The G20 or Group of Twenty is an intergovernmental forum comprising 19 countries and the European Union. It works to address major issues related to the global economy, such as international financial stability, climate change mitigation, and sustainable development.

By Ian Mitchell and Sam Hughes
LONDON, Feb 23 2023 (IPS)

It’s been 25 years since the 1997 Asian financial crisis led to the creation of the G20 forum for finance ministers; and 15 years since this became a leader-level meeting following the global financial crisis. During this period, there has been significant shift in the global finance and economic landscape.

The ascent of several emerging economies has seen their contributions to the multilateral finance system that supports development rise significantly. Our new report collates those contributions over the last decade for the first time. It charts how China’s annual contributions to the UN and multilateral development banks rose twenty-fold from $0.1bn to $2.2bn.

But it also looks collectively at a group of 13 rising economies whose developmental contributions to multilateral finance institutions have risen five-fold to over $6bn over the last decade.

These contributions now make up an eighth of the total; and have seen the creation of two new multilateral finance institutions.

In this piece, we draw out key findings from our analysis, including the balance between funding existing and new institutions like the New Development Bank.

We consider whether continued growth in the 13 emerging actors could generate enough new funding for development over the next quarter century, and even create an institution as large at the World Bank’s fund for low-income countries (IDA).

Despite recent rhetoric around the return to a bipolar world order, this report is evidence that a wide group of countries are already playing major role in the global economic and development system, and will continue to do so in years to come

The transformational effect of economic growth on the multilateral system

In 1990 most people in the world lived in low-income countries; by 2020, this share had fallen dramatically to just seven percent of people. Meanwhile, the share of the global population living in middle-income countries swelled from 30 percent in 1990 to 73 percent in 2020.

Such a transformation implies a greater number of countries with the economic output to contribute internationally: widening and deepening participation in the multilateral system.

And this is just what we’ve seen. Over the decade to 2019, we find a group of emerging actors have significantly increased their contributions of development finance to multilateral organisations.

These include thirteen major economies outside the group of more established providers within the Development Assistance Committee (DAC), which tend to receive more attention.

Ten of these emerging actors are G20 members, including the BRICS—Brazil, Russia, India, China, and South Africa—but others have grown quickly too: Argentina, Chile, Indonesia, Israel, Mexico, Saudi Arabia, Turkey, and the United Arab Emirates. Collectively, we refer to these thirteen emerging actors as the “E13.”

Over the decade, the E13’s annual contributions of development finance to multilateral organisations (both core and funding earmarked for particular purposes) have increased almost five-fold, from $1.3bn in 2010 to $6.3bn in 2019 (up 377 percent). And their unrestricted core contributions have risen even more: increasing from $1.0bn to $5.2bn (up 410 percent).

Of these core contributions, we see that those to UN agencies more than quadrupled over the decade, steadily rising from $0.3bn to $1.2bn (up 330 percent). But by far the most striking development in E13 core contributions has come from the creation and capitalisation of two new multilateral organisations: the Asian Infrastructure Investment Bank (AIIB) and the New Development Bank (NDB).

The role of China

Although China has recently stepped back its bilateral finance efforts, its multilateral contributions increased steadily to 2019; and provided a third (34 percent) of the E13 total over the decade. Our colleagues have examined this in detail, including how China has the second highest aggregate voting share after the US in international finance institutions it supports.

Still, our analysis also highlights the importance of Russia, Brazil and India who each contributed over $3bn over the period and collectively contributed a further third of the total. While China’s multilateral contributions have been concentrated (59 percent) in new institutions it co-founded (see below), other providers have concentrated funding in traditional institutions: for example, Argentina, Chile and Mexico did not support the new institutions while for Saudi Arabia and UAE they were 17 percent and 21 percent respectively.

Creating new multilateral finance organisations

Over the ten-year period we examine, almost half of the E13’s core multilateral contributions were to the two new institutions (AIIB and NDB). After 2016, funding provided to these institutions made up over two-thirds of their contributions. Indeed, in 2016 the first financial contributions to AIIB and NDB causedE13 multilateral development finance to triple in a single year.

The E13 provided an additional $6.0bn of core funds for AIIB and NDB in 2016, without reducing their multilateral contributions through other channels.

Though annual contributions reduced to $3.1bn in 2019, AIIB and NDB still accounted for half of the E13’s multilateral development finance in that year, leaving their contributions at the end of the decade far ahead of the beginning.

Figure 1. E13 core and earmarked contributions of development finance to multilateral organisations (nominal USD billions)

Source: Authors’ analysis

Emerging actors fund a sixth of the UN system

As well as higher absolute contributions (Figure 1), the E13’s role in the multilateral system has also grown in relative terms (Figure 2). As a share of the level of finance provided by the 29 high-income countries in the OECD DAC, the E13’s core multilateral contributions rose from 5 percent in 2010 to 12 percent in 2019—more than doubling their relative significance.

This was largely due to the effect of AIIB and NDB (clearly seen by the 2016 peak), but we also see that E13 core contributions to the UN system steadily and quickly rose as a share of the DAC level across the decade: from 5 percent in 2010 to 17 percent in 2019.

Figure 2. E13 core contributions of development finance to multilateral organisations as a share of contributions from DAC countries

Source: Authors’ analysis

A look to 2050—what role might the emerging economies play?

As the economies of the E13 continue to grow, what might this mean for their multilateral contributions in the future? Figure 3 shows how the share of economic output provided as development finance to multilateral organisations (either core or earmarked) tends to increase with higher levels of income per capita.

Though the relationship is steeper for the DAC than the E13, even the E13’s current trajectory implies a significant increase in future multilateral development finance from this group.

Ian Mitchell is Co-Director, Development Cooperation in Europe and Senior Policy Fellow at the Center for Global Development. Sam Hughes is a Research Assistant at the Center for Global Development.

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2022 Year in Review: As conflicts rage, international dialogue remains ‘the only hope’ for peace. Russia’s invasion of Ukraine creating global upheaval, and war, conflict, and unrest blighting all parts of the world in 2022. The UN stressed the importance of international dialogue, and announced plans for a new peace agenda. Credit United Nations

By Herbert Wulf
DUISBURG, Germany, Jan 11 2023 (IPS)

If our societies are to become resilient and sustainable, our priorities must change towards de-escalation, including in diplomacy and economy.

