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West has weaponised sanctions. Here’s what India should do

India should lead Global South in finding ways to moderate their impact. — Sanjaya Baru

 

In his post-election victory address at the Bharatiya Janata Party headquarters last week, Prime Minister Narendra Modi pointed to what he viewed as an important message of the largely favourableelectoral verdict. At a time when the world is in the grip of conflict, instability and mounting inflationary pressures, said the Prime Minister, the electorate, especially in the heartland of Uttar Pradesh, has voted in favour of political stability at home.Domestic political stability in the face of external threats and challenges has been an important concern and theme of successive Prime Ministers.

Mr Modi referred tothe rising price of oil, gas, coal, fertilisers and vegetable oils on account of the current global security and economic environment. He claimed the Union budget had strengthened the foundations of his economic strategy of building an ‘Atmanirbhar Bharat’, an agenda that has gained traction given the new constraints imposed on economic growth by the global situation and western economic sanctions. The PM did well to flag India’s own developmental concerns at a time when the so-called Big Powers have been focused on their own material interests in the name of democratic values.

While the BJP has demonstrated in Uttar Pradesh the ability to win an election without delivering good economic performance even this political model requires sustained economic growth to generate the revenues needed to fund welfare programmes, that reportedly delivered electoral victory in the state. Mr Modi’s focus on new economic challenges in an impromptu, extempore address to party workers, at the end of what was for them a celebratory day, underline the seriousness of the challenge at hand. The PM has to perforce focus on inflation control, employment generation, external economic and security challenges and internal social and political stability at this time.

The current East-West conflict has come at a time when developing economies have already been burdened by disruptions caused by the Covid-19 pandemic that has not yet gone away. In fact, there is every danger of yet another wave slowing down global trade and the movement of people. While the PM has made claims about a robust economic performance at home, he must privately worry that the target date for the economy reaching the US$5 trillion mark has been pushed further back. For India to grow from the current level of $2.7 trillion to $5 trillion the economy would have to grow at 9.0 percent per annum over the next five years. A tough target in the extant situation.

The military invasion of a sovereign nation is not a phenomenon that the world has not dealt with before, even in recent memory. However, with the singular exception of the economic sanctions on Apartheid South Africa, that the West dragged its feet on, there have never been such sweeping sanctions imposed against a major G-20 economy.In this so-called Big Power conflict it is developing economies that would be hit badly.The unintended consequences of G-7 sanctions against Russia may impose greater collateral damage globally than the intended consequences of the Russian invasion of Ukraine.

While the military campaign in Ukraine has destabilised the European security order, economic sanctions on Russia imposed by the United States and the Group of Seven nations are already destabilising the global economic order. Their medium to long term consequences are yet not clear. It is in everyone’s interest that a ceasefire be immediately declared by Russia, but it is also equally in global interest that the US and EU step back from the reckless attempt to weaponise global economic links. At any rate, the G-7 must help insulate India and other low income developing economies from the consequences of their economic sanctions.

India must provide leadership to developing country voices that worry not just about rising energy costs and commodity prices, but also about disruption of the global payments systems and international trade. The Modi government has done well to resist US pressure seeking to prevent the purchase of Russian oil. Given India’s external dependence in oil and gas, it cannot afford to ignore low cost options when they become available.The current crisis also draws attention to the need for a long term strategy to reduce external energy dependence. India has to expand its nuclear and renewable energy programmes.

Developed economies may have the internal shock absorbers that can withstand the pressure of G-7 economic sanctions, but low income developing countries do not. From rising commodity prices to shrinking markets, from devalued currency to fiscal constraints at home, India and developing countries are going to pay a heavy price for Big Power conflict. Perhaps India’s RuPay card deserves to be further promoted both at home and abroad as an insurance against potential threats to the SWIFT system.

It may be satisfying for the Indian political leadership to be seen in the company of the leaders of G-7 and other major powers, and Prime Minister Modi will get more opportunities to interact with them when India hosts the G-20 Summit next year, but India will have to sensitise them to the developmental concerns of the countries of the global South. India’s core national security concerns remain those of a developing economy - economic growth and the enhancement of comprehensive national power through the building of economic, social and human capabilities. 

When Big Powers are busy fighting each other, an improvement in relations with India’s neighbourhood ought to be our foreign policy priority.It is just as well that foreign minister S Jaishankar reiterated last week that “neighbourhood first” is India’s priority. This year began with an important relationship being established with the United Arab Emirates. India has renewed ties with Sri Lanka. The BJP has to get out of the groove that it has been stuck in with respect to Pakistan. A Crisis offers the opportunity for new thinking. Stability and peace in our neighbourhood should be part of our strategy for building comprehensive national power.

https://timesofindia.indiatimes.com/india/when-west-weaponises-sanctions-/articleshow/90358951.cms

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