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/

Global nightmare, false alarm or new geopolitical order?

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.

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

Decentralisation – an instrument of choice

Draft: A policy development note by John Sinclair – July 2016  

It is well understood in the development business that decentralization makes sense. When people in Ottawa try to plan and control development programs located 10,000 kilometres away, projects are much more vulnerable to poorly informed design and local adaptation. Can you Imagine Canadian aid officials paying to build a bread factory with a roof designed to Canadian winter snowload specs when it was to be located on the equator? But it happened at huge costs in time, money and credibility. This sort of thing happens far too often. Somebody responsible and informed on the ground can greatly minimize this risk.

Canada’s record for many decades is as one of the most highly centralized of bilateral donors. Officials talked of ‘localitis ‘as a failing – being too close to the country knowledge could undermine objectivity. This became an obsession in the control-focused Harper decade where project documents gathered dust on Bev Oda’s desk and our partners never knew for months if a project was approved or rejected.  The small CIDA team on the ground had no delegated authority to communicate with the nominally partner country without a HQ authorisation. This meant projects and country strategies were designed in Ottawa for a country that key staff often saw once, maybe twice, a year on a brief mission. Senior management, including policy-makers, most likely had never visited any recipient country except for an international conference.

How can such approaches be seen as developmentally optimal or cost-effective? The net effect is that we dismissed the value of local knowledge of the partner country officials despite the reality that they obviously better knew its economic and social realities. They are also the ones accountable, increasingly via democratic governance, for the wellbeing of their citizens.

How have these bad practices survived?  The explanations are many but a key factor is an imbalance of power, and, in the Canada context, an excessively bureaucratic approach to ‘accountability’.  Western donor institutions and multilateral institutions like the World Bank, controlled the money. They, their staff, far too often thought they knew best. This is not partnership.

That mindset was nominally rejected a decade ago by Canada and the international donor community when we signed the Paris Declaration (2005) which recognized development  effectiveness required ‘country ownership’ and a  ‘country in the driver’s seat’.

The old HQ-centric approach to our relationship with developing countries was never developmentally effective. And now, it is no longer politically acceptable in a world where most developing countries, even the poorest, have governments and citizens/civil societies who feel empowered to be masters in their own land.

The way forward is decentralisation.

Central to Canada really being ‘back,’ is that our relationship with developing countries needs to be a real partnership. As a donor this means our programming should be responsive and inclusive. This is particularly true of the core countries where it needs to be managed in a decentralized mode by strong professionals, with empowered leadership, a resident country director.  The rationale is very practical, not just political correctness. Effectiveness and impact improve substantially if we are close enough to see our partners weekly if not daily – not for reasons of control or book-keeping, but to ensure an optimal understanding of current local realities and the early correction of flawed approaches.

Decentralisation is not new. In the mid-80s CIDA launched into a massive decentralisation exercise following the lead of other bilateral donors. It probably over-reached and, in a strained relationship, let DFAIT co-opt too much of the special start-up funding for buildings. Within three years the pilot was closed. The official explanation was cost; the reality is more that senior management inside CIDA, but also in central agencies, such as Finance, Foreign Affairs and PCO, felt insecure – they had lost their driver’s seat position for what was seen as a distant co-piloting exercise via an in situ partnership between an empowered CIDA field team and the national planning office of  a country such as Tanzania.

Many DAC donors, notably the US, UK and Nordics, have shown more staying power than Canada.  They, including Canada, pushed the World Bank into its massive decentralisation in the late-90s. But we have only returned to decentralisation in a few donor favorites where it was effectively mandatory.

Will the Trudeau government reverse this situation?  The basic arguments still hold. Indeed, in today’s world, Canada wants a stronger set of relationships with developing countries for political and economic reasons. But it is not so clear that the present generation of GAC senior bureaucrats are willing to let go and allow development partnerships to be designed and driven in situ, not a Pearson Building tower. Key will be if good managers will eagerly leave Headquarters. In the World Bank transition, its President bluntly told managers: no promotions, no career, without a stint as a decentralised director!

