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GROUP WORK

The fourth ministerial conference of the Group of Twenty finance ministers and central bank- ers has concluded on a prudent note. The joint communiqué that followed the meeting of developed and emerging market economies in New Delhi articulates the steps essential to ensure that globalization results in clear benefits even for those on the margins of the world economy. The finance ministers of the G-20 have, for instance, recognized that there is a need for phasing out trade-distorting subsidies and other trade barriers to enable the weaker economies and poorer countries from extracting tangible dividends from the process of globalization. This essentially is a signal to the major economies, especially the United States of America and the European Union, to eliminate barriers that affect the developing world. The agreement is particularly significant because Mexico has now assumed the chair of the G-20 countries. The next ministerial meeting of the World Trade Organization will also be hosted by Mexico next year. The WTO meeting will particularly address the issue of subsidies in agriculture, and it is expected that there will be an agreement, with a clear time-line, on eliminating subsidies and opening up developed markets to the developing countries. The G-20 conference has also taken note of and expressed its appreciation for the commitment made recently, by some of the developed countries, to increase their official development assistance to the poorer countries, and the support received by the highly indebted poor countries initiative. There seems to be a growing recognition that economic globalization that does not address the problems of the weak and the poor is not only unsustainable, but could aggravate political and social tension which are certain to spill over into the developed world.

Not surprisingly, the G-20 conference also focussed on measures to combat terrorism, particularly those necessary to prevent the financing of terrorist outfits and activities. Although some progress has been made on this score over the last year, clearly much more needs to be done. The battle against terrorism is going to be a long-drawn one, but victory can more easily be ensured if terrorist organizations are choked of the economic resources which are used to sponsor their activities. The G-20 countries have wisely realized that terrorist organizations do not merely rely on money transfers for their operations. Instead, there is a growing tendency to finance terrorism through precious resources, particularly gold and diamond. While there is need for sustained global cooperation to fight terrorism, there are country-specific problems that would require local mechanisms to be developed speedily. Some may view the G-20 conference as yet another multi-lateral forum, high on rhetoric and low on substance. The reality, however, is that in achieving a consensus on critical areas, the conference may have paved the way for a worldwide consensus on globalization.

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