Small BusinessNitin Desai: The 40:40:20 World
Nitin Desai / New Delhi January 21, 2010, 0:25 IST
The Copenhagen Climate Conference saw the emergence of what could be called a 40:40:20 power structure in international relations. The first 40 per cent includes the two big powers — the US and China. The second 40 per cent consists of the EU, a 10 per cent power, Russia, Japan and India, each of them a 5 per cent power, and a string of 2 per cent powers like Brazil, South Africa, Mexico, Indonesia, South Korea, Saudi Arabia, etc. The last 20 per cent covers all the other states whose influence can only come from their membership of some larger group.
Jan cement sales in high double-digit
The proportions, which reflect the share in emissions of the countries concerned, are more a metaphor than an exact measure of power and apply mainly in the economic and environmental sphere. The distribution of military power and political influence has to be looked at not just in terms of global but also of regional power distribution.
The end-game at Copenhagen reflected this balance of power where an agreement between the the US and China was necessary but not sufficient to secure a consensus outcome. The middle powers matter when their weight is needed by one or the other of the big two. Thus in Copenhagen India, Brazil and South Africa were there at the end game because China engineered events so that it was not alone in striking a deal with the US.
The smaller players can acquire influence only occasionally when a full global consensus is needed. At Copenhagen, the big and medium players decided that what mattered was what they committed to each other and the consent of the smaller players was not crucial.
This structure of power also holds in other fields. Take the current problems of global finance. These cannot be resolved without a coordinated and well-calibrated revaluation of the yuan and policy measures in the US to raise savings and reduce the deficit. If the two countries can agree on a programme for resolving this macro imbalance, the solution to the other financial problems will fall in place. In fact, in terms of the metaphor about the power structure the weight of the big two in the world of global finance may be even greater than 40 per cent.
The EU matters because of its contribution to global flows. The continuing fragility of the UK banking system and the risk of domino-like bond defaults in Southern and Eastern Europe is a threat to the stability of the global financial system. But unlike the US-China imbalance, resolving Europe’s financial problems will not be sufficient to bring stability to the global financial system. As for the other medium players, they remain bystanders, capable of roiling the system but unimportant in the search for solutions.
In the sphere of trade, the multilateral system is perhaps less dependent on the US and China seeing eye to eye. China is a recent entrant in the WTO and is still finding its feet in the choppy waters of multilateral trade policy. The distinction between the big and medium powers is less obvious and all of them exercise significant influence in the process. The smaller countries, when they get their act together, can use the need for a consensus to secure a binding legal agreement as a lever to assert their interests. But outside the framework of the WTO, in the discussions on FTAs and the regional arrangements, the 40:40:20 power structure becomes more relevant.
This emerging power structure does not bode well for the smaller states. They require a multilateral system based on principles and rules of fairness and any shift away towards more oligarchic structures of global governance will hurt them. In the system that is emerging, their interests will be protected only to the extent to which they coincide with the interests of China, India and the other new members who pay lip service to their G-77 loyalties.
India has to learn how to operate in this new structure of power. The dominance of the G-2 depends on their getting their act together. If they do not, then there is room for the medium powers to exercise influence by leveraging their support for one or the other of the two big contenders. This means that maintaining a dialogue with both the US and China must be given equal importance by India. However, with both countries, economic and environmental matters cannot be separated completely from the ups and downs of political and military relations.
Over the past decade, India has built strong links with the US, as its stance on Kargil and the nuclear deal have generated a level of comfort that allows deeper cooperation in other areas. Non-official links are also strong because of the US-based NRIs, the corporate contacts, personal and institutional academic contacts and the ease of a common language.
This has not happened with China. Despite several high-level visits, political and security relations remain adversarial. There is an undercurrent of rivalry in relations with neighbours and even in places like Africa and Central Asia. Forging a deeper dialogue on economic and environmental matters will be more difficult and may have to depend even more on non-official contacts between research institutions and think-tanks. Such contacts will not develop without many more diplomats, officials, academics and journalists proficient in Chinese, and strong and substantial support from the government for seminars and visits. One hopes that this will be forthcoming.
G-2 dominance is not the only game in town. The medium powers can wield independent influence if they come together and this may happen on specific issues through purpose-oriented coalitions of the willing. The G-20 grouping on global finance is an example. Hence India must also strengthen its dialogue with the EU, Japan, Russia and some of the larger developing countries.
But a word of caution is needed. We need to pursue compatible goals in the different strands of bilateral, multilateral and coalition-building diplomacy. One fears that with responsibilities for international economic and environmental relations being fragmented between country and subject desks and also between ministries, incoherence may be a more likely product of this thickening of relations on multiple fronts. Hence a strong system of issue-based coordination of international relations implemented through an empowered National Security Council is very necessary.
We are a middle-level power in a structured global oligarchy and must act without any illusions about our relative status.
nitin-desai@hotmail.com