Interview: Economist Jeffrey Sachs on how India can rebalance the world | THE WEEK
Economist Jeffrey D. Sachs is one of the most influential voices that predict the end of American hegemony and a unipolar world. A global expert in sustainable development, he is an unabashed critic of the apathy of rich countries, especially the US, in financing solutions for issues like poverty and climate change. Sachs, who has worked as an adviser to both Russian and Ukrainian presidents in the 1990s and 2000s, respectively, is highly critical of the US and NATO positions in the Russia-Ukraine war. In an exclusive interview, he talks about why India and China should come together for a “transformation from a west-led world to a world-led world”.
rican Union should become 21st member of G20, he says
Economist Jeffrey D. Sachs is one of the most influential voices that predict the end of American hegemony and a unipolar world. A global expert in sustainable development, he is an unabashed critic of the apathy of rich countries, especially the US, in financing solutions for issues like poverty and climate change. Sachs, who has worked as an adviser to presidents of the USSR, Russia and Ukraine in the 1990s and 2000s, is highly critical of the US and NATO positions in the Russia-Ukraine war. In an exclusive interview, he talks about why India and China should come together for a “transformation from a west-led world to a world-led world”. Excerpts:
There is a huge shared interest between India and China in the success of the transformation from a western-led world to a world-led world to a truly multipolar world.
The climate today is deranged and degraded because of the rich countries in the past. So that is a historical responsibility.
Q/ Prime Minister Narendra Modi recently said that India’s G20 presidency gives voice to the global south. Do you think that this meeting will give more attention to the issues faced by the poor and less developed countries?
A/ The whole idea of the G20 is to expand beyond clubs of rich countries like the G7 to a true global society and true global dialogue, and the G20 process began in one form more than 20 years ago. I was one of the early proponents of ‘let’s make sure we have all countries at the table’. So, in the early days, the G7 dominated the process, but the world is changing very fast to a multipolar world in which it is no longer the case that the US and a few other countries dominate the world policy debate or world economy. We are now in a multipolar world and we have four G20s in a row led by important emerging economies: Indonesia, India, Brazil and South Africa. We need these G20s, and I think India’s [presidency] will be especially important, to make the institutional breakthroughs in global financial architecture and governance architecture. To turn this changing reality into changing way of global shared responsibilities. So, I’m here because of how important it is that India is president of the G20, and proposing exactly this rebalancing of the international governance system.
Q/ What is the direction in which the world should move to bridge the global north-global south divide?
A/ We have the technologies, especially digital technologies, that can enable countries that were lagging in economic development to make huge progress. India, of course, is the case in point now. It is the fastest-growing large economy in the world. There is a tremendous uptake of digital infrastructure. Hundreds of millions of people coming into broadband services and the entire population is online in some sense with digital identity and with digital public services. To my mind, this is very good for India’s development and it enables India’s current growth of about 7 per cent per year, which is very good and could accelerate, in fact. We need this kind of pattern in general throughout the developing world. Africa is a good case in point. It is about the same population as India, but it is divided into 55 countries. That is because there were many colonial powers in Africa. They carved up the continent and therefore when independence came that were dozens of independent countries; all of which were too small to achieve development at scale. Finally, the African Union is creating a union, and one point that I have made is that the African Union should become the 21st member of the G20, as a permanent member. Second, India is learning about deploying large-scale digital [technology] on a very rapid basis. I think it can be a roadmap for Africa as well, and also for strong India-Africa diplomacy and trade.
Q/ In 2022, some 50 countries took financial support from the International Monetary Fund. Is this a sign that the global shocks are disproportionately impacting the global south?
A/ We have many shocks right now. So, this is a very unsettling time. We have Covid, we have the financial tightening and even a crisis. We have the sanctions regime against Russia. We have the Russia-Ukraine war and we have the US-China tensions. On top of all of that are the long-term deep crises of climate change, environmental degradation and so on. We need to solve some of these intense geopolitical crises, quickly before they overwhelm us in financial, economic and even military terms. Right now, the system is not operating properly. It is, of course, overwhelmed by the crises, so it is not delivering.
And, even when the countries come to the IMF, well the IMF helps them. But the fact is that it is already too late. It is already being in the emergency room rather than prevention. One of the goals of the G20 needs to be a new financial architecture, which provides a lot more capital to developing countries so that they don’t end up in the IMF emergency room.
