Politics / Globalisation

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

Rethinking the Future of Asia: Moving Beyond U.S. Dominance

Asia needs to discover a bridge between multipolarity and multilateralism. India could play an important role as a “bridge power.”

By and , December 11, 2016
Original link is here

Asia will shape the 21st century as much as the Atlantic consensus shaped the 20th century, or Europe the 19th. But to get there, Asia has to pursue a new project, one that begins to create a political Asia.

Like the Atlantic order flourished on the basis of the Bretton Woods and UN systems, Asia needs a reordering of the global landscape. We need a new management, a new board of directors and a new security architecture.

Any usable platforms?

At the very least, this emerging Asian system needs to bring three resident actors (China, Japan and India) and two regional stakeholders (the United States and Russia) to the same table. Other sub-regional influencers should be drawn in as well.

Could the East Asia Summit, of which all these countries are members, serve as a possible platform for such an architecture? Not quite. The East Asia Summit cannot really address the concerns of Central and West Asia.

Alternatively, Ii an expanded mandate for the G20 (seven Asian countries, two more if one were to include Turkey and Russia) the answer? Or do we need to think about a greenfield institution?

Three possibilities

Three possibilities — distinct, but not mutually exclusive — emerge. At the commencement of the 21st century, Asia’s politics resembles the fraught, rudderless multipolarity of the beginning of the 20th.

It took 50 years and two world wars for that reckless order to settle into a multilateral equilibrium.

Asia has to do it better, faster and without the external “stimulus” of a “Great War.” As the dowager power, the United States can incubate new institutional arrangements in Asia, playing Greece to emergent Asia’s Rome, to borrow from Harold Macmillan’s description of the post-war relationship between Britain and the U.S.

Option 1: India as the bridge power

Should the United States choose to bequeath the liberal international order to Asian powers, India will be the heir-apparent.

However, India would not play the role of a great power, but simply that of a “bridge power.” Asia is too fractious and politically vibrant to be managed by one entity.

India is in a unique and catalytic position, with its ability to singularly span the geographic and ideological length of the continent.

But for that to become a distinct possibility, two variables will need to be determined:

1. Can the US find it within itself to incubate an order in Asia that may in the future not afford it the pride of place like the trans-Atlantic system?

2. Can India get its act together and utilize the opportunity that it has right before it to become the inheritor of a liberal Asia?

Option 2: An Asian “Concert of Nations

The second possibility for a future Asian order is that it resembles the 19th century Concert of Europe. That would mean opting for an unstable but necessary political coalition of major powers on the continent.

The practical result would be that the “Big Eight” in Asia (China, India Japan, Saudi Arabia, Iran, Australia, Russia and the United States of America) would all be locked in a marriage of convenience (one hopes).

To be sure, aligning their disparate interests for the greater cause of shared governance, in one way or another, is a desirable outcome.

Difficult as it would be to predict the contours of this system, it would likely be focused on preventing shocks to “core” governance functions in Asia.

These include the preservation of the financial system, territorial and political sovereignties and inter-dependent security arrangements.

Given that each major player in this system would likely see this merely as an ad hoc mechanism, there is a potential major downside: Its chances of devolving into a debilitating bilateral or multi-front conflict for superiority would be high — very much like the (European) Concert of Nations eventually that gave way to the First World War.

Option 3: Sidelining the U.S.?

A third possibility could see the emergence of an Asian political architecture that does not involve the United States. This system — or more precisely, a universe of subsystems — would see the regional economic and security alliances take a prominent role in managing their areas of interest.

As a consequence, institutions like ASEAN, the Shanghai Cooperation Organization, the AIIB, the Gulf Cooperation Council and the South Asian Association of Regional Cooperation would become the “hubs” of governance.

The United States, for its part, would remain only distantly engaged with these sub-systems. It would be neither invested in their continuity nor be part of its membership.

Which outcome?

Rather than crystal gazing these three possibilities, our objective is to gauge the political underpinnings behind an emerging Asian architecture. Very simply, the question is: Will it be defined by contestation or cooperation?

Quite a bit will depend on the stance of the United States. Can the U.S. incubate a political order that is largely similar to existing multilateral systems? Or will the cost of creating disruptive institutions keep Asian countries from buying into them?