Putin’s war against Ukraine has not only damaged the international cooperative security architecture, it has permanently destroyed it. The Helsinki Act of 1975, the Charter of Paris of 1990 and the NATO-Russia Founding Act of 1997 created a basis for security cooperation in Europe – even ‘a new era of democracy, peace and unity’, as the Charter of Paris was euphorically titled. At least, that is how the heads of state saw it in the decade after the end of the Cold War.

Today, the war in Ukraine casts a long shadow over European and global security. Cooperation and collaboration have been replaced by military confrontation. Economic cooperation has been shattered, fear of dependency in the energy sector has led to a turning point and the concept of the positive effect of economic interdependence (‘change through trade’) has proven to be a misperception not only in the case of Russia but also with respect to the relationship of the USA and its Asian and European allies against China.

On the contrary, the turn towards confrontational, essentially military-based defence policies can be felt all over the world. Global military spending is at an all-time high of over two trillion US dollars.

Given the budget announcements for the next few years, this sum will continue to rise rapidly in the future. Nuclear weapons have come back into focus. After Russia’s surprising attack, which was hardly considered possible, it is understandable that now – as a first reflex – arms are being upgraded, that economic dependencies are being reduced and, of course, there are concerns about critical infrastructure.

It is not only about traditional military threats. The boundaries between war and peace have become blurred. Hybrid warfare, the use of mercenaries, cyber warfare, destruction of critical infrastructure, undermining social cohesion with disinformation campaigns and election interference, sanctions and other measures of economic warfare have become the standard of international conflict.

De-escalation on three levels

Is there a way out of the constant political, economic and above all military escalation? Despite the apparent hopelessness of an end to the power struggle with Putin, despite the escalated situation in East Asia, despite the many now less noticed wars and conflicts – be it Yemen, Syria, Afghanistan or Mali – it is necessary to think about the possible end of these wars. This should happen in parallel on three levels: security, diplomacy and economy.

With all understanding for the hectic procurement of new weapons now being commissioned in the sign of the turn of the times, it should be noted that security policy is more than defence with weapons. Even if there is currently no path in sight for a negotiated solution to the Ukraine war, such a solution should still be considered.

Ultimately, this war can only be ended through agreements at the negotiating table. Even though Russia started the war in Ukraine in violation of international law and is obviously committing war crimes, in the long term there can be no peace in Europe without Russia and certainly not against Russia.

Respect for Russian security interests, however difficult this may be because of Russian aggression and Putin’s fantasy ideas of Russia, is a prerequisite for de-escalation and serious negotiations.

Geopolitics that maximises only one’s own advantages leads to a dangerous dead end: the clash is pre-programmed.

Many countries rely on a militarily supported geostrategic foreign policy. China’s assertive military, foreign and economic policies are rightly viewed with concern. But the EU also wants to become militarily autonomous.

The US is trying to find partners for its policy conducted in competition with China. Other powers such as Australia, Japan or India are also positioning themselves in rivalry to China.

Instead of focusing on geopolitics, it is necessary to focus on values (democracy, human rights) and binding rules (international law), even if Putin is blatantly violating international law and ‘democracy’ is a foreign word in China. It is necessary to change the narrative significantly.

‘The West’, which demands rule of law and democracy with rigour, has all too often emphasised these values and principles in a know-it-all manner – ‘the West against the rest’. Often enough, double standards were applied and these values were not observed by ‘the West’ itself, such as in the so-called war on terror and the war in Iraq.

If these principles and projects for democracy and against autocracy are to be convincing, then one must completely abandon the concept of ‘the West’ and try to cultivate partnership-based – and not Euro-centric (or ‘Westro-centric’) – relations with democratic countries. In short, geopolitics that maximises only one’s own advantages leads to a dangerous dead end: the clash is pre-programmed.

Is the sole answer of ‘the West’ to keep the upper hand in the geopolitical competition by military means? Economically, it makes sense to reduce dependencies and diversify supply chains. This cannot be done through radical decoupling, but must be done gradually.

Obviously, the shock of the pandemic, but above all Russia’s possibilities to blackmail by stopping energy deliveries, have changed the priorities a little. But by no means all priorities. At no time since the early 1990s has the military burden on global income been as high as it is today: well over two per cent with a trend towards further increases.

The need for timely disarmament

Should the new era (Zeitenwende) consist only of a return to old-fashioned patterns of the military-supported use of force? Arms control is not taking place at the moment. The United Nations and other arms control forums have been pushed to the side. But arms control and de-escalation must already now be considered, even if the Kremlin is still opposed to them and the Chinese leadership is hardly responsive to them at present.

The continuation of the current course leads globally to a situation that is becoming more dangerous than the confrontation in the heyday of the Cold War, since the world is now also seriously endangered by the climate crisis.

Almost all arms exports are accounted for by the G20 and 98 per cent of nuclear warheads are stored in their arsenals.

Although the risks of climate change and armament are well known, there is currently no reversal of this trend in sight. The two crises are heading towards a seemingly unavoidable catastrophe. After the old-world order – with a halfway functioning multilateralism, compromises and give-and-take – was replaced by nationalist aspirations, which then led to a breach of international law in the case of Russia, by an emphasis on nuclear weapons and by the pursuit of supposed self-interest, the goals of the climate agreements are being missed and arms control treaties are being ground down.

Geopolitically ambitious powers such as China, India, Turkey, Brazil, South Africa or Saudi Arabia must be integrated into arms control efforts. Almost ‘naturally’, the G20 summits offer themselves as a forum for this.

The G20 initially focused their talks primarily on macroeconomic issues, but have since also negotiated on sustainable development, energy, the environment and climate change – but not seriously on global security policy.

However, the G20 member countries are responsible for 82 per cent of global military spending. Almost all arms exports are accounted for by the G20 and 98 per cent of nuclear warheads are stored in their arsenals. Today’s military-based arms efforts are concentrated in the G20.

Since the members of this exclusive G20 club are also the main perpetrators of climate change, they bear the main responsibility for the two current catastrophic trends.

