Columns/Op-Eds, Politics / Globalisation

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.

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Columns/Op-Eds, Development Goals, Politics / Globalisation

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)

 

 

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The Future of the Indian Workforce

Samir Saran|Vivan Sharma

The informal economy is growing in India, and that may be a good thing. Even as policy-makers around the world attempt to grapple with challenges linked to labour productivity and ageing, India’s circumstances are unique. By 2030, when most major countries will have middle-aged or elderly workforces, India will still be young. Around 36% of the Indian population in 2011-12 was 17 years or younger and around 13% was between 18 and 24 years (Table 3.3). The informal economy also accounted for nearly half of the employment for those between 18 and 24. Therefore, the discussion on the future of India’s informal workforce must be brought to the forefront when discussing growth, employment, sustainability and poverty eradication efforts.

Read the full paper here.

This paper has been published in the OECD Library under Chapter 3 – ‘Risks and Opportunities for Inclusive Societies in Developing and Emerging Countries’ of the book titled, ‘ Beyond Shifting Wealth: Perspectives on Development Risks and Opportunities from the Global South’. 

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Columns/Op-Eds, Development Goals, 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)

 

 

 

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The next chapter in Internet governance

Samir Saran

Once cradled by global ideals, the multistakeholder community that manages the global commons of cyberspace must now be nurtured by local realities.

civil society, advocates, not-for-profit organisations, Internet governance, multistakeholder community
Photo: Eric Bridiers/CC BY-ND 2.0

The inclusion of “civil society” — an umbrella group of activists, advocates, not-for-profit organisations, and even the academia — in Internet governance ranks among the most significant achievements of this decade in international relations. For a while, it appeared the “global, multistakeholder community” that drove normative processes like the 2014 NetMundial conference in Brazil, would stitch together rules for managing the global commons of cyberspace.

That assumption today stands on shaky ground. If multistakeholder models of Internet governance were itself a product of globalisation, its future appears uncertain in this current climate of “de-globalisation” and localism.

So, if states and strongmen have reclaimed political authority over national governance, why would they allow digital economies to function outside their remit? What’s more, these popular political leaders have discredited the private sector, which was expected to underwrite the global expansion of digital networks.

Today, companies have neither the appetite nor the legitimacy to incubate such governing platforms. Instruments of globalisation like the Trans-Pacific Partnership were supported by big technology corporations, but as the TPP’s demise shows, the mood across much of the world appears to favour protectionism over expanded trade. If the private sector recedes, multistakeholderism loses its most powerful advocate.

The inclusion of “non-state” actors in global governance itself emerged from a political context, which no longer exists. A world bruised by the global financial crisis mistrusted governments, and created a network of institutions that would not be managed by states alone.

The formation of the G20 (and its sister groupings for businesses and civil society like B20 and C20), short-lived government-bank partnerships, and the renewed focus on cross-border trade all, but ensured that the private sector and non-governmental organisations were seated at the high table of international politics.

Digital spaces benefited immensely from this geoeconomic moment. Whether to widen their consumer base, sustain their fledgling online presence, or ensure connectivity, businesses and governments realised they needed the Internet. Digital networks, therefore, became the conduit for globalisation.

Ironically, digital spaces also sowed the seeds of the current anti-globalisation mood. By shrinking geographies, social media platforms brought divergent, often conflicting voices in proximity to each other. Such online polarisation spilled over into the real world, pitting communities in a zero-sum game.

Majoritarian movements unleashed across the world threw up political strongmen, who in turn renewed the mandate of a strong nation-state. Governments today are more powerful than ever, enforcing protectionist policies, limiting migrants, micromanaging currency supplies, and engaging in widespread surveillance.

This moment in international politics should offer pause to the multistakeholder community, which finds itself in danger of being sidelined by governments — perhaps for good reason.

“Multistakeholderism 1.0” reflects a sharp bias towards transnational corporations, and powerful, omnipresent civil society actors, while constituents from the global South have had their voices hijacked.

As the plethora of cyber policy conversations at the 2017 Munich Security Conference demonstrated, matters of the Internet are essentially a dialogue between white males shouting across the Atlantic. Meanwhile, the biggest technology giants have woefully under-invested in local talent, resources and needs.

