policy ecosystem will have to dismantle the silos and the fragmented approach that have blinded policymaking processes to broader determinants of outcomes.
  1. Need for innovative sources of financing: Although the last budget saw a significant rise in central allocations to health, new sources need to be pooled in, given the low absolute levels of spending. The private sector must contribute significantly to the PM’s initiatives to improve the quality of India’s human capital and philanthropists must be made part of any national planning process.
  1. Need for disaggregated tracking of outcomes: We must ensure we have reliable data sources to track outcomes regularly. While Haryana has 100% coverage of birth and death registration, UP still has only 68% birth registration and 46% death registration, placing a major handicap on the administration’s ability to track progress. This needs urgent rectification and the new UP CM’s attention towards this is highly desirable. Other states must follow suit.
  1. Need to leverage new technology in a big way: Disruption in technology has rendered many binding constraints and trade-offs of policymaking irrelevant. Whether it is taking services to underserved areas or helping collect data, or reaching out to the population with information campaigns, new technology will play a transformative role. But technology is a tool and a catalyst and will need to be backed by building up of institutional capacity.

If we take these five initiatives forward, Prime Minister Modi’s legacy will not just be a healthier India, but also of creating robust institutional framework that will guard against any relapse to the status-quo. It’s time to swallow the pill and internalise that SDGs are a story of India serving its own people and contributing to global transformation. It is time for a leading power to discover new pathways.

(Samir Saran is Vice President at the Observer Research Foundation)

 

 

Building a New Delhi Consensus

March 17, 2017, Original article is here

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What kind of great power will India be? Is “greatness” an index of raw power – economic, military and political — or is it variable of a country’s ability to punch above its weight? While tipping one’s hat to the already robust debate in New Delhi’s strategic community about India’s future as a “leading power”, it is also important to acknowledge the fluid environment in which such ambitions will be pursued.

What do we know for sure? There is a certain inevitability to India’s imminent arrival as a 10 trillion dollar economy. Moribund politics or risk-averse policies cannot prevent this from happening. In pure mathematical terms, our trajectory appears to be on the right path, to break out as one of the three biggest economies in the world, perhaps by 2035. What is uncertain is India’s ability to “act” like a multi-trillion dollar economy. In other words, there is no inevitability to India having the necessary administrative capability, strategic foresight or institutional arrangements that can effectively leverage its size. There is even less certainty that India will shape global affairs in consonance with its own ethics and experience.

This is due to a number of factors: nation-states today find themselves with limited resources to pursue “development”, given that wealth generation and deployment is definitively in the hands of the private sector. For instance, India spends nearly 5% of its GDP today — nearly $90 billion — on infrastructure building. Over their lifetimes, Facebook founder Mark Zuckerberg and his wife Priscilla will give away half that amount to philanthropic causes. What does the staggering and unprecedented accumulation of wealth by the private sector mean for the state? Governance will no longer be the domain solely of the state, as businesses contribute and influence the agenda of “nation-building”. The assumption that an economically powerful India will have a unified strategic vision to execute its great power plans will, therefore, be severely tested.

Secondly, civil society actors and academics are today at the forefront of global governance, their inclusion made possible by digital technologies. If businesses and civil society actors struggled to make their voice heard at the time the General Agreement on Tariffs and Trade was negotiated (GATT) in the nineties, they have been instrumental in killing the Trans-Pacific Partnership. Policymaking on internet governance today needs the seal of approval of civil society, who make sure digital spaces respect free expression, privacy and affordable access. The Indian state, whatever its grand strategy may be, will have no option but to co-opt civil society and policy thinkers in its attempt to project power in the region and beyond.

How might a multi-faceted, multi-stakeholder discussion about India’s great power ambitions come about? Given the multiplicity of actors and interests, is it reasonable to expect India to act in a coherent, unified and most importantly, far-sighted manner so as to sustain its global clout? In other words, can a New Delhi Consensus emerge?

India has just over 15 years to discover some key aspects of its own national identity as it makes its journey to the 10 trillion GDP mark. The New Delhi Consensus can be achieved if India eschews some of its idiosyncratic postures and gives shape to a coherent Indian voice and proposition that will help guide the remaining decades of this century. The principles of the New Delhi Consensus must go beyond a common, minimum proposition and must be endorsed and advocated enthusiastically by India’s own businesses, its influential thinkers and commentators and civil society actors. While they may contest some micro propositions as all healthy democracies must, the specific positions of all stakeholders must in the same quadrant. All big powers have been able to shape such a ‘quadrant of consensus’.

