A divided world: G19 + 1

HillTimes.  July 12, 2017. Oped by John Sinclair

A divided world: G19 + 1

The U.S. retreat from leadership of the west’s liberal multilateralism could open policy space for a new global rulebook.

Normally dull and technical G20, chaired this year by German Chancellor Angela Merkel, rolled out in Hamburg Friday to the familiar noise of smoke grenades and water cannons at a major anti-globalization street protest.

Chancellor Merkel found herself the reluctant de facto leader of the western world, given the continuing flawed performance of United States President Donald Trump. His White House staff were so scatty that they even forgot his hotel bookings!

The G20 debating style was calmer perhaps reflecting exhaustion from the recent very stormy G7 meeting. Participants were more focused, recognising a new consensus on topics like climate change and trade liberalization was out of sight. This still left the G20 sherpas working through the night to cobble together an unusually short communiqué that reflected Merkel’s ambitions for a forward-looking text on the key issues of climate change, trade liberalization, and migration for the Nineteen, plus a separate paragraph for the U.S. to reiterate its negatives, notably its quitting of the Paris climate change agreement. In true G20 style, the actual communiqué text was full of familiar promises and unimplemented plans on topics such as banking reform and measures to reduce tax evasion.

Outside, the protesters were so busy shouting that they (and maybe some G20 members) missed a game-changing transition. Hamburg saw a G20 that broke the traditional G7 exclusivity on geopolitical debate. Even if the challenges are the same, G20 perspectives are intrinsically more inclusive, bridging North and South. Voices such as those of China and India clearly counted more now than those of the United Kingdom, Italy, or Canada. More basically the U.S. under ‘America First’ was seen as isolating itself from its nominal friends, treating them as competitors not allies.

Future G20 meetings could well operate at several levels. Traditional finance-minister roles would continue on topics like global financial systems, notably the International Monetary Fund and too-big-to-fail megabanks. But developing countries as the effective majority in the G20 are now demanding an equal voice in an overdue debate on more inclusive and fair (to the poorest) global financial and trading systems. The U.S. retreat from leadership of the West’s liberal multilateralism will probably open policy space for a new global rulebook. This has been long blocked by U.S. and allied delegations, not just at the G20, but also the IMF and World Trade Organisation.

Most of the action in this G20 took place in private bilaterals, side-meetings between leaders. The showpiece was Trump’s meeting with Russian President Vladimir Putin. Nobody, maybe not even the principals, knew how the chemistry would evolve. While the secret bromance has been widely discussed, they had never met, and both say phone calls cannot convey nuances. The event was billed to last 30 minutes, but ran for more than two hours, even though Melania Trump barged in midway to effectively say ‘time boys’. The hottest topic was whether Putin had really influenced the U.S. election. It was certainly discussed and Trump said he, even if not most Americans, now believed Putin’s denial. They both said they wanted to move on—but to where? New joint peace deals for Ukraine and Syria?

Much more discreet and tense, also unmentioned in the official communiqué, were side discussions between Trump and Chinese President Xi Jinping on North Korea. To most outsiders, a dangerous game of potentially nuclear chicken is being played, with the populations of Seoul and several Japanese cities as involuntary road-kill. Trump, having talked of sharing hamburgers with Kim Jong-un in Washington, is instead now trying to pass the ball to China. But Trump and his advisors know the next move is actually theirs. A hard one to swallow, it involves offering peace to the North Korean leader, rather than showing off who has the biggest bomb. Few in the G20, North or South, supports a dry run at World War III.

Unlike the G7, the G20 is not a cozy forum. With its many special guests, we are talking of maybe 40- plus leaders around the table. Networking skills, a strength of Prime Minister Justin Trudeau, were premium assets. Trudeau proved a useful friend to a harried Merkel, as well as gaining a buddy earlier in his European trip in the new Irish prime minister (but they are our rivals for a next UN Security Council seat). Overall, he had a substantive but not superstar conference role, even earning a Trump ‘shout-out indicating they were close friends ( for now!)

John Sinclair is a Cambridge- educated economist, formerly with the Canadian International Development Agency and the World Bank. As Senior Fellow at the University of Ottawa and a McLeod Group member, he teaches and comments on global issues and international development.

Disruptor at G7 table

HillTimes Oped. May 24th 2017

Trudeau and the Disruptor at the G7 Table

If Canada’s PM finds the right G7 allies, he could emerge in a room of wary leaders as the timely conciliator between Trump and the others.

John Sinclair

The G7 struggles to retain influence given the ascendency of the G20. Its traditional plus has been its solidarity and collegiality. However, in Taormina, Italy this weekend, there will be a disruptor at the G7 table. This summit has the potential for high drama and controversy, even if the final outcome disappoints.

The last year or two has seen the G7 focused on an agenda of rebuilding dynamism and sustainability across the global economy, whether in Europe or the Global South. However, today’s core G7 concern, not formally on the agenda but filling the corridors, will be uncertainties in global power politics. New actors mean many opportunities for conflict and flux. Italy as the weak host faces an almost impossible task in herding the cats.

United States President Donald Trump, superstar and disruptor, will be in unknown territory, somewhat alone with his bag of old tweets. Much is uncertain, even if he has dropped any idea of Russian President Vladimir Putin rejoining the G7. He will be wary, unsure who around the table is a true ally. None are natural soulmates, even if he seems to have found new Arab friends. The other G7 participants will be just as wary, worrying which tweet will be his opening card, and which of them will draw the short straw and have to shoot his ideas down, pleading for predictability and consistency in his policy messaging. However, to isolate him would be a political disaster.