This model is synonymous with the absence of government from governance, and relied mostly on the benevolence of markets. This is unsustainable, and will prompt state agencies to step into the governance vacuum created by continuing market failures.

What is the solution to this crisis of conscience and confidence for the multistakeholder community? First, the role of the state should be reviewed in multistakeholder processes. State-led institutions still hold political appeal, especially in democracies, and Internet governance must work with this real and popular mandate of governments.

The state in developing countries continues to guarantee the security of digital infrastructure and networks as a public good, a role that must be acknowledged in multistakeholder platforms. Second, domestic multistakeholder conversations on Internet governance need to be strengthened to ensure marginalised communities that do not have the wherewithal to participate in global dialogue are uniquely represented.

Finally, the thrust of multistakeholder Internet governance itself requires reformation. So far, such processes have sought to promote the openness and freedom of digital spaces and conversations, a laudable goal in which civil society plays an important role. But little energy has been spent on ensuring affordable digital access, and in conceptualising how the next billion will engage with digital platforms.

Will first-generation Internet users in the Asia-Pacific and Africa rely entirely on mobile devices, triggering new conversations on platform security? Are digital policies equipped to handle the proliferation of local language content across devices? Are emerging Internet of Things ecosystems interoperable? Will new Internet users be discouraged from digital spaces by subversive activity online? Will insurance hurdles and cyber-risk ratings retard the growth of digital economies in some regions? These are complex questions that should be confronted by “Multistakeholderism 2.0”.

Multistakeholderism 2.0 requires a democratisation of the process of Internet governance and pluralism in uncovering the universality of the so-called “core values” that influence policy conversations. Recent political developments in the US and Europe suggest the sanguine belief of the existence of a “global civil society” — rallying around common values or ethics — will be tested in the days to come. Therefore, the success of Multistakeholderism 2.0 will be contingent on bringing local communities, businesses and leadership to the forefront of Net politics. As commentators like Latha Reddy argue, countries like India will not only have the obligation to speak for the second largest constituency of Internet users, but also the largest population of unconnected citizens. To serve them, multistakeholderism, cradled by global ideals, must now be nurtured by local realities.

This commentary originally appeared in Live Mint.

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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

 

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Globalism, radicalism, populism on Raisina Hill

Samir Saran

The keynote speeches by three world leaders at the Raisina Dialogue stood out for their pronouncements on globalisation.

Raisina Dialogue, Raisina Hill, globalisation, radicalism, Narendra Modi, Stephen Harper, Boris Johnson
Photolabs@ORF

In many ways, the Raisina Dialogue hosted by Observer Research Foundation and the Ministry of External Affairs, Government of India, set the tone for the year’s momentous developments in geopolitics. 2017 is yet to complete fifty days, but the events of the last few weeks will have a lasting impact on our times. The Raisina Dialogue, in particular, highlighted the clash between liberal “internationalism” and the radical movements that threaten to upend it. Keynote speeches by three leaders at Raisina stood out for their pronouncements on globalisation. The first, by India’s Prime Minister Narendra Modi, sounded a note of caution about the “gains of globalisation” being at risk. “Economic gains are no longer easy to come by,” said PM Modi, who went on to cite the “barriers to effective multilateralism.” The Prime Minister’s message was direct and simple: that globalisation needs new inheritors who can help promote the projects, regimes and norms of the 20th century. This responsibility would invariably fall on the shoulders of a class of nations that we have come to know as “emerging powers.”

“Globalisation needs new inheritors who can help promote the projects, regimes and norms of the 20th century.” — Narendra Modi

A second perspective on globalisation came from former Canadian PM Stephen Harper, who highlighted the role that religion plays in these turbulent times. Mr. Harper noted the role that Pope John Paul II, a Pole, played in providing “anti-communists in Poland effective leadership outside the country” in their struggle against the Soviet Union. PM Harper was hinting at the capacity of a religious leader whose tacit support of the Western ethos ensured resistance to entrenched nation-states. In this respect, religion returned to world politics (to destroy the Soviet Empire) in the eighties, long before the rise of the Islamic State. Can tendencies driven by religious sentiment today — whether through the rise of terrorist groups like ISIS, or through the counter-movements against migration in Europe — defeat the globalisation project driven by states?

