With the Washington Consensus from the 1980s being challenged, President Donald Trump withdrawing the United States from the Trans-Pacific Partnership (TPP), and China pursuing its Belt and Road Initiative (BRI), most notably with its own initiatives such as the multilateral Asian Infrastructure Investment Bank (AIIB), the political and economic landscape in East Asia continues to evolve. Jomo Kwame Sundaram was interviewed about likely implications for developing countries in the region and beyond.

Belt and Road Initiative

What do you think of world growth prospects and China’s Belt and Road Initiative?

Jomo Kwame Sundaram

The situation is more promising in East Asia due to China’s diminished but sustained growth, and its almost unique rising labour share of national income. Most importantly for others, China has been willing to finance massive infrastructure projects, although this has given rise to a host of problems. For example, Chinese contractors are known for using Chinese material and human resources as far as possible, minimizing multiplier benefits for host economies. A few years ago, China’s ambassador to Tanzania publicly apologized for the conduct of Chinese firms in Africa, but most others tend to see all Chinese in monolithic terms. Meanwhile, US, European, Japanese, Indian and other competition for influence has helped increased options for other developing countries. However, it is not yet clear that China’s BRI and ‘alternative globalization’ will be enough to sustain rapid progress in the region.

Trade liberalization?

You once said that “If President…Trump lives up to his campaign rhetoric, all plurilateral and multilateral free trade agreements will be affected.” Now, with the US having withdrawn from the TPP, why are the Japanese, Australians and Singaporeans still pushing for the CPTPP (Comprehensive and Progressive TPP) with all the others without the US?

It must be emphasized that the US, the EU and Japan have done little to advance trade multilateralism and keep the promise of the Doha Round of World Trade Organization negotiations, flawed as they are against developing country interests. Meanwhile, the Japanese, Australians and Singaporeans are trying to hype up the CPTPP as a political counterweight to China. But as a trade agreement, it will not do much except to strengthen foreign corporate power and further weaken governments, e.g., through its investor state dispute settlement (ISDS) provisions.

Why will the CPTPP have little impact on growth, but will strengthen the power of foreign enterprises?

Let us be clear that even with the original TPP, all projections, including the most optimistic ones by the Peterson Institute, projected very modest economic growth attributable to trade liberalization. US government projections were much more modest. About 85 percent of the Peterson Institute’s projected ‘growth gains’ were attributed to ‘non-trade measures’, mainly broadening and strengthening intellectual property rights (IPRs) and foreign corporate legal rights against host governments with its ISDS provisions, which they are promoting as features for so-called 21st century free trade agreements. So, for example, if stronger IPRs raise the prices of medicines, the value of trade will also rise! With ISDS, if a government decides to ban the use of a toxic agrochemical to protect farm workers and consumers for instance, it will have to compensate the supplier for loss of profits!

International financial institutions

Do you think the Washington Consensus is threatened by South-led financial institutions like the Asian Infrastructure Investment Bank and New Development Bank?

Although still very influential, the Washington Consensus is acknowledged to have been superseded by new policy prescriptions. Despite recent ethno-nationalist Western reactions, all too many developing country governments still believe that further trade liberalization will boost growth. Meanwhile, financial globalization continues despite its adverse effects for growth, stability and equity.

Now, digital globalization is supposed to have wonderful progressive effects when it has clearly accelerated concentration of power and wealth, albeit with the rapid ascendance of innovative new players able to quickly consolidate lucrative monopolies.

I wish the new multilateral development banks would be bolder, but thus far, they have largely chosen to work within the dominant framework shaped by the Washington Consensus, probably to secure market confidence.

Credit from China’s banks, usually benefiting China’s corporations, is far more important than what the AIIB and NDB offer. Of course, lending by China’s banks has undermined the BWIs’ monopolies, and this has already been reflected by new policy initiatives by the West and Japan, e.g., to more generously provide infrastructure finance.

