International Relations: May 2025 Current Affairs | Current Affairs & General Knowledge - CLAT PDF Download

Strengthening G20’s Effectiveness

Why in News?

The G20, often described as the 'premier forum for international economic cooperation,' is currently facing criticism due to its lack of global representation. Its exclusive membership is seen as undermining its credibility and effectiveness in tackling global issues. With South Africa set to chair the G20 in 2025, there is an increasing call for reforms aimed at making the forum more inclusive and globally representative.

Key Takeaways

• The G20 was established in 1999 in response to the Asian financial crisis.
• It was elevated to a leaders' level forum after the 2007-08 financial crisis.
• The G20 now covers a wide range of issues including trade, health, and climate change.
• It represents 67% of the global population, 85% of world GDP, and 75% of global trade.

Additional Details

• Significance of G20: The G20 serves as a key platform for finance ministers and central bank governors to address global economic and financial matters.
• Membership: Comprises 19 national economies and the European Union, with the African Union included. India has been a member since its inception in 1999.
• Structure and Governance: Operates under a rotating presidency and does not have a permanent secretariat, with the troika system managing its operations.
• Global Influence: Engages with international organizations like the IMF, World Bank, and OECD during its meetings.

Key Outcomes of G20 over the Years

• Global Alliance Against Hunger and Poverty: Launched in 2024, aiming to aid 500 million people and provide 150 million school meals by 2030.
• India-Middle East-Europe Economic Corridor: Initiated in New Delhi to enhance trade relations.
• Global Minimum Corporate Tax: Endorsed a 15% global minimum tax in 2021 to counter tax avoidance.
• Climate Change Action Plan: Established initiatives promoting low-carbon growth.

Limitations of the G20

• Lack of Representation: The G20 is a self-selected group, excluding over 90% of global nations.
• Exclusivity in Decision-Making: The informal structure limits engagement with non-member countries.
• Global Challenges Require Global Solutions: Its narrow membership restricts the ability to form inclusive solutions to issues like climate change.
• Divergent Priorities: Developed nations focus on technology and geopolitical stability, whereas developing nations prioritize poverty alleviation.
• Geopolitical Rivalries: Political tensions among member nations hinder consensus-building.

Proposed Reforms for Inclusivity

• Regional Consultative Groups: Adopt a governance model similar to the Financial Stability Board to include non-member perspectives.
• Expand Participation: Grant permanent observer status to non-G20 nations from the Global South.
• Improve Institutional Structure: Establish a permanent secretariat and create working groups on urgent issues.
• Address Key Global Challenges: Set binding climate funding targets and reform global debt architecture.

Conclusion

The G20 plays a crucial role in global governance, its lack of inclusivity and persistent geopolitical tensions diminish its effectiveness. To enhance its legitimacy, it must embrace more inclusive participation models, establish permanent governance frameworks, and focus on actionable solutions.

Mains Question

Q: Critically analyze the limitations of the G20 in addressing global economic challenges and suggest measures to strengthen its role in global governance.

Strengthening India-West Asia Ties

Why in News?

India's strategic and economic ties with West Asia are gaining importance under the 'Link West' policy. The deepening relations with countries such as UAE, Saudi Arabia, Iran, and Israel signify a shift in India's strategy to secure energy, boost trade, and enhance its role in West Asian geopolitics.

Key Takeaways

• India's energy security is heavily reliant on West Asia, which supplies nearly 50% of its crude oil.
• West Asia is home to significant global oil and natural gas reserves, making it crucial for India's economy.
• India's strategic connectivity initiatives aim to enhance trade routes and counter competitive influences in the region.

Additional Details

• Geographical Classification: West Asia is a subregion located west of Central and South Asia, south of Eastern Europe, and north of Africa. It includes 18 countries and is bordered by major water bodies such as the Mediterranean Sea and Persian Gulf.
• Significance for India: West Asia is essential for India's energy security and economic ties. Key partners include Qatar, which is a significant supplier of natural gas, and the UAE, which ranks as India's third-largest trading partner.
• Security Cooperation: India collaborates on defense and counterterrorism with nations like Saudi Arabia and the UAE, particularly against threats from regional conflicts.
• The strategic interests of India in West Asia necessitate a balanced approach, focusing on cooperation and resilience in the face of challenges. 
• By prioritizing issue-based diplomacy, India can position itself as a stabilizing force in the region, contributing to peace while safeguarding its national interests.

Foreign Aid and India

Why in News?

India's attitude towards foreign help has been equivocal – sometimes embracing, sometimes rejecting. Current worldwide trends, particularly the United States' exit under Trump and potential European follow-ups, point to a global drop in official aid.

Foreign Aid: Overview and Evolution

Foreign Aid refers to the assistance provided by one country to another, aimed at supporting development, disaster relief, health, and other humanitarian needs.

Types of Foreign Aid:

• Official Development Assistance (ODA): Provided by governments to promote economic development and welfare.
• Private Aid: Funded by non-governmental organizations (NGOs) and private entities, typically targeting specific sectors like health or education.
• Recipients of Aid: Primarily governments and NGOs in the developing world, which use these resources for various developmental purposes.