Several G7 heavyweights face fragile politics back home. Happiest will be France’s shiny new president, Emmanuel Macron, but even he faces an immediate struggle to win a majority in legislative elections. British Prime Minister Theresa May will be the most likely to cozy up to Trump. Even if she is looking forward to a big majority in her June 8 election, Brexit is losing her many traditional friends. Japan will be extra silent, worrying about North Korean missiles and now a new peacenik president in South Korea.

The G7’s grand dame is Germany’s chancellor, Angela Merkel. However, the vibes at her first meeting with Trump were not good, with Germany’s much-praised economic successes bluntly called unfair trading and euro-currency manipulation. She faces her own elections in September but her prospects here now look good. She also chairs the upcoming (July 7-8) G20 summit, a very different, more inclusive meeting with all the major emerging economies assertively at the table—notably China, the absent elephant at the G7.

Far from last, there will be Prime Minister Justin Trudeau, who will also be being wary. He is already feeling Trump’s menace, including a potentially massive rewrite of NAFTA. However, if the going gets rough he could end up with a key role as bridge-maker, along with Angela Merkel. Intriguingly, he might find a potential new longer-term ally in France’s also youthful new leader, whose just-appointed first cabinet is also half-female.

Of course, while the high drama continues around the G7 table, the hard-working sherpas, high-level public servants, will be searching draft proposals, many pre-negotiated a month or so ago, for some reportable successes. The main points in a somewhat thinner than usual communiqué will likely be well-worn, but unresolved calls to fight inequality, and promote inclusive growth and loophole-free global tax rules. As is increasingly the norm, the tougher topics will be passed to the G20 summit in July.

Tellingly, facing an unyielding Trump, this G7 will have no formal pledge to avoid protectionism, or joint commitment on climate change. On the latter, Trump’s best offer is that he will wait until he gets home to announce whether he plans to quit the Paris global climate agreement.

The North Korea situation will be another cloud over the G7, but serious debate needs China and South Korea at the table.

And Monday night’s attack in Britain at a pop concert will put a new focus on fighting terrorism, a topic where perhaps it will be easier to find common ground, but maybe not viable solutions. Italy’s prime minister has said work is underway so that the summit can produce a stronger anti-terrorism commitment.

Hotter than usual will be cyber security. How can the G7 respond to this threat, implemented by unknown cyber-bandits holding us all, including our hospitals, to ransom?

For Trudeau, there is a bright side. If he finds the right G7 allies, he could emerge in a room of wary leaders, as the timely conciliator, a semi-hero, including by helping ease Merkel’s path to a more productive G20 meeting in July.

John Sinclair is a Cambridge-educated economist, formerly with the Canadian International Development Agency and the World Bank. As a senior fellow at the University of Ottawa and a McLeod Group member he teaches and comments on global issues and international development.

Geopolitical policy challenges on a new Canadian path

Geopolitical policy challenges on a new Canadian path.

Canada needs to move beyond a policy perspective largely shaped by relations with the US and EU and create partnerships with the Global South.

Published by Policy Options.  May 1, 2017.  Written by John Sinclair

The future is always hard to predict, but we already know that there is a new human disrupter at work on Planet Earth. Unfortunately for Canada, he lives just to our south. Any optimistic dreams that he might sober up after a few months on the job have been dispelled. He shows no signs of pulling back even as he is politically humiliated by his failure to end Obamacare or by finding that his Islamophobia is not widely shared by the US judicial system.

Applauded by his team of loyalist advisers, Trump makes macho claims of “taking care of” semi-nuclear North Korea if China won’t. Tough news for Seoul, in easy missile reach just across the border in South Korea, with its 10 million people; the city is at obvious risk of immediate collateral damage, even a gas attack that could kill maybe a million children. As major storms and floods intensify across the planet, President Trump remains a committed denier on climate change, issuing a directive ending President Obama’s restrictions on burning coal. These are not the actions that Canada wants to see from its neighbour.

Meanwhile there are other changes in the global sphere that are shaping the world and Canadians’ path within it. Some are relatively benign, such as advances in technology and access to knowledge. Some are new uncertainties, notably a stumbling Europe adjusting to social change as populations age and new immigration disturbs social conservatives. If the EU starts to lose its cohesion because of Trump-like politics, then our brand new trade deal with Europe, the Comprehensive Economic and Trade Agreement, could be at risk. A major uncertainty has been created by the Brexit folly. Just under 52 percent of the UK population, mainly the older generation, chose the “Leave” path, which is strewn with likely major economic costs for themselves and even more so for their own children, who voted “Remain” by a large margin.

The most radical change that Canada’s world view needs to take into account is the emergence of the global South as a major driver, probably soon the most powerful, of global economic development. Many countries of the South are also significant military powers as well as beneficial sources of social and cultural diversity. Some, notably India and China, were global trading leaders as well as military and seafaring powers a millennium ago, at a time when Europe was just finding its feudal feet.

This global transformation, a new geopolitical order, is getting under way slowly and unevenly. It will likely take many years to come to fruition. But in a resource-scarce world, one driven by new communication modes and marketing-induced consumption “needs,” the South will not want to replicate the features of a North besotted by consumption and enthralled by globalization. Canadian geopolitical strategies will need to be shaped around the new players in the global South as producers, customers and investors, as well as future major markets for our raw materials and industrial products.

Of course, not everyone will benefit. Trump’s electoral upset, rooted in the fears of displaced white male industrial workers, shows that even in the nominally richest of nations, inequality and exclusion remain widespread. For the global South, even with its macro-success stories like China and India, poverty in all its dimensions will remain a harsh reality.

Ending persistent extreme poverty is the central goal of the UN’s Agenda 2030, and Canada subscribed fully to this initiative in 2015. However, that commitment has not translated well into public policy so far. Recent years have indeed seen a declining share of our budget and GDP devoted to “development cooperation” (the new partnership-spirit term for foreign aid), first under Stephen Harper and now, seemingly still, under a smiling, “We are back” Trudeau government.