Meanwhile, the World Bank has aligned itself more closely with the UN’s Sustainable Development Goals in order to provide its new initiatives to promote market-based private finance such as securities and derivatives besides public private partnerships.

Capital controls

You have pointed out that both portfolio investment inflows to developing countries have in recent years. Do you think it appropriate to resume capital controls, as Malaysia did during the 1997-1998 Asian financial crisis, to counter capital outflows?

With even China reintroducing capital controls, it is important to consider such options. I have long advocated counter-cyclical ‘capital account management’ to smoothen financial cycles, rather than to only impose controls after a crisis, as effective capital account management must be pro-active, agile, and flexible.

Almost by definition, capital account management is context specific. There are few ‘one size fits all’ rules. What I specifically called for in the early and mid-1990s is probably no longer relevant or appropriate. The challenge is not to expect the last crisis to recur, but to protect national economic progress from likely future threats.

Capital inflows to sustainably enhance the real economy should be prioritized, not portfolio flows which tend to be speculative, easily reversible, and do not enhance the real economy.

Jomo Kwame Sundaram, a former economics professor, was United Nations Assistant Secretary-General for Economic Development, and received the Wassily Leontief Prize for Advancing the Frontiers of Economic Thought.

By Roberto Savio
ROME, Jan 27 2016 (IPS)

The rich and the powerful, who meet every year at the World Economic Forum (WEF), were in a gloomy mood this time. Not only because the day they met close to eight trillion dollars has been wiped off global equity markets by a “correction”. But because no leader could be in a buoyant mood.

Roberto Savio

German Chancellor Angela Merkel is losing ground because of the way she handled the refugee crisis. French President Francois Hollande is facing decline in the polls that are favoring Marine Le Pen. Spanish president Mariano Rajoy practically lost the elections. Italian President Matteo Renzi is facing a very serious crisis in the Italian banking system, which could shatter the third economy of Europe. And the leaders from China, Brazil, India, Nigeria and other economies from the emerging countries (as they are called in economic jargon), are all going through a serious economic slowdown, which is affecting also the economies of the North. The absence of the presidents of Brazil and China was a telling sign.

However the last Davos (20-23 January) will remain in the history of the WEF, as the best example of the growing disconnection between the elites and the citizens. The theme of the Forum was “how to master the fourth revolution,” a thesis that Klaus Schwab the founder and CEO of Davos exposed in a book published few weeks before. The theory is that we are now facing a fusion of all technologies, that will completely change the system of production and work.

The First Industrial Revolution was to replace, at beginning of the 19th century, human power with machines. Then at the end of that century came the Second Industrial Revolution, which was to combine science with industry, with a total change of the system of production. Then came the era of computers, at the middle of last century, making the Third Industrial Revolution, the digital one. And now, according Schwab, we are entering the fourth revolution, where workers will be substituted by robots and mechanization.

The Swiss Bank UBS released in the conference a study in which it reports that the Fourth Revolution will “benefit those holding more.” In other words, the rich will become richer…it is important for the uninitiated to know that the money that goes to the superrich, is not printed for them. In other words, it is money that is sucked from the pockets of people.

Davos created two notable reactions: the first came with the creation of the World Social Forum (WSF), in 1991, where 40,000 social activists convened to denounce as illegitimate the gathering of the rich and powerful in Davos. They said it gave the elite a platform for decision making, without anything being mandated by citizens, and directed mainly to interests of the rich.

The WSF declared that “another world is possible,” in opposition to the Washington Consensus, formulated by the International Monetary Fund (IMF), the World Bank, and the Treasury of the United States. The consensus declared that since capitalism triumphed over Communism, the path to follow was to dismantle the state as much as possible, privatize, slash social costs which are by definition unproductive, and eliminate any barrier to the free markets. The problem was that, to avoid political contagion, the WSF established rules which reduced the Forums to internal debating and sharing among the participants, without the ability to act on the political institutions. In 2001, Davos did consider Porto Alegre a dangerous alternative; soon it went out of its radar.

