The Telegraph
Since 1st March, 1999
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Tidings from Cancun
- With the right alignments, India can help resist pressures of the Washington Consensus

In the wake of the stalemate in Cancun, the Indian commerce minister, always confident and suave-looking, offered a judgment: the major lesson from Cancun, he observed, was that economic issues, whether at the national or the international level, need to be considered in isolation of political issues.

How naïve one can be, or seem to be' What, after all, are the positive achievements of the World Trade Organization ministerial meeting in the Mexican resort city' For the developing countries, the principal outcome is not just the rejection of the proposal to continue the inordinately high farm subsidies now prevalent in the advanced industrial countries. The latter group of countries have been told in no uncertain terms that reciprocity is the heart of the matter: if Europeans and North Americans are reluctant to cut down drastically their farm subsidies, as far as the poor countries are concerned, no further progress with trade liberalization is possible on their part either.

The second success story, which has not received the prominence it deserved in media reporting, is the virtual stalling of the agenda set up half a dozen years ago at Singapore. Governments of the developing countries had then abjectly caved in and accepted, as prime subsequent tasks of the WTO, the initiation of measures towards liberalization of investment policy, competition policy, public procurement and the services sector. Were this agenda insisted upon, their macro-economic management would in effect be handed over by the poorer to the richer nations; with the Washington Consensus determining the contours of domestic as well as international economic policy. The passionate brawl in Cancun over agricultural subsidies, which blanked out all other themes, put paid to Western ambitions in this respect.

Consider the factors which helped the poorer countries to record these triumphs. At the core of the success was the presence of the solid phalanx of anti-globalization demonstrators, laying a siege at the conference venue for days on end, thousands and thousands of protestors from the different continents. It was political drama of the most intense type, ringing out the clarion call: “injustice shall not pass”. Lee Kyung Hae’s martyrdom signified a noble, heroic climax to the proceedings.

The breadth of the protest movement, and its organizational vigour, unnerved as much the representatives of the rich countries as the intending Judases amongst governments of the poorer nations. The global protest has ceased to be an occasional international nuisance, it has evolved into a great ethical phenomenon, before which both the greedy crowd and the feeble-minded stragglers could only cower. Without question, this is the most significant global development over the past decade; politics is in command, and has taken charge of economic issues.

The second political factor at work is of equal import. For the first time, China functioned as a strategic member of the WTO. It made its weight felt. This meant a qualitative difference to the in-house parleys: China’s has been in recent times the fastest growing national economy, with an increasingly major share in global exports. Yet another factor helped to tilt the scales at Cancun: Brazil has now a national government presided over by an incorrigible left ideologue, and is no longer a pushover. China, Asia’s biggest nation, and Brazil, Latin America’s biggest, became the prime movers of resistance to Western blandishments; the respect they drew facilitated the cementing of the concordat of the poor. This too is a development of immense significance. India could not dare to break ranks; even the ordinarily prim Indian mandarindom, befuddled by the turn of events, is unable to predict how the international balance of power is going to shift in the immediate and not so immediate future.

For there is a further exogenous explanation of why the American administration and its friends failed to shatter the unity of the poorer countries. Post-Iraq, the United States of America, while still the world’s mightiest political and economic power, is in real danger of being reduced to the status of almost a paper tiger. The number one crony, Tony Blair, is fighting for his political life; the report of the Hutton commission might well prove to be his swansong.

What is more daunting, American public opinion has suddenly begun to swing wildly against George W. Bush. The number of body bags shipped from Iraq is regularly increasing, leading to widespread public disaffection at home. Even the portals of Washington’s stodgy National Press Club, the sanctum sanctorium of the US establishment, is no longer a safe haven for the US defence secretary, or, for the matter, the president himself; doubts are being freely expressed over the re-electability of the president in the elections next year. Even the frog feels superior when the elephant gets bogged down in a marsh. Not surprisingly, fainthearts have come to gather courage, the US government has been unable to persuade the majority of the 148 member-nations of the WTO into rubberstamping the draft resolution it sponsored.

What does all this add up to' Quite obviously, success in economic causes is a basic product of political pulls and counter-pulls. And it is only a beginning, a very mild beginning. Within the Indian delegation too, political considerations emerged to the fore. The Federation of Indian Chambers of Commerce and Industry-Confederation of Indian Industry lobby must have dearly loved to strike a deal with the Americans, since that might have helped to push up India’s exports to the US from the current level of around four billion dollars to something double of that over the next few years, and thereby countered the ongoing industrial recession in the country. Poor farmers, who will be at the receiving end of any such side deal with the US, however, make up a much larger slice of Indian electorate. Crucial elections are in the offing; the Bharatiya Janata Party-led regime had therefore little choice but to join the China-Brazil entente.

Political calculations nonetheless, change ever so swiftly every now and then. Poll arithmetic can be made to swim this way or that by coalition permutations and combinations worked out by political parties; the farm lobby could lose its clout over New Delhi’s government following the emergence of a new situation. Besides, no Judas today does not guarantee no Judases for tomorrow. Should Hindu fundamentalism take over the BJP lock, stock and barrel, the ruling thought may veer towards the dream of a grand American-Israeli-Indian armed conglomerate. There could be other developments worldwide, and the solidarity of the poor nations might turn out to be a transitory episode.

But, then, prognosis on such issues is awfully difficult. Habits do not dissolve overnight. American citizens, having got used to relatively cheap consumer goods from China, India and Brazil, could be unwilling to give up merchandise coming from these countries; their votes too count in US elections. This possibility may still not calm the nervousness of the New Delhi regime. It may start worrying over the consequences of an adverse impact of retributive measures launched by the American administration. It may also decide not to take seriously the point of view that clamping restrictions on importables from the poorer countries through tariffs and quotas could make the US itself a major defaulter of WTO rules.

Those determined to surrender national sovereignty to external forces may choose not to be detained for long by the realpolitik of global trade. The danger remains of an Indian capitulation, if not within the next few months, may be after the Lok Sabha elections next year. The necessity of vigilance — on the political front — therefore cannot be wished away.

A couple of concluding thoughts. First, for close to forty years, India has refused to have any meaningful conversation with China. In retrospect, this has been a major blunder. China’s annual exports to the US stand at close to 125 billion dollars. These comprise an impressive array of mostly consumer goods which the Americans would hate not to be continuously supplied with at the present reasonable prices. China also holds exchange reserves exceeding 700 billion dollars that are swelling at the annual rate of 100 billion dollars.

It will be wise on our part to forget past animosities, and attempt to arrive at an arrangement with the northern neighbours so that some of the more abrasive moves of the Washington Consensus can be effectively resisted through joint action. This will also enable us to stay on the right side of the Arab world. Secondly, the Western discomfiture at Cancun can certainly be availed of to propose a re-appraisal of the existing staffing structure of the WTO secretariat. It currently acts as an articulator of the interests of the highly rich, industrialized Western countries. It must be changed so as to be in accord with emerging global realities.

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