The Indian example and its democratic choices are persuasive and much needed in the world.

BRICS,New Development Bank,Soft Power

Historian and sociologist Krzysztof Zalewski sits down for a Q&A with ORF Vice President Samir Saran.

Krzysztof Zalewski: India is a large country, both in terms of its population and its land area, with a fast-growing economy. It is perceived as a major new player on the global stage. What would the world order look like if co-organised by India?

Samir Saran: India’s impact on the world order is already significant, but it is a ‘work in progress’ at the same time. It is significant, because it is a telling story of a poor, developing country adopting robust democracy as the principle political instrument to improve the lives of its people. While India’s peers have fiddled with democratic and liberal ambitions, the Indian example and its democratic choices are persuasive and much needed in the world generally and in its own neighbourhood particularly. This story is a source of India’s soft power.

It is still a work in progress because a few concrete ideas need to crystallise. Over the next couple of years India needs to articulate its view of the world and on the principles of managing world affairs. What could be our proposition? Will it be based on key Indian realities like its democratic experiences, high-tech industry, expanding service sector, and agrarian transformation? India will need to arrive at an internal consensus on what is the Indian proposition.

KZ: So what would be the nature of India’s influence in the world?

SS: We need to answer a few questions internally first. Will India be seeking to replace old powers with a new face? Or is it going to change the ethos of how we manage our affairs collectively? As a country that will rise from the third world to soon become the third largest economy of the world, I am sure there would be expectations that the inclusive governance frameworks, which have been sought by India from the time of its first Prime Minister Nehru to its current Prime Minister Modi, must be what the Indian proposition should be based on. It will still take India another two decades to get to this point and this time should be spent on building up domestic debate and participating in conversations on the subject.

KZ: Every new power tries to formulate its ideological appeal when it is rising. We know what the American Dream is; in the last few years we have heard much about Chinese attempts to formulate the Chinese Dream. So what would be the Indian Dream in your personal view?

SS: Any Indian dream would not be too different to the ones of our founding fathers or even those of our current leaders. It has to be one that envisions a result in the eradication of poverty, disease and despair. In other words, the challenge is to integrate into global economic processes the approximately 500 million Indians who were born in the last 25 years and about four times that number born globally in the same period. They all want to have jobs, they all have dreams, they all have aspirations. Many were denied their dreams because of the colour of their skin, because of the place they call home, or because incumbents have refused to allow them a fair share of this world. India must attempt to find space for them in the global order.

KZ: Here in India I find many people are fascinated by the Chinese example and are sometimes a bit frustrated both by the slow decision-making process, normal for a democratic society, and the very complicated Indian federal system. So is it possible that Indian society will find the Chinese model increasingly attractive?

SS: Yes and no. To answer the first part of your question, many of us, and perhaps the vast majority, imagine ourselves as open, liberal and democratic people. We are far more comfortable with the values enshrined in the liberal order. India, in the second half of the century, will be one of the largest contributors to and defenders of the liberal order. In a sense, we will inherit the responsibility of serving these values, just as the Americans have been doing since the second half of the 20th century. In my opinion, it will be impossible for international liberalism to survive unless India takes the baton by then. The rest of the big international players will not necessarily have the affinity to Western European and American models of global governance.

While we do criticise our complex decision-making processes, which delay and sometimes deny development, in my mind, this criticism is not directed at the foundations of the political system that we have chosen and that we are governed under. While we admire the Chinese, we also admire the Germans and the Japanese. There is a greater allusion to China because it has been a fellow developing country and it offers us a real target to chase.

KZ: One of the instruments India has developed to become more visible as a global player is the BRICS group. In the Oxford Handbook of Indian Foreign Policy you have recently written a wonderful article on what BRICS is for India. From this I conclude that the BRICS grouping is a bit like a train with passengers leaving it at different stations.

SS: I am not speaking for the government of India, and I am certainly not speaking about the ambitions of China, South Africa, Brazil or Russia. I would argue that BRICS is a transitory vehicle for India. For a long time we were heading the global trade union, we were the driving force behind G-77 and Non-Aligned Movement, we were the energy which created third world institutions. Now we are a power that needs to contribute towards growth, peace and sustainability, and we will need to bear the costs of these as well. India will need to become a net provider in the global development architecture.

BRICS will help move India from the position of a global trade union leader to that of a global manager. We must do this carefully. We have to leave our erstwhile partners in this process, and it is more palatable if we part company in favour of BRICS than the OECD, given current realities.