Moreover, there are links between climate and arms policy that are most clearly reflected in the wars and violent conflicts of the last decades, the movements of refugees, migrant flows and corresponding counter-reactions.

If our societies are to become more resilient and more ecologically sustainable, then priorities must be changed, and then such a large share of resources cannot be permanently poured into the military – without any prospect of de-escalation. Our current shift must therefore contain more than the present rearmament.

Since the members of this exclusive G20 club are also the main perpetrators of climate change, they bear the main responsibility for the two current catastrophic trends. So, it is time to remind them of their responsibility and urge them to turn back. Perhaps the fact that India is chairing the G20 this year can be used to put security policy prominently on the forum’s agenda.

After all, India has refused to adopt Western sanctions against Russia, citing its own interests. In doing so, the government in Delhi – similar to some other countries in the G20 group (Brazil, South Africa and Turkey) – has kept an open door for potential talks. In order to enable a turning point towards a global security order and cooperation in the climate crisis, more is needed than the current clear military positioning of ‘the West’ in confrontation with Russia.

It is to be hoped that the leading powers of the Global South will strive for a rules-based, multilateral world order within the framework of the G20 talks. That there are possibilities for a security order that looks beyond Europe, as hinted at by Indian Foreign Minister Jaishankar, when he confidently stated: ‘Europe’s problems are the world’s problems, but the world’s problems are not Europe’s.’

Herbert Wulf, Director of the Bonn International Center for Conversion (BICC) from its foundation in 1994 until 2001, is currently a Senior Fellow at BICC and an Adjunct Senior Researcher at the Institute for Development and Peace, University of Duisburg/Essen where he was previously a Deputy Director.

Source: Source: International Politics and Society (IPS)-Journal published by the International Political Analysis Unit of the Friedrich-Ebert-Stiftung, Hiroshimastrasse 28, D-10785 Berlin

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Many of the global crises we face are caused or exacerbated by corruption. Credit: Ashwath Hedge/Wikimedia Commons

By Blair Glencorse and Sanjeeta Pant
WASHINGTON DC, Sep 27 2022 (IPS)

As global crises mount, the G20 is proving unable to find solutions. Political disagreements within the bloc- including most prominently with Russia over the ongoing war in Ukraine- have hamstrung collective efforts.

Economic challenges have inevitably led to a focus on domestic priorities. And significant political changes in key G20 countries over the past few months- such as the UK and Italy- have further undermined joint decision-making.

Equally, on corruption issues, the G20 has a long way go, although the body continues to reiterate its commitment fighting graft and leading by example on core issues such as the role of audit institutions, anti-corruption education, money laundering and graft in the renewable energy sector.

The G20 Anti-Corruption Working Group (ACWG) meets for the final time under the Indonesian Presidency this week- and while there remains plenty to do, there are also glimmers of hope for the future, as India takes on leadership of the G20 for 2023.

It is easy to get disheartened about the continued ubiquity of corruption- but beyond the headlines and if we pay attention to the small print, there is some important progress being made

To better understand the progress made, Accountability Lab, as one of the international Co-Chairs of the C20 Anti-Corruption Working Group (ACWG), has partnered with the Royal United Services Institute (RUSI) to distill complex and scattered information on anti-corruption within G20 countries (often buried in lengthy reports, as we’ve highlighted previously) into a set of easy-to-understand one-pagers. Each of these (see Australia here or South Africa here for example) outlines for each of the member countries the progress made against key priorities, with the goal of encouraging sharing of ideas and learning within the G20.

Here is what we found:

Enhancing the role of audit in tackling corruption

The G20 ACWG recognizes the important role of audit in preventing corruption in both the public and private sectors, and member countries have institutions and systems in place to deter corruption.

For instance, 17 out of the 19 G20 member countries (the 20th is the EU) score over a global average of 63 on the International Budget Partnership’s metric for oversight by supreme audit institutions. Brazil has received a great deal of scrutiny in recent years because of corruption, but Brazil’s Tribunal de Contas da Uniao (TCU) is cited as an example for its innovative use of data analytics and artificial intelligence including identifying indicators of corruption.

Member countries are also improving existing laws, with Japan proposing to reform its audit law to provide more enforcement power to the Japanese Institute of Certified Public Accountants and improve oversight of listed companies.

Promoting public participation and anti-corruption education

Most G20 member countries have policies guaranteeing the right to participation through specific laws such as the right to information, public information disclosure or public procurement, to name a few.

In India, the Pre-legislative Consultation Policy was passed recently to ensure public participation in policy-making processes, and government as well as civil society platforms are available to promote public education, including on corruption issues.

Similarly, South Korea’s Public-Private Consultative Council for Transparent Society under the Anti-Corruption and Civil Rights Commission provides a platform to inform and disseminate anti-corruption messages. South Korea also aims to strengthen civic space and public participation including through a national Participatory Budgeting Citizens’ Committee.

In Australia a public-private partnership (Bribery Prevention Network) launched in October 2020 bringing together the private sector, civil society, government and academia to provide free resources to help corporates implement anti-bribery programmes, and was runner up in the Anti Corruption Collective Action Awards 2022.

Professional enablers of money laundering

The G20 acknowledges gaps in member countries’ anti-money laundering efforts, particularly related to preventive measures targeting professional enablers, including accountants, lawyers, or real estate agents- and is aiming to pull together guidance on these issues through a Compendium for Professional Enablers of Money Laundering.

While most countries do not have a comprehensive definition of Designated Non-Financial Business Professionals (DNFBPs), Indonesia, Japan, Mexico, and Saudi Arabia comply with the 2012 Financial Action Task Force (FATF) standards on the definition. The 2021 follow-up review from FATF noted that the revisions to China’s anti-money laundering law will include general provisions and supervision of DNFPBs.

In the US, if the ENABLERS Act– which was approved by the House of Representatives in July 2022– is passed by the Senate, it could regulate professional enablers; and in the UK, lack of supervision of enablers is being acknowledged by the government as it looks at different models to strengthen the supervision of accountants and lawyers.

Promoting corruption in the renewable energy sector

The G20 is working on a background note on Promoting Anti-Corruption in Renewable Energy in order to raise awareness and increase collaboration to prevent corruption in the energy sector. In 2022, Argentina launched an open information system (SIACAM) which provides public access to data on mining activities in the country, including their environmental and socio-economic impacts.

