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G8 must make way for new system

07-07-2010 09:34 BJT Special Report:

By M D Nalapat

BEIJING, July 7 (Xinhaunet) -- Over the years, there has been a crescendo of voices from the US and the EU urging that large emerging economies such as India and China be "responsible stakeholders in the international system".

What is left unsaid is that such voices expect Delhi and Beijing to be responsible to Washington and Brussels. They would like the leaders of both Asian giants to adopt (or to agree to) policies that harm the interests of their own citizens, and promote the interests of a few in the US and the EU, such as the large financial institutions that have almost destroyed the world economy by their greed, or oil and copper companies who assist speculators to drive up prices of raw materials in a way that harms the economic interests of the 2.5 billion people of India and China combined.

Take the example of the EU. This huge association seeks to shut the door to competition from the big emerging economies, by putting in place numerous tariff and non-tariff barriers to entry. At the same time, they seek to maximize the sale of luxury cars and other high-priced items to the Asian markets. Clearly, for the EU mandarins, "Free Trade" means freedom for the EU to sell goods to Asia, but no freedom for Asian entities to have reciprocal privileges in European markets. It is the same with human beings.

Both Europe and Asia should follow the same policies on giving each other market access and welcoming migration, rather than the one-way traffic that is the norm presently.

When the G8 was expanded into the G20, it was expected that the new forum would set right the imbalance in global consultations on financial matters by ensuring that the voices of China, India and Brazil are heard before policy gets decided. In other words, just as the G7 became the G8, the G8 would become the G20.

Instead, the G8 has continued, and has imposed a format whereby they meet in advance of the G20 summits and work out a common position that they then ask the other 12 countries to accept. The G8: G20 format has become a means to influence the big emerging nations to once again accept the policy leadership of the US and the EU, rather than being a forum to reconcile the needs of both the developed as well as the emerging countries.

If the G8 continues, then the "G12" need to meet in advance of such get-togethers the way the G8 does, so as to seek to find common positions on global issues.

Both the developed economies as well as the big emerging economies need each other for mutual benefit and common prosperity. Both need to work in harmony and conciliation. However, the present situation is that the G8 still seek to impose their views on the rest of the world.

They need to understand that the world has changed since the 2008 financial crisis. Till then, the developed countries could pretend that they were responsible and successful in ensuring steady growth, at least for themselves. They could pretend that they had higher moral standards than emerging nations.

Rating agencies fed such an illusion by giving Triple A ratings to the sovereign debt of countries that we know now to have been bankrupt at the time (and still are), while giving much lower ratings to Asian countries that have a much healthier fiscal record. Anti-corruption watchdogs used to call the countries of North America and Europe highly principled and honest, while they called several Asian countries corrupt. The 2008 crash showed that the extent of corruption and greed in the US, the UK and other so-called "honest" countries dwarfed in its scale the graft that exists in Asia.

How many of the officers of the financial institutions that together cheated tens of millions of investors out of more than $6 trillion have been arrested? Just a handful, while most have got huge bonuses out of their flawed activities, rewards that they have been allowed to keep. Many are still in their jobs, and more than a few are in high positions in governments. In contrast, several have paid a far higher price for graft in China, as have in India. After the unethical underbelly of the developed world has been exposed by the financial crisis, it is no longer possible for them to dictate terms to Asia.

It needs at this point to be remembered that in the 1997 Asian financial meltdown, countries such as Indonesia and Thailand that faithfully followed the advice given by New York and Frankfurt saw an economic collapse, while countries that ignored such advice escaped.

The developed world needs to accept that it can no longer dictate to the big emerging countries. They need to understand that a win-win solution means that both sides share both the pain and the gain.

The G8 needs to disband itself so that both developed and emerging countries can together work to resolve the problems facing humanity. Should it continue, then we need a G12.

The author is vice-chair, Manipal Advanced Research Group, UNESCO Peace chair and professor of Geopolitics, Manipal University.


Editor:Zhang Pengfei |Source: China Daily

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