Can tendencies driven by religious sentiment today defeat the globalisation project driven by states?

And finally, British Foreign Secretary Boris Johnson offered yet another take on globalisation, in balancing his full-throated defence of Brexit with his call for greater economic cooperation with Britain. The “selective” or “a la carte” globalisation that Secretary Johnson pushed for at the Raisina Dialogue reflects the desire of many Western states to preserve its economic benefits while assuaging “nativist” tendencies at home.

What do these three speeches at the recently concluded global conclave tell us about the world today? For one, they concede that globalisation of a certain kind has run its course. This was a globalisation spurred by Western leadership in the 20th century, promoting ideas and institutions to salvage economies that had been devastated after two great wars. The urgency and desire to create those linkages no longer exist in the trans-Atlantic universe, so this period is witnessing selective de-globalisation.

Second, the leaders’ speeches acknowledge that globalisation is a victim of its own success. In true Hegelian fashion, the “idea” has been destroyed by its “actualisation.” Globalised economies today promote the free and rapid flow of information, bringing communities, societies and peoples together. These connected networks are by no means homogenous. They are miscellaneous groupings that often have little in common, by way of political heritage or intellectual traditions. As a result, they begin to sense their respective differences quickly and conspicuously. To be sure, the world was just as polarised or opinionated before the Information Age. But digital spaces have made distances shorter, and differences sharper.

Digital spaces have made distances shorter, and differences sharper.

Third, their utterances indicated globalisation is in need of new torchbearers, who may not be able to project strength or underwrite stability in the same vein as the United States or Europe, but will preserve its normative roots regionally. These torchbearers will emerge from Asia, Africa and Latin America: they may not be connected by a lingua franca but their political systems will share a common commitment to free expression and trade. Their rise will be neither smooth nor inevitable. If disruptors today find the cost to destabilise the global system rather low, its custodians realise it is expensive to fix the mess they leave behind.

Prime Minister Modi astutely observed at the RaisinaDialogue that the dust has not yet settled on what has replaced the Cold War. Russian Parliamentarian Vyacheslav Nikonov, one of the speakers at the Dialogue, went one step further: “We may not be the number one military in the world,” he said, “but we [Russia] are not No. 2 either.” With the traditional leadership of Western powers giving way to the rise of regional powers, it is anyone’s guess if they will emerge as preservers or destroyers.

Above all, the speeches by Mr. Modi, Mr. Johnson and Mr. Harper at the Dialogue reflect their desire to couch globalisation in normative terms. The Washington Consensus was not solely about free markets, but also untrammelled expression and political dissent. The room for promoting such norms, for all the reasons mentioned above, is considerably limited today. The rise of China presents perhaps the biggest challenge to an ideas-based global order. Beijing has pursued with transactional vigour and single-minded ambition the setting up of regional financial architecture to bankroll its infrastructure projects. These initiatives place little regard for notions held sacred in the international order.

At the Dialogue, PM Modi highlighted the importance of these norms for the continued execution of the globalisation project. “Only by respecting the sovereignty of countries involved, can regional connectivity corridors fulfil their promise and avoid differences and discord,” said PM Modi.

It should be clear then that there is only one legitimate inheritor to the global liberal order of any consequence: India. New Delhi alone can pursue the expansion of regional and global economic linkages while staying true to the ideals that drive them. The Raisina Dialogue itself was an example of how a global platform can be forged in India, bringing together contradicting opinions and voices from across the world. As the steward of the process, the Prime Minister cited the Rig Veda, inviting “noble thoughts […] from all directions.” The future of the globalisation project is intimately tied to India’s modernisation and rise. There is no growth without ideas, and conversely, no innovation without prosperity. India is the world’s best shot and perhaps the last shot at achieving both in these turbulent times.

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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

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India needs to articulate the principles of managing world affairs

Samir Saran

The Indian example and its democratic choices are persuasive and much needed in the world.

BRICS,New Development Bank,Soft Power

Historian and sociologist Krzysztof Zalewski sits down for a Q&A with ORF Vice President Samir Saran.

Krzysztof Zalewski: India is a large country, both in terms of its population and its land area, with a fast-growing economy. It is perceived as a major new player on the global stage. What would the world order look like if co-organised by India?

