Editorial 1 : UN Security Council reform is a song in a loop
Context:
The debate over fundamental reforms at the United Nations (UN) has resurfaced at the ongoing General Assembly (UNGA) session. UN’s SecretaryGeneral, António Guterres, issued a stern warning: “The world has changed. Our institutions have not. We cannot effectively address problems as they are if institutions do not reflect the world as it is. Instead of solving problems, they risk becoming part of the problem.”
Old wine in new bottle:
It could not have been put more bluntly, but we have heard this song before. Politically, it is untenable that the P5 or the five permanent members of UN Security Council (UNSC)- China, France, Russia, the United Kingdom, and the United States– enjoy their position, and the privilege of a veto over any Council resolution or decision, merely by virtue of having won a war 76 years ago. In the case of China, the word ‘won’ needs to be placed within inverted commas.
An unjust situation in terms of equity
1. Issue of representation
- The Security Council reflects the geopolitical realities of 1945 and not of today. When the UN was founded in 1945, the Council consisted of 11 members out of a total UN membership of 51 countries; in other words, some 22% of the member states were on the Security Council. Today, there are 193 member states of the UN, and only 15 members of the Council — fewer than 8%.
- The one change ever made to the original Charter was in 1965 when the Security Council was expanded from 11 members to 15 by adding four more elected non-permanent members.
2. Issue of composition
- The composition of the Council also gives undue weightage to the balance of power of those days. Europe, for instance, which accounts for barely 5% of the world’s population, still controls 33% of the seats in any given year (and that does not count Russia, another European power).
3. Issue of financial contribution
- In terms of simple considerations of equity, this situation is unjust to those countries whose financial contributions to the UN outweigh those of four of the P5 members — Japan and Germany have for decades been the second and third largest contributors to the UN budget, while still being referred to as ‘enemy states’ in the United Nations Charter (since the UN was set up by the victorious Allies of the Second World War).
4. Case of India
- And it denies opportunities to other states such as India, which by its sheer size of population, share of the world economy, or contributions in kind to the UN (through participation in peacekeeping operations, for example) have helped shape the evolution of world affairs in the seven decades since the organisation was born.
Stances by countries
- So, the Security Council is clearly ripe for reform to bring it into the second quarter of the 21st century. But for every state that feels it deserves a place on the Security Council, and especially the handful of countries which believe their status in the world ought to be recognised as being in no way inferior to at least three of the existing permanent members, there are several who know they will not benefit from any reform.
- The small countries that make up more than half the UN’s membership accept that reality and are content to compete occasionally for a two year non permanent seat on the Council.
- But the medium sized and large countries, which are the rivals of the prospective beneficiaries, deeply resent the prospect of a select few breaking free of their current secondrank status in the world body.
- Many are openly animated by a spirit of competition, historical grievance or simple envy. They have successfully and indefinitely thwarted reform of the membership of the Security Council.
Difficulties in amending the UN Charter
- Part of the problem is that the bar to amending the UN Charter has been set rather high. Any amendment requires a two thirds majority of the overall membership, in other words 129 of the 193 states in the General Assembly, and would further have to be ratified by two thirds of the member states.
- Ratification is usually a parliamentary procedure, so, in other words, the only ‘prescription’ that has any chance of passing is one that will both persuade two thirds of the UN member states to support it and not attract the opposition of any of the existing permanent five.
- India’s credentials may seem obvious to us, but China is none too keen on diluting its status as the only Asian permanent member; Pakistan, which fancies itself as India’s strategic rival on the subcontinent, is unalterably opposed; and to some extent Indonesia seems to feel diminished by the prospect of an Indian seat.
Continuing gridlock
- So, while the debate keeps going round in circles for decades, gridlock continues in the Security Council, as most vividly illustrated recently over the Ukraine conflict, when a Permanent Member of the Security Council invaded a sovereign UN member state and the Council proved powerless to respond.
- Russia’s increasing resort to the veto has blocked resolutions on Ukraine, Mali, Syria and North Korea. Similar obstructionism by the West has affected proposals to reform the financial institutions established at Bretton Woods in 1944, the World Bank and the International Monetary Fund.
- And yet this is the only global system we have got that brings all countries together on a common platform. Can we afford to let it fade into ineffectiveness and irrelevance?
Editorial 2 : ‘Modi-nomics’ fails to buck the trend
Context:
- There has been intense focus on India’s growth performance of late. First, on the occasion of the Delhi meetings of the G20, the government announced that it was the world’s fastest growing major economy.
- It was met with a challenge from an independent economist on the grounds that the government had relied on the income method to estimate GDP, and that were the expenditure method to be used instead the observed growth rate would be lower. The Finance Ministry responded that the Government of India had been consistent in using GDP estimated by the income method throughout. This is correct.
A focus that is flawed
- However, it may be noted that the contestation had been over economic performance in a single quarter, namely the first quarter of the current financial year.
- Soon after this exchange, Arvind Subramanian and Josh Felman investigated whether India’s growth rate is accelerating or decelerating after the COVID19 year of 2020-21 (FY21). They concluded that “after a strong recovery there has been a significant ebbing of dynamism over the last three quarters”.
- But both the government and those challenging its narrative are focused on very short phases of growth. This can result in mistaking the cycle — a temporary fluctuation — for the trend, which is the long term tendency.
Growth, from 1950 to the present
- Studying growth up to the year 201920, which is the preCOVID year, we find that the last time the growth rate increased in India was in 2000. The conclusion from this must be that the current government has not had success in raising the rate of growth of India’s economy while in office.
- There has been growth of income per capita, but this government has not been able to quicken the pace at which they have been coming our way for decades.
- The finding does not surprise, for in the six years up to the COVID19 pandemic, the growth rate had slowed sequentially in three, immediately upon the demonetisation of 2016. As no major exogenous shock struck the economy in this period, it must be concluded that it is the demonetisation that caused the slowing.
- We may forecast GDP in the years after COVID-19 by projecting forward the growth rate achieved prior to 2019-20, and see how actual outcomes compare to these projections. So, we forecast the GDP in 2022-23 by extending the average annual growth rate of 6.5% achieved for the period 2000-01 to 2019-20. We found that actual GDP in 2022-23 is 11.1% less than predicted. So, the recovery from the pandemic may well have been ‘V- shaped’ but till last year, GDP was yet below trend.
The COVID-19 year
- Finally, though focusing on GDP growth after the pandemic may show the Indian economy in a relatively good light compared to other major economies, it misses a crucial aspect of economic management during the present government’s term in office.
- During the COVID year of 2020-21, most BRICS countries (Brazil, Russia, India, China and South Africa) and the United States contracted less than India did. All these countries had also adopted a stronger macroeconomic stimulus. The stimulus adopted by the Government of India then was astonishingly small.
- The contraction of GDP during the pandemic in India is most related to that dogmatic refusal to stimulate the economy when needed. It accounts for the corresponding recovery that followed in 2021-22.
- In effect, very high growth that year reflects the restarting of production after the lifting of a very stringent lockdown, rather than an independent economic response to smart policy, which is how it is presented.
Conclusion:
- Having left the economy to shift for itself for much of its tenure recently, Modinomics has swivelled to addressing growth frontally. Perhaps having realised that it has not had much success in stimulating private investment, the government has, over the last two Budgets, hiked capital spending at historically high rates. The ideal of ‘minimum government’ seems to have been shelved in election season.