The Resource Governance Index notes that Argentina is one of only 7 countries that has made this type of data available. Similarly in Mexico, progress has been made with the publication of all oil procurement contracts on the state-owned website oil company, Pemex.

Japan’s cooperation agreement with India and the European Union to share experiences and best practices on liquid natural gas is cited as an example to follow by the International Energy Agency.

It is easy to get disheartened about the continued ubiquity of corruption- but beyond the headlines and if we pay attention to the small print, there is some important progress being made.

With the G20, the key now- as India assumes leadership of group- is for member countries to double down on their commitments and follow-through on implementation of reforms. Many of the global crises we face are caused or exacerbated by corruption- now is the time for our leaders to get this right.

Blair Glencorse is Executive Director of Accountability Lab; Sanjeeta Pant is of Accountability Lab. This piece draws on research carried out with RUSI. Follow the Lab on Twitter @accountlab

More than 1.3 billion tons of edible food is wasted annually, according the Food and Agriculture Organization. Credit: Busani Bafana / IPS

By Busani Bafana
BULAWAYO, Zimbabwe, Jul 15 2021 (IPS)

With its political and economic clout, the G20 should lead in delivering sustainable food systems as the world grapples with rising hunger, malnutrition and inequality.

That was the consensus of leading food and development leaders at a virtual conference on Fixing Food 2021: An opportunity for G20 countries to lead the way, hosted this week by Barilla Center for Food and Nutrition Foundation (BCFN) and the Economic Intelligence Unit.

The conference coincided with the launch of a new Food Sustainability Index (FSI) related to G20 countries, a collective of powerful economies.

The 2021 FSI measures the sustainability of food systems in 78 countries across the pillars of food loss and waste, sustainable agriculture and nutrition. Food systems include the whole range of actors in the agriculture sector and their interlinked value-added activities, including production, processing, distribution, consumption and disposal of food products from agriculture, forestry or fisheries.

The G20 is a forum of 19 countries and the European Union bringing together leading economies whose members account for 80 percent of the global GDP and have 60 percent of the world’s population. They sit on 60 percent of agricultural land worldwide and are responsible for 75 percent of Green House Gas Emissions (GHG) that the Paris Agreement allocates to food production, thus risking the global climate agenda.

While it has the financial and political muscle in influencing global policymaking, the G20 group needs to lead the way in making food systems more sustainable owing to its big environmental footprint, the FSI noted.

“On a per-head basis, people living in the G20 consume three to five times the maximum optimal intake of 28g of meat per day and wasted 2,166kg of food in 2019 —which is greater than the weight of the average large car,” the report found.

It cautioned that “if all non-G20 countries adopted the food habits of G20 members, there would be not just higher environmental costs, but higher health costs too.”

The G20 has prioritised food sustainability and recently committed to addressing food and nutrition security at the recently opted Matera Declaration.

Italy, which takes over the Presidency of the group at its Summit in October 2021, is focusing efforts on people, the planet, and prosperity when the world is grappling with increased hunger and malnourishment. The G20 has an enormous challenge to help transform food systems in achieving the SDGs, especially SDG 1 of ending poverty by 2030.

Marta Antonelli, Head of Research, BCFN, said G20 countries have a strong responsibility to create the conditions for more equitable and sustainable food systems.

“G20 members’ actions, both domestically and globally, are critical for promoting sustainable growth in food and agriculture, fostering better nutrition, and building the world back better and more equitably,” Antonelli told IPS.

“We need the G20 to lead, to set forth a coordinated action agenda that builds upon a common sense of purpose for food system transformation that paves the way and inspires to new policies and approaches at the regional, national and local level.”

“We are at a crossroads that requires immediate action,” said Antonelli highlighting that the G20 can provide collective and coordinated leadership to tackle current food crises, boost investments in the transition towards more sustainable food systems.

The countries that performed well on the three pillars of the Index include Canada, Japan, Australia and Germany and France because of their robust policy responses. For example, Canada has strong national policies on food loss and waste and sustainable agriculture. Furthermore, most of the countries in the group have targets on addressing food loss and waste the need to improve on measuring it.

“Measuring is hard though and more needs to be done by countries to report levels of food loss and waste,” commented Diana Hindle Fisher, a Senior Analyst at EIU, calling for countries to adopt a target-measure-act approach on food loss and waste.

Policymakers are strategic in helping assess data on food loss and waste and developing binding legislation to commit to set targets. At the same time, the business community could form new schemes to reduce food loss and waste.

Fisher said that civil society could promote positive behaviour and launch information campaigns on reducing food loss and waste.

Barbara Buchner, Global Managing Director at the Climate Policy Initiative, noted that while all the countries had made progress on the three pillars of the Index, there was room for improvement through investment in climate action awareness and plugging knowledge gaps that hinder governments from making efficient policy decisions.

“There is a tremendous opportunity for the G20 not only to lead by example but to learn from and listen to the experiences of farmers and food eaters from the global south,” said Danielle Nierenberg, President and Founder of the Food Tank who commended the FSI for including new indicators on food availability and gender equality.

“The role of women in agriculture is important,” Nierenberg observed. “It is no secret that women are agriculture leaders, making up more than 40 percent of the agriculture labour force, and in many countries, they are the majority of farmers, Nierenberg said.

“Unfortunately, women are discriminated against and do not have access to the same resources male farmers have, including access to land, banking and financial services.”

The State of Food Security and Nutrition in the World report of the UN Food and Agriculture Organisation (FAO) laments that the world is not on track to achieve targets for any of the nutrition indicators in the SDGs by 2030.

More than 800 million people in the world faced hunger in 2020, 161 million more than in 2019, while nearly 2.3 billion others did not have adequate food in the same period, according to the FAO.

“Against this backdrop, the G20 group has the resources, power and influence to unlock the necessary transformation in food systems by providing real leadership and inspire action not only domestically but internationally,” Antonelli said.
Painting a bleak picture of global hunger exacerbated by the COVID 19 pandemic, the report said the pandemic had exposed the fragility of global food systems, but there was an opportunity to build forward better and get on track towards achieving SDG 2 of ending hunger.

