 Hello and welcome to NewsClick. The G20 summit is slated for later this week on the 9th and 10th of September 2023. The press is breathless in the coverage of this forthcoming event and the Indian government has gone all out with claiming the Presidentship this year as a feather in its cap. But what can developing countries including India expect from the G20? What is the background to this grouping and how does it relate to what other groupings including from the global south are doing today? We are going to discuss these all important issues with Dr. Mr. Ajit Dhar, the noted economist and a specialist in trade policy. Dr. Dhar, thanks very much for joining us. You know, I want to begin asking you about this G20 summit from a perspective which is widely being circulated. It is being said that this is going to respond to the priorities of the global south and that it will be based on an inclusive and balanced international agenda. In the discussions that we have seen in the run-up to this meeting later this week, are you seeing either of these things get reflected? Well, let me pick up three areas through which I am going to be reflecting on the question that you asked me. And then I will leave it to you and the viewers to pick up their mind whether what is being talked about is being realized or could be realized moving forward. So, three areas I will pick up are all sort of related to the global economy in a very broad sense. The first is the whole issue of climate change. It is of course, intimately linked to the economic well-being and the global economy. The second issue is the question of developing country debt indebtedness, which has been hanging for a long time and now it is especially the debt of low-income countries. And the third issue is the question of reforming the multilateral development banks. And these are the financial institutions beyond the Washington-based, the Bretton Woods institutions. They are also ADB, the regional development banks. So, there has been a discussion on reforming these agencies and make them more development oriented. So, I am going to just reflect on these three. So, first on climate change. Now, I think it is very clear to anyone experiencing the problems of variable weather and uncertain weather climate climate conditions, that climate change is something that should have been done maybe a few days back, not even today. And what we are seeing here is this big battle going on between the developed and the developing countries on the question of first the net zero when it is going to be achieved. And the second is how it is to be achieved and the how is largely being discussed in the context of climate finance. So, the West wants us to do the whole net zero or meet the net zero target ASAP by 2050 that is what they talk about. India of course has said no, we have asked for more time. But in the middle of all this I think what is not being discussed is that the framework is was really that countries are going to do the mitigation adaptation according to their ability. So, there was this common but differentiated responsibility. Both in terms of how much you will do and of course, common but differentiated responsibility also on the basis of whether there are enabling conditions and that is why the climate finance issue comes in. Now, I think there was a need to actually do a comprehensive review of the entire you know this landscape. Who can do how much? Because it is very important because there are it is not the climate change is not something that you know if you just think that a few countries are going to do it the problem of climate change is going to go away. So, the transboundary implications of the carbon footprint in different countries makes it imperative that everyone is on the same page and therefore enabling all the countries to be on the same page is the responsibility of the global community. So, now climate finance and we this is the most disappointing story it has not been forthcoming. Now, it was not forthcoming before the pandemic and after the pandemic it has become a kind of a mirage I would say because the developed countries are now busy putting their house in order. So, the kind of the kind of priming that the Americans did and the Biden administration did and onward you know it is the kind of funds it is pumping in to support an industrial policy because it wants to you know sort of decoupled from China. That is a big question mark of course, but so what has happened is that the big guys and same thing is happening in Europe they are also doing a similar project. So, availability of finance is going to be a problem that is what I can see. So, somewhere I think there has to be a discussion in the G20 as to who is going to bear the burden of financing in the global community to get on to this you know sort of to meet the net zero target you know reasonably quickly. So, that is not something that you know the Indian presidency is going to be able to come to terms with. Why do you say so? No that is the reason that I said that you know even before pandemic there was not much funds coming forthcoming and now with these guys putting in money in their own economies and you know sort of trying to de-globalize in you know if I may use that so this is what is happening. So, there is going to be further pressure on you know so there was a need to take a realistic view as to how this is going to be done and there are a number of factors that come in for instance this whole issue of trying to set their own agenda of de-globalization at a very critical juncture also something that feeds into the sole climate issue because like I said that the kind of money that you and US are pumping in will certainly have an implication on the availability of finance for climate. The second issue that you know we have not been discussing at all seriously is a question of technology and they had to be a consensus on availability of critical technologies. We saw how the West just looked the other way during COVID pandemic. The developing countries kept insisting that the stranglehold of IPR should be removed in order to in order that the developing countries can get access to these technologies the vaccine and you know the medicines it wasn't done. So, at the worst in the worst kind of a pandemic that modern magazine we didn't see any response on the technology front from the advanced countries and on climate this has been a long story. Somewhere down the line the focus went off from this technology aspect almost entirely. And shifted entirely to the domain of finance. Only on finance and that was another I think a big mistake that the developing countries did. India in particular, India was a very strong advocate of technology transfer. Of course, I would I would listen to say that even this term technology transfer is not really an appropriate term because technologies are never transferred. These are bought and sold in the marketplace. And how and the terms on which you will be able to get the technology is the critical you know critical element. And on this particular aspect then they had to be a global consensus you know. And forums like G20 are the ones where this kind of you know a decision should have been taken. And