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/

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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.

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.

 

 

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.

Poverty lose out to ‘shirt-fronting’ at Brisbane G20

Published in EMBASSY, Wednesday, November 12, 2014—16 Opinion

Climate change, poverty lose out to ‘shirt-fronting’ at G20

It is becoming harder each year to see anything new and bold, anything that speaks to a better global future, from the G20. The 20 most powerful global leaders will gather this weekend in Brisbane, Australia, talk in private, have their photo-ops, then issue a pre-packaged communiqué that has been endlessly fine-tuned over several months to the point of tedium by twenty anonymous bureaucrats, the sherpas.

We won’t even get to see the big fight: ‘shirt-fronting’ host Tony Abbott versa black-belt holder, Vladimir Putin. (Some well-informed punters suggested 10-1 odds on a Putin win.)

Meanwhile the world outside, our world, stumbles on into another year of under-performing economies and a billion plus global citizens still living on less than $1.25 per day. This year’s rotating chair, Australia, almost succeeded in removing the existential topic of climate change from the agenda as mere ‘clutter’, until a last minute reprieve under pressure from the US and EU.

It is not clear if we are dealing with incompetence or indifference, but I fear the latter.

Of course the sherpas, respecting PM Abbott’s goals, have put together a busy but dull agenda, much of it is unfinished work from previous summits. Timely effective implementation does not seem to be a G20 strong point. Too many ‘decisions’ becomes subject to further studies. Maybe it needs a better accountability framework, one that is public and independently assessed.

Under the heading ‘a more resilient global economy’ the leaders will sign off on further regulations for those ‘too-big-to-fail’ banks that led us into the global financial crisis back in 2008. However past G20 decisions have done little for a struggling Europe. And now the German powerhouse is stalled and China admits to planning for slower growth.

PM Abbott’s favourite is a largely private sector-driven G20 push on infrastructure, to be supported by a newly created knowledge ‘Hub’ for those who don’t know quite what to do.

Meanwhile an impatient China has simply set up its own $100 billion Asian Infrastructure Bank.

There is more on the agenda – after all they have to touch at least lightly upon everything in the draft communiqué. They say they will discuss reforming global institutions – but, blocked by the US Congress, the very modest 2010 IMF reform package is still not implemented and the BRICS, in frustration at this inaction, have now announced their own IMF clone. The G20 plans to talk about ‘modernising international taxation’, a polite way of saying stopping the tax avoidance activities of companies such as Starbucks and Apple as they shuffle huge worldwide profits into countries such as Ireland and Luxembourg where very low taxes need to be paid. Will they remember to include the idea of a financial transactions tax to create new funds for climate action and development?

The meeting will plead for progress on the work of the WTO (World Trade Organisation) but the same reform package was rejected last year by veto-holding developing countries, notably India, since it failed to include any action to reduce huge US and EU agricultural subsidies that undermine the efforts of low-income country farmers. And those same G20 member industrialised countries, with Canada to the fore, are busy cooking up trade side-deals that undermine the WTO mandate for multilateralism. Sadly, the big fix idea for burgeoning unemployment, especially of the young, is discredited trickle-down economics. The G20 will call upon themselves to speed-up (+2%) growth, itself dependent on that plan for a surge in private investment on infrastructure.

All this suggests some holes in the master-plan for Brisbane. But it also points to serious structural flaws in the G20. Most fundamental is inadequately engaged leadership. There is too little focus on fundamental global challenges; too much technical clutter that should be left to others. The G20 is also institutionally weak. It has no secretariat. Its leaders probably rely too much on advice from IMF and OECD officials plus international bankers. It has no leadership continuity beyond the flimsy idea of the troika in which a team of ‘volunteers’, mainly bureaucrats seconded by the next chairman’s country, takes over afresh.

Moreover, despite being much more inclusive than the old elitist G7, the G20 needs to gain a permanent voice for the most vulnerable of low-income countries, the fragiles, known now as the ‘g7+’. Not unlike the IMF, the main problem is over-representation by Europe with 5/20 formal seats plus Spain with a permanent guest ticket. Any volunteers?

