In the last few years, three factors have been the key drivers of global uncertainty: A worldwide pandemic, a geopolitical shock, and rising economic constraints (inflation, interest rates, and debt). They seriously affected emerging countries and the most fragile segments of the population.
As stated by the World Bank, while people across all income groups experienced losses during the pandemic, the poorest 20% saw the steepest decline in incomes. In 2021, their incomes declined further while the richest began to stem the tide. The decline in incomes has translated into around 100 million more people living in extreme poverty. Debt loads in emerging markets and developing economies also spiked during the pandemic. The debt burden will be felt long after the virus abates as servicing costs rise, slowing recoveries and hindering efforts to address other development challenges — including the climate crisis.
Moreover, the repercussions of the Russian aggression in Ukraine and the sharp rise in global energy prices played a role in accelerating inflation and its consequences (interest rates and debt sustainability). Since energy is a critical commodity for food production and heating, these soaring prices have downstream implications. For instance, higher energy prices have already affected fertiliser prices, increasing the cost of food production.
Within this context, the climate crisis is an existential problem for some small island States, and many developing countries are particularly vulnerable to droughts, floods, heat waves, and tropical storms. The climate crisis can push up to 132 million people into extreme poverty by 2030, according to World Bank estimates, and most of the world’s poorest people will live in situations characterised by fragility, conflict, and violence. Hence, it is the sharing of technology and a new way of funding that can help the rising countries.
India raised the issue of insufficient representation of the countries of the Global South in the governing bodies of international institutions and underlined a growing need for the availability and sustainability of international loans and debt financing. Last January, New Delhi hosted the virtual conference, “Voice of Global South”, where leaders and ministers from 120 countries discussed a wide range of topics, from debt sustainability to health, and from agriculture to trade and energy.
India has been investing hugely in its ambition to push forward the issues of the Global South among the priorities of the international agenda, starting with that of the G20, showing strong determination in pursuing the reform of multilateral development and finance frameworks.
While India represents an ideal bridge between the Global South and the western countries, Italy is committed to dismantling the fallacious rhetoric of “West Against the Rest”, together with the European Union, which has become a leader in international cooperation and development aid, thanks to innovative and more sustainable funding schemes and financial tools. As it prepares to take over the presidency of G7 in 2024, Italy sees the worth of addressing the concerns of a large part of the world on the present political and economic global governance.
In this perspective, as was envisioned by Prime Minister (PM) Giorgia Meloni in her recent meeting in Delhi with PM Narendra Modi, Italy and India have a strategic connection thanks to the role that the two countries intend to play in the Global South. Italy launched the Mattei Plan (Enrico Mattei was the leader of energy company, ENI, who, in the 1950s, introduced a new investment paradigm in Africa based on the principle of local ownership). The plan has brought to international attention the matter of Africa, the need for sustainable investment and for a lasting and inclusive partnership.
Italy is also at the core of the “enlarged” Mediterranean, which is strongly interconnected with the Indo-Pacific, as was emphasised by the Italian and Indian PMs. Furthermore, a number of priorities of the Indian G20 presidency – from debt relief for developing countries and the reform of international financial institutions to the tracks of health and finance, and climate change – are in strong continuity with the agenda of the Italian presidency of 2021.
Italy and India, in two distinct but interconnected geopolitical scenarios, can play a mutually reinforcing role in stimulating and supporting a new global agenda aimed at addressing the most urgent contemporary issues that primarily affect the South, but which have a major impact on the security, stability and environmental sustainability of the whole world.
Vincenzo de Luca is ambassador of Italy to India and Nepal
The views expressed are personal