Beyond the U.S. dimension, can any credible pan-Asian governance institution successfully absorb — or at the very least acknowledge — the cultural, economic and social differences that characterize the continent?

Conclusion

The quest for the Asian century is not about finding the Holy Grail of shared governance, but diagnosing the right means to reach a sustainable and inclusive platform.

Rethinking the Future of Asia: Moving Beyond U.S. Dominance – The Globalist

About Ashok Malik

Ashok Malik is a Distinguished Fellow, and Head of ORF’s Neighbourhood Regional Studies Initiative.

About Samir Saran

Samir Saran is Vice President of the Observer Research Foundation.

Democracy, Diversity, Development: 2016 was dominated by their dark sides, can we channel the Force this year?

Times of India, Blog page, 10 January, 2017

Original link is here

2016 was witness to dramatic political changes. Everything that seemed improbable, even unthinkable somehow found new ways of manifesting itself, and that too repeatedly.

The impregnable walls of the European Union (EU) were breached when its largest security provider, Britain, decided to break free from the European project. A celebrity of a reality TV show was able to capture the imagination of a frustrated American public and walked away with a near impossible victory in presidential elections.

Liberal actors and voices were constantly defeated in many arenas by populist movements. The new energy of right-wing forces in several geographies competed with the new fanaticism among Islamic radicals. The defeat of liberalism defined the mood and events of 2016.

More than any year in the recent past, 2016 signified a metamorphosis of the global order itself. 2017 therefore becomes a very significant year as it brings together two unknowns for all of us to grapple with.

First is the future of global economics and financial systems, which are yet to be adequately restructured following the crises of 2008. Second are the political questions raised by the happenings of the year gone by. Both of these will have to be addressed discretely and jointly, if gains of the post-war order are to be maintained and strengthened.

Three, words must receive significant attention this year as we respond to the economic and political challenges that lie ahead: democracy, diversity and development. All three are today under threat, and all three by themselves are a threat to global stability.

In sheer numbers, more countries have adopted democracy as their principal political system than ever before. But there is also little doubt that there has been petty and political capture of democratic systems within these countries.

Democracy as a social ethic is under threat. It is assuming shades of majoritarianism in some instances – becoming a tool for convenient choices by the majority section of society. Democracy has also become a means for political leaders to absolve themselves from taking hard decisions. The moral fibre of democracy is being undermined by its numerical logic.

It can be argued that democracy is becoming a weapon to weaken pluralism. The ability of multitudes to take part in democratic debates through mass media, social media and other emerging platforms has certainly included new stakeholders. Yet the principles of the ensuing debates are no longer decided by what is right or wrong, but on the basis of right and left; ideologies multiplied by numbers are determining outcomes.

Democracy has also been hijacked as a legitimising tool by undemocratic forces. Be it Islamist parties in Turkey and the Middle East, or fundamentalist groups in Asia, the US and Europe, all of them have used democratic means to fulfil undemocratic objectives. In many societies, the word “democracy” needs to be re-thought, re-imagined, re-served, and made compatible with pluralistic principles.

Diversity is at one level being threatened by majoritarianism – by brute force that seeks to reduce those who are different, and marginalise those who belong to minority communities. On the other hand, diversity itself is now being used as the basis to recruit and create small communities, sub-national identities and radical movements that are fuelled by the difference that defines diversity – with violent consequences.

An extreme fringe of the Muslim community in Europe, the Buddhists in Myanmar, and Shia-Sunni postures in the Middle East: all of these are using this difference to either inflict violence on the ‘other’ or to motivate violence against those seen as irreconcilable enemies.

Technology and diversity together have created a new dynamic. Assimilation of outsiders in new communities has today become improbable as, instead of communicating with their physical neighbours, people remain locked in with those miles away.

This creates a basis of new exclusions, divisions and differences between those who may otherwise be in physical proximity. It makes the evolution of assimilative cultures and societies more difficult. In fact, it threatens to undermine syncretic civilisations that have existed over millennia. Diversity is both under threat, and is a threat in itself.

Development today is being threatened by a reluctance of large and important players to remain invested in liberal trading systems; to commit to the ideals of globalisation; to promote cross-border flows of finance, technology and people; and to achieve a convergence of lifestyles across continents.

