GLOBAL SOUTH IN CONTENDING GLOBAL LINKAGES

Contending Leadership for the Global South

The term “Global South” commonly refers to the majority of countries outside the Western sphere. It signifies the desire of emerging economies to exert greater influence on global affairs and their often-critical stance towards Western policies. However, the organisation of the Global South lacks uniformity. Geo-strategic choices, competition, and configurations have always influenced the contours of the designation of the Global South. The rise of the Global South has transitioned through stages such as decolonisation, globalisation, and the emergence of new economies, each affecting the international order in terms of power structures, modes of interaction, and international rules. The geopolitical rivalry, especially between major powers like the USA, China, and Russia, has further shaped the dynamics and identity of the Global South. Consequently, the Global South is not a fixed geographic unit. Politics, economics, and ideology play a significant role in its formation and transformation. It is elastic, evolutionary, and dynamic, depending on circumstances. For instance, many regions, such as “South Asia,” “Southeast Asia,” “Africa,” and “Sub-Saharan America,” were politically “invented” to claim the status of the Global South. Moreover, what once was non-alignment in a bipolar world has transitioned to the Global South in unipolar, neoliberal world order. During the Cold War, nations not aligned with the US or Soviet blocs were categorised as “Third World.” Yet, the struggle for leadership of the Global South persists. While America maintains significant influence over the Global South, China has emerged as a dominant force within the group. It has resulted in conflicting aspirations for leadership. This conflicting leadership in the Global South is also evident in the varied approaches to development finance. For instance, Chinese loans typically feature commercial interest rates that average around 2.5 per cent, have a maturity of 10-15 years, offer no grace period, and use the renminbi as the debt currency. In contrast, the International Development Association (IDA) and the International Bank for Reconstruction and Development (IBRD) offer resources on highly concessional terms, including zero interest, extended grace periods, and long-term maturities, making these credits more manageable for borrowers to repay.

Moreover, the deepening conflict among contending leaderships has divided global society into competing camps: one defending the old institutional order and the other advocating for a new one. Once this polarisation occurs, political recourse often fails. As they differ about the institutional matrix and acknowledge no supra-institutional framework for the adjudication of difference, the parties resort to the techniques of mass persuasion, often including coercive measures. Following the collapse of the Second World (the Soviet bloc) and the emergence of the post-Cold War era, patterns such as globalisation in the context of privatisation and free markets, regionalisation and democratisation, became worldwide. In this context, the classification of the international system on a North-South basis and the validity of dependency theory have become subjects of debate. The North-South divide, which categorises countries based on their socio-economic and political characteristics, has been criticised for oversimplifying global inequalities. Similarly, dependency theory, which suggests that underdevelopment in poorer countries consequent upon their exploitation by wealthier nations, has faced scrutiny. While it provides a useful framework for understanding global economic disparities, its predictive power and applicability have been questioned. Moreover, the international system of the post-Cold War era was working in favour of further integration of peripheries in the world system rather than separation.

Nevertheless, China’s rise has posed a challenge to US dominance, especially in Asia and the broader global arena. China aimed at reforming international institutions, rules, and laws. In 2023, China’s then foreign minister argued that the principal contradiction in today’s world is not at all a so-called ‘democracy vs. autocracy’ played up by a handful of countries, but a struggle between development and containment of development, and between global justice and power politics. China is intensely strategic about winning influence, by targeting swing states with infrastructure support, financing and more. According to an earlier analysis by Pardee Centre for International Futures, from 1992 to 2020 the number of countries over which China had more influence than America almost doubled, from 33 to 61. From 2000 to 2021 it funded more than 20,000 infrastructure projects, many of which were under the “Belt and Road Initiative” (BRI), across 165 countries with aid or credit worth $1.3trn. Moreover, China asserts strategic control over recipient countries of its credit and investment. For instance, the China-Pakistan Economic Corridor (CPEC), initiated in 2015 with an investment of $62 billion, is a component of China’s Belt and Road Initiative (BRI). It seeks to extend China’s geopolitical influence by investing billions of dollars in infrastructure projects across Pakistan. However, the Chinese approach of not partnering with local companies is not going to help create new job opportunities for millions of Pakistani youths. Since Chinese companies are tax-exempt, they bring everything from China, including labour, and hence they will have no reliance on Pakistani businesses to fulfil their demands. It essentially renders Pakistan a client state of China. From the start, many in Pakistan worried that CPEC was a neo-colonial project that would give China control over Pakistan, like the British East India Company through which the British colonized the Indian Subcontinent.

Trade flows between a US-aligned group and another group linked to China have decreased by approximately 12% more than trade within the same bloc since Russia’s full-scale invasion of Ukraine in 2022. Foreign direct investment projects have experienced a roughly 20% greater decline between blocs compared to within blocs during the same timeframe. The decline’s magnitude is significant both economically and statistically. Although the current level of fragmentation is relatively minor, and its duration remains uncertain, the separation between rival geopolitical blocs during the Cold War indicates that it could deteriorate significantly if geopolitical tensions continue and trade-restrictive policies become more stringent.