Some of the defining characteristics of the “consensus” have already made themselves apparent. These features, as noted below, could form the baseline principles around which the Indian state, businesses and non-governmental organisations coalesce.

First, India is likely to pursue a developmental model that combines democracy and liberal values with high growth, setting a template for other emerging economies. As the only successful example of this variety — the “developmental states” of East Asia have all conceded to some form of authoritarian tendencies in the past century — the New Delhi Consensus must have this as the bedrock of its foreign policy. The Indian foreign secretary described it best at the recently concluded Raisina Dialogue: “Can India be different by being different?”

Second, if India is able to pursue both its economic development and liberal democratic traditions, it must offer a non-Western ethos to balance both. This is easier said than done. After all, it is commonly (but mistakenly) argued that modernity, pluralism, free societies and indeed democracy are all products of the Enlightenment era. Distinctly different from the binary Anglo-Saxon and Judaeo-Christian traditions that the United States and UK have followed, India must be less evangelical in its advocacy, and must respect and acknowledge the many forms of social contracts between the state, citizens and businesses.

Third, India must channel its leadership towards equitable global governance. Its foreign policy must be rooted in respect and shared governance of common spaces and the public goods they provide. India is the sole emerging power that does not see common spaces in acquisitive or captive terms, and its presence will temper the unbridled western urge to profit from the management of public goods. Indian contribution to the global climate change agenda in the Paris talks of 2015 as well as its developmental assistance to African countries seeking access to affordable antiretrovirals in the battle against HIV/AIDS offer examples of actions that are morally correct and economically sustainable.

Fourth, India’s global partnership and assistance programme should be recipient-led for it to be an influential shaper of the global growth and development agenda. The largest “quota” of new development finance will flow from India (among other economies) in the next two decades. What’s more, India’s journey to the $ 10 trillion mark will be replete with experiences to share, some to emulate and others to improve. Having made no attempts to pursue exceptionalism — unlike the United States and China — India’s development story will be embraced with vigour by foreign markets and governments.

And finally, India must combine its pragmatic pursuit of economic or strategic interests with idealism. For instance, New Delhi should pursue an absolute commitment to universal nuclear disarmament as a realisable goal, along with desire to be on the NSG high table as a responsible and rule-setting nuclear power. Moral leadership, dismissed all too easily in the dust and dirt of international politics, is increasingly important to global governance. The pursuit of ideals is itself a strategic imperative, as the United States and Europe have most recently demonstrated through their successful campaign for “green growth”, ensuring both a global emissions reduction pathway and the promotion of Western technologies for sustainable development.

Observers of India’s foreign policy would acknowledge that Prime Minister Modi and his team have already taken a few steps to further develop these tenets. Renewed attention towards India’s development partnership programme, its leadership role on matters of global governance (such as climate and internet regimes) and the government’s “Neighbourhood First” policy emphasise the desire to cultivate a New Delhi Consensus. This desire is also motivated by a realist assessment of current times. In a rare speech on foreign policy delivered at the Raisina Dialogue 2017, Prime Minister Modi acknowledged that “gains of globalisation” were at risk and there were new “barriers to effective multilateralism.” Implicit in his remarks was his appreciation that the world needed new leaders, such as India, who would guide many global projects over the course of this century.

India’s approach to global governance would stand out from the Washington Consensus or the Beijing Consensus in that it would acknowledge the important roles of the private sector and civil society. While both the United States and China see the capturing of global markets as a way to perpetuate their influence, their world views stem from the absolute primacy of the state. The Washington Consensus, despite its professed commitment to open markets, saw the nation-state as the mediator of the terms of development.

The New Delhi consensus, in contrast, must absorb views from outside the government, co-opting businesses, rights groups, universities and research institutions as essential players in its global agenda. The history of india is a saga of the progress of society, and of social and community institutions, with or without a strong state and sometimes in spite of the state. We cannot forget that essence while crafting the New Delhi Consensus.

(Samir Saran is Vice President at the Observer Research Foundation)

 

 

 

Being Vladimir Putin: Russia’s president gets 20th century geopolitics, what he doesn’t get is 21st century geoeconomics

Times of India, March 2, 2017

Link is here

Being Vladimir Putin: Russia’s president gets 20th century geopolitics, what he doesn’t get is 21st century geoeconomics. 

In 2009 we witnessed a watershed moment for geoeconomics when the credit crisis, born in the United States, spread across the world. The integrated global economy temporarily tilted over the edge of the financial abyss before being pulled back by concerted collective action involving large economies around the world.

