Official Spokesperson, Vishnu Prakash: Good afternoon and welcome to the briefing by Foreign Secretary on the eve of Prime Minister’s visit to London for the G-20 Financial Summit. After his opening remarks Foreign Secretary will be taking a few questions. Let me also introduce my colleague Mr. J.S. Mukul, Joint Secretary (ER&TC).
Foreign Secretary, Shivshankar Menon: Mukul is also one of the sous-Sherpas for the G-20 process. That is why he is here. I thought I would brief you on the PM’s visit to the UK to the meeting of G-20 leaders in London. But before that there was something I wanted to give you about the situation in Lahore.
We, the Government of India, are deeply saddened and shocked by the events in Lahore. We hope that the Pakistan authorities will be able to resolve the situation soon with a minimum loss of life. Our sympathies and condolences go out to the families of those who have been killed. Terrorism is a menace to the entire region.
About the G-20 leaders’ meeting, as you know Prime Minister will be leaving tomorrow for London. He will be in London on the first and the second, and will return on the third. He is accompanied by a senior delegation which includes Deputy-Chairman, Planning Commission, Mr. Montek Singh Ahluwalia, who is the Sherpa for the G-20 process from India.
In London, the Summit programme starts with the reception by Her majesty the Queen on the first, which is followed by a dinner by the Prime Minister of the UK for the visiting G-20 leaders. On the second of April, there is an intense programme which starts with the Leaders’ Breakfast Meeting followed by Summit Plenaries in the morning, Leaders’ Lunch; and then another Plenary in the afternoon. Prime Minister will also be having a bilateral meeting with Prime Minister Brown of the UK on the first, and a separate bilateral meeting with President Obama of the US on the second of April. He will, as I said, return to India on the third (of April).
I presume you know the names of the countries in the G-20 and if necessary we will circulate that. By way of background, the G-20 came into existence in 1999 following the Asian Financial Crisis. It was essentially an informal forum of major developed countries and major emerging economies representing anywhere between 85 to 90 per cent of world GDP together. It was a forum which met at the Finance Ministers, Governors of Central Bank level consistently until the financial crisis and the economic crisis which began in 2007.
Last year, there was the first meeting of the leaders of the G-20 in Washington on November 15. That was when the leaders actually agreed on a Declaration, which I am sure you have seen, which spoke of a common understanding of the root causes of the global crisis, spoke of common principles for reforming financial markets, spoke of the launch of an action plan to implement those principles and reaffirm their commitment to free market principles and opposition to protectionism.
The Washington Summit had mandated follow-up work in several areas - in strengthening transparency and accountability, enhancing sound regulation, in promoting integrity in financial markets, in reinforcing international cooperation, and in reforming international financial institutions. Work on these was conducted in four Working Groups. India participated in all of them and actually co-chaired the First Working Group with Cananda. Rakesh Mohan, the Deputy Governor of the Reserve Bank, was our nominee on that.
Working Group-I was on enhancing sound regulation and strengthening transparency. Working Group-2 was on reinforcing international cooperation and promoting integrity in financial markets. Working Group-3 was on reforming the IMF. Working Group-4 was on the World Bank and other multilateral development banks. All four of the Working Groups have done their work; they have produced reports; they have made a set of recommendations; all of which were considered by the Finance Ministers two weeks ago and will now come to the Summit.
What will happen is that the Sherpas will meet again and the Finance Ministers on the first (of April), just before the Summit in London. So, the preparatory process is still going on. Besides, I do not want to here start telling you about outcomes when they have not completed even the preparatory process, let alone the Summit has not happened yet. But what we would expect really from the London Summit - and these are really expectations, not so much the outcomes, which will have to await the end of the preparatory process and the leaders’ meetings where they will discuss these things – is that once they have reviewed the international economic situation and what has been recommended to them that there would be a set of regulatory measures for efficient and effective supervision and oversight of the financial and economic system, I am sure that individual countries will also brief on their national stimulus packages and what they intend to do to promote economic recovery and to reverse the recession in those countries where there is recession.
The area where we would like to see action is really against protectionism in various forms, which we consider is very important. This was agreed in the Washington Summit. But it is something that will have to be taken forward since we have seen both the crisis deepen and a series of steps by several countries which to our mind appear protectionist.
The other area that we attach considerable importance to is reform of the international financial institutions. There are some suggestions which have already come from the Working Groups and which have been approved by the Finance Ministers. For instance, expanding the membership of the FSF (the Financial Stability Forum) or of the Basel Committee in which India and other emerging economies will now be members. But there are other steps as well, including steps like increasing the ability of the IMF, the World Bank and regional development banks like the ADB, to deal with crises like these to respond the needs of developing countries in particular.
There is general agreement on increasing the amount of resources available to these institutions but the manner of doing so and how quickly it can be done, I think those are still issues which will need to be discussed and resolved. There is also agreement, for instance, on bringing forward the reallocation of quotas to January 2011. The Finance Ministers announced this on the 14th of March. But we will have to see how that works out in detail.
One issue which we think and which we will be highlighting is really the need in dealing with the effects of the crisis and in dealing with both the financial aspects and the economic recovery to ensure that development is not a victim. That is because some of the worst sufferers from the crisis, from the drying up of trade finance, of other forms of finance, have really been developing countries, smaller developing countries. That is something that, I think, will be addressed during the Summit. These are really the themes - if one has to look for outcomes, for what matters, what we would measure the Summit against - these are the issues that we would be looking at.
I would expect that the Summit would also produce a Declaration or an outcome document, but work is continuing. So, as I said, I do not want to jump the gun and say what we think will come out at the end. We will brief you right through the process both on the way there and after the Summit as well.
I would be happy to answer any questions which you might have.