The new global order will shape 2030 — and 2067, Canada’s next big milestone. It was triggered by the global financial crisis of 2008-09, rooted in bankers’ greed and failed financial regulation in New York and London. The South, in the shape of China and what we call the emerging economies, substantially saved that day by keeping its economies rolling, as both producers and consumers. The mechanism used, massive coordinated financial stimulus, was implemented by global leaders from both North and South, working within the leaders’ G20, an enhanced and enlarged version of the G7. As we know, to our regret, the crisis action may have saved the day but has still left millions jobless.

Many observers regard the continuing impact of the financial crisis as proof that the old economic order, what we call globalization, is no longer adequate, either economically or politically. It is leaving political leaders insecure. Populations, both those Trump-supporting white males and the refugee waves crossing into Europe for the past two years, remain angry and desperate.

The countries of the South, at least the leading members, are now setting their own global policy agendas. The recent mini-summit of President Trump and China’s President Xi Jinping may be the first of many G2-type events, but these are not meetings of minds; rather, they are a forum for tough manoeuvring for power. So far it is Trump who is blinking first.

It remains unclear if China wants to take on the global leader role as the US slips away from automatic supremacy. The BRICS countries (Brazil, Russia, India, China and South Africa), the G7’s mirror in the South, are creating new financial instruments that will match and compete with the IMF and the World Bank. Most visible of these is the new Asia Infrastructure Investment Bank(AIIB), with $100 billion in capital and a membership embracing most of the OECD and the G20; the US and Japan are now the only significant holdouts. Canada needs to be an active collaborator in these new partnerships. Unfortunately, we allowed ourselves to be bullied by the US into initially staying out of the AIIB. Now, belatedly, somewhat cap in hand, we have asked to join, ending up with a small voting share as a junior member.

Canadian public policy could constructively support further enhancements to the G20: a broader mandate and more inclusive membership, as well as a more collegial relationship with the UN.

The BRICS network, having started out as a means of defence against an assertive G7, saw up close during the 2008-09 financial crisis the vulnerability of the West, in its inability to manage growth equitably and sustainably. The G20 is becoming the BRICS countries’ chosen vehicle for rebalancing global rules of finance and trade created over decades that privilege Western OECD/G7 interests. Canadian public policy could constructively support further enhancements to the G20: a broader mandate and more inclusive membership, as well as a more collegial relationship with the UN.

For G7 countries, especially middle powers like Canada, the dilemma now is whether to hold on to familiar privileges or move to a more open approach. We need these new partnerships for political and commercial reasons, but do not quite know how to let go of the past. The North largely kept its privileged voting shares in the IMF and World Bank, and then feigned surprise at the creation of several new BRICS clones. Canada could opt to be a leader in building those alliances. Historically we have no colonial baggage, but all too often we hesitate to be the bold voice of change internationally.

Another dimension with potential for major new conflicts, including some that can seriously affect Canada, is changing leadership in world trade. To demonstrate his omnipotence and protectionist mindset, President Trump, days after his swearing-in, pulled the plug on the almost fully negotiated Trans-Pacific Partnership (TPP), a deal originally designed, in part, to exclude China from the benefits of freer trade. With the rug pulled from underneath them, the rump of TPP members may now fall into the hands of China, as it becomes the new leader on global trading arrangements, even on globalization. The US and its followers — even Canada, which joined late and missed influencing the negotiations — lost the opportunity to make an eventual TPP more inclusive, more sensitive to the needs of poorer developing countries and less favourable to the multinationals.

Clearly a multitude of public policy challenges face Canada and many of its middle-tier OECD peers in the coming decades. Do we move with a tide of change, supporting an approach that engages the global South as an increasingly viable, indeed attractive partner in political, investment and trade ventures? For now, Canada seems to favour more conservative policy options. We will instead buy a few dozen jet fighters from the US, ready for a hypothetical nuclear war with Russia or China, and let aid flows stagnate. We are chasing a Security Council seat but overlooking the immediate need to strengthen our relations with the voting majority of UN countries, which are in the Global South.

Canada should advance a different set of interests: we should be peace builders, rather than bomb droppers. We should support inclusive approaches, not hold on to shaky privilege. We gain from global systems and should favour multilateral approaches. We should avoid playing the bully, like a junior Trump, in developing ties with the Global South.

We still have a few decades to get it all right, but we have to change our public policy mindset now, perhaps taking advantage of the confusion, even conflict, our southern neighbour is creating in the global arena. Sooner, rather than too late, we need to create new partnerships of our own with key nations of the global South. Today’s uncertainty should make it clearer than ever why we need to move beyond a global perspective largely shaped by relations with the US and EU.

This article is part of the Public Policy ‘toward 2067 special feature.

URL: http://policyoptions.irpp.org/magazines/may-2017/geopolitical-policy-challenges-on-a-new-canadian-path/

Global nightmare, false alarm, or new geopolitical order

It is likely we will see a fundamental shake-up in the global pecking order in the aftermath of the US election.

We have had a month now to calm our jangling nerves. President-elect Donald Trump sat down and had a civilized conversation with President Barack Obama. He promised to keep a couple of popular features of Obamacare and said he understood global warming was partly man-made. But he clearly plans to be an almost omnipotent president. One has only to look at the military men he is recruiting to his cabinet. He will probably control both Congress and Senate for four years and, maybe worse for Americans, shape the Supreme Court for another decade. What can Canada expect and can we find a safe path forward in the geopolitical confusion that is likely to come?