this is something that we were actually hoping that would happen. When the G20 was upgraded from a finance minister's platform to a summit level meeting of these countries of these member countries. And the G7 brought in a bunch of emerging economies in order to well the immediate trigger was to find a response to the economic downturn of 2008. So, the first summit was held in 2008 and then it started happening every year. And the question that we have been asking all the time is that what is the point of the developing countries being on the high table if issues that are of critical importance to these countries are not raised in the manner that they should be done. So, apart from the technology transfer and the negotiations on climate change which you say have not gone in favor of the you know what's now everyone says the global south the developing countries. What are the other aspects that you think? Yeah. So, the second issue that I am going to raise is the question of external debt of developing countries. Now, the first major debt crisis of the developing countries happened in the 1980s. And there was no resolution here which was worth talking about from a developing country perspective. All that happened was that the American administration together with the IMF and the World Bank were able to find a way they actually what you the term that you use that we have been using is the model through provided additional funding to these countries the indebted countries in order that they do not default on their debt. So, all the consideration was that they should not they shouldn't be a crisis that the financial market faces. That's right. Yeah. So, the rescue the so, what was done was the rescue of the financial market the big banks the banks they were too big to fail. All these investment banks like GP Morgan and others and the developing countries were left to their own fate. And then came the structural adjustment program and then the entire burden of adjustment was on the developing countries. You are actually telling us about the history of the G20. That is right. You know how from the G7. Exactly. You added these countries which you thought were economically progressing and you thought it would be advantageous to have them all and that is what the G20 is. That's right. Oh, but I'm what I was telling you is that look the debt crisis has a history and it's never been resolved. So, when you fast forward and then come to the COVID pandemic and that's where the direct role of G20 can be seen in the wake of the G20 of the pandemic the G20 took a decision that the debt servicing problems of low income countries and there were initially 73 countries then 69 countries which had really serious debt overhang very large debt burden. Their debt servicing problems will be reduced. It's not as if there will be some write offs. Right. The only thing that was being discussed was that they had to repay the debt. They had to service their debt, pay the interest and the principal. That will be waved for a period of time and G20 just talked about this. Now, what also was discussed was on the table was not the entire debt stock because the debt that these countries had accumulated had three sources. First is bilateral debt, bilateral loans that were given from government to government kind of loans. The second is private sector lending and the third is the lending by the multilateral development banks like I mentioned in the World Bank, IMF and regional development banks. So, there are three components. So, what did the G20 decide? They said the debt servicing obligations of these countries that they owe to the official creditors. That means the governments, only that component of debt servicing will be postponed. So, it will be suspended. So, it was called the Debt Service Suspension Initiative, DSSI. So, what is the problem with this? Now, the problem with this thing is like I said that there are these three sources. One of the smallest for many countries is the official creditors. The largest in most cases is the private creditors and they are not touched. And this is the component which you actually highlight in a paper that you wrote published in the India forum that it is one up from 14 billion dollars in the 2010s to a decade later about 83 billion dollars. That is right. So, look at the extent to which private lending has increased to these countries. And so, something had to be seriously done in order to decrease the debt. If something is seriously done, then you have to decrease the debt that these countries owe to the private creditors. So, there has to be a write off. Now, that is not on the table. It was not been discussed at all. Will the G20 become a forum this time to discuss this? No, G20 has been discussing this from 2020. The private aspect of the? No, no, no. I am saying that the overall thing has been discussed. Even now the G20 is only saying the private creditors are invited to support this initiative. But there is no binding commitment. There is no binding commitment. They do not have to take a binding commitment. In other words, there is no reason why they should feel encouraged to come on board this initiative at all and say that. No, they are not. Because there is no, the one thing that we understand the way these processes are functioning, that unless there is a proper commitment which is brought on a particular set of agencies, they do not actually budge an inch. But the situation is that even if there are commitments, they will still not budge. But the first thing that you need to do is to bring certain amount of commitments on them. But that is not happening. And the reasons are quite obvious. The reasons are that the developed countries will be extremely wary to touch the private creditors. And that is the nature of the political economy. Because they have always been supporting these big financial institutions. And whenever there has been a crisis, these financial institutions have been given big assistance by the government and all in the name of too big to fail. So, when this is the reality, then you cannot expect anything to happen to the poor countries getting any kind of relief from the private creditors. Now, why is this external debt issue important for these countries, in whom countries? First is that if you have this burden of debt, now you can see it parallel from any an individual household, that if a family owns huge debt, then this family's future looks completely in the dark. They will feel they won't have a proper future. So, for these countries which are now have to implement things like what we were discussing earlier, the climate change commitments, sort of reducing the carbon footprint. So, now they are in a situation that if they take any additional funding from anywhere, they just can't sustain it. They just completely collapse. The only thing, only option that they will be left before them would be to declare insolvency, that we just can't, they throw up their hands and we can't do anything about it. But unlike a lot of the private sector companies, the big ones who declare insolvency and then they get support from the government and then they get back on track. For the governments, it can be very difficult situation. So, apart