EXPERIENCE TELLS- The developing world has much to thank Pranab Mukherjee for
When Pranab Mukherjee meets Barack Obama next time, the president of the United States of America may be tempted to tell the finance minister that the Obama administration has fulfilled a promise that Washington made to the world's rising powers 31 months ago by the standards set by Mukherjee last week.
On September 24, 2009, Obama formalized India's place at the world's high table with a statement that contained 42 words. "Today, leaders endorsed the G-20 as the premier forum for their international economic cooperation. This decision brings to the table the countries needed to build a stronger, more balanced global economy, reform the financial system, and lift the lives of the poorest," Obama's travelling White House said in a statement that day in Pittsburgh, where heads of state or government from India and 19 other countries were meeting under the shadow of a global financial meltdown.
There has been much talk in the preceding years — and since the Pittsburgh summit — about India's aspiration to be a global power. But it was not until that September morning that the world's rich and powerful nations, collectively known as the Group of Eight, had realistically made way for newcomers like India or Brazil into their club.
At the first summit of the Group of 20 in Washington in November 2008, convened by the then US president, George W. Bush, in the trauma of the collapse of several American giants of the financial world, and at a follow-up meeting in London in April 2009, these newcomers sat among the group's leaders. But in reality, their presence at both the meetings was tentative and there were shades of uncertainty whether such a rearranged high table would become a permanent fixture of global economic diplomacy.
If Obama opened a new page in history with those 42 words at the Pittsburgh summit, last week it was Mukherjee's turn in Washington to enlarge that page into an entire chapter. Of the 25 hours that the finance minister spent over three days at the World Bank group's headquarters in Washington, ostensibly for the spring meetings of the International Monetary Fund and the World Bank, the bulk of his time was, in fact, taken up by meetings of the G-20.
Discussions within "the premier forum for international economic cooperation," as Obama put it, were originally scheduled as a sideshow to the World Bank-IMF talks. But as it turned out in practice, the G-20 dialogue, which began on Thursday evening, carried through a working dinner, then spilled over into next morning and continued through lunch and even afterwards in four different sessions.
It is instructive that in the end, Mukherjee spent less than eight hours during that three-day period at designated meetings of the World Bank or the IMF, which were all overtaken by the G-20, except in ceremony. That goes to show how far the ways of transacting global economic diplomacy has changed between Obama's September 2009 statement and now.
His promise to India and other emerging economic powers to "bring to the table the countries needed to build a stronger, more balanced global economy, reform the financial system, and lift the lives of the poorest" has been fulfilled — certainly in form if not entirely in substance — as borne out by the finance minister's schedule.
If Mukherjee's time in Washington, taken up by discussions among finance ministers from an increasingly important grouping known as BRICS — namely Brazil, Russia, India, China and South Africa —and the bilateral meetings he scheduled with several of his counterparts, is added to his G-20 schedule, it becomes obvious that the impact, nature and relevance of the Bretton Woods institutions have already undergone a significant transformation in the 21st century.
Unlike in the corridors of these institutions, there is often an inadequate appreciation within India of the fact that there are few finance ministers in the world other than Mukherjee who can relate to or interpret such changes not from briefing notes and talking points but from his own experience.
Given the global changes in the last two decades, it is no longer fashionable in New Delhi to tout the idea that India should make common cause with third world countries on monetary and development issues. But on the sidelines of the just- concluded Fund-Bank meetings, Mukherjee was at ease with this constituency, which has traditionally been India's strength at international gatherings.
He chaired what is known as the Group of 24, a gathering of developing nations that held its 87th meeting last week, reminded by the Indian finance minister that he first chaired its session in 1984. It was a refreshing and realistic change from the more common "global power" messages from Indian ministers when Mukherjee was heard telling the meeting that "many of us who are gathered here today represent the voice of the masses of the poor and vulnerable populations who are adversely affected by the lack of jobs, infrastructure, food and finance and for whom we need to do more together."
With the recent change in the leadership of the IMF, Mukherjee may have found his biggest admirer on the international stage. The friendship between Christine Lagarde and Mukherjee was forged during the years when she was his French counterpart.
Lagarde's latest Mukherjee anecdote, told at a private dinner in Washington shortly after her first visit to New Delhi as managing director of IMF last month, was about the finance minister's observation that whenever India approached the Fund for assistance, the IMF was headed by the French. Pat, she responded, hoping that India will not need such help during her tenure, but it was clear from her narration that Mukherjee's observation had left a lasting impression on Lagarde. The French are very conscious of their role in the world and often feel under-recognized.
Last year, when Lagarde was about to replace the discredited Dominique Strauss-Kahn, she had an exchange with Mukherjee that is a barometer of what long years of networking at the top can yield. When Lagarde told Mukherjee that she wanted to visit New Delhi to enlist India's support for her candidacy, she was told in jest that New Delhi would vote for her only if she accepted an invitation to a lunch hosted by him. Lagarde immediately told Mukherjee, also in jest, that even if India did not vote for her, she would gladly accept his invitation to lunch.
It was no surprise, therefore, that India agreed at the Fund meetings last Saturday to support Lagarde's proposal to augment IMF's resources. India, as chair of the BRICS finance ministers meeting last week, also played a role in getting the entire group to support the new funding initiative.
Now, the hard bargaining for changing the core structure of the Bretton Woods institutions will begin. But Mukherjee was wise in not linking India's contribution to reforming the IMF's voting quota formula. There is much more to be gained with the pretence that additional financial commitments are voluntary and not a quid pro quo.
If Mukherjee is able to bring his long experience to bear on the Fund-Bank reform process, the stage could well be set for shifting the IMF's voting power favourably towards emerging economies by the time the Fund's quota formula comes up for review in January next year. Critical decisions such as this will not be made on considerations of personal chemistry between leaders. But in this case, the strong equation between Mukherjee and Lagarde will certainly help. It will be a crowning achievement of Mukherjee's twin innings as finance minister if the IMF's long delayed voting power reform takes place during his time in North Block, pushed by India's chairmanship of both BRICS and the G-24 alliance of developing countries.