At the last Davos, the WSF was not any point of reference. But it was the other actor, the international aid organization Oxfam, which has been presenting at every WEF a report on Global Wealth.

Those reports have been documenting how fast the concentration of wealth at an obscene level is creating a world of inequality not known since the First Industrial Revolution. In 2010, 388 individuals owned the same wealth as 3.6 billion people, half of humankind. In 2014, just 80 people owned as much as 3.8 billion people. And in 2015, the number came down to 62 individuals. And the concentration of wealth is accelerating. In its report of 2015, Oxfam predicted that the wealth of the top 1 per cent would overtake the rest of the population by 2016: in fact, that was reached within ten months. Twenty years ago, the superrich 1 per cent had the equivalent of 62 per cent of the world population.

It would have been logical to expect that those who run the world, looking at the unprecedented phenomena of a fast growing inequality, would have connected Oxfam report with that of UBS, and consider the new and immense challenge that the present economic and political system is facing. Also because the Fourth Revolution foresees the phasing out of workers from whatever function can be taken by machines. According to Schwab, the use of robots in production will go from the present 12 per cent to 55 per cent in 2050. This will cause obviously a dramatic unemployment, in a society where the social safety net is already in a steep decline.

Instead, the WEF largely ignored the issue of inequality, echoing the present level of lack of interest in the political institutions. We are well ahead in the American presidential campaign, and if it were not for one candidate, Bernie Sanders, the issue would have been ignored or sidestepped by the other 14 candidates. There is no reference to inequality in the European political debate either, apart from ritual declarations: refugees are now a much more pressing issue. It is a sign of the times that the financial institutions, like IMF and the World Bank, are way ahead of political institutions, releasing a number of studies on how inequality is a drag on economic development, and how its social impact has a very negative impact on the central issue of democracy and participation. The United Nations has done of inequality a central issue. Alicia Barcena, the Executive secretary of CEPAL, the Regional Center for Latin America, has also published in time for Davos a very worrying report on the stagnation in which the region is entering, and indicating the issue of inequality as an urgent problem.

But beside inequality, also the very central issue of climate change was largely ignored. All this despite the participants in the Paris Conference on Climate, recognized that the engagements taken by all countries will bring down the temperature of no more than 3.7 degrees, when a safe target would be 1.5 degrees. In spite of this very dangerous failure, the leaders in Paris gave lot of hopeful declarations, stating that the solution will come from the technological development, driven by the markets. It would have been logical to think, that in a large gathering of technological titans, with political leaders, the issue of climate change would have been a clear priority.

So, let us agree on the lesson from Davos. The rich and powerful had all the necessary data for focusing on existential issues for the planet and its inhabitants. Yet they failed to do so. This is a powerful example of the disconnection between the concern of citizens and their elite. The political and financial system is more and more self reverent: but is also fast losing legitimacy in the eyes of many people. Alternative candidates like Donald Trump or Matteo Salvini in Italy, or governments like those of Hungary and Poland, would have never been possible without a massive discontent. What is increasingly at stage is democracy itself? Are we entering in a Weimar stage of the world?

(End)

Excerpt:

By Roberto Savio
ROME, Apr 20 2015 (IPS)

This month’s World Economic Outlook released by the International Monetary Fund (IMF) only confirms that consequences of the collapse of the financial system, which started six years ago, are serious. And they are accentuated by the aging of the population, not only in Europe but also in Asia, the slowing of productivity and weak private investment.

Roberto Savio

Average growth before the financial crisis in 2008 was around 2.4 percent. It fell to 1.3 percent between 2008 and 2014 and now the estimates are that it will stabilise at 1.6 percent until 2020, in what economists call the “new normal”. In other words, “normality” is now unemployment, anaemic growth and, obviously, a difficult political climate.

For the emerging countries, the overall picture does not look much better. It is expected that potential growth is expected to decline further, from an average of about 6.5 percent between 2008 and 2014 to 5.2 percent during the period 2015-2020.