Samir Saran: India’s impact on the world order is already significant, but it is a ‘work in progress’ at the same time. It is significant, because it is a telling story of a poor, developing country adopting robust democracy as the principle political instrument to improve the lives of its people. While India’s peers have fiddled with democratic and liberal ambitions, the Indian example and its democratic choices are persuasive and much needed in the world generally and in its own neighbourhood particularly. This story is a source of India’s soft power.

It is still a work in progress because a few concrete ideas need to crystallise. Over the next couple of years India needs to articulate its view of the world and on the principles of managing world affairs. What could be our proposition? Will it be based on key Indian realities like its democratic experiences, high-tech industry, expanding service sector, and agrarian transformation? India will need to arrive at an internal consensus on what is the Indian proposition.

KZ: So what would be the nature of India’s influence in the world?

SS: We need to answer a few questions internally first. Will India be seeking to replace old powers with a new face? Or is it going to change the ethos of how we manage our affairs collectively? As a country that will rise from the third world to soon become the third largest economy of the world, I am sure there would be expectations that the inclusive governance frameworks, which have been sought by India from the time of its first Prime Minister Nehru to its current Prime Minister Modi, must be what the Indian proposition should be based on. It will still take India another two decades to get to this point and this time should be spent on building up domestic debate and participating in conversations on the subject.

KZ: Every new power tries to formulate its ideological appeal when it is rising. We know what the American Dream is; in the last few years we have heard much about Chinese attempts to formulate the Chinese Dream. So what would be the Indian Dream in your personal view?

SS: Any Indian dream would not be too different to the ones of our founding fathers or even those of our current leaders. It has to be one that envisions a result in the eradication of poverty, disease and despair. In other words, the challenge is to integrate into global economic processes the approximately 500 million Indians who were born in the last 25 years and about four times that number born globally in the same period. They all want to have jobs, they all have dreams, they all have aspirations. Many were denied their dreams because of the colour of their skin, because of the place they call home, or because incumbents have refused to allow them a fair share of this world. India must attempt to find space for them in the global order.

KZ: Here in India I find many people are fascinated by the Chinese example and are sometimes a bit frustrated both by the slow decision-making process, normal for a democratic society, and the very complicated Indian federal system. So is it possible that Indian society will find the Chinese model increasingly attractive?

SS: Yes and no. To answer the first part of your question, many of us, and perhaps the vast majority, imagine ourselves as open, liberal and democratic people. We are far more comfortable with the values enshrined in the liberal order. India, in the second half of the century, will be one of the largest contributors to and defenders of the liberal order. In a sense, we will inherit the responsibility of serving these values, just as the Americans have been doing since the second half of the 20th century. In my opinion, it will be impossible for international liberalism to survive unless India takes the baton by then. The rest of the big international players will not necessarily have the affinity to Western European and American models of global governance.

While we do criticise our complex decision-making processes, which delay and sometimes deny development, in my mind, this criticism is not directed at the foundations of the political system that we have chosen and that we are governed under. While we admire the Chinese, we also admire the Germans and the Japanese. There is a greater allusion to China because it has been a fellow developing country and it offers us a real target to chase.

KZ: One of the instruments India has developed to become more visible as a global player is the BRICS group. In the Oxford Handbook of Indian Foreign Policy you have recently written a wonderful article on what BRICS is for India. From this I conclude that the BRICS grouping is a bit like a train with passengers leaving it at different stations.

SS: I am not speaking for the government of India, and I am certainly not speaking about the ambitions of China, South Africa, Brazil or Russia. I would argue that BRICS is a transitory vehicle for India. For a long time we were heading the global trade union, we were the driving force behind G-77 and Non-Aligned Movement, we were the energy which created third world institutions. Now we are a power that needs to contribute towards growth, peace and sustainability, and we will need to bear the costs of these as well. India will need to become a net provider in the global development architecture.

BRICS will help move India from the position of a global trade union leader to that of a global manager. We must do this carefully. We have to leave our erstwhile partners in this process, and it is more palatable if we part company in favour of BRICS than the OECD, given current realities.

KZ: So what does BRICS bring India in concrete terms?