Democratic forces, and fissures of diverse interests, vantage points and identities, make convergence on development goals near impossible. Institutionalised greed and the lack of enlightened action, masking itself as capitalist principle, will challenge both the global objective of responding to climate change as well as achieving the Sustainable Development Goals (SDGs).

But development is also a threat. Large actors, with large pools of funds, have begun to steer the processes of development to their own advantage. They seek to make life choices for all: to define healthcare for each citizen on Earth, write trade narratives for each society, define what constitutes the well-being and happiness of this planet, and adjudicate the boundaries to right to life itself. Development finance, aid, loans and know-how, under the garb of development partnerships, are seeking to create a landscape of economic growth, trade and transaction that will benefit a few.

The dark sides of democracy, diversity and development have defined global and local politics lately. Can 2017 be the year when the tide begins to turn and when a new light illuminates the essential and positive ethic associated with each of these three words?

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

 

Why India should sign a free-trade deal with itself

World Economic Forum, Monday 3 October 2016,  in collaboration with Quartz.

Original link is here

High-rise residential towers under construction are pictured behind an old residential building in central Mumbai September 9, 2011.

Image: REUTERS/Vivek Prakash

India is currently in the midst of two large but different endeavours.

The first is to complete the unfinished agenda of the previous decade, providing the country with the modern infrastructure, rural amenities, social services and connectivity that any developed economy needs. And the second, the most ambitious of the two, is to create jobs, wealth and value to accommodate a young and aspiring population, eradicate poverty and boost GDP growth.

 

But these two projects are being undertaken at a time when global headwinds are deeply unfavourable. Today there are five hurdles that stand between India and its ambition to join the club of developed economies.

 

India’s challenges

 

The first is the advent of this new age where the open, free, and democratic global trading system has become a pale shadow of its previous self. The multilateral trading system—and the preference for this kind of model—has waned considerably. It is being replaced by free trade arrangements between smaller groups of countries and regions, where a handful of stakeholders are able to decide the terms of trade.

 

This is coupled with a stagnation in global financial flows, because of weak growth, and the growing disquiet over globalization, curiously enough, in the developed world. From the European Union to the United Kingdom to the United States, politicians are using globalization as a convenient culprit for all that ails domestic economies and societies.

 

It’s against this backdrop that India has to discover new markets, new sources of funding and new trading arrangements.

 

Second, the advance of technology and the expansion of the digital economy, along with the advance of robotics, is in many ways closing the window for export-led manufacturing growth. They have significantly eroded the advantages that cheap labour typically provides for developing countries. Industrialization, when seen through the narrow prism of manufacturing, therefore already looks improbable, if not impossible.

 

End of manufacturing as we know it

 

Emerging economies will be stuck with the traditional disadvantages of weak governance, cumbersome bureaucracies, quality and competence issues, fragile supply chains and a lack of skilled labour, even as they compete with machines and machine learning. Large labour pools are unlikely to provide any competitive advantage unless the labour force is reoriented, retrained and reimagined.

 

That’s going to make things difficult for India. Even though the country might benefit in the next 5-10 years from weak energy prices, industries exiting China, and inflows of foreign direct investment, it’s going to get harder to compete in manufacturing.

A case in point is the relocation of textile and garment production to the developed world. This was previously a sector most sensitive to cheap labour and therefore the first to be off-shored to the developing world. Today, it’s now returning to robotized factories in the US and the EU.

 

Indeed, it can be argued that with 3D printing and artificial intelligence, manufacturing as we know it may be coming to an end. Whatever form that manufacturing takes in the future, we can safely assume that it will based on high competencies in design, material science, resource management, super-computing, and precision engineering, all delivered by machines or sets of machines and requiring minimal labour.

 

Third, energy derived from fossil fuels may no longer be a given in any new industrialization effort. In a “climate-aware” world, it is apparent that there is a willingness to compromise with low incomes and poverty but little appetite to allow the developing world too much carbon space.