The case of China is the best example. Growth is expected to fall from an average 8.3 percent in the last 10 years to somewhere around 6.8 percent. The result is that the Chinese contraction has worsened the balance of exports of raw materials everywhere.

The crisis is especially strong in Latin America, and in Brazil the fall in exports has contributed to worsening the country’s serious crisis and increasing the unpopularity of President Dilma Rousseff, already high because of economic mismanagement and the Petrobras scandal.“Progressive parties were able to build their success during economic expansion but the Left has not developed much economic science on what to do in period of crisis”

This, by the way, opens up a reflection which is fundamental. From Marx to Keynes, redistribution theories were all basically built on stable or expanding economies.

Progressive parties were able to build their success during economic expansion but the Left has not developed much economic science on what to do in period of crisis. What it tends to do is mimic the receipts and proposals from the Right and, when the crisis is over, it has lost its identity and has declined in the eyes of the electorate.

From this perspective, the situation in Europe is exemplary. All those right-wing xenophobic parties which have sprouted up – even in countries long held to be models of democracy such as the Nordic countries – have developed since 2008, the beginning of the financial crisis. In the same period of time, all progressive parties have lost weight and credibility. And now that the IMF sees some improvement in the European economy, it is not the traditional progressive parties that are the beneficiaries.

The term that the IMF gives to the current economic moment is “new mediocrity” – which is a franker way of saying “new normal” – and it observes that in the coming five years, we will face serious problems for public policies like fiscal sustainability and job creation.

In fact, every day, the macroeconomic figures, which have become the best way to hide social realities, are becoming less and less realistic if we go back to microeconomics as we have done during the last 50 years.

The best example is the United Kingdom, which is the champion of liberalism. Each year it has cut public spending and now claims to have growth in employment, with 600,000 new jobs in the last year. The only problem is that if you look into the structure of those jobs, you will find that the large majority are part-time or underpaid, and employment in the public sector is at its lowest since 1999.

A clear indicator is the number of people who visit the food banks created to meet the needs of the indigent. In the world’s sixth largest economy, their numbers have grown from 20,000 before the crisis seven years ago to over one million last year. And the same has happened all over Europe, albeit to a lesser extent in the Nordic countries.

U.K. economists have published studies on how austerity has affected growth. According to the Office for Budgetary Responsibility, established by the U.K. government, austerity blocked economic growth by one percent between 2011 and 2012. But, according to Simon Wren-Lewis of Oxford University, the figure is actually about five percent (or 100 billion pounds).

In other words, fiscal austerity reduces growth, and this creates large deficits which call for more fiscal austerity. It is a trap that Nobel laureate Keynesian economists Joseph Stiglitz and Paul Krugman have described in detail to no avail. We are all following the “liberal order” of Germany, which think its reality should be the norm and that deviations should be punished.

Now, while we can all agree that much of this is obvious to the average citizen in terms of its impact on everyday life, what is important and new is that the IMF, the fiscal guardian which has imposed the Washington Consensus (basically a formula of austerity plus free market at any cost) all over the Third World with tragic results, has woken up to reality.

Don’t get me wrong – I’m not implying that the IMF is becoming a progressive organisation, but there are signs that an important pillar of neoliberal thinking is vacillating.

Of course, those responsible for the global crisis – bankers – have come out with impunity. The world has exacted over three trillion dollars from its citizens to put banks back on their feet. The over 140 billion dollars in fines that banks have paid since the beginning of the crisis is the quantitative measure of illegal and criminal activities.

The United Nations calculates that the financial crisis has created at least 200 million new poor, several hundred millions of unemployed, and many more precarious jobs, especially for young people. And, yet, nobody has paid, while prisons are full of people who are there for minor theft, the social impact of which is infinitesimal by comparison.

