Opinion Among ourselves

increasingly being informed by bilateral and regional considerations rather than the ideal of multilateralism. At the risk of sounding politically incorrect,one might even suggest that the world is currently witnessing the death of multilateralism at various levels. This phenomenon is creating completely new equations between the current and some emerging economic powers,giving a further boost to bilateralism. The dynamics of this process are very interesting,and are rooted in certain objective realities on the ground.

At the heart of this process is the growing paranoia in the United States that it is fast losing ground as a global economic leader. Some of the top US think tanks in recent months have ranked the decline of the American dollar as a much bigger threat than Islamist terror being incubated by the Taliban and Al-Qaeda in this part of the world. This fear was well articulated in a year-end television debate

conducted by the US business channel CNBC,in which some of the leading American CEOs and Obama advisors spoke candidly about the threats to their nation as an economic power.

Most telling was a comment by Jeff Immelt,CEO of General Electric,America’s most valued company with a footprint in every part of the world. Immelt’s New Year message to Americans was that they must get off their butts,stop being lazy and start producing more goods and services and

export to the rest of the world,if the nation is to survive as a leading economic power. “Why are America’s total exports just 7 per cent of its GDP whereas Germany’s is 40 per cent? We have to do something about this. I see myself as a paranoid hustler who is trying to go to every nook and corner of the world trying to sell GE products,” he said. He even suggested that Americans must work hard first before complaining about American jobs being outsourced to China and India.

Immelt’s self-description as a “paranoid hustler” struck me as most telling. Is this America’s new way of looking at itself? It is important for students of global trade and diplomacy to go deeper into this new self-characterisation by the head of the largest global multinational company. Some of these characteristics can be seen in the strategies adopted by the US in the climate change negotiations at Copenhagen.

And if you try to analyse this new approach being evolved by the US at various global platforms,it will become clear why the world is gradually moving away from multilateralism. For instance,it was pretty evident even before the start of the Copenhagen summit that the US was interested in doing bilateral deals with emerging economies like China,India and Brazil. The reason is simple: green investments in energy and infrastructure will be of the order of $33 trillion by 2030,

according to an estimate by the UK. Over 70 per cent of these investments will naturally happen in China,India and a few emerging economies where over a billion poor people will start consuming electricity to run their basic home appliances and transport over the next decade. It is only logical to

expect America to “hustle” for such a massive chunk of business,with a substantial green component.

So a hustling America will get impatient and want to strike bilateral deals with the BASIC (China,India,Brazil,South Africa) bloc of nations. On a purchase power parity basis China and India alone will add over $7 trillion to their GDPs in the next five to seven years. The US will surely want to get a big piece of this cake.

The BASIC countries must also respond to the US as they have much to gain as their negotiation this time will be from a position of relative strength. The fundamental change that has occurred is some of the paranoia that developing economies suffered from a decade ago has got transferred to the US! Barack Obama’s visit to China recently showed how much leverage China has over America,post the global financial crises and the recession in the West.

Multilateralism is also dying because some emerging economies,especially among the BASIC bloc,are growing in a

non-linear trajectory whereas the OECD bloc will most likely witness linear GDP growth (1 to 2 per cent average). On a purchase power parity basis the share of the bigger emerging economies may easily touch 60 to 65 per cent of global output a decade from now.

So it makes eminent sense for the US or even the European Union to focus their attention on just a few fast growing,high population/ big market size economies to do bilateral deals,whether it is on climate change or global trade. The reason why America encouraged the formation of G-20 was precisely that it wanted to deal with a group of nations that are seen as emerging economic powers.

Multilateralism had far more relevance in the past when the US and EU needed to get some 100 small and fragmented economies to sit around a table to build a consensus on one issue or the other. Increasingly,given the rapid and non-linear change in the relative size of various emerging economies,the West finds it easier to deal with just a few nations. This approach will get more legitimised in the years ahead.

This is not a totally unlikely scenario; in the years ahead the US and EU might seriously attempt free trade agreements on goods and services with India and China. If that happens,there will be no need for WTO!

The writer is Managing Editor,‘The Financial Express’

mk.venu@expressindia.com