In a provocative article published recently, Jim O’Neill, the former chairman of Goldman Sachs Asset Management who first coined the acronym BRIC, writes it’s “time up” for the G7 group of nations. Replace this old world order, he says, with a new G7 comprising the US, the European Union (as a bloc), Japan and the four BRIC nations, Brazil, Russia, India and China.
Out go post-Brexit Britain and Canada from the old G7. France, Germany and Italy stay on only as part of the collective EU. As a former UK treasury minister and currently chair of British think tank Chatham House, O’Neill’s proposition will be taken seriously—for exactly 10 seconds.
The old world order, represented by the current G7, has no intention of giving up its global clout, however much that clout has shrunk in recent years. O’Neill himself writes with a nudge and a wink that nothing of the kind he is proposing is likely to happen. “While Canada and a post-Brexit UK would lose some of their current influence,” he says, “they would have no less of it than similarly situated countries such as Australia. At any rate, they need not worry. There is no reason to expect a diplomatic overhaul of this scale anytime soon.”
O’Neill is right and wrong. He’s right that a new G7 should be fashioned and the old G7 junked. He’s wrong that it won’t happen anytime soon. Sculpting a new world order that more fairly represents the geopolitics and and achievable. A new G7 comprising the US, China, India, Brazil, Russia, Japan and the EU would account for 75% of global GDP. The old G7 represents a post-Second World War order.
It comprises four countries from Europe (Britain, Germany, France and Italy), two from North America (the US and Canada) and one from Asia (Japan). The new G7 would have three nations from Asia (China, India and Japan), one from South America (Brazil), one from North America (US), one from Eurasia (Russia) and one from the West European bloc (EU).
The old world order extends to the structure of the International Monetary Fund (IMF), the World Bank (WB) and the United Nations Security Council (UNSC). All three institutions have systematically loaded the post-colonial world order in the West’s favour since 1945. The World Bank president is always an American national. The IMF managing director is always European. Of the UNSC’s five permanent, veto-carrying powers, three are part of the Western alliance.
The West uses the global levers of finance and politics that these three institutions wield to impose economic sanctions, invade sovereign nations, wage extra-territorial wars, and control global finance. Media is a key instrument to mould opinion. Western media is careful not to use Western reporters to distort facts. They use hired Indian or other Asian journalists to indemnify themselves from the charge of racism. The dollar and euro buys many non-Western journalists who are paid for their grim, biased reportage of Asia and Africa.
Moreover, Indian professionals who live and work overseas often see the glass half empty. In a recent op-ed in a leading Indian daily on India’s proposed $10 billion sovereign bond, former RBI Governor Raghuram Rajan laboured hard to find reasons why it was a bad idea and pregnant with risk: “In her Budget speech, Finance Minister Nirmala Sitharaman said that India would start borrowing in external markets in external currencies.
This is a marked change from the past when India issued government bonds in rupees, and borrowed in foreign exchange only from official lenders like the World Bank. It will not reduce the domestic government bonds the market has to absorb (by an) iota. So what is the real rationale for this adventurous move? A small issuance will likely not be problematic. The concern is that once the door is opened, the government will be tempted to issue more, much more, with attendant risks—after all, all addictions start small.”
It is this conservative mindset, looking for problems for every solution rather than seeking solutions for every problem that has held India back. The Indian government, which hired Rajan as RBI governor, is no different. It is cautious and status quoist just like Rajan was as RBI governor, insisting on high interest rates even when inflation was low. In the bargain, India’s economy fell into a deflationary spiral. The government has not done enough since Rajan left to restore growth. It is such reflexive caution that slowed India’s rise for decades, to the delight of the old G7. For them, the rise of a new G7 is anathema.
European nationalism brought war and misery to the world throughout the first half of the 20th century. For the previous 200 years, from the 1750s to the 1950s, Europe and its invasive Anglo-Saxon settlements in the Americas and Australasia, the brutal African slave trade to the Americas, and the damaging colonisation of Asia and Africa, lifted Western societies to great wealth and global influence.
The post-1945 world order was designed to preserve that wealth and influence. Indian nationalism, properly defined, is plural, inclusive and non-expansionary. In contrast, Western nationalism was exclusionary and expansionist. The new world order and the new G7 is welcome precisely because it will posit global politics and economics under vastly fairer terms of engagement.