Cost is often raised as a problem. But decentralisation was affordable once and the technique of using local professionals in so-called PSU’s (program support units) not only dramatically reduced costs but meant that the Canadian field staff had even close contact with local policy-makers and think-tanks. Decentralisation is an enriching professional experience, but to work staff need a distinct set of skills and attitudes to sustain the partnership.

An in-situ director quickly gets to know the inside story on host government policy. Delegated authority, as evidence of trust from the HQ, in turn facilitates a trusting working relationship with host country ministers and senior officials. Donors in situ often work together in thematic partnerships. In the Canadian embassy, it is typically the development people, not the lone trade officer, who learn first of big local deals and scams. As Canada shift attention to the poorest, especially fragile states, often with absorptive capacity constraints, we will need even more of that closeness for effective implementation.

For Canada to regain its political and professional credibility as a partner in the developing world the present GAC consultations needs to draw some bold conclusions on strengthening decentralisation. That ‘boldness’ should emerge from recognition of the effectiveness and relationship gains from such partnership. Certainly more ODA is needed by LDCs, but decentralisation will help ensure us a richer return from that investment.

Are the ‘No Ones’ again being ‘Left Behind’?

Embassy Newspaper Oped: published Aug 26th 2015

Financing for Development: Are the No Ones again being Left Behind?

Just a few weeks ago, 7000 ministers and senior officials, plus CSOs and private sector representatives met in Addis Ababa at the UN Conference on Financing for Development (FfD). Participants came from the richest to the poorest of nations. Their core goal was to ensure resources would be available to effectively implement the UN Post-2015 Agenda, the international community’s core vehicle for ‘Eliminating Extreme Poverty by 2030’, poverty that weighs upon over a billion global citizens. Post-2015 itself is due to be endorsed, after several years of dialogue and negotiations, at a UN Summit in New York this September. Canada will be one of the many which sign on to an agenda framed by the moral, as well as the practical, objective of ‘No One Left Behind’.

Against that objective, FfD has already failed. Its main goal was to ensure that Post-2015 would have a smooth beginning to its 15 years ‘transformational’ journey. Often tense negotiations instead produced a rambling 134 paragraph Addis Ababa Action Agenda (AAAA). Despite the fancy acronym the document is full of critical holes and papered-over cracks following discussions between rich nations and the developing countries (the G77 as they code themselves). Over four months of intermittent negotiations had their formal climax in just four days of tense exchanges in Addis. Even before they arrived everybody knew there would be no bold resolution to tackle the financing needs of the poorest. Traditional donors, struggling still with their own shaky economies, were in no mood for generosity, instead they were looking for alibis. The final Addis agreement has both North and South endorsing a minimalist, lowest common denominator model, with little for the poorest.

This means that the Post-2015 Agenda Summit, planned as a showcase of bold commitments to defeat poverty, will be more a gathering of embarrassed world leaders committing themselves to an unfunded agenda, maybe wisely renamed ‘Agenda 2030’. The harsh truth is that there is no plan for effective implementation.

Addis certainly had many big ideas on the table, but the problem was that there was little consensus on their content and many of the solutions have no proven viability. One of the most disturbing outcomes is that the poor living in the least developed countries (LDCs) or fragile states (g7+), had no champion amongst the power-brokers of the international community. Many one-time liberal voices amongst Western donors were almost as defensive on increasing aid volume as traditional misers such as the USA. Canada sadly (and Australia) has joined the USA and Japan in a cabal of development policy hard-liners in the eyes of the G77, drawing ‘red lines’ indicating forbidden ideas that were once norms of good policy. Progress was instead represented by gimmicky ideas with no money or concrete action plan. Canada boasted about Convergence, a ‘blended finance platform’, which sounded more like the name for a new perfume brand. We breathed a sigh of relief that nobody pressed for dates for the 0.7% aid target. [Canadian aid under Mr. Harper has sunk to 0.24%, close to an all-time low.]