A by now perennial criticism is that the G20, both Leaders and Finance Ministers, have obsessed about mending Humpty after the global financial crisis at the expense of everything else we expect to concern global leaders. This is the last G20 before the UN membership at a summit next September sets in place a very ambitious global development agenda for the next 15 years, one set to eliminate extreme poverty by 2030. One might think the G20 would be devoting at least half of its time to this topic (and at least a sold chunk of the other half to Climate Change) leaving topics like the minutiae of new banking rules and efforts to resuscitate the WTO to technocrats. In practice the words ‘Post-2015 Agenda’ do not even appear once in the baseline framework posted on its Australian-managed website. How many lines will it merit in the Brisbane Action Plan? Perhaps a few passing words of moral support? Certainly expect no promises of aggressive unified G20 leadership at the critical Financing for Development conference next July in Ethiopia.

Intriguingly yesterday’s de facto summit of the G2 – USA and China – saw public pledges by Presidents Obama and Xi to work more closely on global issues, including specifically climate change. Is this a new opening for G20 leadership?

Is Canada a party to all this? Yes. We certainly had our sherpa at all the planning meetings. Moreover as Australia’s special ‘mate’ we have had privileged opportunities to influence them, beyond the idea of excluding Russia (something a BRICS’ public statement saying ‘hands off our G20’ quickly squelched). We probably support the incrementalist economics – but so far the Harper government has been dismissive of Opposition calls for a big infrastructure program using our new-found budget surplus. The government more broadly probably dislikes the idea of any action that challenges their dated view that the G7 is still the right place for serious global leadership. Overall we are happy to have had the Australians talking our party line, thus saving us from always being the spoiler.

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

Global Partnership – ready to broaden its mandate?

Global Partnership for Effective Cooperation

Updated for a global audience in February 2014 on Global Partnership/GPEDC blog site ; original published by CIPS on September 4, 2013.

 John Sinclair, Distinguished Associate, North-South Institute, Canada.

Global Partnership – ready to Broaden Its Mandate?

Partnership, especially global, has to be a good thing. Many saw the Global Partnership for Effective Development Co-operation as a last-minute compromise reached at the 2011 Forum on Aid Effectiveness in Busan, Korea, but the Global Partnership’s first High Level meeting in Mexico on April 15-16 is the opportunity to prove its mettle.

The question remaining is whether the Global Partnership can evolve into a leading element in the new global architecture on sustainable development or risks remaining just a slightly enlarged, post-Busan technical forum.

The Global Partnership was conceived as a bridge, political as well as technical, between North and South. However for it to function, Western donors must find common cause with new development actors from an invigorated South such as China, India and Brazil. They must also respect country leadership from increasingly diverse recipient-partners ranging from lower-middle-income Vietnam to highly vulnerable Haiti.

“A Global Partnership linked ministerially to the G20, but also well co-ordinated with the UN, could be a win-win solution for development effectiveness.”

While the Global Partnership continues to find its feet, North and South are moving ahead on the Post-2015 Agenda, the stage beyond the Millennium Development Goals. Building upon his High-Level Panel and extensive consultations, the United Nations’ Secretary-General has proposed to build a consensus around two main objectives: the global elimination of extreme poverty and a set of sustainable development goals linking economic growth, social justice and environmental protection. The UN’s Open Working Group on Sustainable Development Goals is accelerating its work to frame these new goals later in 2014.

An enhanced Global Partnership could play a more engaged role in building that consensus. A modest first step is already happening. The Global Partnership is informally extending beyond monitoring post-Busan performance to a role in helping frame the Post-2015 Development Agenda. But its leadership is still wary, focusing for now on their first High-Level Meeting.

Today’s Global Partnership, with its tripartite ministerial leadership from the UK, Indonesia and Nigeria, works through a committee of 15 international ‘worthies’, selected, with what some might see as only partial legitimacy, to reflect views from different country groupings, international organisations, the private sector and civil society. It has a modest secretariat drawn from the United Nations Development Programme and the Organisation for Economic Co-operation and Development.

This is all far from optimal for a global leadership role. The Partnership risks being left as a weak voice which will defer on strategic issues to traditional global governance fora such as the OECD Development Assistance Committee and the somewhat tired Bretton Woods’ Committees.

Why not start, even if incrementally, to move towards a stronger role? To do this the Global Partnership needs a broader mandate. Busan already saw a shift in vocabulary from aid to development effectiveness. But development post-Busan must be understood more broadly to embrace trade and investment, intellectual property rights, climate change, global governance, etc. Encouragingly that broader agenda is already entering Post-2015 thinking.

