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Round The World
New
Delhi, 27 October 2008
Manmohan Singh At ASEM
GLOBAL POLITY COULD TIDE OVER MESS
By Monish Tourangbam
School of International Studies (JNU)
The economist in Prime Minister
Manmohan Singh came to the fore during his visit to the 7th Asian
European meeting (ASEM) in Beijing.
In the largest gathering of leaders under the ASEM since its inception in 1996,
he gave a detailed analysis of the global financial crisis and prescriptions on
how to tackle the current slump.
With the participation of Manmohan Singh
in this summit attended by leaders from 45 Asian and European nations and
organizations, India
made its debut at the highest level, i.e. heads of Government, at the ASEM
summit. In May last year, External Affairs Minister Pranab Mukherjee had
attended the Ministerial meeting of the ASEM in Hamburg, Germany.
With concerns over ramifications of the current financial crisis topping the
priority list of the Asian and European leaders, attending the summit, Singh took centre-stage bringing
up his long-standing experience in discussing financial reforms at the
international level, having served as a member of a special International
Monetary Fund (IMF) committee tasked with suggesting financial reforms in the
1970s alongside Paul Volcker, who later went on to become chairman of the U.S.
Federal Reserve.
In the wake of the current crisis
that has forced leaders scampering for a viable solution, Singh thought it
prudent to prove his economics’ credentials. Presenting a Keynesian analysis of
the meltdown, he said that that any international agenda to reform the international
financial system would have to take on board the “economically damaging role of
excessive speculative activity.” Reminding the attending leaders of the
Keynesian dictum that speculators did no harm as bubbles on a steady stream
surprise of enterprise, he further added, “but the position is serious when
enterprise becomes the bubble on a whirlpool of speculation. When the capital
development of a country becomes a byproduct of the activities of a casino, the
job is likely to be ill-done.”
According to the Manmohan Singh, the
international financial crisis on the failure of regulation and supervision in
major developed countries, risk management in private financial institutions
and the market discipline mechanism were largely responsible for the current
crisis. He further said, “the sad truth is that in this age of globalization,
we have a global economy of sorts but it is not supported by a global polity to
provide effective governance.’’
Accordingly, he sought the “de-clogging”
of the global credit markets which had choked up as a result of the crisis, as
the foremost task of the antidote. He was
of the opinion that multilateral institution like the World Bank and IMF
had to step in with significant assistance “with less service conditionalities
and greater flexibility,’’ which can act
as a stabilizer in the global economy. He wanted the IMF to consider creating
liquidity through a fresh allocation of Special Drawing Rights (SDRs) in favor
of multilateral development finance institutions.
With the French President Nicolas
Sarkozy propagating an overhauling of the Bretton Woods system that has
governed international finance and China’s Premier Wen Jiabao
emphasizing the importance of “financial supervision”, the Indian Prime
Minister’s proposals seemed moored to the Bretton Woods system and valued the
merits of capitalism and globalization. He rather insisted on the need of “financial
governance”. Mr. Sarkozy had called for Asia to support Europe and help in
presenting a united voice during the Washington
summit to be held in mid-November. In fact, one of the major concerns of Manmohan
Singh is the differences in understanding the crisis in Europe, North America
and Asia. In the absence of a clear
understanding about it, he feared that the upcoming summit in Washington could end up sending out confused
and even wrong signals to the global markets.
Most European leaders attending the
summit looked towards Asia to play a major
role in helping tide the crisis and asked the Asian countries to refrain from
using “economic nationalism” as a protection from the likely fallouts of the
crisis. Commenting on the effects on the Indian economy, he said that Indian
economy cannot remain immune in this age of globalization and that the impact
was bound to show sooner or later if the global scene does not stabilize.
Though notifying that the stock market and the currency were under pressure due
to capital outflows caused by panicky foreign institutional investors, he was
optimistic of the Indian economy of maintaining a growth rate of 7-7.5 per cent
this year.
Expressing complete commitment to
both the commission and omission of policies by his administration, Prime Minister
said, “As far as our economy is concerned, we have social safety nets-- programmes
like NREGA, good minimum support price to the farmers, plus infrastructure
projects like investments in railways, roads and ports. So, we have enough
in-built stabilization in our system.” He used the occasion to attack what he
called the “bigger players” in global finance, saying that countries like India were
victims of the crisis that originated in these countries.
On the sidelines of the summit,
Prime Minister Singh also met the Chinese President Hu Jintao and the two sides
agreed to work with each other and with like-minded countries to come up with
“pragmatic and practical” solutions. He also had a breakfast meeting with
German Chancellor Angela Merkel which too centred around the financial crisis.
Mr. Singh also met his Pakistani counterpart, Yusuf Raza Gilani and both
expressed terrorism as the common enemy of both India
and Pakistan.
Terming terrorism as a “menace”, Mr. Gilani said, “There is only one stand on
terrorism, it is dangerous for both countries… We are poor countries, we can’t
afford terrorism and therefore, we should fight [it] jointly. They expressed
happiness at the resumption of trade across the Line of Control. Respective
concerns were brought out by both India
and Pakistan
regarding the contentious Indus Water Treaty.
Manmohan Singh also addressed a
special session of the ASEM summit devoted to sustainable development, wherein
he said climate change was a threat to the environment and dwelt on the need of
a holistic approach to tackle the problem. “We cannot do so by perpetuating the
poverty of the developing countries, or by preventing their industrialization,”
he said. He emphasized the principle of common but differentiated
responsibility to be the “cardinal principle of negotiations” in the search for
pragmatic solutions within the U.N. Framework Convention on Climate Change. As
envisioned by the National Action Plan on Climate Change, he also reiterated
the need for a global “operational strategy” aimed at equalizing the amount of
per capita greenhouse emissions from developed and developing countries.
Hailing the ASEM summit as a “powerful forum to deal with global issues”, he
said the current preoccupation with the financial crisis should not detract
from important task of the fulfillment of the Millennium Development Goals
(MDGs), which according to him, needs much more than what countries have currently
managed to pledge.---INFA
(Copyright,
India News and Feature Alliance)
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