Maybe worse, the powerful G77 countries, the BRICS and other leading voices seemed equally unsupportive of their weaker brethren. Instead they were preoccupied in Addis drawing their own ‘red lines’ as they sought to advance their own agendas. Key was international tax reform on which they fought a long battle with OECD countries. The case for more grant aid for the LDCs was not pressed by G77 leaders and unsurprisingly no enhanced LDC-specific target was set.

One of the new realities in the international dialogue of recent years is that the development agenda is being debated in much more than aid terms. This would be fine if the other new possible instruments being discussed were incremental (and proven viable) … and not being used to justify stagnant traditional grant aid, even for the poorest. The problem is that the latter is closer to the truth. Look at where Canada is placing its emphasis. We have steadily cut our ODA effort in the recent years. Instead we joined forces with such as the World Economic Forum, the club for multinational CEOs, in designing approaches to enhanced financing for the private sector, often the equivalent of investment subsidies. Roughly 5/30 pages of AAAA are on possible enhanced private sector activities and it took just two paras to reject more demanding aid volume targets.

The ‘proven viable’ is a key proviso. Most private investment in developing countries goes to a few strong middle-income economies such as Brazil, India and, of course, China. Virtually none goes to the LDCs where most ‘no one left behind’ poor are presently living, unskilled and under-educated. The only exception is profit-driven investors seeking privileged access to their raw materials. This does not seem like a ‘transformational‘ reality.

Significantly in Addis there were reportedly 500 or so activist CSOs, but private sector CEOs were essentially ‘no show’ actors, implicitly signaling their tenuous interest in being the West’s frontline warriors in eliminating extreme poverty.

The hottest topic in Addis was international tax reform: new rules that seek to end a situation where many private companies, those multinationals, evade fair tax obligations. This costs tax revenue in both those developing countries where multinationals have factories and in developed countries, their corporate homes. Instead these corporations hide their profits in tax havens or by phony transfer pricing. The battle in Addis was about who should lead the search for answers. At present this is done using tax reform ideas from the OECD Secretariat. The G77 argued that this work on what is a global problem must be centered in a strengthened UN framework, its Tax Committee. They saw OECD technical advice as seriously tainted; the OECD is home to most tax-evading multinationals. Both sides drew ‘red lines’ and in the end Addis saw a stand-off that leaves tax-evaders off the hook. No prize for guessing Canada’s side.

Canada was a blocking voice in Addis. We were leaders in the search for instruments that eased political pressures for more aid. We joined opposition to enhanced aid for LDCs. All this only reinforced our ever-diminished credibility with the developing world and even with once like-minded Western nations, (most Nordics, the UK), who still recognise their global responsibilities.. and longer-term interests in ending global poverty.

John Sinclair, a Cambridge-educated economist, worked as a development practitioner at CIDA and the World Bank. He is a member of the advocacy McLeod Group. He is a Distinguished Associate of the former North-South Institute.

Financing for Development – new integrity needed

Financing for Development, the Net New challenge

– blog for Huffington.ca  published Jun 4/2015. by John Sinclair 

 The UN Conference on Financing for Development (FfD) meets this July in Addis Ababa. It is designed to mobilize the trillions of new dollars needed to fully implement the UN’s new Post-2015 Agenda. The Agenda embodies the principle of ‘leaving nobody behind’ and has a bold core goal, the elimination of extreme poverty by 2030.

All very worthy, but will Western donors be seen as evasive in Addis and deliberately avoiding the need for ‘Net New’ resource? This is economist jargon for asking two things: that donor support is genuinely additional, the ‘new’; also that there is no false labelling, that we recognise that the new private investment will be substantially recovered as profits or declared as loans from development banks, the ‘net’.

We know private flows far exceed traditional grant aid. But worrisomely donors now talk about these trillions of investment dollars as being equivalent to ‘aid’.

