Print This Post
19 January 2023, Nikkei Asia

Japan and India in the multilateral hotseat

Russia has been at the center of tensions between the G7 and G20. The current G20 and G7 Presidency has put Asia at the center of global problem-solving and collaboration. India and Japan through its existing strong bilateral and converging interests like economic and financial governance, health, climate commitments and energy transition can bridge the rift between the two multilateral groupings in 2023.

Executive Director, Gateway House

post image

Japan and India this year are leading the Group of Seven and the Group of 20, respectively, putting Asia at the center of global problem-solving and collaboration.

This will be a tough job for Tokyo and New Delhi amid ongoing geopolitical and economic stresses, made harder by a rift between the two groupings.

The G-7, formed in 1973, has evolved into an elite club of likeminded rich economies. It is homogenous, with intimate internal cohesion and formidable cultural, political, security and trade ties. The group’s stance against Russia’s invasion of Ukraine and the sanctions the G-7 has imposed reflect its role as a custodian of principles and values.

The G-20, which took shape in 1999 as an offspring of a more open G-7, is quite different. It includes emerging market economies and thus encompasses both North-South and South-South cooperation.

Elevated to include leader-level summits in the wake of the global financial crisis, the goal of the G-20 is economic and financial progress and better global governance. It is more pragmatic than principles-driven, and more reflective of the emerging multipolar world order.

Russia has been at the center of tensions between the two groupings.

Beginning in 1997, the G-7 operated as the Group of Eight by including Russia, but it reverted to form after Moscow’s seizure and annexation of the Crimea region from Ukraine in 2014.

As the previous G-20 president, Indonesia, with India’s support, was keen to include Russia as a bona fide group member at the Bali leaders’ summit it was hosting last November, but this was opposed by G-7 members. Ultimately, Russia’s foreign minister attended in place of President Vladimir Putin, keeping the G-20 intact.

India and Japan can help to reconcile the two groups in 2023 by focusing on several converging themes.

First, economic and financial governance and health. These are critical areas for both the G-20 and the G-7, in terms of questions such as ensuring access to vaccines and assisting underdeveloped nations in debt distress due to the pandemic.

Second, climate commitments and energy transitions. Here, the G-7’s Russia sanctions have caused rifts over disruptions to supplies of fuel, fertilizer and food.

The long-standing ties between Japan and India, which date back to religious and imperial trade connections, will be important in advancing common goals in this case. The two nations have drawn significantly closer since 2008, when then-Prime Minister Shinzo Abe reached out to India as a linchpin of his vision of a free and open Indo-Pacific region and a counter to China.

Japan is now India’s fifth-largest foreign investor, with nearly $40 billion committed over the last 20 years. Bilateral trade in //the year ended March 2021?// was $15 billion.

Japan and India are both middle powers in Asia, one developed and aging, one emerging and youthful. Both face serious challenges from China and are strong supporting actors in important groupings like the Quad.

The two are already looking at investments for the future. Last March, in his first visit to India as Japan’s prime minister, Fumio Kishida pledged his country would invest 5 trillion yen ($37.7 billion) into India over five years in areas like digital, health and renewable energy.

These are exactly the areas in which Japan and India can bridge the gap between the G-7 and the G-20.

Consider the Covishield vaccine which was produced in India with technology from the U.K. and then exported worldwide. Japan similarly has unmatched renewable technology, which can be used to produce energy systems at scale in India, which would help to build its manufacturing base and expand Asian supply chains beyond China.

The G-7 has a $600 billion infrastructure development fund for developing countries which has yet to be deployed. India and Japan could collaborate on moving the fund forward, bringing in likeminded G-20 countries to compete effectively with China’s Belt and Road Initiative to realize projects.

To overcome the ongoing food crisis, Japan and India can work together to build buffer stocks of food from countries in surplus for the benefit of those in need, particularly in Africa.

India boasts world-class digital services and robust e-commerce activity. Its efforts to build public digital infrastructure could serve as a new model for the world, offering a way for entrepreneurs and governments to utilize a level playing field for digital inclusion, a key U.N. goal.

Likewise, India can help Japan enter the new equitable digital era, leaving behind the disagreements between the two over free data flows that emerged during Japan’s 2019 G-20 presidency.

All these efforts will require robust implementation mechanisms. Best practices can be documented collaboratively by officials from the two countries and include think tanks and academics as well as diplomats.

The Quad summit to be held in May in Canberra should provide a good opportunity for Kishida and Indian Prime Minister Narendra Modi to develop a working synergy to bridge the gap between the G-7 and G-20 ahead of the groupings’ respective summits in Hiroshima and New Delhi.

A new template for collaboration can be set in and by Asia, providing the world with a greater unity for tackling shared problems.

Manjeet Kripalani is the Executive Director, Gateway House.

A shorter version of this article appeared first in Nikkei Asia