Two alternative scenarios for the future of globalisation are fragmentation and re-globalisation. Fragmentation refers to a shift away from the cooperative approach of the current multilateral trading system towards more localised and bloc-based trade, along with unilateral policies. Re-globalisation involves reducing trade barriers for those who have been on the fringes of the trading system, ranging from the least-developed economies to workers in the industrial centres of advanced economies. Re-globalisation promotes resilience through diversification, inclusiveness through development, and sustainability through the diffusion of knowledge. However, the competition for leadership over the Global South has resulted in trade diversion in the changing global value chain.

Trade Diversion amid Cold –War mentality

The sovereign nations of the world assume their independent existence to align with other countries. Any leadership mentality casts a shadow on the genuine aspirations of the Global South and traps them into the block mentality of the Cold War era. However, global trade and investment have remained robust largely due to the redirection of flows through connector countries. These neutral nations stand to gain from the increasing geo-economic fragmentation. Amid escalating strategic competition between the US and China, the IMF has cautioned against the economic fallout of fragmentation, projecting a potential long-term forfeiture of up to 7% of global GDP.

Trade diversion in block trading is a significant concern, as it involves replacing an efficient trading partner with an inefficient one, leading to a suboptimal allocation of productive resources. This undermines the robust supply chain and heightens the economic reliance of less efficient members on their more capable counterparts. The misalignment of countries’ geopolitical interests impedes their geo-economic potential. Unlike the early years of the cold war, a group of nonaligned ‘connector’ countries is emerging as significant players, acting as intermediaries between blocs. For instance, India has used multi-alignment approach well. It has skilfully joined China-led strategic alliances like BRICS, SCO, and AIIB, as well as the US-led QUAD and partnerships with other powers. India has gained the necessary strategic latitude to evade the constraints of a cold-war mindset. As such, India has the potential to act as a bridge between two rival blocs vying for influence in the Global South. While the rise of these connectors has introduced resilience into global trade and activities, it does not necessarily promote diversification, fortify supply chains, or reduce strategic dependencies.

Developing Countries must resist the pressures of global economic fragmentation, which could be expensive and potentially undermine supply resilience. A more promising approach is ‘reglobalisation’: creating deeper, less concentrated markets by integrating more individuals and locations from the periphery into the core of the global economy. Increased diversification would make it more difficult to exploit interdependencies. It also mitigates the effects of trade diversion. This concept has become more popular as the global supply chain has faced multiple shocks, including escalating geopolitical tensions and recent crises such as the COVID-19 pandemic, the conflict in Ukraine, climate-related shocks, and the consequent trade disruptions. People won’t stop trading goods-- and depending on how long a view you take; the world has always been in a state of re-globalisation. The phrase simply describes the constantly shifting circumstances and relationships in global trade.

India’s way for the Global South

Amid the ever-evolving dynamics and the reshuffling of trade and investment ties, countries of the Global South must strategise effectively. While the world order appears to be shifting towards multipolarity, it remains influenced by bipolar tendencies, with China emerging as the principal challenger to the US-dominated world order. The global and regional power competition for strategic advantages over geo-economic and geopolitical issues underscore the relevance of realist discourse in international political economy. The principles of anarchy, self-help, and power balancing inherent in realism remain pertinent.

The complex evolution of a bipolar or multipolar world order necessitates re-evaluating the emerging global order through a realistic lens. Competition in multipolar systems is more complicated than competition in bipolar ones because uncertainties about the comparative capabilities of states multiply as numbers grow, and because estimates of the cohesiveness and strength of coalitions are hard to make. The strategic competition between the US and China have intended to shape and restructure the emerging world order as per their imagination and interest. Moreover, in an interconnected world, the nations of the Global South have shifted towards multi-alignment from non-alignment. The multi-alignment is of more strategic in nature.

Permanent Representative of India to the UN has argued that India’s strategic position, coupled with its non-aligned (multi- alignment) history, enables it to engage with various power blocs constructively. India’s ability to navigate complex diplomatic waters showcases India as a potential mediator in international conflicts. The nation’s adept management of the G20 summit, which included nations of differing ideologies, exemplifies its role as a foundational element. It provides a model for the nations of the Global South to follow. India’s model for the Global South represents the shared history of countries against colonial domination and exploitation, shaping modern hierarchical relation that is illustrated by the World System theory. Furthermore, India does not seek to present an alternative to the liberal international order like China. Instead, it aims to reform the existing order to ensure accommodation and adequate representation for countries of the Global South. Additionally, India’s dedication to the Global South is demonstrated through a demand-driven, outcome-oriented, transparent, and sustainable array of development projects undertaken by New Delhi in 78 countries.

Conclusion

The leadership contest among major powers has intensified the bloc mentality in the Global South. This rivalry has led to trade diversion, potentially slowing global trade and GDP. It undermines robust supply chains and heightens the economic reliance of less efficient nations on more efficient ones. Misalignment of countries due to geopolitical interests obstructs their geo-economic potential. The realist theories of anarchy, self-help, and power balancing remain pertinent, offering guidance for the Global South. India exemplifies this, having adeptly navigated power blocs for its benefit while also serving as a mediator between opposing factions.