In 2014, James Morgan, the boss of Morgan Stanley, cashed in 22.5 million dollars, Lloyd Blanfein, the boss of Goldman Sachs, 24 million, James Dimon, the boss of J.P. Morgan, 20 million. The most exploited of all, Brian Moynihan of the Bank of America, a paltry 13 million. Nobody stops the growth of bankers.

Edited by Phil Harris   

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, IPS – Inter Press Service. 

Excerpt:

President Rafael Correa Delgado of Ecuador does not mince words when it comes to development. ”Neoliberal policies based on so-called competitiveness, efficiency and the labour flexibility framework have helped the empire of capital to prosper at the cost of human labour,” he told a crowded auditorium at the 15th Raul Prebitsch Lecture.

The Raul Prebitsch Lectures, which are named after the first Secretary-General of the U.N. Conference on Trade and Development (UNCTAD) when it was set up in 1964, allow prominent personalities to speak to a wide audience on burning trade and development topics.

This year, President Correa took the floor on Oct. 24 with a lecture on ‘Ecuador: Development as a Political Process’, which covered efforts by his country to build a model of equitable and sustainable development, “Neoliberal policies based on so-called competitiveness, efficiency and the labour flexibility framework have helped the empire of capital to prosper at the cost of human labour” – President Rafael Correa Delgado of Ecuador

Development, he told his audience, “is a political process and not a technical equation that can be solved with capital” and he offered a developmental paradigm that seeks to build on “people-oriented” socio-economic and cultural policies to improve the welfare of millions of poor people instead of catering to the “elites of the empire of capital”.

Proposing a “new regional financial architecture”, he said that “the time has come to pool our resources for establishing a bank and a reserve fund for South American countries to pursue people-oriented developmental policies in our region” and reverse the “elite-based”, “capital-dominated”, “neoliberal” economic order that has wrought havoc over the past three decades.

“We need to reverse the dollarisation of our economies and stop the transfer of our wealth to finance Treasury bills in the United States,” Correa said. “South American economies have transferred over 800 billion dollars to the United States for sustaining U.S. Treasury bills and this is unacceptable.”

According to Correa, people-centric policies in the fields of education, health and employment in Ecuador have improved the country’s Human Development Index (HDI) since 2007. The HDI is published annually by the U.N. Development Programme (UNDP) is a composite statistic of life expectancy, education and income indices used to rank countries into tiers of human development.

Ecuador’s HDI value for 2012 is 0.724 – in the high human development tier – positioning the country at 89 out of 187 countries and territories, according to UNDP’s Human Development Report (HDR) for 2013.

Explaining his country’s achievement, Correa said that public investments involving the creation of roads, bridges, power grids, telecommunications, water works, educational institutions, hospitals and judiciary have all helped the private sector to reap benefits from overall development.

“At a time when Hooverian depression policies based on austerity measures are continuing to impoverish people while the banks which created the world’s worst economic crisis in 2008 are reaping benefits because of the rule of capital,  Ecuador has successfully overcome many hurdles because of its people-oriented policies,”  he said.

Correa argued that by investing public funds in education, which is the “cornerstone of democracy”, particularly in higher education or the “Socrates of education”, including special education projects for indigenous and Afro-Ecuadorian people, it has been shown that society can put an end to capital-dominated policies.

“We need to change international power relations to overcome neocolonial dependency,” Correa told the diplomats present at the lecture.  “Globalisation is the quest for global consumers and it does not serve global citizens.”

The Ecuadorian president argued that developing countries have secured a raw deal from the current international trading system which has helped the industrialised nations to pursue imbalanced policies while selectively maintaining barriers.

He urged developing countries to implement autonomous industrialisation strategies, just as the United States had done over two centuries ago.

Developing countries, he said, must pursue ”protectionist policies as the United States had implemented under the leadership of Alexander Hamilton [U.S Secretary of the Treasury under first president George Washington] when it closed its economy to imports from the United Kingdom.”

Citing the research findings of Cambridge-based economist Ha-Joon Chang in his book ‘Bad Samaritans:  The Myth of Free Trade and the Secret History of Capitalism’, Correa said that protectionist policies are essential for the development of developing countries.