“We are aware that transforming food systems so that they provide nutritious and affordable food for all and become more efficient, resilient, inclusive and sustainable has several entry points and can contribute to progress across the SDGs,” Qu Dongyu, FAO Director-General, Gilbert F Houngbo, IFAD President, Henrietta H Fore, UNICEF Executive Director, David Beasley WFP Executive Director and Tedros Adhanom Ghebreyesus WHO Director-General, said a joint foreword to the report.

“Future food systems need to provide decent livelihoods for the people who work within them, in particular for small-scale producers in developing countries – the people who harvest, process, package, transport and market our food,” said the report.

It concluded that transformed food systems could become a powerful driving force towards ending hunger, food insecurity and malnutrition.

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Ahead of a G20 that promises to address the pandemic’s impact on developing countries, Nobel Peace Laureate Kailash Satyarthi is calling on the nations which are spearheading the global response to be just in their treatment of the most at-risk communities, including the world’s poorest and most marginalised children. Credit: Mahmuddun Rashed Manik/IPS

By Alison Kentish
UNITED NATIONS, Nov 19 2020 (IPS)

Heads of youth movements and student unions are challenging the world’s richest nations to correct an ‘incredibly unequal’ global response to COVID-19, by considering the plight of the world’s most vulnerable children and young people.

The youth leaders gathered for a global forum ahead of the 2020 G20 Summit, which Saudi Arabia is hosting virtually from Nov. 21 to 22. The online youth event, ‘A Fair Share for our Future’, was organised by the 100 Million Campaign, an initiative of Nobel Peace Laureate Kailash Satyarthi, which empowers young people and tackles issues such as child labour, poverty, access to education and violence against children.

Satyarthi, a longtime child rights advocate, has been pleading with world leaders to be particularly attentive to the needs of children during the COVID-19 pandemic. In September, he urged governments to hold large corporations to account for child labour. Ahead of a G20 that promises to address the pandemic’s impact on developing countries, Satyarthi is calling on the nations which are spearheading the global response to be just in their treatment of the most at-risk communities.

“The richest governments have focused heavily on bailing out businesses and economies as part of the global COVID relief. While this must be done, it cannot be done at the expense of the world’s poorest and most marginalised children,” Satyarthi said. “Ensuring a Fair Share for Children by allocating 20 percent of the global COVID relief to the 20 percent most marginalised children and their families, along with the immediate release of $1 trillion (just a fraction of the global response), can save over 70 million lives. I call upon the G20 members to prioritise the most marginalised children this year and save losing an entire generation.”

According to the official agenda, G20 leaders will focus on three main areas; empowering people, safeguarding the planet and shaping new frontiers. Leandra Phiri, a youth activist from Malawi, urged young people to hold the leaders accountable to their promise of opportunities for all.

“Provide solutions and prepare the future generations not to face the things that we are facing right now. We are facing insecurities, imbalances and exclusions. On behalf of my fellow youth, if they won’t let us dream – we won’t let them sleep,” she said.

Ankit Tripathi, an Indian international student in Canada, addressed the detrimental impact of COVID-19 on inherently vulnerable migrant populations. His comments follow a recent landmark joint global report by the International Organisation for Migration and the World Food Programme, which warned that COVID-19 and measures taken to contain its spread have disrupted human mobility patterns, the consequences of which could been seen for years to come. Tripathi said leaders must ensure migrant access to health and social services.

“Migrants are often the exception to many public services in countries. Living everyday lives that are the same or harder than others, yet access to public services is severely diminished.  Some of the wealthiest nations in the world are competing to increase international student populations in their countries for both financial and social capital, but when it comes to providing support, we don’t even receive lip service let alone any real policy support,” he said.

Another area of concern for the youth involves domestic violence made worse by the economic blow of COVID-19 including unemployment. Johannah Reyes of Trinidad and Tobago’s feminist organisation WOMANTRA issued a passionate plea to leaders to protect women and children from abuse. She reminded the summit that women and youth are bearing the brunt of COVID-19 related job losses in the Americas and need help.

“This unemployment disparity means that there is a decrease in the capacity of women and young people to protect themselves from abuse and also decreases their ability to participate in political processes and organise,” she said. “My organisation WOMANTRA has documented 20 femicides for the year thus far in Trinidad and Tobago. This heart wrenching list includes Trinidadian women, Venezuelan migrant women and a child born with a disability,” Reyes said.

The young activists say the pandemic has severely derailed the education of at-risk children. In many parts of the world, COVID-19 restrictions have resulted in a transition to online instruction, but millions of students with no access to the required technology are falling behind. Brazilian student union leader Rozana Barroso said for many students in her country, as the digital divide widens, hunger increases.

“[Brazilian President Jair] Bolsonaro ignores the digital exclusion of young people who don’t have access to the internet,” she said. “It has now been 7 months since some students have been able to attend school. Democracy means having access to internet and the fight against hunger. Many students have also been suffering from more hunger because some of them were only able to have their daily meal at school.”

In Malawi, grassroots activists are worried about the toll that COVID-19 disruption in classroom instruction is taking on young girls, particularly in rural areas. According to the United Nations Children’s Fund and the U.N. Population Fund, the reality of life in pre-COVID Malawi included high rates of child marriage, teenage pregnancy and maternal mortality. The Malawi National Students Union has been tracking the numbers and the union’s president Japhet Nthala said they have been rising since COVID lockdowns.

“From the closure of school which happened on Mar. 28 this year up to around June we have witnessed rampant cases of teenage pregnancies and child marriages. In the eastern region of the country we have witnessed about 7,274 teenage pregnancies and this came into effect because of students being idle and schools being closed,” Nthala said.

The youth leaders say from hunger and abuse to unemployment and lack of access to health services, the problems faced by the world’s most marginalised continue to be exacerbated by COVID-19. They are demanding that world leaders deliver an equal, moral and fair internationalist response to COVID‐19, that national governments uphold the fundamental human rights of their citizens and that they give special protection for the most vulnerable children and young people during the pandemic.

They say the G20 leaders have assumed the reins of the COVID-response and now must also take the charge for responding to the needs of the world’s most vulnerable people.