Is it the end of the world as we know it? It is likely we are seeing a fundamental shake-up in the global pecking order. The United States, under a weakened Obama, was already fading. Europe is too weak and divided to be a stand-in. Whatever else, this seems like the end of the US as the all-purpose global leader. The world, shaped by the US, has experienced a decade of mismanaged domestic economic policies that has led to the continuing global financial crisis. This has been combined with a series of misjudged and costly military interventions across Asia and the Middle East, including in Iraq, Syria and Afghanistan. The US is no longer everybody’s favourite model. China and Russia, with their complementary aspirations for regional and global spheres of influence, are likely to become more substantial military powers in the next decade or two, especially if their present partnership holds. Somewhat bizarrely, the Trump of “America First” talks as if, as long as the US is not directly challenged, he is prepared to tolerate their aspirations. Bye-bye Ukraine and South China Sea.

China is expected to regain its global leadership in overall economic performance in the next few years. As it completes a politically driven shift of focus to a pro-poor, internal consumption approach, its economic growth will likely stabilize at a healthy 7 percent per year, on the way to surpassing the US’s gross national income (GNI) by roughly 2025. Especially with the Trans Pacific Partnership (TPP) trade deal dead in the water, China will again become the driver of many global resource markets. It will be dominant in shaping Asian markets, both as a consumer and seller. Geopolitically, it could start to fill the vacated US shoes. Somewhat perversely, the present Chinese approach of boosting domestic consumption to provide jobs for otherwise uncompetitive workers might emerge as a sensible strategy for Trump to use in meeting his own promises to rust-belt voters, those “left behind” poor white male Americans.

However, we should have no illusions that Trump might emerge as a closet liberal, even if he is wriggling back from a few extreme positions on Obamacare and that wall along the Mexican border. As Paul Krugman notes, a Trump-inspired Keynesian push, even one that includes substantial tax cuts for the rich, could temporarily be better than a few more years of global financial crisis. Indeed, for some in the international development community, Trump’s policy message resonates with the UN’s global Agenda 2030, with its signature “no one left behind” policy.

There is no such semi-silver-lining for the Paris agreement on climate change. Last month’s COP22 meeting in Morocco to formalize the treaty put in place a legalistic trick designed to undermine the immediate Trump threat. The treaty now forbids any signatory to withdraw for the next four years. This is mandatory solidarity! Of course, Trump and his emerging team of climate deniers can do a lot of damage inside the US itself, although a couple of European leaders have suggested that they might promote new global trade rules that would apply a special tariff penalty to any country (that is, the US) that fails to meet its carbon reduction target. The Trump threat could also have an inhibiting effect on Canada’s new plan for a universal, slowly escalating carbon tax. We will have to grit our teeth and hope that the benefits of the green technology people are hoping for turn out to be real. (Who knows, in extremis, California, which already co-ordinates some green policies with us, might one day ponder joining Canada!)

Trump’s international policy stances, especially his seeming admiration of Russia’s Vladimir Putin and his hesitation over confronting China, could lead to a whole new set of partnerships. For example, in the UN Security Council, a new alignment of power could sometimes find the US on the side of Russia and/or China, shirking the traditional positions of the G7/OECD block of liberal votes on human rights or international development. Canada could find itself on the losing side of important debates. The situation could be worsened by a division in the voting of members of a diminished European Union and a post-Brexit United Kingdom.

It is hard to define what will be the future path of the other two Asian giants, India and Japan. They certainly have no inclination to kowtow to China, but they desperately need market access and partnerships to sustain their own economic growth. They, probably along with Indonesia, Thailand and even Vietnam, will want to opt into any new China-led agreement that replaces the failed US-led TPP. With political support from a more inward-looking Trump-led USA uncertain, fence-sitting may not be a very easy option. The choices will be even more painful for OECD-linked Japan, South Korea and Australia.

Independent of Trump’s plans, Japan, similar to much of Europe in its current anti-immigrant hysteria, will need to seek out substantial immigration to counter the shrinking of its population. It is increasingly essential for Japan, although it might be culturally painful, to have more person-power to sustain a strong economy. It will need to sign a formal trade deal with China, as well as signing up for China’s Asia Infrastructure Bank. If it does not, its global competitiveness will slowly decline.

India’s situation is more optimistic. It is now, after all, the world’s largest country, in population terms, and the fastest growing economically. But that growth rate is an aberration, the result of China’s transition to a new inward-looking policy, which has temporarily lowered China’s growth rate to closer to 6 percent. Also, because of its long history of intraregional tensions with Pakistan and other countries, India cannot lead its own economic bloc in South Asia. It will therefore need to find an accommodation with China. This should not be impossible, since there is a complementarity in their mindsets and management skills — one the world’s largest democracy, the other the world’s strongest economy (after the US), and both very education/skills-focused societies. They could overcome past tensions and form a great partnership. If that fails, India will likely end up aligning with the US, but only after Trump.

Under Trump, the US might seek once again to be the hegemon for the Americas. This will likely fail. Why would Brazil, Argentina and Mexico, Latin America’s dominant economies, give up their independence when they have their own, albeit more modest, regional partnerships? They will wait for Trump to go, and hope, as will many others, that the US will quickly regain its place as a constructive world leader (hopefully a chastened one), a neighbourly quasi-social democracy just like Canada.

Africa, which has the biggest concentration of the world’s poorest, must find the political will to move to a more inclusive, more equitable and liberal-minded political model. Over the very long term it has untapped potential from its natural resources, land and minerals, but in order to access these it needs a more highly skilled population, and it has to control that population’s growth. It is starting on these journeys, but slowly and erratically. Aid to Africa is a significant part of the US’s assistance program, and it will be be a major setback for Africa if it loses that aid under a President Trump. If this happens, it will also open up even more space for China, whose aggressive aid and investment presence is already by many counts the biggest among all the donors, even the major multilaterals. The impact on Africa of global warming-induced droughts is a new threat to the continent’s progress. This threat will only be compounded if the Trump government stays offside in the global struggle to combat climate change.