It is becoming political cover for the reality of almost stagnant grant aid. Is this fantasy, window-dressing, even a practical possibility? Critically will it be ‘net new’? Practically, developed country governments cannot instruct private companies to invest in poverty reduction, rather than profit maximization.

We need to recall that most private flows are going to the richest of developing countries, to China not a Cambodia. This distribution runs counter to a goal of ‘leaving nobody behind’. The least developed countries for sure want both: more private investment and a bigger share of traditional grant aid.

So is there too much donor ‘window-dressing’?  However for those who believe in fairness (don’t we all?) it means that developed nations are expected to contribute substantially the ‘Net New’ stuff that is needed by the poorest nations.

However global equity does not seem to be in vogue. Many traditional Western donors have let their grant aid stagnate.  Canadian aid is down to 0.24% of national income (GNI)…  and still falling. We boast of our competence in handling the global financial crisis, but then say it has left us too poor to contribute.  A better model is the UK.  It chose to protect its budget allocation for meeting the UN’s 0.7% target. Western donors are not searching for ‘new net’ but rather for innovative ways of reporting and boasting about other things we can count as ‘sort of like’ aid.

Private sector activities have always been the life-blood of national economies in developed and developing countries alike. But now it is to be the big innovation in development. In practice, this means the money multinational and their shareholders in such as New York and Toronto spend clearing tropical jungle to grow oil palms in Indonesia or building jean factories in Haiti. Donors, including multilaterals such as the World Bank, note these huge gross flows in the IMF statistics, but conveniently overlook the large matching item called ‘remitted profits’.  This can leave as the only ‘Net New’ benefit for say Bangladesh low-paid jobs, sometimes even tragic death in a factory fire.

To compound the problem multinationals often find the means of not paying taxes on their profits. Sometimes this is technically legal, sometimes essentially fraud via false documentation. The net effect is the same – a loss of public funds for social investment in the developing country (and often also to the investor’s home country as profits are parked in tax havens). This massive leakage is now a major topic of discussion in the OECD and the G20, but there is all too little action on reformed global taxation systems, binding codes of good practice for multinationals, rules on fair taxation in the country where production occurs, etc. We need to make tax avoidance history.

One last example of missing ‘net new’ are the $ billions recorded as  ‘remittances’ in the IMF statistics. Key at the human level is the money saved by individuals born in the South, now working in the West as say a taxi-driver in Montreal or picking strawberries in California. The remittances are the personal savings they send home to even poorer mothers in Guatemala or Ethiopia. It is somewhat offensive that these millions of tiny personal transfers back home are now being discussed as new ‘treasure’ discovered by Canadian and other aid officials that can be boasted of as some sort of national ‘aid’ money.

We need a new integrity in the debate about financing global development, notably the Post-2015 Agenda. Its implementation will be costly.  As in the past most will be born by developing countries themselves, hopefully with more effective local tax efforts. Private and public external contributions are all needed and valid but they must be measured in ‘net new’ terms, not as repackaged old goods. Much better be honest with Canadian citizens who when polled say they want to be seen as generous donors to the most needy, surely not as tax avoiders or trying to double-count the savings of a poor Haitian taxi-driver living in Montreal.

Global Partnership ready for Action?

Posted on CIPS site, Ottawa University. Feb. 25, 2015

Link: http://cips.uottawa.ca/is-the-global-partnership-ready-for-action/

The Global Partnership for Effective Development Co-operation was born at a global conference held in Busan, Korea in 2011 to confront concerns that old-fashioned aid (ODA) was not working. Billions were being spent and the Global South’s poor and vulnerable remained frozen in their fate. Grant aid had to be understood as a necessary but not sufficient condition. Out of the Busan conference came a more inclusive concept, Development Co-operation, embracing elements such as trade, private sector, human rights and environmental sustainability.

Western donors, including Canada, had warily signed on to another part of the answer, ‘country ownership’, which implies that aid succeeds only when programs are designed and implemented by the beneficiaries rather than being imposed by outsiders. Another set of actors, the BRICS and other emerging economies, has now entered the donor arena as well as being seen as the West’s saviour from the worst impact of the global financial crisis. The past decade has seen them become a major force in development co-operation.