In 2016, we witnessed a backlash against this economic interconnectedness and the ideal of collective governance with a plethora of populist anti-globalisation movements leading to outcomes such as Brexit and the election of Trump. It is increasingly apparent that we are at the beginning of a new epoch, where global arrangements will be defined by various shades of nationalism, reassertion of state sovereignty, and multidimensional contests over territory, both real and virtual.

These developments also shaped the conversations at the recently concluded Munich Security Conference. Beyond the interest and noise around the Trump presidency, and the US approach to some of the global challenges, it was clear to most that President Putin was by far the most influential global leader on all matters security, something that three contemporary developments demonstrate emphatically.

Let’s start with West Asia. In less than 18 months, Russia has cleverly co-opted Turkey, firmly embraced Iran as a strategic partner and doubled down on its old ally Syria, bringing into its tent three diverging interests masterfully. In fact this alignment and the Russian relevance in this region stems from its understanding of how regional constellations of states and state-supported militias align. Guided by its partners, the US has faltered precisely on this aspect, erroneously programming itself into the Shia-Sunni schism, without realising that the nation-state still holds normative appeal in the region.

Second, Putin has managed to breach Fortress Nato by making Turkey pivot significantly towards Russia. Using President Erdoğan’s disillusionment with the Obama White House deftly, Putin has managed to drive a wedge between Nato and one of its oldest member states.

And finally, Putin has turned the tables on the most powerful nation in the world, by using its own modus operandi against it – that of intervening in the domestic politics of other states. Through strategic leaks, Putin deftly placed his finger on the scale of the American elections, tipping them in favour of Trump.

In this age of renewed political gamesmanship, Putin is the only player who has retained a chess set from the 20th century. While others have long forgotten the craft of geopolitics, Putin continues to move pieces like a Grandmaster. But does he have an endgame?

And herein lies the rub. This most influential global political figure, a man who has formidable military and security capacities at his disposal, is an inconsequential economic actor with insignificant economic agency. Russia, a country with a military might rivalling that of the US, has a GDP smaller than that of Australia and is ranked only ahead of South Africa among the Brics grouping that it helped create.

For all the accumulation of power and orchestration of geopolitics, Putin’s tactics are not going to fill Russia’s treasury. While 20th century realpolitik may be useful in 2017, Putin is also handicapped because he continues to view economics through a 20th century prism. Russia’s fixation with large transcontinental connectivity projects has led it to support China’s New Silk Road.

Without any significant expansion in Russia’s industrial and manufacturing economy, the country is fast being reduced to a political guarantor for Chinese economic expansion or a policeman for China’s property. And what of the future? In a world where 3D printing may become de rigueur, the transportation of millions of tonnes of manufacturing goods could be a dying reality.

Connectivity in this century is not simply about roads and railways, but also about bits and bytes and hearts and minds. It is the networks – knowledge, digital, social – that transfer and transmit value in the new world order. Economic growth in the 21st century requires digital hubs, clusters of start-ups and liberal regulatory confines where young minds working with technology can push society forward.

The reality is that 20th century economic projects that Russia is undertaking benefit China, and 21st century economic projects in Russia suffer from the absence of a requisite ecosystem. This has led to a certain fragility in the global governance architecture.

I have argued before that the asymmetry between Russia’s military potency and its economic state is dangerous. China, with its $11 trillion GDP, has significant destructive and disruptive capability as well. The stakes that it holds in the global economy, however, ensure that it will never destabilise global systems because it stands to gain from them. Russia does not have sizeable economic stakes in these systems and therefore only its political capability motivates its actions. This is being Vladimir Putin.

US efforts to “isolate” Moscow through sanctions have not only failed but also proved to be counterproductive. They have reduced Russia’s skin in the global economic game, allowing Putin to engage in exactly the same conduct that sanctions seek to deter. Washington DC must focus on cultivating a sense of ownership (and consequently, the fear of loss) in Russia towards economic and trading regimes.

But this is easier said than done and ironically it is Donald Trump, derided for his lack of diplomatic acumen, who is proving himself to be astute in this matter by reaching out to arguably the most influential man in the world – Vladimir Putin.

The writer is Vice-President Observer Research Foundation

 

The end of Davos man: West-led globalisation has reached its limits, new champions for it are needed

February 7, 2017, Times of India , Samir Saran and Ashok Malik

Original link is here

President Donald Trump’s initial policy pronouncements on migration and his increasingly evident determination for creating jobs in America itself are new markers in this post-globalisation era. They end an epoch that began 25 years ago today, when the Maastricht Treaty was signed, creating the European Union. Three years later WTO was inaugurated. By the turn of the century, Project Globalisation had gained unstoppable momentum courtesy the internet.