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Excerpt:

Zimbabwe needs urgent economic and political reforms to transform its economy amidst a growing national crisis, researchers say as more than 7 million Zimbabwean are food insecure owing to a projected 50 percent fall in the 2019 cereal harvest. Credit: Jeffrey Moyo/IPS

By Busani Bafana
BULAWAYO, Jan 16 2020 (IPS)

Zimbabwe needs urgent economic and political reforms to transform its economy amidst a growing national crisis, researchers say in a new study that urges swift policy changes and a sound financial framework to attract investment.

The country has been reeling from one of the worst droughts in decades, with the United Nation’s World Food Programme (WFP) identifying Zimbabwe as one of the 15 critical emergencies around the world at risk of crisis without rapid intervention.

• More than 7 million Zimbabwean are food insecure owing to a projected 50 percent fall in the 2019 cereal harvest. This month the WFP is doubling its assistance to reach 4.1 million people who are hardest hit in rural areas.

But the study, G20 Compact with Africa: No Reformers, No Compact- The Zimbabwean Case Study,  states that the G20 Compact with Africa (CwA) investment framework, initiated by the G20 countries in 2017, could support Zimbabwe’s economic transformation only if Zimbabwe was committed to undertaking reforms.

• The voluntary compact has been signed by 12 African countries to date, including Benin, Burkina Faso, Côte d’Ivoire, Ethiopia, Rwanda, Senegal, Togo and Tunisia. Zimbabwe is not a signatory.
• The compact seeks to stimulate economic growth, create employment and nurture investment. Through this partnership, African governments are responsible for spearheading reforms that will make their countries attractive to international investors.
• The focus of the CwA is to promote a sustainable development framework in those African countries that accepted the invitation to be part of the initiative, in an attempt to attract private investors. The framework is a three-tiered approach to reforming three economic fundamentals – macroeconomics, business and finance.

“As a reform strategy, the CwA framework has the potential to support Zimbabwe’s economic transformation agenda,” the study published last week by the South African Institute of International Affairs (SAIIA), an independent public policy think tank, stated. It further noted that the compact was relevant to Zimbabwe’s re-engagement agenda and the Transitional Stabilisation Programme (TSP), which was introduced in 2018 as a blue print to turn around the economy.

But a crisis of governance and financial stewardship has long been stalking Zimbabwe, a Southern African nation that was once a model of economic success and democracy in Africa. Life has become difficult for its citizens who have to battle with a high cost of living and many things are in short supply from water to electricity to monetary currency, jobs, food and even political freedoms.  

The report pointed out that Zimbabwe’s economic woes are multi-faceted — a result of a combination of factors, including economic mismanagement, chaotic land reform, indigenisation policies, political instability and fiscal mismanagement driven by corruption.

Cold reception for compact

Yet despite its relevance, the compact has failed to raise enthusiasm among Zimbabwean policymakers, and few economic stakeholders are aware of it, the study found, pointing out that the Zimbabwe government is desperate and preoccupied with finding a quick solution to the economic crisis.

The study also made a note that there is no reform culture among the custodians of reforms in Zimbabwe.

Besides, the country’s multilateral debt, estimated at over $8,2 billion, has prevented any potential inroads with the international organisations involved with the compact.

“Clearance of multilateral debt arrears: the sanctions rhetoric seems to have taken the centre
stage ahead of reform implementation,” noted the study, adding that, “This behaviour has promoted corruption and stands in the way of reforms; hence there is no CwA for Zimbabwe.”

Economic analyst, John Robertson, said nobody agrees with the government on the point of economic sanctions imposed by the Western countries on individuals accused of human rights abuses in Zimbabwe.

“The sanctions are not applied to the country; the sanctions did not cause the country’s failure. The failure is caused by our decision to close down our biggest industries,” Robertson told IPS, referring to the destruction of the agriculture sector and the collapse of the manufacturing sector.

Poor policy choices

“The policy choices that we made have caused so much damage to our productive sectors starting with agriculture,” said Robertson, adding, “We imposed upon ourselves a serious handicap when we said the land in the country no longer has market value land so [people with] land can no longer borrow against ownership rights to that land because the land is now the property of the state.”

David Moore, researcher and political economist at the University of Johannesburg, told IPS that if the ruling Zimbabwe African National Union – Patriotic Front (ZANU PF) party had maintained its neo-liberal and white-farmer-friendly economic promises it might have kept the “west” on its side.

But cabals and corruption cannot be dismantled – they are the pillars of the party, he said. And so the military-party complex so tight that it cannot be untied: they are integral parts of the country’s political economy.

Academic and social commentator, Rudo Gaidzanwa, concurred saying it will take pushing to get ZANU (PF) ruling party and its military allies to undertake political and social reforms.

“The types of political and economic reforms that the civilians want will undermine the interests of the militarist elements in the state and the security sector,” Gaidzanwa, a Sociology Professor at the University of Zimbabwe, told IPS.

“ZANU won’t stand for anything that undermines their hold over the state and the society. It is not likely that any meaningful reform will occur unless dramatic social and political changes occur in Zimbabwe,” she said, adding that the ZANU PF led-government and elites have used economic sanctions as a convenient excuse to evade responsibility for economic and social crises.

Sanctions have not prevented the president and his cohorts from pillaging mineral resources. The current chaos was ideal for pillaging resources and undermining the rule of law and democracy, she said.

• Zimbabwe’s late president Robert Mugabe, who was ousted from power in November 2017, is believed to have looted hundreds of millions of dollars, though no exact figure has been given.
• Tendai Biti, Zimbabwe’s finance minister between 2009-2013, told Deutsche Welle that Mugabe and his family where not the only ones responsible for looting the state and that during his term of office some $15 billion had “disappeared through other channels”.
• Last July the country’s auditor general released a report that since Mugabe’s ouster, executives at state-owned enterprises had mismanaged millions of dollars, spending the money to their personal benefit.

“Rigged elections are an issue because they prevent the will of the people from prevailing,” Gaidzanwa told IPS. “The present situation over contested presidential elections between (Nelson) Chamisa and (Emerson) Mnangagwa is symptomatic of that struggle…These issues have dogged our elections for decades and remain unresolved hence our dire economic and political situation.”

• After Mugabe was ousted from power Zimbabweans went to the polls in July 2018 to elect a new leader, with Mnangagwa winning 50.8 percent of the voted compared to Chamisa’s 44.3 percent.
• The results were disputed.

