Huge Challenges Ahead For Our Economic Diplomacy

The inability of government to clearly deploy its economic agenda and formulate the corresponding macro-economic policy framework is proving to be a serious stumbling block on the road to
socio-economic progress

The general consensus from all sections of the population these days is that it is high time for those who hold the levers of decision making in their hands to shift gear and place the economic plight of the country at the top of the national agenda.

Granted that politics is an essential part of our democratic way of life, it is nonetheless damaging when cheap politics seems to continually occupy the centre stage for too long. It then becomes a huge distraction from what ought to be the real preoccupations of any government. The resulting inability of government to clearly deploy its economic agenda and formulate the corresponding macro-economic policy framework is proving to be a serious stumbling block on the road to socio-economic progress.

A crying illustration of this frustrating experience has been provided by the recent budget presentation: the positive effects were very soon overwhelmed by the most untimely negative political developments. This failure of government to give a bold sense of direction to its economic agenda has been widely commented upon by analysts and politicians alike. In the rest of this paper we shall therefore consider another part of the equation which, to our mind, has been rather neglected up to now although it may have dramatic consequences for our future economic prospects:

Unnoticed since roughly the beginning of this year, a seismic shift seems to be taking place in our economic diplomacy. There is no inherent harm in the fact that this should be happening as a result of some of the dramatic shifts which have occurred in the geo-political market place starting, among others, from the now established rise of China and India as major global players, to more recent events such as the rapid emergence of a consumer class in Africa not to mention the Brexit.

That our economic diplomacy definitely needed a brush-up to adjust to this new external global landscape is certainly not questionable. What is extremely worrying however is the fact that there is no indication that this is happening as a result of a well-thought through exercise and that a road map defining a holistic approach has been drawn for guidance on the way forward. As a result one is therefore left with the uneasy impression that in the absence of such a clear road map our economic diplomacy may be going haywire. In a deteriorating global context characterized by threats of global trade contraction and gradual abandonment of the liberal trade policies of the last decades, such ineptitudes could prove to be hugely penalizing.

In this case, as in so many other instances in the country these days, the failure of institutions and the dysfunctional structures which have replaced them are largely responsible for this sad state of affairs. The present divorce between what one could term “political diplomacy”, which seems to lie more and more in the PMO rather than the Ministry of Foreign Affairs, and “economic diplomacy” under the latter’s jurisdiction is a fundamental flaw which is bound to undermine our national interest if it is not remedied soon.

Economic diplomacy simply cannot be reduced to trade diplomacy — the negotiation of trade agreements in bilateral, regional or multilateral contexts — as seems to have been the case for some time now. Trade diplomacy is an essential but only fractional part of economic diplomacy which has been defined as “policies relating to production, movement or exchange of goods, services, investments (including official development assistance), money, information and their regulation”. Such a definition which admittedly covers a very wide range of issues is undoubtedly more relevant for a country which has set itself the goal of achieving the status of a “high income” nation by, among other things, positioning itself as a significant regional economic player.

The case of the re-negotiation of the Double Taxation Avoidance Agreement with India at the beginning of the year, from which our specialist trade negotiators of the Ministry of Foreign Affairs were conspicuously absent, has already highlighted the pernicious effects of the “independent silos” approach. As indeed the recent (over)reaction of the British government, which not so “diplomatically” reminded us of the important position of Great Britain as a market and provider of capital for Mauritius, in the midst of the dispute and just claims for sovereignty over the Chagos islands, provides a counter example of how political and economic diplomacy remain inextricably linked.

In an IMF report back in 1997, it was stated that “the pressures of globalization… accentuate the benefits of good policies and the costs of bad policies”. It must be said that almost twenty years later the validity of this statement remains as potent as when it was first made. Mauritius, as a small island developing state, is particularly vulnerable to globalization whether in its positive or negative effects.

In a first phase of our socio-economic development, the conduct of our political diplomacy was one of our greatest strengths. It was once said that our diplomacy was a mirror reflection of our tourism industry characteristics — friendly, conciliatory and consensual.

The country has grown in stature from a developing country to a middle-income economy in an increasingly liberalized, competitive and global regime. Its ambitions have been scaled up to that of becoming a regional platform for business geared to a new emerging Africa while the rest of our traditional economic partners face increasingly turbulent times. In such a context the role of economic diplomacy as a lever of economic and social progress has increased exponentially.

Paradoxically at a time when foreign ministry work is morphing through shifts in priorities towards the primacy of economic diplomacy, Mauritius seems to be taking the opposite route. The latest trends noted above are all pointing to a total lack of effectiveness in the structures, process and design of our economic diplomacy. It is unfortunate that we seem to be living in times when even the reputedly experienced, professional and competent cadre of officers at the Ministry of Foreign Affairs seem helpless and cannot even raise the proverbial red flag…

Rajiv Servansingh