SS: We are learning how to build new institutions of global governance, such as the New Development Bank (NDB) and the Contingency Reserve Arrangement (CRA) to manage liquidity and currency crises in the BRICS countries. We are also thinking of creating a credit rating agency, and about strengthening the WTO. We have also established security and energy working groups under the national security advisors within the forum of BRICS.

BRICS is important for the messaging it provides to India’s domestic audience. It motivates Indian citizens to be part of something bigger, to contribute to global challenges and realise greater responsibility, such as through the BRICS fund put to disposal during the eurozone crisis few years ago.

KZ: You mentioned the New Development Bank. In Asia a number of institutions of global economic governance are emerging, such as the Asian Infrastructure Investment Bank. How do you see the division of labour between these two institutions?

SS: The AIIB is exactly what the name suggests: it is a bank that focuses on Asian needs in developing infrastructure, in which India is the second biggest equity holder. The NDB has different goals and a different structure, which is novel, as every participant has equal rights. It will help finance not only infrastructure, but also place emphasis on social goods, such as advancing healthcare and stimulating small and medium enterprises. Joseph E. Stiglitz, the previous head of the World Bank, has argued that the world needs many more such institutions. Indeed, AIIB and NDB are only two of the many more institutions which need to emerge in order to transfer global savings into investments in developing countries.

KZ: The NDB has five member states with equal voting rights despite the vast difference of economic power within the BRICS. But it is open to other participants.

SS: 49% of the ownership can go to entities outside of BRICS member countries. It already envisages that other international institutions and maybe even countries can contribute. And I think over the next 2-3 years we will see that happening. The largest percentage of shares will be held by the BRICS countries, the rest can be owned by different states and institutions. It is important for the bank to have Americans, Scandinavians, and other Europeans on board. It will improve the bank’s rating, which means the cost of capital will go down.

KZ: If one wanted to encourage the Polish government to participate, what kind of arguments should be used?

SS: I would use two kind of arguments. Firstly, there is a huge disparity between development needs and the available capital. If Poland believes development infrastructure is an important area, the NDB is a useful vehicle for global economic development. Secondly, the NDB is a new bank, so if you come in early, you can still co-create this institution and have a say in the decision-making processes of the bank.

KZ: The NDB is just a part of the BRICS agenda for a change in global economic governance. But in my country it is sometimes perceived as a rival to the geopolitical order we generally support, a rival of the US. How would you convince people that you would like to contribute to the world order and not to fundamentally challenge it?

SS: The way you perceive BRICS’ contribution depends on where you are sitting. If you control global institutions, you will always look at newer constructs providing similar services to the global community with a certain degree of scepticism. BRICS is often accused of undermining the established international financial institutions, such as the World Bank or IMF, which is not true. I think BRICS does not have the capacity to be adversarial even if it wanted to play such a role. BRICS offers complimentary institutions in financial security and in other fields. It will deliver these services to those who need them most, that is, the underdeveloped countries. And it will do it in a manner different from what the OECD countries have done so far. So if it can lend money without the same conditions the World Bank does, and it can lend money directly to the sectors which will create jobs in Asia and Africa, it is contributing to creating solutions in these countries, and this will give it credibility in Asian and African countries. If the only difference between the NDB and the World Bank are the ethnicities of its managers, we would only be replacing one set with another and business will continue as usual. The credibility of BRICS will be assessed by the quality of the institutions it offers. Can the member countries create a credible BRICS rating agency, can they create secure digital economies, can they create an effective energy agency? So the challenge is really to create institutions.

KZ: Commenting on the BRICS summit in Goa last autumn, the media tended to focus on Indian attempts to isolate Pakistan. What should be done in order to prevent current political issues from dominating the BRICS agenda?

SS: We must not allow bilateral politics to define the narrative of these institutions; they must be bigger than the individual members.

We need to create a comfortable arms-length distance between bilateral relations of BRICS member states with third parties and the agenda of the grouping as such. If you look at the outcome document, Pakistan is not mentioned. Principles are mentioned. As long as you can discuss (within BRICS) principles of countering terrorism, it is helpful. If you try to shame and blame, you make cooperation weaker. BRICS should, however, continue to focus on strengthening economic cooperation.

This interview originally appeared in CSPA.

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Moving towards a secure digital economy

Samir Saran| Vivan Sharan

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.

Read Also | Demonetisation

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.

This commentary was first published in Live Mint.

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