While the London Summit focuses on the existing crisis and reflect on short and medium term measures, BICS leaders must spare time to take a longer-view as well for reform of financial systems and principles for reforming international financial institutions. At the meeting of sherpas, India and South Africa have already indicated their position against protectionism. However, precise and key articulation on the issue has come from China, which has come-up with a position paper for the G-20 meeting. Foreign minister Yang Jiechi Yang has stressed that the global financial crisis should create more of a say for his and other poorer countries. This is largely the position that BICS must extend at the G-20 table. It is important to realise that the London Summit of G-20 is taking place in a situation, which is different from the situation that the global economy faced, when this grouping met last at the US summit.
As the crisis is unfolding now, severe impact on more and more of least developed economies is becoming clearer. It does not require great effort to realise that the current crisis has been transmitted to the developing world through finance and trade channels. It is worth noting that, even those African economies that were being held as most successful cases like Ghana, Mali and Mozambique are now facing payments crisis. Their remittances receipts have declined, and so have exports. This would make attainment of MDGs very difficult for them. These economies may face further problems as remittances and aid also decline in the near future. It is estimated that Sub-Saharan Africa would be severely affected with deceleration in remittances. Even before the crisis, the DAC Annual Report 2008 had expressed concern over failing of DAC members to abide by their own commitments at Gleneagles by around $39 billion. The linkages of trade, and for that matter of the real sector, with this crisis are equally important. A major outcome of this crisis is the steep decline in global commodity prices. According to a recent World Bank report in the later half of 2008, non-energy commodity prices have declined by 38%. There are several countries which improved their economic performance in the last decade but commodity still plays a major role. They include countries like Tajikistan, Bolivia and Trinidad & Tobago where GDP from commodity exports account between 12 to 22%. At the aggregate level, the World Bank report reveals that of the 68 developing countries which experienced deteriorating terms of trade during last three quarters of 2008, except for eight, all went through the same experience in the last quarter of 2008 as well. But these numbers are of lesser significance given the larger opportunity to change the way global affairs are being managed so far.
The BICS should take the global stage to convey a larger vision for the development of the world. This should certainly be different from what G-7 has been propagating so far. BICS would have to give a message that in their richness they retain the agony of poverty and exploitation. Worlds high table with G-7 must be seen just as an instrument for a change. Beyond this, the management of global affairs should be brought back to the UN system. BW institutions, which were high jacked by economic superpower(s), be tamed back under the auspices of the UN. Whether existing UN agencies are in position to take up this role or we would require a new agency is a relevant question one should think of. Given the disappointing role UN Economic and Social Council (ECOSOC) has played so far, it may be worth thinking of an agency that works at par with UN Security Council but with mandate on economic and sustainable issues. Whatever is its nomenclature, it is important is that BICS get the action back under UN, where all developing and least developed countries have a voice. Let World Bank and IMF be in reporting role to this agency and they also derive their mandate from here. It would set the global stage for a fair and transparent system.
The current crisis is a good opportunity to realise what has not worked well with us. If a relatively monopolised Bank-Fund has not worked, then a heavy bureaucratic structure within UN like ECOSOC has also not worked. These impediments should not deter us from making global governance more participative and less exploitative. Global governance should be based on international laws, which are embodiment of shared values rather than outcome of any monopoly of economic superpower(s). India must seize this opportunity and provide real global leadership which was on its zenith at the Bandung Summit.
The writer is a senior fellow at the Research and Information System (RIS), New Delhi. These are his personal views