The Middle East will require a lot of healing to recover from its multiple wars, many of which the US triggered as a result of its post 9/11 paranoia. The countries most affected are Afghanistan, Iraq, Iran, Syria and Palestine. The US remains an active player in this region, but more as an ambiguous peacemaker than as an active warmonger. The uncomfortable accommodation between Russia and the US as both fight ISIS may even deepen under President Trump, who seems to want to avoid further costly US entanglement in the region’s destructive conflicts. He seems to have lost his bombing blitz urges, as long as there is no direct threat to the USA. This is a possible “plus” point for Trump’s impact (Hillary Clinton was the more eager hawk), but the region’s physical and political rehabilitation will take longer than Trump’s term. The Sunni-Shia/hence Saudi-Iranian competition is deep-rooted, and there is no resolution in sight, unless an even more drastic fall in oil prices makes that competition totally unaffordable for both!

This complex framework of changing power relations points to many challenges for Canada. The US political elite has just had a deafening wake-up call from those citizens who are left behind economically and ignored politically. Canada cannot expect to escape significant collateral damage, living as we do next to this seriously wounded and bitter giant.

We need to be part of the diplomatic effort to get Trump and his administration to recognize the folly of not confronting the existential threat of global warming. Over the medium term, we need to take measured steps to move beyond our historical economic linkages with the now weakened EU and UK, recognizing they alone can no longer be sufficient for our economic future, even our global security. Those steps involve understanding and responding proactively to the major shifts of power and global leadership in Asia. As Australia has already been doing for a decade or more, we need to connect to the emerging networks of Asian partnerships, notably (but not exclusively) those centred on China and India. Less critically, we could bypass the US to link more strongly to Latin America. These networks are not sitting waiting for us; we will need to seek them out and earn their trust. This effort will be part of our commitment to a better global future, including implementing the UN’s Agenda 2030 on sustainable development, as a donor and as a global citizen.

Today’s multi-ethnic Canada is well placed to succeed in these efforts. We should seize this unplanned opportunity for bold changes, to think outside the box. The President Trump crisis facing our southern neighbours should serve as the trigger for a decade of Canadian outreach to the new emerging centres of power in an increasingly multipolar world.

 

URL: http://policyoptions.irpp.org/fr/magazines/decembre-2016/global-nightmare-false-alarm-or-new-geopolitical-order/

From ‘Assistance’ to Cooperation and Partnership :Policy Options

The countries we help through international assistance are no longer just recipients, but partners in a global mission to meet sustainable development goals.

September 20, 2016. published in ‘Policy Options’. 

The global economic crisis of 2008, and the stagnation and political crises that followed, have made us acutely aware that our future can no longer rely on relationships with other developed countries. The North (basically OECD countries) and the South (developing countries), rich and poor, must increasingly cooperate.

Our vocabulary and thinking is changing. We are moving beyond what we used to call “assistance,” the charitable response of richer nations to global poverty, to something less paternalistic. We now talk of “development cooperation.” Today’s assistance is multifaceted, and includes more than just financial and technical aid. It can include preferential tariffs on goods from the least­developed countries (LDCs); tweaking the legal frameworks defining what constitutes a refugee; and adjusting intellectual property rules to allow for preferential transfers of technology to LDCs. Development cooperation also encompasses a topic that is particularly hot today: fair payment of taxation by foreign investors, for example, a Canadian mining company operating in a poor African country.

As the federal government reviews its international assistance policies, it should be guided by this evolving vision of development, with financial aid as just one component. The UN Agenda 2030 for Sustainable Development will shape how the government approaches cooperation, seeing the countries it assists as partners in a collective mission to alleviate poverty, rather than mere recipients.

Building relationships through partnerships and enhanced development cooperation

Looking ahead, for political, commercial and security reasons, Canada will need to engage with a more complex array of actors. Some of these countries will be very poor. Our trading and investment partners are as likely to be emerging developing economies as they are familiar OECD countries. The BRICS and other middle­income countries (MICs) are already competing with the United States and other G­7 nations as economic actors. They are reshaping global markets as suppliers and buyers, sometimes as equity investors. The economies of these countries are growing much faster than ours is, even during this extended period of economic stagnation. Today’s BRICS superstar is India, which, despite its 300 million poor, is now growing at about 7 percent per year — faster than China.

 

Critically, more and more developing countries, even the poorest, are changing socially: they are more democratic, and their populations are better educated, with growing expectations of enhanced well­being for their sons and daughters. These expectations are often frustrated by Northern unwillingness to share old privileges and power that have been jealously guarded since the Second World War. One symbolic battlefield is around fairer, more representative governance of global institutions such as the IMF and World Bank. The battle, often driven by the BRICS, has led to the creation of several parallel global financial institutions. One recent (2015) dramatic step was the creation by China of its US$50 billion+ Asia Infrastructure Investment Bank. We saw most major European countries rushing to join as founding contributors, despite very public US objections. Canada belatedly asked China if it could join, after stalling for months under US pressure.

These rapidly changing power relationships between Southern and Northern powers yield a key message: Canada, as a middle power that was substantially absent from the global dialogue for a decade, has a lot of catching up to do. We need new friends, new partnerships in the world.

Obvious candidates are the BRICS, notably China, India and Brazil; but there are also emerging lower­middle­income developing countries (LMICs) such as Ghana, Vietnam, Indonesia, even Egypt or Nigeria. These and other nations could soon be important trade and investment partners for Canada. Of course, old neighbours and friends in the OECD and the G­7 will still be important, but they won’t be enough. Indeed, some of them are already ahead of Canada in building their own new South­facing partnerships.

An enhanced development cooperation approach is a key entry point, a place where we can build relationships and demonstrate our merit as a good partner, to show mutual respect and build trust. However, such partnerships require more than a 24­hour drop­by trade mission, with Canadian politicians desperately searching for a few deals to sign. We need sustained engagements on the ground, over decades, sharing in the struggles of partner countries to end poverty.