Economist and former parliamentarian, Eddie Cross sees the situation differently, saying Zimbabwe, despite its current challenges, has a good start to turn around its economic fortunes.

“We have a fiscal surplus, government salaries are down to a third of the budget from over 95 percent, we have a balance of payments surplus and nearly $1 billion in bank accounts,” Cross said, adding that Zimbabwe’s domestic debt has been devalued and exports are highly profitable.

“[Political] Stability is no longer an issue – it’s a done deal, what is a problem is financing and this is going to be a challenge because we really have to look after ourselves,” Cross, a member of the Reserve Bank of Zimbabwe’s Monetary Committee, told IPS in an interview. “A couple of billion dollars would be useful. Perhaps we can persuade Mrs. [Grace] Mugabe to bring some money back from abroad.”

Cross believes Zimbabwe can benefit from the G20 CwA even though the country is a pariah state.

“I think Brexit is important and also the IMF and if we play our cards right and get on with reforms I see no reason why we cannot be in a very different place in 2021.”

The joint move by the U.S. and China, which account for nearly 40 percent of global carbon emissions, paves the way for the Paris Agreement forged last December to enter into force. Credit: Bigstock

By Guy Dinmore
HONOLULU, Hawaii, Sep 3 2016 (IPS)

The world’s super-polluters – the United States and China – have formally joined the Paris Agreement on climate change in a symbolic show of unity.

At a ceremony in the eastern Chinese city of Hangzhou, where China is hosting a summit of G20 industrialised nations, President Barack Obama and President Xi Jinping handed their documents of ratification to UN Secretary-General Ban Ki-moon.In contrast to the excitement in Honolulu among the world’s leading environmental activists and scientists, the announcement that Obama had used his executive authority to accede to the Paris Agreement was widely ignored by the major U.S. networks.

The joint move by the U.S. and China, which account for nearly 40 percent of global carbon emissions, paves the way for the Paris Agreement forged last December to enter into force, most likely by the end of the year. For the agreement to enter into effect and start to be implemented, at least 55 countries representing at least 55 percent of global emissions need to formally join.

The UN Secretary General praised Obama for his “inspiring” leadership. He said Obama and Xi had both been “far-sighted, bold and ambitious”.

The joint accession by the world’s biggest polluters was enthusiastically welcomed in Honolulu where the International Union for Conservation of Nature, which groups governments and NGOs, is holding a key congress that aims to chart the future path for stopping the planet’s slide into environmental ruin.

“This is a momentous event,” Xavier Sticker, France’s ambassador for the environment, said of the ratification by the U.S. and China. He told IPS it was expected to pave the way for many other countries to follow. But he cautioned that the European Union needs to accede as a bloc and that the internal complexities of national political systems could lead to delays. Belgium requires the assent of seven legislative assemblies, for example. France has already ratified but the UK has not.

Delegates at the IUCN World Conservation Congress warned that there was a risk for the European Union that the Paris Agreement implementation taskforce would be formed next month without EU involvement.

Patricia Espinosa, head of the UN Framework Convention on Climate Change, urged IUCN delegates representing the global conservation community to lobby governments on what must be done to achieve the Paris Agreement targets on emissions and limiting the rise of global temperatures.

“We are very excited about this good news, for the early entry into force of the Paris Agreement. No one had imagined it would be this year,” she said shortly before official confirmation arrived from Hangzhou.

In contrast to the excitement in Honolulu among the world’s leading environmental activists and scientists, the announcement that Obama had used his executive authority to accede to the Paris Agreement was widely ignored by the major US networks in their news bulletins. Ironically, however, there was considerable coverage of Tropical Storm Hermine moving up the east coast of the U.S. on Labour Day weekend, possibly turning back into hurricane force, and also of Hurricane Lester brushing past Hawaii.

“We are here together because we believe that for all the challenges that we face, the growing threat of climate change could define the contours of this century more dramatically than any other challenge,” Obama said in a speech in Hangzhou.

“And someday we may see this as the moment that we finally decided to save our planet,” he added. “There are no shortage of cynics who thought the agreement would not happen. But they missed two big things: The investments that we made to allow for incredible innovation in clean energy, and the strong, principled diplomacy over the course of years that we were able to see pay off in the Paris Agreement. The United States and China were central to that effort. Over the past few years, our joint leadership on climate has been one of the most significant drivers of global action,” Obama said.

Xi was reported as calling the Paris Agreement a milestone that marks the “emergence of a global government system” for climate change. “Our response to climate change bears on the future of our people and the well-being of mankind,” China’s president said.

The accession of China and the U.S. bring to 25 the number of countries to have ratified so far. Diplomatic pressure is expected to be ramped up on other major polluters, such as India and Russia.

But scientists and activists are warning that the Paris Agreement target of keeping temperature rises “well below” 2 degrees centigrade, with a soft target of 1.5 degrees, is already on its way to being breached as the world records a succession of the hottest months on record.

“What’s needed is comprehensive and urgent action now to slash emissions and build a low-carbon future,” Friends of the Earth commented.

The Paris Agreement also provides for 100 billion dollars a year in climate finance for developing countries by 2020, with a commitment to further finance in the future.

The U.S. and China have set widely differing targets on carbon emissions, because of their different stages of economic development. The U.S. plans over the next 10 years to reduce emissions by over a quarter below the level of 2005, while China says it intends to stop increasing its emissions by 2030.

Ministerial Segment of the High-level Political Forum on Sustainable Development Goals. Credit: UN Photo/Manuel Elias.

By an IPS Correspondent
UNITED NATIONS, Jul 22 2016 (IPS)

UN member states “are going beyond rhetoric and earnestly working to achieve real progress” towards the Sustainable Goals, the members of the Group of 77 and China said in a ministerial statement delivered here on 18 July.

The statement was delivered by Ambassador Virachai Plasai, Chair of the Group Of 77 (G77) and China during the High Level Political Forum (HLPF) which took place at UN Headquarters in New York from 18 to 20 July.

During the forum, the 134 members of the G77 and China reaffirmed the importance of not only achieving the Sustainable Development Goals but also the driving principle of leaving no one behind.

