President Bush has certainly done a great service by calling the G-20 meeting just before demitting his office. With this, the time for burial service of the ?Washington Consensus? has come. This meeting is also the opportune time to convey certain terse messages to the elite club of G-7. The foremost challenge at the global level is to explore how best global governance mechanisms can be altered to become inclusive and effective. It was a strange reality that the US was out of the purview of the Washington Consensus. IMF, which was out after the LDCs on pretext of fiscal management but never bothered about the current account deficits of US. As a result, the monitor of global financial architecture was never scrutinised.
It is to be appreciated that the process of globalisation has also raised questions related to inequality and improper distribution of gains. In the last two decades the debate on globalisation has gone through two distinct phases namely, the nature and extent of globalisation. The first phase, largely led by Bretton Woods?s institutions, emphasised on inclusion of developing countries in the wider effort of joining the global economy, which was resisted at various levels in the developing countries leading to intense movements for protectionism. The arena for the second wave of this debate has largely been confined to the capitals of the key OECD economies where policy makers are grappling with the entry of mega developing economies in the global market place. If the recent US elections are any indication, it is very clear that the neo-nationalism may enter in the public forums of those very economies which triggered the initial phase of the debate on globalisation. If one takes a dispassionate view of these debates on globalisation, one gets an impression that the global governance is passing through a critical juncture where immature reactions may derail the global economic growth process itself.
The time has come when leaders from BICS (Brazil, India, China and South Africa) should provide a collective leadership to the G-20 grouping. They would have to construct on the already existing processes at the global level. The global arrangement like the G-8 is part of the G-20. The limited initiatives in this regard launched during the German Presidency of G-8 called as the Heiligendamm Process, have exhibited a strategic response to the new global dynamics as is increasingly evident in the realms of trade, investment and technology. However, these initiatives are to be further intensified and further expanded without attempting to impose any kind of prejudged positions. At the G-8 forum, for instance, it was proposed to focus on strengthening the freedom of investment by means of an open investment climate. This had no meaning till the well established clauses like the performance criteria were included. It also wanted emerging economies to abide by the OECD led efforts for strengthening the principles of corporate social responsibility. At the Heiligendamm meeting of G-8, the finance ministers from the emerging economies had emphasised for more work in this area but the recent US experience has unfolded a huge area to be addressed by the regulators and agencies like the OECD. There are several areas of policy importance which have been neglected over many years. The G-20 should address this insidious inequality expeditiously.
At the third IBSA Summit in New Delhi, President Lula had rightly pointed out that the rich countries and irresponsible speculators transformed the world into ?a gigantic casino?. The Delhi Summit Declaration echoed similar frustration. It decried the explosion of new financial instruments most of which are not backed by credible and systemic regulations. IBSA Summit unequivocally argued for a new international initiative to bring about structural reforms in the world?s financial system and that the solutions adopted must be global and ensure the full participation of developing countries.
This should bring in focus the long pending reforms at the Bretton Woods so as to reflect a multi-polar world and adopt necessary mechanisms to ensure this rationality. The forthcoming global summit should earnestly try to develop a far more responsible and representative global multilateral mechanism. How to make them more inclusive and bring people of large developing world at the centre especially when non-OECD economies are more than half of the global economy is the major issue before the Summit.
The best possible course of action may be to make the current G-20 as a permanent global arrangement in place of the current G-8, so as to tackle the global challenges on a wider platform rather than G-8 falling over the BICS for management of one or the other crisis. Globalisation is exposing us to different kinds of challenges to which we find current institutional arrangements falling short of the requirements. A larger institutional arrangement should help in avoiding conventional polarisation across ?North-South? divide. In this context, the G-20 forum may also vow to ensure, at the Doha high-level meeting on financing for development that this crisis does not adversely affect resource flow under development, cooperation to the neediest countries.
?The writer is a fellow at the Research and Information System for Developing Coun-tries. The views expressed are personal