 

Fourth, global finance is increasingly agnostic, if not outright unfriendly, to the idea of traditional industrial growth. An IMF working paper suggests that “investors such as pension funds, insurance companies and mutual funds, and other investors such as sovereign wealth funds, hold around $100 trillion in assets under management.” This study estimates the infrastructure-funding gap between $1 trillion and $1.5 trillion each year, with the deficit significantly higher in developing countries. This paper and other studies have argued that this stems from a lack of financial instruments and a lack of appetite to invest in the industrial ventures of the past. Global capital and even local commercial capital in developing countries are being crowded away from investing in infrastructure.

 

Fifth, innovation itself has a spatial flaw. Discovery and invention are still the preserve of the Atlantic system while consumption and absorption are witnessing greater uptake in the Asian economies and in Africa. This new innovation divide, when combined with restrictive intellectual property regimes set up for the benefit of Western corporations, is bad news for developing countries. It’s likely that they will merely transform from being labour sources, marginal consumers, and resource-rich spaces to markets for innovation, sources for the data that drives the process, and part of a value chain where the largest wealth will still be created in the old economies.

This will ensure that their purchasing power remains low. Without large-scale, export-driven manufacturing, and without the revenues that would accrue to the owners of technology, there is a high possibility that developing countries that are not yet middle-income will remain trapped in a low-productivity, low-wage spiral.

India: GDP in current prices from 2010 to 2020

Image: Statista

The better way forward

 

So what should India do, given these five trends in global economic development?

 

First, India must get its own house in order. One-fifth of humanity is a market and a productive base in and of itself. But for the country to take advantage of its size, it must sign a free trade deal with itself.

 

Currently the 30-odd states and union territories that comprise the Republic of India are nominally a single economy. But in reality they’re less integrated than the economies of Europe. India’s states and union territories often have sharply different regulations and incompatible tax systems. As a result, trading across state boundaries is a nightmare and India really needs to focus on creating a trade association among these regions.

 

As a single tax, the GST is the first step in the right direction as it will allow new manufacturing units set up under the “Make in India” programme to have access to multiple markets.

 

And there are other government policies that also fit well with this endeavour:Digital India knits markets together, allowing for vast e-commerce and business-to-business opportunities, and Start-up India gives new entrepreneurs access to the finance and incubation required for them to take advantage of these opportunities.

 

Secondly, the attitude towards informal employment needs to change. It’s time to stop thinking of the informal economy as a bad thing, particularly since an overwhelmingly large number of Indian workers (over 90% by some estimates) are currently employed in the sector. The government should instead focus on creating support systems that will allow for India’s vast informal workforce to become more secure, productive, and, where feasible, more entrepreneurial.

 

Finally, India must think big. It must consider the possibility that it will have to leapfrog over the industrialisation process itself. It must imagine itself becoming the epicentre of the robotics and AI world, much like Japan become the hub for electronics, Germany for automobiles, and China for manufacturing everything at a tenth of the cost.

To prosper in a world that is suffering from the absence of growth and the disruption of old models, India must strive to become the principal stakeholder of the digital revolution—and ensure that its teeming millions partake in it gainfully, even if informally.

 

 

 

 

 

 

Brics Summit in Goa: Ahead of 8th conference, the bloc must focus on institution-building

Original link is here

When India hosts the 8th Brics Summit in Goa next month, it will need to be the ‘B’ along with the ‘I” in Brics. The ‘bright spot’ that infuses direction, ideas and momentum into a collective whose individual members have certainly seen better days. With a relatively strong economic performance and a vigorous and imaginative foreign policy (on most counts), India has the capacity to help the Brics plurilateral discover a new ethos that will channel cooperative sentiments into concrete objectives, durable institutions and constructive internationalism.

For the Indian Brics presidency to achieve this, it would need to get all members to agree on the need for creating new and agile institutions that can help the group and others respond to the current economic and political realities, and the visceral gridlock that plagues multilateralism and global governance generally.

In a recent article penned by the authors, two organising principles had been proposed as being fundamental to the Brics regimes even as they seek to reform, reshape and steer the contemporary geopolitical and geo-economic environment. The first was the principle of ‘sovereign preponderance’ and the second the principle of ‘democratic equity’. As per the former principle, the state remains the primary and inviolable unit in the international system and its imperatives override all other concerns in setting the international agenda. Intra-state cooperation is possible insofar as such cooperation leads to greater state agency. This higher agency is then channelled to meet the unique developmental needs of each country and, through it, the global community.

