Holding the cards

Which is why India needs to be pushing. Objectively, India is still a bit player in the international economy 8212; and particularly in international finance. In any system being designed with that in mind, its interests would get short shrift. But there are specific reasons why India holds a slight tactical advantage at this moment, which could be turned into a strategic advantage lasting for decades.

The biggest such advantage is, of course, that for once the West needs us. To be precise, they need India and China to keep growing, investing in big, recession-proof infrastructure projects, to soak up their savings and give them decent returns. We8217;re going to be the engine they expect will pull them out of their recession; that was made clear at the Asia-Europe summit in Beijing recently. They won8217;t need us for long, but, if we8217;re quick, they will for at least the time that it takes to negotiate new systems.

The second is a lot less tangible, but shouldn8217;t be discounted, for all that. There8217;s a sense in which the US is chastened today, unsure of its ideological moorings. We shouldn8217;t be pleased, but we can take advantage of it to help push them towards fundamentally redrawing the lines of power. Compare one such previous moment, the Congress of Vienna: Europe had defeated Napoleon, and Russia, under a notoriously liberal Tsar, had played the most effective role. One would have thought that the new order would suit Tsar Alexander8217;s liberal principles. But he, and Russia, were chastened by identification of his principles with Napoleon8217;s; and the Congress gave the world, instead, 40 years of illiberal, stultifying stability. Ideological exhaustion is as enervating as any other kind.

India, by comparison, is looking pretty smart. Something that continues to astound those many who believe we8217;ve been insulated not through any careful planning but through a giant helping of chance with a dollop of fear. We8217;ve got a heterodox, reformist, economist prime minister. Every report from recent summits that the PM8217;s attended is that there is universal, slightly surprised, pleasure at how seriously India8217;s views are being sought. This ideological comparative advantage is something we8217;ve got to make good use of.

The meeting in DC will be crucial. George W. Bush is trying desperately to limit the scope of the meeting. This isn8217;t surprising 8212; he8217;ll be remembered for many things, but not as an instinctive multilateralist. The new president-elect is a very different man. India, and the world, have to press the current administration to put everything on the table, lame duck or no; and have to make it clear to the next administration that staying out is not an option. That being said, once negotiations start, that8217;s another handle for India and China to exploit, as is Obama8217;s image among his adoring fans as the man who8217;ll make everyone love America again.

Three ways, thus, in which India can take this moment of crisis and spin it into something of lasting value 8212; a permanent place at a new high table. India has two per cent of the vote at the IMF and the World Bank, the EU 38 per cent. That8217;s a disgrace. Fixing that is easiest; and, if cross-border regulation is being hammered out, a strong enough role for India is also something we should expect. What other demands need to be put on the table as soon as possible, and argued for forcefully, using these handles? One is that the enormous sums bailing out banks across the West can8217;t be taken out of the system altogether. Banks so guaranteed need to be able to pass that money on to profitable investments for them 8212; a large proportion of which will be in emerging economies. Systems of mutual insurance, so that vulnerable economies no longer have to sit on vast foreign-currency reserves 8212; and instead invest that cash in, say, Indian infrastructure bonds 8212; is something else to push for.

Above all, we8217;ve got to join with the US and Gordon Brown and announce that the Doha round of trade talks is not dead. India has proved it is a tough negotiator at these talks, and its new-found leverage will make it tougher. That8217;s an opportunity too good to miss.

But we could miss it. Already concerns have been raised about our lack of capacity for such talks. That8217;s perhaps not fair; in-house capacity is easy to discount, but this government is showing some nimbleness when it comes to getting help from outside. And we8217;ve senior policy-makers familiar with the balancing of interests required for such negotiations. Where we might slip up is in a lack of imagination. This, above all, is a time to think big. On November 15, the PM8217;s got to ask for the moon.

mihir.sharmaexpressindia.com