India's Shift from Aid to Investment

Post-Independence Development Strategy: India initially relied on foreign aid to fuel its developmental agenda after independence. This aid, particularly in the form of loans and grants, was essential for India’s infrastructure and institutional building.

Changing Global Perception of India:

• Economic Growth: With substantial economic progress, India has become the world's fifth-largest economy and is expected to maintain this trajectory.
• Political and Religious Shifts: The internal political landscape has evolved, contributing to India's stronger global position.
• India is no longer viewed by the West as a typical aid-receiving nation due to these remarkable changes.

Peak Aid Period

Between 1955-1965, India received substantial foreign aid, primarily from Western countries, which helped lay the foundation for its early development.

Changing Dynamics of Foreign Aid

Decline in Official Aid:

• The Trump administration's stance on reducing the budget for USAID has reflected a broader trend of decreasing official aid, with possible repercussions in Europe as well.
• India’s Rising Status: The economic growth and global aspirations of India have led Western nations to no longer view India as aid-dependent. India is transitioning towards Foreign Direct Investment (FDI), global trade cooperation, and technological collaborations as the primary tools for progress.

Shift from Aid to Investment

• Post-1990s Transition: India’s focus shifted towards FDI, trade agreements, and global cooperation, reducing reliance on foreign aid.
• Challenges from Declining Private Aid: The decline in private aid poses significant challenges for NGOs, especially in areas like health and rural development, affecting their ability to sustain crucial projects.

What is the Relevance of Foreign Aid for India?

• Post-independence support – Shortly after gaining independence, India sought international assistance to help it catch up with wealthy countries.
• Supporting the government – The majority of the aid went to the government, as it was felt that the government should be the primary reform agent. The peak era was 1955-1965, and the majority of it came from Western countries.
• Compensating for a lack of government financing – Where government grants are limited and difficult to get, international aid has aided Indian non-governmental organisations (NGOs).
• Supporting NGOs – While public donations supported Indian NGOs prior to independence and for a few years later, since the 1960s, government grants and foreign aid have emerged as the two primary sources of funding for NGOs in development.
• Poverty Reduction – Foreign aid has helped to alleviate poverty by funding economic development initiatives, raising educational standards, and encouraging inclusive development.
• Geopolitical Tool – India uses foreign aid, both received and given, to advance its geopolitical interests and create connections with other countries, particularly its neighbours.

Declining Relevance of Official Aid

• Steady Decline in Aid: From the 1970s, official aid to India has been in a continuous decline, with foreign aid becoming insignificant by the 1990s. This was due to India's rapid economic growth and its rising global standing, reducing the dependency on external aid.
• Shift Toward Investment and Cooperation: With growing economic strength, India has increasingly sought Foreign Direct Investment (FDI) and global partnerships in areas like trade, technology, and climate action, further reducing the reliance on official aid.
• Impact of Private Aid: The decline in private foreign aid to NGOs has had a more significant impact than the fall in official development aid.

Mounting Pressures on the NGO Sector

• Critical Role of NGOs: NGOs play a crucial role in filling governance gaps and holding authorities accountable. These organizations are significantly more vulnerable to the decline in foreign aid than government bodies.
• Funding Challenges: Initially, NGOs relied on public donations; however, from the 1960s, there was an increasing dependence on government grants and foreign aid. The rise of Corporate Social Responsibility (CSR) as a major funding source only became prominent after 2013.
• Significant Decline in Aid: Between 2017-18 to 2021-22, NGOs received around ₹88,882 million in aid, although accurate FCRA figures remain unavailable. This period marks a steep decline in funding.

Government Control and Regulation of Aid

• Tightening of FCRA Rules: The Foreign Contributions Regulation Act (FCRA), implemented in 1976, set strict terms for receiving foreign funds. Amendments in 2010, 2011, 2020, 2023, and 2024 have further tightened these regulations, leading to the revocation of many NGO registrations.
• Growing Official Distrust: The Indian government has long viewed foreign influence with suspicion, often accusing NGOs of religious conversions or engaging in anti-government protests. Organizations like the Soros Foundation have been actively discouraged from funding Indian NGOs.
• Restrictive but Permissive Stance: While NGOs are technically allowed to accept foreign aid, the stringent regulations and the mistrust from the government have made this space increasingly restrictive.

What are the Consequences of Reduced Foreign Aid?

• Unemployment - Low financial flow will have an impact on employment in assistance groups in both donor and recipient nations.
• Wastage of stored food and medicines - Without the fund, humanitarian food and medicine supplies cannot be provided to those in need.
• Reduced global collaboration - The decline of foreign aid will have an impact on health and environmental cooperation between developed and poor countries.
• Affects NGO functioning - Private non-governmental organisations (NGOs) involved in development work will be disproportionately affected by a drop in both official and private aid.
• Slowing social sector development - Inadequate aid funds will have an impact on the development of existing and future social initiatives such as school and hospital building, among others.
• The decline in US AID funding for India's AIDS society, as well as the resulting drop in human and material assistance, will have an impact on India's AIDS elimination target.