(from left)  Michel Temer, Narendra Modi, Xi Jinping, Vladimir Putin and Jacob Zuma ahead of the 8th Brics Summit. Twitter @BRICS2016

The principle of democratic equity holds that the international order, in the economic, political or security spheres, should be shaped equitably after taking due cognisance of the increasing heft and aspirations of emerging powers and economies. These two principles do indeed shape various Brics regimes that contexualise developmental and economic goals, both within the member-states and in the international system at large. They also motivate the stated ambition of this group to redress unfairness (perceived and real), intrinsic to the extant global political and economic governance architectures. With these organising principles as the basis, it becomes apparent that ‘institutions’and ‘institutionalisation’ are imperative for the collective-action plans of the Brics.

The very act of institutionalisation within Brics gives the Brics regimes lives of their own, even while there is contest and conflict on some issues among member states. Institutionalist literature and studies have recognised this aspect. This literature suggests that institutions persist, since the costs of setting up new institutions are often much higher than the benefits that would accrue by dissolving them. Sunk costs (into building institutions) also lock institutions into a path of dependence that leads to increasing (as opposed to decreasing) returns over time.

Institutions codify cooperation and convergence of expectations. They also specify limits to cooperation by delineating formal agreements on some instances and looser norms of cooperative behaviour on others. The former is, by definition, binding while the latter allows wider sovereign leeway.

Taking a leaf from this body of work, the Brics must seek to further their agenda through the creation of four new institutions and institutional arrangements with varying degrees of formalisation.

The first such formal institution must be the New Development Bank Institute (NDBI), the ideational arm of the NDB and perhaps of the wider Brics project itself. The notion of the NDBI was proposed by Prime Minister Narendra Modi last year who described it as “a bank of ideas, a storehouse of experience and a knowledge powerhouse”. The NDBI must become the institution that defines the pathway for the bank but more expansively becomes the laboratory where Brics produces new narratives, discovers new ideas and develops new solutions for the political and economic future. It must seek to become an OECD-like think-tank of and for the emerging world, where issues of economy, currency, credit rating, political risk, industrial models and development options are agitated and sought to be responded to.

A second key arrangement must be developed for trade and commerce. It is apparent that the Brics, more than any other significant group, is invested in the open and democratic trading system led by the WTO, even as the progenitors of the WTO are seeking to subvert the system with mega free trade agreements involving group of similarly placed economies and some others with little choice or agency. One area within this rubric would be the setting up a body that would develop and set Brics-wide standards and benchmarks. While a Brics free trade agreement appears far-fetched, a body that sets benchmarks and standards is in everyone’s interest. It allows Brics to engage on an aspect that decisively shapes global trade and would contribute to strengthening the multilateral trading regime, even as it furthers intra-Brics trade without a formal FTA.

The very act of institutionalisation within Brics gives the Brics regimes lives of their own, even while there is contest and conflict on some issues among member states.

A third key Brics institutional framework that must be created, is for the digital economy where Brics members are already key stakeholders. Currently, the Atlantic powers are embarking on a major programme to shape the norms that will govern the digital space. The proposed ‘Digital 2 Dozen’ principles of the Trans-Pacific Partnership, and the digital regulation initiatives of the European Union are examples of this. As leading consumers as well as creators of digital technologies, products and solutions, Brics needs to be influential voices in the norms-making space. They must act to shape the discursive space around the digital world and inform debates around contentious issues such as encryption, supply chain integrity, data management and data flows and appropriate stakeholder models to manage these aspects.

Finally, Brics must formalise institutional collaborations that explore the unique opportunities and challenges lying at the intersection of the twin imperatives of economic growth and sustainable development. The Brics development agenda should be one that promotes the latter without sacrificing the former. This could be tasked to a standing conference on development partnership, an initiative to discover and promote a Brics development agenda. It would also catalogue experiences of member states and others, diffuse lessons learned to those who seek it, and track progress unobtrusively within a voluntary and democratic framework.