Q/ In 1998, Nirupam Bajpai and you presented a three-pronged approach for an enhanced growth strategy for India―an export-led growth, rural improvement and maintaining macroeconomic stability. After 25 years, how do you assess India’s growth in these three segments?
India is achieving huge progress. What we did not know in 1998 was how the digital revolution would support that whole agenda because now with near-universal access to the online ID and bank accounts and public services, the rural areas which were left behind can be fully connected. India is in the process of making significant strides in using digital for health care, education, payments, finance and public services. There is a lot of innovation taking place not only in Indian business operations but in science and technology.
Q/ You recently said that the US’s fear of China is misplaced. China wielding more power is creating tension for India, too. What should be India’s strategy in this changing world scenario?
Even as important as the US-China dialogue is the India-China dialogue. India and China have both a lot to work out. [There will be] incredible gains if cooperation is achieved. China should seek out India as a partner in building a multipolar world. India and China went through a similar history. Looking back to 1800, both were major economies, not only major civilizations. In the 150 years between 1800 and 1950, both India and China suffered badly. Since the mid-20th century, both are again becoming major global powers, and they are working to create a multipolar world. There is a huge shared interest between India and China in the success of that transformation from a western-led world to a world-led world to a truly multipolar world. So, India and China have a lot to cooperate on and they do cooperate in the BRICS process and other venues. But this border conflict that China instigated is a mistake.
Q/ Could you please explain the background of your position on the Russia-Ukraine war?
I have argued that this war resulted in part from the idea that NATO would [expand] to Russia’s border. And, I thought that proposal was a terrible mistake when it was first made in 2008. The US and Europe have continued to push that idea even after President Putin said that is a red line for us. We will not and cannot accept NATO on our Ukraine border. So, you have to stop. I think that Russia is correct about that. Prudence would say don’t keep pushing this issue, it will create a wider war.
I think that point of view is widely understood outside of the western world. India, China, Brazil, South Africa are all saying this war should end through negotiation. This war should respect Russia’s security interests as well as Ukraine’s security interests. This to my mind is the way to end this war. And, I believe that if China, India, Brazil, South Africa, Indonesia and other countries around the G20 table say clearly “peace, we need peace… we need a negotiated end”, that message can be heard. It is the right message. It is fair. It is practical. It is implementable. It is safe for the world.
Q/ You are a proponent of the idea that rich countries should pay their fair share of the costs of climate adjustment. Do you think the rich countries are not doing enough for climate mitigation?
Rich countries have three kinds of responsibilities. First, for historical emissions. The climate today is deranged and degraded because of the rich countries in the past. So that is a historical responsibility. Then there is an ongoing responsibility. Rich countries emit far more greenhouse gases per capita than poor countries. This is a current issue and the US is still emitting 15 tonnes of carbon dioxide per person and in India, it is below two tonnes per capita, if I remembered the most recent data correctly. And so, this is a huge gap and that is a general truth that the rich countries still are the major emitters but even within the rich, there is a difference between Europe and the US. The US is a heavy emitter.
The third responsibility is financial. The current economic system favours the rich over the poor. The rich pay low-interest costs when they borrow, and the poor pay sky-high usury costs. The rich have a responsibility to rectify this situation so that finance works for everybody. That is what the G20’s central mission should be. So, in this sense, if you ask are the rich doing enough, not by a very long distance. They are not respecting their historical responsibility. They are not respecting their current responsibility and they are not solving the financial crisis.
Q/ India is also a major emitter, but a developing country. How can we have a balance between our economic growth and our commitment to climate mitigation?
India’s role is basically to develop smartly. So, India is building out electrification. There is a lot more to come. India is going to need a lot more power in the future, but it should be clean power. Even if it weren’t climate, the need to clean up the pollution is extremely urgent. Second, of course, this country gets very hot in the springtime. We are seeing mega heat waves. We are seeing drought conditions. So, India needs to be at the forefront of saying to all of the countries: “You have to do this together. We will do this together with you”. India has proposed a massive transformation of the Indian economy, but it has also said, “Where is the finance? Why are we paying seven or eight per cent interest rates whereas the US and Europe are paying two or three per cent interest rates. We will do our part but we need a system that works.” So, these are the issues that are at the centre of the G20 agenda.
Q/ How do you assess the performance of the Narendra Modi government?
This is a business-directed government. So, this government says we are going to electrify every village in the country. This government says we are going to ensure digital access for everybody. This government thinks in terms of solutions at the scale of 1.4 billion people. And that is what I meant by a business-like government that is thinking at scale, planning at scale and it is happening.
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