Canada was such an engaged partner for many decades. CIDA was the vehicle for our development cooperation activities since the late 1960s — activities that were seen as innovative (the first to provide funding for multiyear programs, rather than individual NGO­led projects) and generous (our aid level peaked at 0.54 percent of GNI in 1975 under Pierre Trudeau). But our leadership presence slowly faded, first from the austerity measures under the Chrétien government, then from the very ambiguous engagement of the Harper years, when our credibility as an innovative donor decreased. Programs became more politicized, and budget cuts sent overall international assistance to a low of 0.23 percent of gross national income (GNI).

But who now should be the beneficiaries of our development assistance? The 2030 United Nations Agenda for Sustainable Development’s core target is to eliminate extreme poverty. The extremely poor population largely resides within the LDCs. Unfortunately, the Harper era saw a distortion toward countries that were considered political or commercial favourites, rather than toward the LDCs. Looking forward, the poorest, still numbering about 1 billion, are in two overlapping country groupings. These are the 48 UN­listed LDCs and some 20 “fragile” countries that are vulnerable and conflict­-afflicted, such as Haiti. An updated list of countries of focus for Canada is urgently needed, and it should consist mainly of LDCs and the ‘fragiles’. Our funding for LDCs should meet the UN aid target of 0.20 percent of GNI.

 

Aid focused on the poorest will meet our commitment under Agenda 2030’s signature principle of “No ­One Left Behind.” However, it does not preclude development cooperation with a few middle­ income countries with whom Canada has important strategic or historic ties, such as the Caribbean states. For them, there could be customized agreements, partnerships or actions that do not require diverting scarce aid. These could focus on arrangements around trade, investment, technology transfer and fairer taxation. They could include possible new cooperation instruments that seek to help engage the private sector, or so­called “triangular cooperation”: innovative aid projects involving partnerships between Canada, a new developing country donor such as Brazil or China, and an LDC or other poorer country.

The 2030 UN Agenda for Sustainable Development as our guide

The universality principle embedded in the preamble of Agenda 2030 brings development cooperation into the heart of Canadian domestic policy. It means all countries, developing and developed, are committed to the same goals as core economic and social performance targets. It is Canada’s statement of global solidarity. This “obligation,” essentially putting Canada on equal footing with developing nations, was once seen as an unacceptable intrusion by former Conservative foreign affairs minister John Baird.

There is a synergy between many of the 17 sustainable development goals (SDGs) and the Trudeau government’s core domestic policy commitments such as working toward gender equity, tackling neglect of our Indigenous population and fighting climate change. This synergy is being taken very seriously as a domestic policy mandate by many Western countries. Already the leaders of Germany and Finland have made full public presentations in the UN on their “whole of government” governance structures for SDGs. Canada has been slower to act, and we have yet to announce our plan. Logically it should be driven by a powerful office that reports directly to the prime minister, and coordinates and monitors activities in partnership with the provinces and territories.

Canada is now in the middle of a complex consultation, seeking new thinking on how to be a better development cooperation partner. Drawing upon Agenda 2030, there are easy­to­select thematic priorities such as gender equity, climate change and poverty elimination. But the real challenge is how we frame and implement the new programs. The rules of the game have changed. Under the Paris Declaration on aid effectiveness, recipient countries should be in the driver’s seat. Partnership is becoming the new norm of international development cooperation. We need to learn how to work differently: it is not a federal department’s choices but the recipient’s stated priorities that should dictate the framework for development cooperation. To this end we will need new cooperation strategies that are prepared jointly with our partner countries. Such strategies should be built around stable four­ to five­year budget commitments.

 

All this means we need to recognize the many practical challenges confronting Canada’s aid officials and partners like civil society organizations. We could start by reclaiming the name CIDA (Canadian International Development Agency), the brand recognized by ordinary Canadians and our partner­ recipients. Global Affairs Canada staff involved in implementing development programs need empathetic senior managers who understand that some of the most effective work is inherently risky. Tidy goals set in Ottawa often fail to internalize the challenges of working in another continent and culture. Finally, the government requires staff who are working closely with their clients on the ground. This requires decentralization — Global Affairs’ development assistance teams working out of our embassies with delegated authority.

As long as they are generous, and delivered effectively and with commitment, our development cooperation programs in the least developed and middle­income countries can be key to the future economic and political partnerships Canada needs as a middle power in a troubled world.

URL:  https://jsinclair43.wordpress.com/2016/10/26/from-assistance-to-cooperation-and-partnership-policy-options/

 

John Sinclair.    September 20, 2016

G20 needs new blood, sense of mission

The Hill Times  OPINION

by John Sinclair. 

PUBLISHED : Wednesday, Aug. 31, 2016

G20 needs new blood, sense of mission

Trudeau might suggest a tighter-knit forum for decisions on core global issues, starting with climate change.

As China prepares to host the G20 leaders’ summit for the first time this week, it is promising a different kind of summit, one focused on global development and the challenges of implementing the pro-poor goals of the UN’s new Agenda 2030.

But China seems fated to do little better than past chairs. The G20 is starting to look as tired as the G7. It needs new blood and a new sense of mission. Perhaps there are too many Europeans; certainly there is no voice at the table for the poorest nations.

The G20 started in 1999 as a club of finance ministers mainly G7 but augmented by the BRICS and a few other friendly minor countries, including some middle-income developing countries. The goal was to make symbolic amends for an ineffective International Monetary Fund response to the recent Asian financial crisis.

The world has avoided a new depression in 2008 via massive stimulus packages implemented by a G20, upgraded to a Leaders’ Summit. However, the regulatory reform of the flawed global financial systems that triggered the crisis is still unfinished. Indeed, the situation has been compounded by the ripple effect of recent European financial disorder. As for the upcoming United States election, it is being fought over who can most forcefully say globalization is the cause of all our social ills, including growing inequality and underemployment.