It will follow and measure Brics’ implementation of the ambitious multilateral agreements pertaining to sustainability and climate action, but in a way that does not constrain imperatives of states as they chart their unique developmental trajectories. This new ethos of managing development and assisting others in their own endeavors correspond to both the organising principles of sovereign preponderance and democratic equity.

Samir Saran is vice-president and Abhijnan Rej is a fellow at the Observer Research Foundation. This article is drawn from a forthcoming monograph by the authors titled Thinking BRICS: A Theoretical Inquiry Into Emerging-Powers Plurilateralism

If India wants to become a superpower, it has to stop trying to become the next China

Original links are : ORF and Quartz India

India is currently in the midst of two large but different endeavours.

The first is to complete the unfinished agenda of the previous decade, providing the country with the modern infrastructure, rural amenities, social services, and connectivity that any developed economy needs. And the second, the most ambitious of the two, is to create jobs, wealth, and value to accommodate a young and aspiring population, eradicate poverty, and boost GDP growth.

But these two projects are being undertaken at a time when global headwinds are deeply unfavourable. Today there are five hurdles that stand between India and its ambition to join the club of developed economies.

The first is the advent of this new age where the open, free, and democratic global trading system has become a pale shadow of its previous self. The multilateral trading system — and the preference for this kind of model — has waned considerably. It is being replaced by free trade arrangements between smaller groups of countries and regions, where a handful of stakeholders are able to decide the terms of trade.

This is coupled with a stagnation in global financial flows, because of weak growth, and the growing disquiet over globalisation, curiously enough, in the developed world. From the EU to the UK to the US, politicians are using globalisation as a convenient culprit for all that ails domestic economies and societies.

It’s against this backdrop that India has to discover new markets, new sources of funding, and new trading arrangements.

Second, the advance of technology and the expansion of the digital economy, along with robotisation, is in many ways closing the window for export-led manufacturing growth. They have significantly eroded the advantages that cheap labour typically provide for developing countries. Industrialisation, when seen through the narrow prism of manufacturing, therefore already looks improbable, if not impossible.

Manufacturing, Globalisation, Digital India, Labour

Emerging economies will be stuck with the traditional disadvantages of weak governance, cumbersome bureaucracies, quality and competence issues, fragile supply chains, and a lack of skilled labour even as they compete with machines and machine learning. Large labour pools are unlikely to provide any competitive advantage unless the labour force is reoriented, retrained, and reimagined.

That’s going to make things difficult for India. Even though the country might benefit in the next five to 10 years from weak energy prices, industries exiting China, and inflows of foreign direct investment, it’s going to get harder to compete in manufacturing.

Large labour pools are unlikely to provide any competitive advantage unless the labour force is reoriented, retrained, and reimagined.

A case in point is the relocation of textile and garment production to the developed world. This was previously a sector most sensitive to cheap labour and therefore the first to be off-shored to the developing world. Today, it’s now returning to robotised factories in the US and the EU.

Indeed, it can be argued that with 3D printing and artificial intelligence, manufacturing as we know it may be coming to an end. Whatever form that manufacturing takes in the future, we can safely assume that it will based on high competencies in design, material science, resource management, super-computing, and precision engineering, all delivered by machines or sets of machines and requiring minimal labour.

Third, energy derived from fossil fuels may no longer be a given in any new industrialisation effort. In a “climate-aware” world, it is apparent that there is a willingness to compromise with low incomes and poverty but little appetite to allow the developing world too much carbon space.

Fourth, global finance is increasingly agnostic, if not outright unfriendly, to the idea of traditional industrial growth. An IMF working paper suggests that “investors such as pension funds, insurance companies and mutual funds, and other investors such as sovereign wealth funds hold around $100 trillion in assets under management.” This study estimates the infrastructure-funding gap between $1 trillion and $1.5 trillion each year, with the deficit significantly higher in developing countries. This paper and other studies have argued that this stems from a lack of financial instruments and a lack of appetite to invest in the industrial ventures of the past. Global capital and even local commercial capital in developing countries are being crowded away from investing in infrastructure.