In that same spirit the Global Partnership could be reformatted to include a broader–based, more representative ministerial-level body, perhaps as an enlarged steering committee on some sort of ‘constituency’ basis like the OWG. This enlarged Ministerial membership might be broadly aligned with that of the current low-key development working group of the G20. Conveniently, two of the Partnership’s Co-Chairs already sit as nations around the G20 table.

None of this will be easy. The exact mechanics will need to be worked out within the Partnership and with the G20. The latter has its own challenges of legitimacy and flawed inclusiveness. It needs to quickly add a so-called fragile state. Conveniently one is already on the Global Partnership steering committee.

Maybe more problematically, some influential NY voices within the G77 see Busan, thus the Global Partnership, as a ‘plot’ challenging the primacy of the UN. The G77 might prefer another body, the so-called High Level Political Forum, born at Rio+20 to work on the ‘how’ of Post-2015; however, it is also seen as stunted in terms of real power.

The occasion for a first step could be the High-Level Meeting. Could ministers, especially those from countries already within the G20, in Mexico reach beyond the Global Partnership’s Development Effectiveness mandate to encompass the related challenges of merging Post-2015 Millennium Development Goals and new Sustainable Development Goals?

Their formal agenda is important but somewhat technical, including post-Busan monitoring, future roles for the private sector, South-South co-operation, domestic resource mobilization and country-level implementation. This is not the stuff that usually grabs the attention of busy ministers. Moreover, there are more problematic issues that, although raised in Busan or the UN’s Open Working Group, may require a high-level political forum such as a G20 working group enriched with some Global Partnership ministers to build consensus or frame needed compromises.

To move forward global leaders, from South and North, need to agree that there is no one ‘right’ global forum for decision-making or dialogue. Many ideas have their roots in the UN system; others emerge in fora such as the G20 or the Bretton Woods Institutions. None of these fora should have an exclusive right to global power and leadership. Indeed, in our multi-polar world enhanced inclusivity is ever more the institutional challenge.

With this opportunity and also institutional ambiguity, maybe the Partnership even at this late hour might add an informal session in Mexico on its own mandate and future place in global governance? After all this will be first time the Global Partnership comes together as 100+ ministers at a meeting of old and new donors/partners and recipients. The session might be difficult, but still an invaluable exploration. Even to deal with its original Busan mandate, the Global Partnership needs greater legitimacy and empowerment. In a G20 context, North and South have learned to work as partners countering the global financial crisis. Extending that spirit to break the traditionalism within OECD and G77 circles might be a big boost towards the mindset needed for an effective Partnership.

An important caveat is that some low-income, still aid-dependent, developing countries find an enhanced Global Partnership role a worrying concept.  They fear it could distract traditional donors from maintaining the essential flow of conventional aid. Emerging Economies, the BRICS (that is, Brazil, Russia, India, China and South Africa), need to reassure them that this new broader development agenda will have space for both their own needs and those of the fragile states and LICs (Low Income Countries).

A Global Partnership linked ministerially to the G20 will be institutionally a bold step. But, especially if it is also well co-ordinated with the UN, it could be a win-win solution for development effectiveness. Its first challenge could be to assist with the trouble-shooting and consensus–building essential for a successful outcome on the Post-2015 Agenda and its new Sustainable Development Goals. Beyond that, an enhanced ministerial leadership of the Global Partnership building upon its development effectiveness focus, could play a key role in pushing the G20 itself, still overly focused on the global financial crisis, towards a broader geo-political agenda, including issues of equitable and inclusive global development. This would hopefully finally displace any lingering G8 dreams of continuing exclusivity in global leadership. Voices of moderation and partnership in North and South should welcome and support this transition.

 

Who’s Leading the world?

Who’s Leading the World?

August 11, 2014 by John Sinclair.                 http://cips.uottawa.ca/whos-leading-the-world

The simple but disturbing answer is: nobody.

Our world has over a billion people still living in extreme poverty. There are 25 million jobless in Europe. Jihadists control half of Iraq. The Doha Trade Round is in its 13th year without producing any major benefits. And we are burning carbon ever faster, bringing ourselves closer to global warming disaster.