He stressed that developing countries, which are at a comparable of stage of economic development as the United States was in Hamilton’s time, must devise policies that would push their economies into the global economic order.

The strategy of “import-substitution-industrialisation [ISI]” and nascent industry development is needed for developing countries, he said. “However, the developing countries must ensure proper implementation of ISI strategies because governments had committed mistakes in the past while implementing these policies.”

“Free trade and unfettered trade,” continued Correa, is a “fallacy” based on the Washington Consensus and neoliberal economic policies. In fact, while the United States and other countries preach free trade, they have continued to impose barriers on exports from developing countries.

Turning to the global intellectual property rights regime, which he said is not helpful for the development of all countries, Correa said that these rights must serve the greater public good, suggesting that the current rules do not allow equitable development in the sharing of genetic resources, for example.

In this context, he said that governments must not allow faceless international arbitrators to issue rulings that would severely undermine their “sovereignty” in disputes launched by transnational corporations.

President Correa also called for the free movement of labour on a par with capital. “While capital can move without any controls and cause huge volatility and damage to the international economy, movement of labour is criminalised. This is unacceptable and it is absurd that the movement of labour is met with punitive measures while governments have to welcome capital without any barriers.”

He was also severe in his criticism of the financialisation of the global economy which cannot be subjected to the Tobin tax. “Nobel Laureate James Tobin had proposed a tax on financial transactions in 1981 to curb the volatile movement of currencies but it was never implemented because of the power of the financial industry,” he argued.

Concluding with a hint that his government’s social and economic policies are paving the way for the creation of a healthy society, Correa quipped: “The Pope is an Argentinian, God may be a Brazilian, but ‘Paradise’ is in Ecuador.”

(Edited by Phil Harris)

The Sixth BRICS Summit which ended Wednesday in Fortaleza, Brazil, attracted more attention than any other such gathering in the alliance’s short history, and not just from its own members – Brazil, Russia, India, China and South Africa.

Two external groups defined by divergent interests closely watched proceedings: on the one hand, emerging economies and developing countries, and on the other, a group comprising the United States, Japan and other Western countries thriving on the Washington Consensus and the Bretton Woods twins (the World Bank and the International Monetary Fund).

The first group wanted BRICS to succeed in taking its first big steps towards a more democratic global order where international institutions can be reshaped to become more equitable and representative of the world’s majority. The second group has routinely inspired obituaries of BRICS and gambled on the hope that India-China rivalry would stall the BRICS alliance from turning words into deeds.The stature, power, force and credibility of BRICS depend on its internal cohesion and harmony and this, in turn, revolves almost wholly on the state of relations between India and China. If India and China join hands, speak in one voice and march together, then BRICS has a greater chance of its agenda succeeding in the international system.

In the event, the outcome of the three-day BRICS Summit must be a disappointment to the latter group. First, the obituaries were belied as being premature, if not unwarranted. Second, as its more sophisticated opponents have been “advising”, BRICS did not stick to an economic agenda; instead, there emerged a ringing political declaration that would resonate in the world’s trouble spots from Gaza and Syria to Iraq and Afghanistan.

Third, and importantly, far from so-called Indian-China rivalry stalling decisions on the New Development Bank (NDB) and the emergency fund, the Contingency Reserve Arrangement (CRA), the Asian giants grasped the nettle to add a strategic dimension to BRICS.

With a shift in the global economic balance of power towards Asia, the failure of the Washington Consensus and the Bretton Woods twins in spite of conditionalities, structural adjustment programmes and “reforms”, financial meltdown and the collapse of leading banks and financial institutions in the West, there had been an urgent need for new thinking and new instruments for the building of a new order.

Despite the felt need and multilateral meetings that involved developing countries, including China and India which bucked the financial downturn, there had been no sign of alternatives being formed.