Fifth, innovation itself has a spatial flaw. Discovery and invention are still the preserve of the Atlantic system while consumption and absorption are witnessing greater uptake in the Asian economies and in Africa. This new innovation divide, when combined with restrictive intellectual property regimes set up for the benefit of Western corporations, is bad news for developing countries. It’s likely that they will merely transform from being labour sources, marginal consumers, and resource-rich spaces to markets for innovation, sources for the data that drives the process, and part of a value chain where the largest wealth will still be created in the old economies.

Discovery and invention are still the preserve of the Atlantic system while consumption and absorption are witnessing greater uptake in the Asian economies and in Africa.

This will ensure that their purchasing power remains low. Without large-scale, export-driven manufacturing, and without the revenues that would accrue to the owners of technology, there is a high possibility that developing countries that are not yet middle-income will remain trapped in a low-productivity, low-wage spiral.

The better way forward

So what should India do, given these five trends in global economic development?

First, India must get its own house in order. One-fifth of humanity is a market and a productive base in and of itself. But for the country to take advantage of its size, it must sign a free trade deal with itself.

Currently the 30-odd states and union territories that comprise the Republic of India are nominally a single economy. But in reality, they’re less integrated than the economies of Europe. India’s states and union territories often have sharply different regulations and incompatible tax systems. As a result, trading across state boundaries is a nightmare and India really needs to focus on creating a trade association among these regions.

As a single tax, the GST is the first step in the right direction as it will allow new manufacturing units set up under the “Make in India” programme to have access to multiple markets.

Manufacturing, Globalisation, Make in India, Labour

And there are other government policies that also fit well with this endeavour: “Digital India” knits markets together, allowing for vast e-commerce and business-to-business opportunities, and “Start-up India” gives new entrepreneurs access to the finance and incubation required for them to take advantage of these opportunities.

Secondly, the attitude towards informal employment needs to change. It’s time to stop thinking of the informal economy as a bad thing, particularly since an overwhelmingly large number of Indian workers (over 90% by some estimates) are currently employed in the sector. The government should instead focus on creating support systems that will allow for India’s vast informal workforce to become more secure, productive, and, where feasible, more entrepreneurial.

Finally, India must think big. It must consider the possibility that it will have to leapfrog over the industrialisation process itself. It must imagine itself becoming the epicentre of the robotics and AI world, much like Japan become the hub for electronics, Germany for automobiles, and China for manufacturing everything at a tenth of the cost.

To prosper in a world that is suffering from the absence of growth and the disruption of old models, India must strive to become the principal stakeholder of the digital revolution — and ensure that its teeming millions partake in it gainfully, even if informally.

This commentary originally appeared in Quartz India.

Kashmir crippled by lazy politics, needs greater outreach

Aug 12, 2016,  Analysis,  Hindustan Times,Aug 12, 2016

Original link is here

india-kashmir-politics-files_fabe3668-5fa1-11e6-93fe-9ac2f090b545

As prime minister, it is incumbent upon Narendra Modi to expand those options and enhance that outreach. The instruments, dialogue channels and specificities are for him to choose (AFP)

Each time Kashmir erupts, as it has over the past month, a familiar set of opinions and debates comes to the fore, especially on social media and in prime time studios. The discourse is trapped between an overdone nationalism, a hyperbolic romanticism and a mutual denialism. It is important to identify the limits of what can and cannot, and what should and must be achieved in the Valley, keeping five realistic parameters in mind.

First, international appetite for experiments with self-determination is at its lowest since World War I. In recent times, interventions by global powers in Syria, Libya, Iraq and several locations in Africa have — whether militarily or politically — carved new territories and regimes. Moral and strategic arguments for and against these have been made, but there is near unanimity that such interventions have led to instability and created hotspots for radicalism, terrorism and human misery.

Why is this relevant to an understanding of Kashmir? It tells us the desire of the global community for a quasi-independent or unshackled Kashmir, as a manifestation of some libertarian notion of popular aspiration, is near zero. The opening of spaces for potentially Islamist regimes is a non-starter. This explains why, despite the ongoing turbulence, world pressure on India has been minimal. While not sacrificing cherished positions, stakeholders in the Valley have to factor this in.

