Former Prime Minister Manmohan Singh’s Op-Ed piece in the Hindu (April 22) contained many thoughtful observations on the implications of the current Ukraine crisis for the international community and the opportunities it offers to Bharat to become the fulcrum of a new world order. However, on some points, a different view is possible.
He believes that the Ukraine conflict is re-shaping the world order. The governing order was built around free societies, frictionless borders and open economies, he argues. Up to a point this may be true, but how many societies were really free, beginning with China with its central position in the global economy next only to the US. Here we had one free society with extraordinarily deep linkages with what is being reviled today as an autocracy. And these huge economic ties continue despite the political rhetoric. China is by means an open economy, now or in the past, and yet it has risen phenomenally with the support of the West.
As for frictionless borders, our own situation does not endorse this, given the tensions on our borders with China and Pakistan, especially China’s sudden aggression in Ladakh, not to mention the lingering border issues between Russia and Ukraine since 2014 at least.
There is no doubt that, as the former PM says, globalisation produced economic fruits by way of “free movement of goods, services and capital” that resulted in the doubling of GDPs and general peace and prosperity. However, the claim of general peace in the world during the period of globalisation can be contested as this period saw the conflicts in Libya and Syria, for instance, that still continue, China’s maritime aggression in the South China and East China Seas and the enduring war in Afghanistan, not to mention the proliferation of Islamic terrorism, the emergence of the Islamic State and the resurgence of the Taliban culminating in its take-over of Afghanistan through terrorist violence.
As for prosperity, Bharat as well as China has no doubt profited from globalisation. But it began to be contested after the 2008 financial crisis in particular. The sentiment against it grew because of the income inequalities it created both within and between countries, the erosion of the middle classes it caused in western countries with the shifting of production to China in particular, and so on. Protectionist sentiments were growing even before the Covid-19 pandemic struck. The latter has exposed the dangers of the globalisation process through a single country control of critical raw materials and supply chains.
Globalisation has therefore presented a mixed picture. As for free movement of services, Bharat has continued to face problems with regard to its demands that the liberalisation of services should include the movement of our skilled manpower as a service.
To say that the “global village” is a “lived reality” is not entirely true. With the communication revolution and other forms of connectivity, the world has got reduced in size as it were, but if a global village means harmony, living together as a tightly knit community, producing goods to serve its various needs etc. this is not the case. Governance in this global village has never been democratic, its institutions have been dominated by the big powers, reforms of the system are resisted, a unilateral pursuit of self-interest has marked its functioning, and so on.
That this global village has been cemented by the US dollar as a reserve currency, integrated payment systems, advanced transportation networks, and that if this delicate balance is disrupted it will plunge this village into a disequilibrium which will derail the lives of all is a view that raises a few questions. Countries like Russia and China are seeking to trade in national currencies as much as possible as they seek to resist the hegemony of the US dollar. The expulsion of Russia from Swift and the weaponising of finance by Washington as part of enforcing its sanctions on Russia is compelling countries like Bharat to set up a rupee-ruble payment system to maintain some stability in trade with Moscow. The scope of sanctions against Russia should be a wake-up call for non-western countries about the consequences for them of an unbridled US dollar dominated global trading system.
Yet, the former PM believes that entering into some form of bilateral payments system with Russia would be perilous, even to the point of arguing that buying oil and other commodities
at discounted prices would be a departure from the established order of a dollar-based settlement system and that this will jeopardise established trading ties with the West. In reality, this problem has arisen because of the extra-territorial application of US sanctions, not something initiated by Bharat, which is acting in defence of its national interest.
The former PM is against a “forced and hurried dismantling” of the dollar-based system and replacing it with “rushed local currency arrangements” that “can prove to be more detrimental for the global economy in the longer run”. First, it is not possible to quickly move to an alternative system. It will inevitably be a gradual process. It can be reasonably argued that a dispersal of power in the global system, more share in global governance by developing countries, including Bharat, and a reform of the international order organically requires the dilution of the powerful hegemony of the US dollar. Multipolarity would make no sense without it.
That the western powers want to embrace a new paradigm of “free but principled trade” that values both morals and money, as Shri Manmohan Singh notes, is a disputable narrative. What is free and what is principled is defined by them. After all it is they who have been writing the rules of international governance. The manner in which Intellectual Property Rights, for instance, have been used to limit competition and inflate profits as well as deny technology is an unfortunate reality.
Most recently we have seen this reality in the WTO discussions on waiving the TRIPS provisions to allow countries to produce anti-Covid vaccines en masse to meet crying global needs, as proposed by Bharat and South Africa. This is more money than morals. We have come under pressure from the US in the WTO on many issues, disregarding that between a country with a $23 trillion economy and one with less than $3 trillion a “level playing field”, as the US seeks, is not a moral position.
Shri Manmohan Singh’s argues that Bharat needs a nonaligned doctrine for the looming world order as also a non-disruptive geo-economic policy that seeks to maintain the current global economic equilibrium, notwithstanding the fact that the latter has already been disturbed by sanctions against Russia and China’s rising economic challenge to the West. How can Bharat square this circle? He also says that Bharat “needs not just cordial relationships with nations on either side of the new divide but also a stable and established global economic environment”. How Bharat can have cordial ties with Russia (and China) and at the same time fully subscribe to the established global economic order which is currently being disrupted by the US in order to isolate Russia, cause its economic collapse and bring about a regime change there?
The formulation that “It is important for India to adopt a strategic economic self-interest doctrine within the larger paradigm of its non-aligned foreign policy” is not easy to decipher in its practical application. Does it mean that politically Bharat should be non-aligned but economically it should be aligned?
It is not clear how Bharat can be a “fulcrum of this new global order” when the entire argument is not to promote one but accept the current one which the West controls.
(The story has been published via a syndicated feed with minor edits to conform to HinduPost style-guide.)