Meanwhile the G7 seems focused on reviving the Cold War, while the G20 is stuck in first gear working mainly on institutional reform in the mega-banking sector. G2 is a non-starter: the USA and China have very different worldviews.  Despite a recent boost for the UN’s leadership in transposing old MDGs into new Sustainable Development Goals for 2015-30, ultimately it is a tired and underfunded family of institutions. Even the BRICS—who are key to future global leadership—are in defensive mode and starting to create their own parallel world of institutions.

This is not anarchy: things are being done, and some crises are being tackled (especially when they hit the CNN headlines). But leadership and vision are absent. We are seeing institutional frameworks that should complement each other instead struggling to protect old turf. Competition, rather than partnership and co-ordination, is still the norm. Meanwhile, jobless growth in often unequal societies is squandering the potential of the next generation, driving the young towards social apathy and even terrorism.

Much of the flawed leadership can be linked to the 2007 global financial crisis, which transformed a modest club of finance ministers into the Leaders’ G20. The crisis proved beyond the capability of the G7 alone: it was China’s economic weight (and its four trillion dollars of US Treasury bonds) that proved key to financial rescue.

The G20 rescue plan was too single-mindedly focused on stabilization (i.e. saving those “too big to fail” banks); creating jobs was only a secondary consideration. As a result, the crisis still casts a cloud over the world economy. Global stagnation has become the new norm: seven years into the crisis, the IMF has just lowered its 2014 world growth forecast.

And now the global governance framework is getting into deeper geo-political trouble with Russia’s expulsion from the G8 for its actions in Crimea. The likely tragic error of an incompetent Ukrainian separatist shooting down the wrong plane has raised Cold War tensions to heights not seen in decades.

Almost at the same time, there was a critical action in Brazil at the latest BRICS Summit. This group now represents over a quarter of the global economy, outshining the old G7 in growth. Reflecting their frustration at the failure of Western governments to deliver on promised first steps towards rebalancing power within the World Bank and the IMF, BRICS leaders announced two new global instruments. One is the New Development Bank (NDB), a World Bank clone designed to finance infrastructure and other development projects, with an initial $50 billion in capital and a $100 billion Contingent Reserve Arrangement to replace key functions of the IMF. By 2016 the NDB will move into a glossy HQ tower in Shanghai under its first president, an Indian.

So where are we going with global governance?

The news seems uniformly bleak. The G8 is dead, leaving the G7 as an old Western clique. The G20 is underperforming even in reforming global financial systems. Now this year’s chair (the Australian PM) again wants to expel Russia, a move that could shatter the organisation. Meanwhile, the BRICS are racing ahead building a parallel governance framework driven by the global South.

Even the conservative editors of the Economist, according to their commentary last month, think the North is missing the boat in blocking the South from its fair share of leadership in the world of multilateral organisations. On the urgent issues of trade reform, political reconciliation and climate change, G7 leaders seem to want such items kept off the G20 agenda because that wider forum would be too ‘unmanageable’ (i.e. would not meekly buy into the G7’s worldview). And is it just coincidence that in the first nine G20 meetings, the summit has never been hosted by any of the developing countries who constitute 8 of its 20 members?

Sadly, neither North nor South seems ready for change. Drift seems to be the favoured scenario, even in the face of growing global challenges. Both hide from the reality that global economics and politics are increasingly intertwined. They grumble at indecision in the UN Security Council (UNSC), a body unaltered since it was created to include only World War II victors. Critically, no existing or aspirant member wants to give up their blocking UNSC veto. The concern is that the North will sign on to bold Post-2015 goals in the UN, but then refuse the funding and other actions needed to implement them.

Canada, once a leader in the multilateral domain, is now seen as a spoiler and foot-dragger. We were the biggest cheerleader for expelling Russia from the G8, and now we and the Australians seem to oppose any idea of broadening the G20’s mandate. We prefer to revel in the fantasy of the G7 as the world’s natural leaders, while countries of much greater significance (e.g. China and India) sit by in a hamstrung G20.

It would seem that Canada and others in the G7 find it difficult to deal with nations holding a different—and increasingly important—worldview.  It might be a bold move for Canada to encourage a moreinclusive G20, with a voice for the weakest as well as the most powerful. At present, however, political insecurity is keeping a weakened North distant from its future partners in the South.