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BW Businessworld

Unrealistic Expectations

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With the resignation of Dominique Strauss-Kahn as managing director of the International Monetary Fund (IMF), the top job at the world's central bank is now open for other contenders. From the way things are going, another European, perhaps even a Frenchwoman, will be the likely winner (not that getting the job is a contest in the best sense of the term).

Within our borders, there are many who feel that as India's star is on the ascendant on the world stage, having an Indian take that position is not out of the question. The name of the deputy chairman of the Planning Commission Montek Singh Ahluwalia, a former director of the IMF's External Evaluation Office, has been bandied about. He has worked in the institution, has held an influential position at the World Bank, and is a generally recognised name in the US and Europe.

As an individual choice, his candidature seems fine. But is the idea practically implementable? History suggests that it will be a few more years before an Indian heads a global institution of the stature of the IMF; international financial institutions have been headed by hegemonic powers that have dominated the world in the past few centuries, and as a country, we are nowhere close to being hegemonic.

For one thing, our history in international relations has not been very successful. Yes, India was at the heart of the Non-Aligned Movement (which has since been consigned to the dustbin of that same history), but the influence of that august body in the post-colonial world has been minimal. The Commonwealth of Nations — the group countries that were ruled by the colonising power we all won independence from, Great Britain — was controlled largely by the UK.

For yet another, and in a more multi-polar world, we have been unable to convince the rest of the world that India deserves to be a permanent member of the UN Security Council; years of effort have been expended to this end, and while the appropriate noises are being made in the West, the likelihood of it coming to pass is remote in the immediate future.

Third, our ability to influence the economy of our own neighbourhood has been weak; China, not Pakistan, Sri Lanka or any of the Asean nations is our largest and more equal trading partner. As an economic institution, Saarc is not exactly a resounding success, let alone the opposition we face from our immediate neighbours.

The IMF is controlled by its 24-member board of directors, with the US, which had 18 per cent of the vote (combined with Japan, the UK, France and Germany, all of whom vote the way the US does, that vote goes up to 40 per cent) calling the shots. The MD of the IMF has great personal influence, and gets his way by persuasion, but also backed by US support (for evidence, just see how Strauss-Kahn, a French Socialist, almost forced Greece to accept a capitalist solution to its public debt problems). Could an Indian head of the IMF do that? Unlikely.

It would be a waste of time to seek such an outcome by mere statements, and justifications, that we are an emerging global power, and that we live in a multi- not uni-polar world. The world hasn't changed that much in the past 60-odd years. It is better to give up on this pipe dream, at least for now.

(This story was published in Businessworld Issue Dated 30-05-2011)