G20 Declaration highlights Global South’s views

Sushma Ramachandran

Senior Financial Journalist

REAMS were written about the outcome of the G20 summit in New Delhi even before it began. Still, it managed to spring a few surprises on those who were expecting merely glitz in a spruced-up Capital and a brand-new convention centre hosting the event. The first was the announcement of the India-Middle East-Europe Economic Corridor, described tellingly by US President Joe Biden as a ‘real big deal’. The second was the release of a New Delhi Declaration by consensus on the very first day. Innumerable commentators had earlier envisaged a failed summit, based on perceptions of the hardening stances on the Ukraine war. The consensus document was not only a game-changer but it also turned out to be the result of teamwork, with India joining hands with emerging markets like Brazil, Indonesia and South Africa to forge a harmonious statement.

The declaration itself is detailed in scope as it talks about multilateralism, climate change, global debt, and digital public infrastructure even as it welcomes the entry of the African Union into the group. Many ideas are ambitious in scope, like in the arena of climate change, and proof of their effectiveness will lie in implementation at the end of the day.

But the idea of an East-West corridor has captured the imagination of the world. Evidently designed as a competitor to China’s much-vaunted Belt and Road Initiative (BRI), it looks more feasible, given the involvement of many countries. The European Union has come on board along with seven others — India, the US, Saudi Arabia, the United Arab Emirates, Germany, France and Italy. It envisages a cross-border ship-to-rail network accompanied by cables for energy and digital connectivity and a hydrogen pipeline. Goods and services will move from India to Europe through an eastern and northern corridor. It will bypass the Suez Canal, which has been plagued by congestion in recent times.

The corridor is an idea whose time has come. It brings a ray of hope to low- and middle-income countries through which the network will traverse. It will not only bring infrastructure to these areas but also provide access to energy and digital resources through the pipelines accompanying the railway network. In addition, it will make global trade easier for countries that have had to rely on expensive maritime transport. It is also likely to put the failure of the BRI into sharp relief. The scheme has caused many low-income economies to descend into debt traps owing to their inability to pay back enormous loans from China.

The India-Middle East-Europe corridor thus needs to be designed with care to ensure that the outcome is regional prosperity rather than rising indebtedness of emerging economies. The US is also looking forward to the project leading to reduced tensions and instability in West Asia, but that can only be a long-term objective. The immediate goal is to implement the scheme as rapidly as possible. Unlike in the case of the BRI, a great deal of coordination will be essential, given the number of players involved in it. This is actually a point in its favour as the project is transcontinental and participation from major countries along its route will make it easier to implement.

The Delhi Declaration has highlighted one area that is expected to be part of the corridor, that is, digital connectivity. India’s success in creating Digital Public Infrastructure (DPI) has been one of the highlights of the G20 discussions as other countries seek to emulate these systems. India has offered to build and maintain a Global Digital Public Infrastructure Repository (GSDPIR), a virtual repository of DPI, to be shared with the rest of the world. A framework for development and governance of DPI will be created as well as a plan to help low- and middle-income countries to develop their digital economies.

A defining element of the declaration is the emphasis on voicing the needs of the Global South. It is in this context that the theme of climate change has been dealt with, highlighting the urgency of providing funds for energy transition to developing economies. It has pegged the requirements at $5.8-5.9 trillion up to 2030. But the goal of $100 billion annually for mitigation is yet to be achieved despite assurances from developed countries that it will be made this year.

It is the concern for the emerging economies that has motivated the call for reforming the international development finance system and also the detailed proposals on global debt issues. The need for a greater representation in multilateral development banks been highlighted, as also the urgency of providing more funds to the developing world. The Covid pandemic and Ukraine conflict have impacted low- and middle-income countries significantly and the global banking system needs to be revitalised to meet the challenges of this situation. Reform is the need of the hour for the multilateral financing system and this has been recognised for quite some time. The G20 has formulated concrete recommendations for the way forward based on its experts’ report.

On the issue of global debt vulnerabilities in low- and middle-income countries, it has underlined the importance of addressing these in an effective and systematic way. The cases of Zambia, Ghana, Ethiopia and Sri Lanka, which are at different stages of resolution, are mentioned specifically with an appeal for swift action.

India’s presidency has thus laid down several benchmarks, including ensuring that the G20 views challenges facing the world economy through the prism of the Global South. The ambit of the group has been widened immensely by the inclusion of the African Union, which comprises a sizeable share of the developing world. The proposals in the Delhi Declaration, whether in terms of reducing overall debt, reviving multilateral development banks, pushing for more climate finance or expanding the digital economy, are all aimed at supporting the Global South. This is in the fitness of things as the premier forum for international economic cooperation needs to work towards creating an equitable world order.

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