When the leaders of India, the United States, Japan, and Australia met virtually in the first-ever Quadrilateral Leaders’ Summit on Friday, they committed to strengthen their cooperation on the defining challenges of our time. Issues of global health, climate change, and regional security challenges are rightly front and center at the moment, but economic security remains the lynchpin of the entire effort.
The first Quadrilateral Dialogue took place in 2004 to coordinate the humanitarian response to a devastating tsunami. In the years since, the Quad has focused largely on maritime security, with regular meetings of senior defense officials, joint military exercises, and steps toward greater defense system interoperability. Though each Quad country has its own domestic political and geostrategic interests to consider, they all recognize a shared common interest in peace and physical security in the Indo-Pacific.
In light of the global COVID19 pandemic, the Quad leaders have enlarged their vision to encompass a free, open, inclusive, and healthy Indo-Pacific region within which countries enjoy the security to pursue bilateral interests and cooperate on transnational issues. Their commitment to expand vaccine production and equitable distribution across the region is especially timely and important, and shows the value of the Quad partnership of like-minded democracies.
Yet the current crisis also reminds us that economic security in the Indo-Pacific is equally fundamental. The pandemic showed how fragile economic supply chains can be and the extent to which a health crisis can disrupt an economy and undermine a nation’s broader national security. Along with the immediate challenge of defeating the virus, the Quad leaders know they must also deliver a robust and sustainable economic recovery. The time is ripe, then, for them to embrace a Quadrilateral Economic Dialogue.
The IMF projects the four Quad economies will rebound in 2021, with the advanced economies enjoying 2-3 percent growth and India perhaps three times above that. Though impressive, such growth is insufficient to replace that which was lost during the pandemic year. To achieve the levels of economic activity necessary for a full recovery these countries must embrace even greater trade, investment, and economic cooperation.
Given the COVID-induced strain on public finances, private capital and foreign investment are the critical elements necessary to unleash this economic potential. India would especially gain from enhanced cooperation with its Quad partners in this respect. Before the pandemic India’s bilateral trade in goods and services with the Quad countries totaled nearly $200 billion and net direct foreign investment in India from the Quad exceeded $50 billion. With cooperation and the right policy framework these numbers could grow exponentially in the coming years.
Recent efforts in India to strengthen the business climate and support private investment are positive and welcome, but more is needed. India should work with its Quad partners to reverse the counterproductive tariff policies of the past four years and show that “self-reliant India” is an invitation rather than a barrier. At home, it should further reduce impediments to investment in sectors that would benefit from greater foreign capital and know-how, and resolve long-standing tax disputes that are a drag on commercial activity.
Furthermore, the Quadrilateral dialogue will be especially useful for addressing the economic issues posed by climate change that will deeply affect India in coming years. In their joint statement the four leaders committed to redouble Quad engagement in areas such as infrastructure investment and climate finance. All four countries agree that climate change poses serious structural challenges to economic and physical security and have committed to strengthen their actions on climate mitigation, adaptation, and resilience. India should work with its Quad partners to deliver on its ambitious renewable energy goals, scale up financing for green infrastructure investment, strengthen its existing supply chains, and provide adequate financial insurance against the risk of extreme weather events.
A regular Quadrilateral Economic Dialogue would help advance all of these fundamental goals. The Quad leaders have committed their Foreign Ministers to meet together at least once a year; Finance Ministers should make a similar commitment, as a start. By focusing on economic issues in the Quadrilateral setting, India and its like-minded partners can meet the economic challenges of this unique moment and achieve the economic security necessary for a free, open, and thriving Indo-Pacific.
(The author is Senior Vice President, Financial Services, USISPF. Views expressed are personal and do not reflect the official position or policy of the Financial Express Online. )