It is against this backdrop – of the compelling case for firm and feasible steps towards a new global architecture of financial institutions – that BRICS, after much deliberation, succeeded in agreeing on a bank and an emergency fund.

From India’s viewpoint, this summit of BRICS – which represents one-quarter of the world’s land mass across four continents and 40 percent of the world population with a combined GDP of 24 trillion dollars – was an unqualified success. The success is sweeter for the National Democratic Alliance (NDA) government led by the Bharatiya Janata Party (BJP) because the BRICS summit was new Prime Minister Narendra Modi’s first multilateral engagement.

For a debutant, Modi acquitted himself creditably by steering clear of pitfalls in the multilateral forum as well as in bilateral exchanges – particularly in his talks with Chinese President Xi Jiping, with Russian President Vladimir Putin and with Brazilian President Dilma Rousseff – and by delivering a strong political statement calling for reform of the U.N. Security Council and the IMF.

In fact, the intensification and scaling up of India-China relations by their respective powerful leaders is an important outcome of the meeting in Brazil, even though the dialogue between the Asian giants was on the summit’s side-lines. Nevertheless, Modi and Xi spoke in almost in one voice on global politics and conflict, and on the case for reform of international institutions.

The new leaders of India and China, with the power of their recently-acquired mandates, sent out an unmistakable signal that they have more interests in common that unite them than differences that separate them.

Against this backdrop, Indian Prime Minister Modi’s outing was significant for other reasons, not least because of the rapport he was able to strike up, in his first meeting, with Chinese President Xi. The stature, power, force and credibility of BRICS depend on its internal cohesion and harmony and this, in turn, revolves almost wholly on the state of relations between India and China. If India and China join hands, speak in one voice and march together, then BRICS has a greater chance of its agenda succeeding in the international system.

As it happened, Modi and Xi hit it off, much to the consternation of both the United States and Japan. They spoke of shared interests and common concerns, their resolve to press ahead with the agenda of BRICS and the two went so far as to agree on the need for an early resolution of their boundary issue. They invited each other for a state visit, and Xi went one better by inviting Modi to the Asia-Pacific Economic Cooperation meeting in China in November and asking India to deepen its involvement in the Shanghai Cooperation Organisation (SCO).

Modi’s “fruitful” 80-minute meeting with Xi highlights that the two are inclined to seize the opportunities for mutually beneficial partnerships towards larger economic, political and strategic objectives. This meeting has set the tone for Xi’s visit to India in September.

Although strengthening India-China relationship, opening up new tracks and widening and deepening engagement had been one of former Indian Prime Minister Manmohan Singh’s biggest achievements in 10 years of government (2004-2014), after a certain point there was no new trigger or momentum to the ties. Now Xi and Modi are investing effort to infuse new vitality into the relationship which will have an impact in the region and beyond.

As is the wont when it comes to foreign affairs and national security, Modi’s new government has not deviated from the path charted out by the previous government. BRICS as a foreign policy priority represents both continuity and consistency. Even so, the BJP deserves full marks because it did not treat BRICS and the Brazil summit as something it had to go through with for the sake of form or as a chore handed down by the previous government of Manmohan Singh.

Before leaving for Brazil, Modi stressed the “high importance” he attached to BRICS and left no one in doubt that global politics would be high on its agenda.

He pointed attention to the political dimension of the BRICS Summit as a highly political event taking place “at a time of political turmoil, conflict and humanitarian crises in several parts of the world.”

“I look at the BRICS Summit as an opportunity to discuss with my BRICS partners how we can contribute to international efforts to address regional crises, address security threats and restore a climate of peace and stability in the world,” Modi had said on eve of the summit.

Having struck the right notes that would endear him to the Chinese leadership, Modi hailed Russia as “India’s greatest friend” after he met President Vladimir Putin on the side-lines of the summit.

India belongs to BRICS, and if BRICS is the way to move forward in the world, then BRICS can look to India, along with China, for leading the way, regardless of political change at home. That would appear to be the point made by Modi in his first multilateral appearance.