The global financial crisis continues into its eighth year. And it is in the second year of a refugee crisis, as Europe copes badly with the flow of battered humanity escaping the conflict in Syria. The Brexit referendum bombshell, driven by the UK’s own distinct crisis of unwanted migrants from inside the European Union, has stunned an already stalled Europe. Deep depression describes the mood in the very dis-united United Kingdom. Meanwhile many countries, rich and poor, are struggling with trade losses due to China’s policy of a calculated slowdown to 6.5 per cent growth.

China has perhaps over-invited developing countries as summit guests since there will be no big news, no bold new G20 action, no new aid pledges for the least developed or fragile states. Everybody is waiting for a breakthrough in the gloomy economic news.

But the latest IMF forecasts are all about shrinking growth. Global growth is down to 3.1 per cent for 2016, with most of that coming from emerging economies. They’re led by India, moving slightly ahead of China. The growth forecast for so-called advanced economies is just 1.8 per cent. All this is conveniently blamed upon Brexit. It means a major G20 preoccupation this weekend will be how to help the UK and EU find a soft landing after the folly of that referendum.

So what might we see out of Hangzhou? The working agenda is dominated by work by  finance ministers and central bank governors. There is again a pre-negotiated communiqué. The Leaders appear somewhat bystanders.

Once more there will be “almost completed” deals on structural reform, tougher regulation of footloose bankers and this year’s special innovation: promises of more infrastructure spending. Talk about reformed international financial architecture is promised, but the horse is already out of the stable, symbolized by China’s new $50-billion-plus Asian Infrastructure Investment Bank. [Canada announced plans to finally join just days before the G20 meeting.]

Another round of technical debate is needed to forge a broad consensus around so-called tax fairness reform. The present package is essentially designed for large/high-income economies.  In many European countries public pressure insists governments stop tax-avoiding, profit-shifting companies like Starbucks or Google. But the same OECD countries are home to multinational giants seeking every way of avoiding paying taxes. The weakest victims, poorer developing countries, are essentially excluded from both the design and benefits of new OECD/G20 anti-tax-evasion measures. They are to be denied access to key data on taxes evasion by multinational giants.

What key innovations for an enhanced G20 might Prime Minister Justin Trudeau press? He has gone to China a few days early to “reset” the bilateral relationship. He might use that access and Chinese respect for his prime ministerial father’s boldness to get China’s sympathetic ear for an effort to transform the G20 into strictly a leaders’ dialogue.

They need to break the common image of the G20 as a vehicle used by a tired G7 to try to get the BRICS (Brazil, Russia, India, China, and South Africa) to align with their worldview. Mr. Trudeau might suggest that leaders act more boldly to revamp the G20 as a tighter-knit forum for debate and decisions on core global issues, economic and political, starting with climate change. An encouraging precedent is that reportedly the United States and China plan to jointly announce their ratification of the Paris climate agreement on the eve of the summit.

Another G20 initiative could be a new Marshall Plan designed to assure financing, public and private, for the poorest countries in implementing the UN’s Agenda 2030.

And why not encourage the 2017 G20, under German leadership, to target a lasting peace for the Middle East?

G20 finance ministers and central bankers would still have their own high-level meetings on topics like upgraded financial regulation. They could simply mandate a small delegation to report at one session of an otherwise leaders-only G20 meeting.

Acting together, G20 leaders could mobilize the resources and political willpower to counter the economic pessimism reflected in Trumpism and the rise of the radical conservative right in Europe. They should also show the driving spirit to ensure the UN Agenda 2030 is not a fanciful dream, but something realizable.

The G20 needs a more compact forum, but one with the inclusiveness of the UN. It could start by adding a permanent seat for least-developed and fragile states, perhaps by reducing the disproportionate European presence.

John Sinclair is a Cambridge-educated economics graduate formerly with the Canadian International Development Agency and the World Bank. He comments on international development with the McLeod Group, teaches, and writes.

 

 

Country of Focus – IAR submission

IAR Submission: John Sinclair

Subject: Focus: core recommendations… and some key footnotes.

  • focus country selection should be overwhelmingly driven by pro-poor, UN Agenda 2030 policy criteria, not residual drivers from Harper-era commercial/ political motivation (e.g. Colombia and Mongolia)

 

  • focus at the country level is sound policy in development effectiveness terms. For a meaningful ODA presence and significant policy influence, a critical mass of presence, financial and human, is needed. With a likely fixed ODA budget pool, too many priority countries means sub-optimal impact, developmental and in terms of partnership credibility. [1]This might be in 2016 terms perhaps an annual[2] budget of say $50m or maybe more for a very vulnerable LDC/fragile state like Haiti or an Ethiopia. . We are a small donor and for impact we need a sustained, substantive presence, including decentralised Canadian development cooperation staff.  An optimal number of focus/core countries, based upon Canadian policy considerations, and also best practice as displayed by similarly-minded bilateral donors (notably Nordics, UK, Dutch), might be say 15-20 countries. PM Harper increased the number from 20 to 25, perhaps to give the impression of being more generous, but of course with a fixed overall budget each of them received less ODA.  He also chose to drop some small but very poor African LDCs which offered no ‘geopolitical’ gains.

 

  • Good focused development programing needs to be built around a professionally strong and empowered decentralised programming team. Canada is somewhat a laggard[3] in this approach compared to most of our peers. But this is the basis of a healthy collegial relationship with any focus country.

 

  • Under a new focus policy, a small number (10-15) of ‘other’ 2nd tier aid presence countries might be identified and provided with modest levels of bilateral aid for reasons of historic or other linkages, e.g. such to complete ongoing multi-year commitments. Of note, this has been the key political rationale for a special regional programme with the Caribbean.