KZ: So what does BRICS bring India in concrete terms?

SS: We are learning how to build new institutions of global governance, such as the New Development Bank (NDB) and the Contingency Reserve Arrangement (CRA) to manage liquidity and currency crises in the BRICS countries. We are also thinking of creating a credit rating agency, and about strengthening the WTO. We have also established security and energy working groups under the national security advisors within the forum of BRICS.

BRICS is important for the messaging it provides to India’s domestic audience. It motivates Indian citizens to be part of something bigger, to contribute to global challenges and realise greater responsibility, such as through the BRICS fund put to disposal during the eurozone crisis few years ago.

KZ: You mentioned the New Development Bank. In Asia a number of institutions of global economic governance are emerging, such as the Asian Infrastructure Investment Bank. How do you see the division of labour between these two institutions?

SS: The AIIB is exactly what the name suggests: it is a bank that focuses on Asian needs in developing infrastructure, in which India is the second biggest equity holder. The NDB has different goals and a different structure, which is novel, as every participant has equal rights. It will help finance not only infrastructure, but also place emphasis on social goods, such as advancing healthcare and stimulating small and medium enterprises. Joseph E. Stiglitz, the previous head of the World Bank, has argued that the world needs many more such institutions. Indeed, AIIB and NDB are only two of the many more institutions which need to emerge in order to transfer global savings into investments in developing countries.

KZ: The NDB has five member states with equal voting rights despite the vast difference of economic power within the BRICS. But it is open to other participants.

SS: 49% of the ownership can go to entities outside of BRICS member countries. It already envisages that other international institutions and maybe even countries can contribute. And I think over the next 2-3 years we will see that happening. The largest percentage of shares will be held by the BRICS countries, the rest can be owned by different states and institutions. It is important for the bank to have Americans, Scandinavians, and other Europeans on board. It will improve the bank’s rating, which means the cost of capital will go down.

KZ: If one wanted to encourage the Polish government to participate, what kind of arguments should be used?

SS: I would use two kind of arguments. Firstly, there is a huge disparity between development needs and the available capital. If Poland believes development infrastructure is an important area, the NDB is a useful vehicle for global economic development. Secondly, the NDB is a new bank, so if you come in early, you can still co-create this institution and have a say in the decision-making processes of the bank.

KZ: The NDB is just a part of the BRICS agenda for a change in global economic governance. But in my country it is sometimes perceived as a rival to the geopolitical order we generally support, a rival of the US. How would you convince people that you would like to contribute to the world order and not to fundamentally challenge it?

SS: The way you perceive BRICS’ contribution depends on where you are sitting. If you control global institutions, you will always look at newer constructs providing similar services to the global community with a certain degree of scepticism. BRICS is often accused of undermining the established international financial institutions, such as the World Bank or IMF, which is not true. I think BRICS does not have the capacity to be adversarial even if it wanted to play such a role. BRICS offers complimentary institutions in financial security and in other fields. It will deliver these services to those who need them most, that is, the underdeveloped countries. And it will do it in a manner different from what the OECD countries have done so far. So if it can lend money without the same conditions the World Bank does, and it can lend money directly to the sectors which will create jobs in Asia and Africa, it is contributing to creating solutions in these countries, and this will give it credibility in Asian and African countries. If the only difference between the NDB and the World Bank are the ethnicities of its managers, we would only be replacing one set with another and business will continue as usual. The credibility of BRICS will be assessed by the quality of the institutions it offers. Can the member countries create a credible BRICS rating agency, can they create secure digital economies, can they create an effective energy agency? So the challenge is really to create institutions.

KZ: Commenting on the BRICS summit in Goa last autumn, the media tended to focus on Indian attempts to isolate Pakistan. What should be done in order to prevent current political issues from dominating the BRICS agenda?

SS: We must not allow bilateral politics to define the narrative of these institutions; they must be bigger than the individual members.

We need to create a comfortable arms-length distance between bilateral relations of BRICS member states with third parties and the agenda of the grouping as such. If you look at the outcome document, Pakistan is not mentioned. Principles are mentioned. As long as you can discuss (within BRICS) principles of countering terrorism, it is helpful. If you try to shame and blame, you make cooperation weaker. BRICS should, however, continue to focus on strengthening economic cooperation.

This interview originally appeared in CSPA.

The views expressed above belong to the author(s).



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