The vocabulary and ethic of globalisation was written in the liberal democracies of the West. There were some foundational assumptions: that as economies opened to trade, incomes would rise, consumer tastes would converge, and so would values and beliefs. The Davos Man (or Woman), as it were, would become the universal exemplar or at least aspiration. This made a whole generation of politicians, scholars, trade economists and stand-up commentators from the West robust evangelists for globalisation.

As is now obvious after Brexit, the revolt among European nationalities and the Trump mandate – several of those suppositions were flimsy. Additionally, the economic success of globalisation made it easy and convenient to ignore fundamental paradoxes in the international system. For instance, since the end of the Cold War it had been apparent that the multilateral order desperately needed updating. It had been crafted in the aftermath of World War I and metamorphosed into the United Nations 20 years later. Much of its institutional design was no more relevant.

Heady narratives enhanced the allure of globalisation and allowed for papering over many such discrepancies. They also obscured domestic tensions within societies and communities: between coastal and heartland America or rich northern Europe and depressed southern Europe. Since the financial crisis of 2008, the bottom has been knocked out of the West-driven globalisation model. Absent its economic deliverables, it is no longer able to stave off the challenge from societal tensions, political ghosts, institutional gaps and stakeholder inequities. This is happening both internationally and within nations. A “domestic South” is mirroring the grievances of a “global South”.

US elites, hitherto evangelists of globalisation, are numbed by the thought that the sun is setting on the “American century”. Its little people, on the other hand, are rudely rejecting the notion that globalisation benefits all. While rising inequality in emerging economies is widely commented upon, it is often ignored that the current generation in OECD countries will be the first in the modern age to have a standard of living worse than their parents. This has caused a new and sometimes irrational aggregation of grievances. It has resulted in, for instance, the paradox of down-at-heel Americans empathising with a gold-plated Trump.

Gradually, every pillar of the Atlantic System – American hegemony as a security guarantor of last resort; industrial capitalism; liberal trade and free markets; the irrevocable retreat of the state from the citizen’s economic life and well-being – is crumbling. Yet, the West is not alone. The industrial order of the past 150 years, with its stress on big manufacturing and relentless export, is being overtaken by the digital age. This has placed a question mark on the Chinese model, as currently practised. Services and innovation are the rising currency, not shop floors and industrial production. It is these factors that will drive growth in India and Africa.

Having said that, India’s economic transformation, China’s merger with the global political mainstream and Africa’s promise as the final frontier all require the liberal trading order to retain its essential vibrancy and osmosis. This is not necessarily due to any ideological belief in the inevitable universalisation of liberal values, but simply because of utilitarian benefits: market access, capital and technology needs. As such, the Indian state and Indian enterprise can live with, indeed embrace, the pressing reality of transactional capitalism. They are not dogmatically opposed to it, unlike free-trade ayatollahs who never face voters or meet real people.

In its own way, the past 20-25 years have written internationalism into India’s political DNA. In theory, it offers a halfway house and a proposition to moderate both the isolationist impulses of Middle America as well as the overreach of Brussels and the Eurocrats. In attempting this, India is only doing itself a favour. For its economic growth and well-being it needs partner countries, from the European nations to Japan to of course the US, to retain a certain buy-in to the open trading system.

The quest to reimagine the ethic and vocabulary of globalisation is not India’s alone. In January, President Xi Jinping donned the mantle of benefactor of the World Economic Forum in Davos and made a case for free trade (and China’s unfettered access to Western markets). On the same day, Prime Minister Narendra Modi opened the Raisina Dialogue in New Delhi by stating baldly: “Globally connected societies, digital opportunities, technology shifts, knowledge boom and innovation are leading the march of humanity … But walls within nations, a sentiment against trade and migration, and rising parochial and protectionist attitudes across the globe are also in stark evidence. The result: globalisation gains are at risk and economic gains are no longer easy to come by.”

The globalisation narrative is being reimagined by the leaders of both China and India. This has economic implications, but comes with political baggage too – for only one of these narratives is rooted in liberal democratic values. It is for India to promote its narrative, as much as for the West – even the transactional West – to make its choices.

Samir Saran is vice-president and Ashok Malik is distinguished fellow at the Observer Research Foundation

Moving towards a secure digital economy

The velocity of digitisation and technology adoption must necessitate a response different from what was the norm in the ‘public sector era’

by Samir Saran and Vivan Sharan, Live Mint, Jan 26, 2017

Original link is here

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A wider adoption of digital payments will invariably change the dimensions of risks, crime and security as well. Photo: Pradeep Gaur/Mint


Even as incessant political bickering is polarizing opinion on demonetisation, India is making a significant transition to a digital payments ecosystem. This project endeavours to breach the urban-rural divide, geographical exclusions of the real world, and income criteria that privileged only a few with access to certain private and public services. This new digital payments ecosystem is brutal in its attempt to alter the way India transacts, trades and is taxed.