 

  • One concern on focus expressed by some (e.g. CSOs, academics) is that it risks us neglecting a class of usually smaller, resource–poor countries, so-called ‘orphans’, who have no special political friends or strategic interest to big powers or other major donors. These critics suggest that a mid-sized donor like Canada might specifically focus on such countries as a sign of its ‘empathy’ – give more aid to a few relatively under-aided countries. A superior approach to the ‘orphan country’ problem is by recognising the greater effectiveness of multilateral entities such as UN agencies like UNDP and MFIs like the ADB). They are best placed to get aid to possible ‘orphan’ countries. Ensuring orphan countries are not forgotten should certainly be a responsibility for sympathetic bilaterals such as Canada, but not by direct management, but rather by using our position on the executive boards of multilateral entities to insist that they allocate money[4] /effort in this way. This means that support for ‘orphans’ is spread across the whole donor community, perhaps requiring better, increase core funding of such as UNDP or the ADB. The rare exception for a direct role might be where Canada has special historical ties, such as to the Caribbean and some other small Commonwealth countries, but these countries are not orphans but actually receive higher than average aid per capita.

 

  • To build solid partnership relations and provide predictable[5] resource transfers, a Canadian list of focus countries should be reviewed no more than once every four years/on a change of government, with a strong predisposition to continuity if the country is still low-income/LDC/fragile country. Their annual budget should be based upon commitments[6] under a mutually agreed multi-year framework.  Our programming should be based upon a mutually agreed programming framework, a partnership agreement with the recipient government. [ We might seek to encourage a role for their CSOs/local think-tanks in designing that framework.]

 

  • firm and transparent selection criteria aligned with ODAA Act principles should apply. Focus Countries selected should be predominantly (75-80%) low-income/least developed and fragile states (g7+), We should eliminate commercial or political weight in their selection.

 

  • Focus is not just a list of countries, but should involve a complementary concentration of GAC financial/ODA and human resources in designing and delivering programs. Optimally 80% of bilateral ODA might be devoted to focus countries and 80% of that go to low-income LDCs/fragiles.

 

  • Thematic focus (e.g. MNCH) is a distinct policy issue and best dealt with separately. The best practice consensus, to which Canada has always signed up, is the Paris Declaration mantra of ‘country ownership’. Canada should not be trying to impose its policy priorities on countries, exploiting the vulnerability of the poorest countries. Agenda 2030 reiterates the message of country ownership, indicating that each recipient should set the tone and content of the development relationship. We, of course, via our hopefully improved programming dialogue and decentralisation, will be close enough to them to convincingly share many of our most important insights and make them aware of our special competences. But that is fundamentally different from arriving with our plan in hand for running their The latter is old-fashioned neo-colonialism and should be passé in a quality partnership[7].

 

  • Focus countries would also be prime Canadian candidates for important non-aid policies such as trade preferences, investment, educational partnerships, etc. This is more true now than ever in a world where we see successfully developing LDCs and MICs as important longer-term trading and investment partners. It also makes good sense in a Canadian government that see major synergy gains from a whole of government

 

 

John Sinclair – Aug 2016

[1] A realistic target might be to be say the 5th largest donor to the LDCs/fragiles in our revised list of priority countries within next 2 years – it takes time to develop new programming, especially in these countries with their weaker absorptive capacity. We will need in parallel to new funding, to upgrade our field presence by greater decentralisation.

[2] Recall that a typical aid project in today’s world where programmatic aid is the developmental optimum, may have a multi-year budget of $100m.  [for large IFIs the optimum size for a 4-5 year project might be $300-500m]. The old style $10m CIDA project is not something any but the poorest of developing country governments would welcome as optimal. That size is closer to a large NGO project, a good vehicle for piloting but likely to have limited direct national impact/relevance/ substantial bureaucratic overhead costs to both donor and recipient.

[3] A major impediment to decentralization can be the discomfort that senior management in CIDA/GAC feel at having important decisions effectively taken closer to the client than to the DM or Minister. This was always a false excuse; a Minister’s input is optimally strategic, not micro-detail.  This concern is even less justified now with internet and video conferencing. The World Bank is decentralized almost everywhere now since the late-90s, after resisting board members like Canada for years. Decentralisation is inevitably modestly more expensive but there are major gains in quality, trust and effectiveness. [ click above link to separate blog]

[4] we need in parallel to ensure they have the incremental core ODA funding to carry out this task… and Canada needs to drastically reduce its past practice of ear-marking fund allocation in the UN and the IFIs

[5] Predictability is a key topic for aid-dependent LDCs. Their budget situation is often very fragile, even without a global crisis. Their programming for basic services like education and health is often very dependent on a steady flow of core funding from several donors. It is a difficult balancing act for the finance minister of a typical LDC.

[6] See separate IAR submission by John Sinclair entitled ‘A new GAC programming style for LDCs’. Our own formally one-year budget cycle does not forbid multi-year commitments.  In Canada we plan domestically on a multi-year basis with no problems and aid is a tiny % of any Canadian federal budget. If we have a financial crisis, no LDC is going to sue us for breach of contract, indeed we will likely be all getting together in the G20 for a global recovery plan. For many years CIDA had multi-year planning framework (IPFs, Indicative Planning Frameworks). These were usually shared with recipients so that they know for several years what financial support they could expect … and put into their budget planning framework. It is easy and indeed more strategic for a cabinet, theirs and ours, to plan on that basis.  It and creates stability in our own country programming and IAE budgeting.

[7] In a world where Canada is seeking broad relationship/partnerships for non-development reasons such as support via votes for a UN Security Council seat, we need trusting, respectful relationships with developing countries. Bullying is bad practice and we do not even have the relative strength to succeed in this unCanadian role.