The presence of these new actors provided both an opportunity and a geopolitical challenge for the Global Partnership (GP) as a bridge between industrialized North and emerging South. But moving on is proving complex and demanding. The GP has not failed, but success is far from sure.

A key opportunity is almost ready for prime time: this September will see enactment of the UN’s Post-2015 Agenda, the principal goal of which is a world free from extreme poverty. The GP has made a substantive contribution to the implementation of Post-2015 its prime objective.

The GP’s first High Level meeting, hosted in April 2014 by Mexico, had 1500 participants: old donors, new providers, an increasingly differentiated array of recipients, civil society organizations (CSOs) and not least the private sector. The stakeholder-mix wins a prize for inclusiveness, but is still far from being successful effectiveness. Indeed, in a crowded field of competing actors, elements of a surprisingly more assertive UN system are challenging the GP on relevance. Some in the G77 (the UN caucus of developing countries) see it as lacking legitimacy and being just a revamped OECD donor instrument.

2015 will be a challenging year for the GP under its new co-chairs, the Netherlands, Mexico and Malawi, who are working with a very modest support team of officials from the OECD and the UNDP. The next six months will see the GP trying to establish its credibility as an organization that can deliver innovative support on the ground and transform from talk-shop to delivery vehicle.

But many of its members worry that the GP still has too little depth. It is fine to hold conferences and regional workshops, but the ultimate test is whether Southern partners see relevant and credible action that helps brings poverty-reducing programming and better governance at the local level. Trust was reported as a shaky commodity inside the GP, yet is essential for success. CSOs who clapped at Busan when they were formally recognized as independent development actors now grumble at being often excluded on the ground.

The key breakthrough–engaging the new emerging countries—has not happened. They do not even contribute to set-piece global meetings, except via the occasional junior official sent as a note-taker. GP thinking is still dominated by OECD countries who seem hesitant to share or boldly step forward. Equally wary ‘new’ donors see no real merit in taking up the challenge because they see no real partnership on offer.

The time frame is getting tighter, with September set for the Post-2015 Agenda Summit sign-off in New York. In July, GP member donors, Canada included, must find the will to reach consensus on how to pay for the implementation of Post-2015 at the UN global conference on Financing for Development. They are hoping to finesse this by talking of ‘innovative financial mechanisms’—which significantly means diverting scarce grant ODA to subsidize quasi-commercial lending to ‘leverage’ a stronger role for private foreign investors.

Any resolution will be a hard sell. These are hard times for OECD countries. Low-income developing countries are also wary, even if impatient to get back on the growth ladder. They know they need to raise more resources domestically, but they also need a bigger share in assured increases in grant aid (especially given that most of the proposed ‘innovations’ seem likely to only benefit middle-income developing countries rather than themselves).

Are too many eggs being placed in one rather shaky basket? Most private companies, even the big multinationals, do not see ‘pro-poor development’ as their thing, wanting open markets and more opportunities for profit. Canada’s Harper government seems more confused than most: it essentially wants already-diminished grant aid further diverted in order to facilitate Canadian commercial interests.

So what more can one hope for from the GP beyond better monitoring systems or small pilot programs called Voluntary Initiatives? To be relevant to the remaining billion poorest and to Post-2015, these initiatives need to be quickly scalable.

The GP contains the powerful donors of the North, but they are not adequately exercising the leverage of which they are capable. To succeed, they must demonstrate their commitment to partnership starting with high-level dialogue with key new donors and leading partner countries. The Partnership is only just now getting its troops together, (including the senior officials who still effectively shape the agenda of the World Bank and other multilateral institutions) to sell the practical merits of an effective Global Partnership.

Time is running out to make the partnership concrete. Hesitant steps, worse a stumble, could leave the GP unable to deliver its now core mission of becoming a key partner in implementing the Post-2015 Agenda.