A wider adoption of digital payments will invariably change the dimensions of risks, crime and security as well. If pickpockets were a common menace some decades ago, cybercriminals may dominate conversations in the days ahead as they eye digital and online transactions. While the “pickpocket” had to select a relatively “fat target” to make the effort and risk worthwhile, the cyber thief will have a low-risk environment (lack of forensic capabilities, human capacities and attribution challenges) and an expansive reach of technology that will make even “petty pickings” attractive. And although cybercrime will affect us all, it will harm the poor disproportionately. It could ravage the small savings of many, deprive them of their meagre means and, most importantly, result in erosion of trust in the financial ecosystem currently being built. It is, therefore, important that the government pay heed to small fraud.

An early warning of this was provided by the frisson of panic that followed the cautionary message from the newly launched Bharat Interface for Money application (BHIM app) on 4 January 2017: “Users please beware: Decline all unknown payment requests you may get! We will work on an update, which will allow you to report spam.” This response is inefficient and leaves the ecosystem vulnerable to malicious intent.

Governments around the world and here in India must respond to this new dimension, where “petty cash is big money” and digital pickpockets pose a range of threats to individuals, institutions and economic stability itself. Most governments have left themselves with little time to create the requisite mitigation capabilities. The velocity of digitization and technology adoption must necessitate a response from policymakers different from what was the norm in the “public sector era”, where Centrally controlled banks and enterprises offered a modicum of stability, privacy, and security (with less efficiency). To achieve this, a comprehensive approach for securing the digital ecosystem must be devised and some actions must be taken immediately.

First, there are a multiplicity of stakeholders operating networks and tools that pose varying degrees of risk. This, in turn, demands differentiated security responses. These include the Reserve Bank of India (RBI)-run National Electronic Funds Transfer (Neft) and Real Time Gross Settlement (RTGS), the National Payment Corporation of India’s (NPCI’s) Immediate Payment Service (IMPS) on which the Unified Payments Interface (UPI) currently operates, traditional card networks, mobile payments solutions, various banking apps. In a report released in December 2016, the Union ministry of finance’s committee on digital payments suggested a hierarchical approach based on the level of “systemic risk” posed by different tools and networks. This must form the design basis going forward.

Second, while industry is consulted by expert committees such as the one referenced above, an inclusive multi-stakeholder consultative process must become the norm for policymaking itself, to avoid arbitrariness. This can be done by instituting multi-stakeholder consultations that are transparent and inclusive. This is the model India has agreed is best suited to govern the Internet internationally, and it’s time to adopt consonant processes at home.

Third, while the “mobile” is being hailed as a replacement for physical wallets as well as a proof of identity through its widespread use in second-factor authentication of digital payments, government and users should be circumspect about the risks involved. For instance, there is evidence to suggest that distributed denial-of-service (DDoS) attacks—in which a multitude of compromised systems attack a single target, causing denial of service for users of the targeted system—are increasingly targeting the applications layer rather than the network layer of the Internet. In layman terms this means a sophisticated mode of cybercrime is being unleashed on unsuspecting users of mobile applications and popular software.

Mature hardware-based solutions, such as tamper-proof Universal Integrated Circuit Cards and Embedded Secure Elements, are being tested against the latest forms of cyberattack. Software-based solutions such as Host Card Emulation are also relatively secure but require upgrades through the cloud, placing large data demands on the user and testing the service capabilities of the issuer.

Globally payment solutions that have been able to integrate hardware- and software-based security exist, but domestic mobile payments providers are relying largely on software-based security solutions. And while the Indian government’s Computer Emergency Response Team, RBI and NPCI are undertaking security audits of payment solutions, it is important that users be given standardized information to make informed choices, particularly when the digital adoption drive is at its height.

Lastly, it may be useful for the government to think of the digital payments ecosystem, now anchored by the NPCI, as analogous to the Internet. And much like the Internet, the National Financial Switch (the infrastructure backbone of all Indian ATMs, operated by the NPCI) must acquire robust redundancies offered by private-sector partnerships in order not to be a vulnerable single point of failure—which can potentially be compromised by self-styled “legions” of hackers. The NPCI should be managed through multi-stakeholder groups that can help with standard-setting, and can ensure that the payments ecosystem serves the common citizen, making even a small transaction online.

Samir Saran and Vivan Sharan are, respectively, vice-president at the Observer Research Foundation and founding partner at the Koan Advisory Group.