Not right time for protectionism or ending stimulus, PM tells west

PITTSBURGH: With a blow-out over Iran's nuclear programme threatening to upstage G-20 confabulations on the world economy, it's doubtful whether any leaders had an ear for the prescriptions from India's economist-turned-prime minister on how to ride out the economic crisis that has shaken the world.

But for what it is worth, Prime Minister Manmohan Singh listed out a series of measures that he felt would ensure the quickest possible return to normalcy in the global economy. Among them, replacing lost export demand - which has hurt India badly - by expanding investment in infrastructure, including energy, transport and other public services.

The Prime Minister asked the World Bank and other multilateral institutions to step up to fulfill this role, in effect asking richer nations to commit additional resources to fund them. And in a snarky aside to his rich colleagues who may hesitate to commit additional public resources for such recapitalization, the normally soft-spoken had this to say: We must keep in mind what is needed for these institutions is small compared
to the massive scale of public money used to stabilize the private financial system in industrialized countries.

No one said 'ouch' but you could feel it.

Singh also warned against the dangers of growing protectionism amid collapse of exports, an issue that has marred ties between U.S and China in the backdrop of the G-20 summit. (In an episode that has generated a few chicken crossing the road jokes, Washington has imposed hefty tariffs on China-made tyres, and Beijing has retaliated with taxes on American chicken feet)

"I recognize that when growth is low, and unemployment is high, it is inevitable that protectionist pressures will arise," Singh told the G-20 college. "It will be a test of the collective political leadership of this group whether we are able to resist these pressures in our countries." The Prime Minister's remarks came even as India has been increasingly persuaded to open its market, from allowing import of goods and foods California almonds (promoted by Karishma Kapoor, no less) to Washington apples.

Appreciating some of the steps taken so far, Singh said tackling the economic crisis "requires a commitment that we will not undertake any premature withdrawal of stimulus. We must plan for an orderly 'exit" when the time is right, but that time is not now."

In a capacious David Lawrence Convention Center in a downtown Pittsburgh rendered a ghost town because of security concerns and protests by anarchists, Singh warned that if the downturn was not arrested "social and political tensions could increase, undermining the national consensus in support of much needed structural reforms."

Sundry groups protesting everything from Ethiopian President's coup to US ties with Israel roamed the back allies of the city where there were more men in uniform on Friday than denizens of the city.

Earlier in the day, the economic summit was rocked by a political-diplomatic bombshell when President Obama led a severe reprimand of Iran after it was disclosed that Teheran was hiding an undisclosed enrichment plan. In language that was harsh and unsparing, Obama, flanked by French President Nicholas Sarkozy and British Prime Minister Gordon Brown warned Iran of sanctions if it did not cease its pursuit of nuclear weapons. China and Russia were conspicuously absent at the podium during the dressing down.