The idealism of Kashmiriyat, first discredited with the cleansing of Pandits in the early 1990s and then through repeated violence against minorities in the state, is now viewed largely through the prism of “Islamiyat”. Cruel as this sounds, images of stone-pelting protestors being tear-gassed and shot today evoke less horror in the rest of India and the planet than do visuals of masked young men, dressed in black, carrying AK-47s and promoting a mix of religion and armed rebellion. In a post-9/11, post-Islamic State world, the proposition that Islamists are fighting for freedom is neither sellable nor credible.

Second, related to the first point, the backlash against unbridled self-determination is occurring just as the Westphalian system and nation-state territoriality are making a ferocious comeback across the United States, Europe and Asia. There is no patience for redrawing borders. Violence and protests in Kashmir, police action, curfew and suspension of civil liberties, constitute bad politics and poor democracy. Even so, these are seen as sovereign actions the world has left India to take, deal with and live with.

Ironically, this is a consequence of some in Kashmir wanting to “internationalise” their cause. As it happens they have done so by hitching their grievance to global jihad and locating it within an Islamist agenda. This has singularly allowed huge sovereign space for India to act against what is seen as a systemic non-negotiable.

Third, while the Westphalian comeback secures India’s autonomy in Kashmir, it also accentuates the Indian government’s obligations and responsiveness to its citizenry, disaffected or otherwise. Anti-terror crackdowns and operations in Kashmir and the decidedly imperfect democracy in the Valley are not incompatible with the idea of an efficient development state with the rule of law. China, South Korea and others have demonstrated that less-than-optimal political structures do not preclude efficient social and economic development and governance.

Without doubt India has failed in being an efficient development state in Kashmir. Exaggerated talk of the Kashmir valley being among the country’s highest per capita income regions has skewed ambition and design of projects and of human development. Poor integration of the region with key economic centres is a case in point and has allowed a de facto seclusion of the Kashmiri people and their prospects. Article 370 is not the roadblock for this; fundamentally, it is a failure of imagination. Episodically enlightened civil servants and even army commanders do display such imagination, but there is little to institutionalise their initiatives.

Fourth, this poor governance is best (or worst) manifested in the incompetence in managing protests and uprisings. Better riot-police training, more efficient crowd-control methods and upgraded gear and hardware would have resulted in lower casualties. Information management and developing counter-narratives need to be best-in-class as blanket bans on people (curfews) and conversations (media and telecom prohibitions) have deleterious consequences. On social media, separatist propaganda is sophisticated; the Indian State’s information warfare is prehistoric or at least pre-millennial.

To be fair, such renewal is necessary across India and not just in Jammu and Kashmir. It is part of a policing protocol and culture invented by the colonial state after 1857 and suitable for an “occupying” power and “subject” people, not for a government dealing with citizens. This is a challenge India faces in several states, but Kashmir is as good a place as any to invest in 21st century methods, machines and mechanisms.

Fifth, since 1947 the Indian State’s approach to its “frontiers” — whether in the Northeast or Kashmir — has similarly borrowed from the limiting and self-defeating “pacification” tactics of the Raj: bolstering and incentivising local elites and adopting select families for whom networks in Delhi matter more than popular legitimacy or a commitment to widen the sphere of formal politics. Dynasties are frowned upon nationally but over-relied on in these regions. In Kashmir, the Instrument of Accession has been replaced by the Inevitability of Succession.

This is lazy politics. After 70 years of blood and tears, sacrifice and investment, surely India needed to show more options and a greater outreach than just the Abdullahs and Sayeeds? As prime minister, it is incumbent upon Narendra Modi to expand those options and enhance that outreach. The instruments, dialogue channels and specificities are for him to choose.

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

The views expressed are personal

 

Beyond #Brexit: What Ails the European Union?

Samir Saran and Britta Petersen, Issue Briefs and Special reports, July 19, 2016, ORF

Original link is here

Untitled

The European Union (EU) had been lurching from one crisis to the next even before a majority of British voters expressed their desire to leave it. While staying away from the Brexit debate itself, its implications for UK and EU, and the politics and motivations in the run-up to the vote, this paper argues that at the very least the referendum is a wake-up call for Europe to begin to address some of its structural and operational shortcomings in a substantial manner. Accordingly, a few observations from ‘a’ Indian perspective are put forth and may be worth considering as the EU moves towards a renewed and reformed version of itself.