from their development imperative, their future, anything else these countries want to do will be directly impinging on their debt liabilities that they are carrying forward. Right. I wanted to take you back also to another aspect you mentioned in the same paper. You mentioned the Montreal meeting in 2000, again of the G20, where they said, where they actually spoke about the benefits of globalization and integration of economies. So, this doesn't sound like the agenda for the global south that as people understand it, yet this is still the agenda for the G20 meeting. So, in a sense, the G7 does not engage with the agenda of the global south, but it speaks about the global south. It's just words, is it? Absolutely. The first thing that you need to understand and this is what I have been trying to talk about is that G20 and this question that we had been asking initially that what is the point of the developing countries being on the high table? Are their voices heard or are there what is their agenda? Is it discussed in the G20? They are not, because what you can see that systematically the G20 has been driven by the G7. So, I use the term, the G20 has gone through a process of G7ization. So, all these agenda of the north sort of comes here and nothing of the south is actually discussed. You can see this in the third aspect that I wanted to talk about is the reform of the multilateral development banks. Now, we all know that the IMF and the World Bank are sitting on the laps of the US and it can't take a decision other than what the Americans want because of the voting shares. Now, US has this ownership or shareholding of US is an excess of 16%. And for any critical decision to be taken by the IMF for instance, you need a support majority of 85%. So, no decision can be taken without the US coming on board. And there has been a discussion going on for a long time and India and China have been pressing for this that the fund in the bank should reflect the today's reality and the emerging economies, economic sort of presence should also be reflected in the voting shares, the current voting shares of the IMF. Now, that has not happened. So, the whole framework starting from the multilateral bank, development banks which are always been adopting policies that have not favored the developing countries like I mentioned earlier the structural adjustment loans were brought in. And then going forward the kind of relief if at all that has to be given to the low income countries that can't be decided without the Americans coming on board and they are not willing to do that. So, basically the G20 has got caught in this web that has been created by the G7. And they are moving us exactly in the way they want it in the direction that they want. And I would just like to mention one final point and one final issue which is on the multilateral trading system. See, the multilateral trading system is completely broken and we thought that G20 would do something and India has been talking about its support for the multilateral trading system. And the fact that the dispute settlement body of the WTO is broken and because of the Americans, many of us were hoping that at least this issue is discussed seriously. And a way is found out of this long jam and at least the pressure of the 18 other countries will be put on the Americans to change their position. There has been no evidence of that. Again, the news reports even in India, they keep talking about how India is resolving various disputes even with the United States on its own. Oh, they have decided this on the TRIPS issue, on a patents issue or even I think the sugar dispute is still pending. So, this perception is being created that the countries are resolving their problems on their own and the WTO dispute settlement mechanism is sort of an abeyance. Is that really possible? No, it is a very dangerous line to take actually because I am firmly of the view that we need this multilateral set of rules in order to counter the big guys. The big guys do not need the multilateral trading system because they have the economic might, they can do whatever and they have shown it time and time again. Trump went on a unilateral sort of trip on increasing tariffs on a lot of products and did whatever. And now Biden is giving these kinds of huge subsidies to the semiconductor and whatever industries in order to propel their industrial policy. Or anti-dumping duties from time to time on various countries. That is right. So, they can do whatever. But it is the developing countries that they need the WTO in order to resolve the disputes in a manner that does not hurt them. Now, you can always go and settle your scores with a big guy, but the big guy is going to have his or her way. So, that is given. That is the way wherever whichever process you are talking about moves. So, to think that at all times, India can just have these disputes resolved with the US without affecting its own interests. That is a kind of a myth and that is a dangerous kind of a line to take. But we keep saying that we have become very powerful and that India is now a global player. So, fine. If we are a global player then we are resolving our problems. Those who are actually talking about it must look at the way the Americans make their policies whenever the Americans are defining their policy objectives. They say that we are actually doing these policies including trade policy to benefit our businesses, our ranchers, workers, farmers, nothing else. And that is how it should be. I think the point is that it is a sovereign country and it is a democratic country. It has its mandate from its people. So, it is supposed to actually look after the interests of its own people. This is never going to give it up. So, on its own, it is never going to give up its own fundamental interests. Only when you bring it out on a multilateral platform and then you say that there are trade-offs. If you actually, we have all very often told the American that you just want to stick to your way, then there are others who will tell you that you cannot do that. This is all about trade-offs. So, of course, while agreeing to trade-offs, again we have not got a fair bargain. Even in the WTO, we have not got a fair bargain. It is impossible to think of a situation where India can actually bargain with the Americans and get a fair deal. And if it is claimed, and if you do not know the details, surely something has happened that we do not know about. Yes, and that is true because there is a lack of transparency around these kinds of arrangements as well. That is right. We know that we are under pressure to change our patents act. We are under pressure to change our policies. We have been changing our policies in ABC areas and we have been doing that. So, we are sticking to our guns. We have actually been able to dictate terms to the Americans and the Americans have accepted exactly what we wanted to tell them. All right, Dr. Dharad, thank you. Thank you very much for watching Newsclick. I hope you enjoyed our discussion. We will be back with more such discussions in the future. Please keep watching and do subscribe to us on our YouTube channel and follow us on Facebook and our other social media. Thanks again.