“We must identify the “how” in reaching out to those furthest behind,” said Plasai who is also Ambassador and Permanent Representative of the Kingdom of Thailand to the UN.

“To make this real, we cannot simply reaffirm all the principles recognised in the (2030) Agenda, including the principle of common but differentiated responsibilities, but must earnestly implement them in all our endeavours,” Plasai added.

The UN’s 193 member states unanimously adopted the 2030 Development Agenda, including the 17 Sustainable Development Goals, in September 2015. The goals reflect the importance of the three aspects of sustainable development: economic, social and environmental, and countries will work towards achieving them by the year 2030.

However more still needs to be done to ensure that developing countries have access to the resources they need to meet the goals, said Plasai.

“We reiterate that enhancing support to developing countries is fundamental, including through provision of development financial resources, transfer of technology, enhanced international support and targeted capacity-building, and promoting a rules-based and non-discriminatory multilateral trading system,” he said.

“We urge the international community and relevant stakeholders to make real progress in these issues, including through the G20 Summit in China which will focus on developing action plans to support the implementation of the 2030 Agenda.”

At a separate meeting during the High Level Political Forum the G77 and China noted some of the specific gaps that remain in financing for development.

During that meeting the G77 and China expressed concern that rich countries are failing to meet their commitments to deliver Official Development Assistance (ODA) – the official term for aid – to developing countries.

“We note with concern that efforts and genuine will to address these issues are still lagging behind as reflected in this year’s outcome document of the Financing for Development forum which failed to address (gaps in ODA),” said Chulamanee Chartsuwan, Ambassador and Deputy Permanent Representative Of The Kingdom of Thailand to the UN, on behalf of the Group of 77 and China.

Speaking during the forum on July 19, UN Secretary-General Ban Ki-moon underscored the importance of the High Level Political Forum, “as the global central platform for follow-up and review of the Sustainable Development Goals.”

Ban presented the results of the first Sustainable Development Goals report released by the UN Department of Economic and Social Affairs on July 20. The report used “data currently available to highlight the most significant gaps and challenges” in achieving the 2030 Agenda, said Ban.

“The latest data show that about one person in eight still lives in extreme poverty,” he said.

“Nearly 800 million people suffer from hunger.”

“The births of nearly a quarter of children under 5 have not been recorded.”

“1.1 billion people are living without electricity, and water scarcity affects more than 2 billion.”

Leaving No One Behind

Ban also noted that the importance of collecting data about the groups within countries that are more likely to be “left behind”, such as peoples with disabilities or indigenous peoples.

Collecting separate data about how these groups fare is considered one way for governments to help achieve Sustainable Development Goal 10 which aims to decrease inequality within countries.

However SDG 10 also aims to address inequalities between countries, an important objective for the G77, as the main organisation bringing together developing countries at the UN the G77 wants to make sure that countries in special circumstances are not left behind.

Countries in special circumstances include “in particular African countries, least developed countries, landlocked developing countries and Small Island Developing States, as well as countries in conflict and post-conflict situations,” said Chartsuwan.

However while the world’s poorest and most fragile countries have specific challenges, many middle income countries also have challenges too, the G77 statement noted.

Climate Change Agreement Needs Implementation

Developing countries, and particularly countries with special circumstances, are among those that are most adversely affected by climate change, and therefore wish to see speedy adoption and implementation of the Paris Climate Change Agreement alongside the 2030 Agenda.

Ban told the forum that he will host a special event during the UN General Assembly at 8am on September 21 for countries to deposit their instruments of ratification.

“We have 178 countries who have signed this Paris Agreement, and 19 countries have deposited their instrument of ratification.”

“As you are well aware, we need the 55 countries to ratify, and 55 percent of global greenhouse gas emissions accounted.”

“These 19 countries all accounted is less than 1 percent of greenhouse gas emissions.”

“So we need to do much more,” he said.

The G77 Newswire is published with the support of the G77 Perez-Guerrero Trust Fund for South-South Cooperation (PGTF) in partnership with Inter Press Service (IPS).

As the spreading refugee crisis threatens to destabilize national budgets of donor nations in Western Europe, Secretary-General Ban Ki-moon Wednesday appealed to the international community not to forsake its longstanding commitment for development assistance to the world’s poorer nations.

Ban’s appeal comes two days after a UN pledging conference reported a “dramatic decline” in donor commitments: from 560 million dollars in 2014 to 77 million dollars in the most recent pledges, largely covering 2015.

Asked if the Secretary-General’s appeal was the result of the decline in commitments, UN Deputy Spokesman Farhan Haq told IPS: “It’s in response to many factors, including concerns expressed by some states about maintaining aid levels.”

The secretary-general said resources for one area should not come at the expense of another.

Redirecting critical funding away from development aid at this pivotal time could perpetuate challenges that the global community has committed to address, he warned.

“Reducing development assistance to finance the cost of refugee flows is counter-productive and will cause a vicious circle detrimental to health, education and opportunities for a better life at home for millions of vulnerable people in every corner of the world,” Ban declared.

At a summit meeting of political leaders from Europe and Africa in Malta Wednesday, the European Union (EU) was expected to announce plans to create a Special Trust Fund, initially estimated at 1.9 billion dollars, to address the financial problems arising out of the refugee crisis.

Since European countries are expected to boost this fund over the next few months, there are fears these contributions may be at the expense of development assistance.

According to figures released by the Paris-based Organisation for Economic Cooperation and Development (OECD), development aid flows were stable in 2014, after hitting an all-time high in 2013.

But aid to the poorest countries continued to fall, according to official data collected by the OECD Development Assistance Committee (DAC).

Net official development assistance (ODA) from DAC members totalled 135.2 billion dollars, with a record 135.1 billion dollars in 2013, though marking a 0.5% decline in real terms.

Net ODA as a share of gross national income was 0.29%, also on a par with 2013. ODA has increased by 66% in real terms since 2000, when the Millennium Development Goals were agreed, according to OECD.

The secretary-general said that with the world facing the largest crisis of forced displacement since the Second World War, the international community should meet this immense challenge without lessening its commitment to vitally needed official development assistance. (ODA)

He underscored the importance of fully funding both efforts to care for refugees and asylum seekers in host countries as well as longer-term development efforts.

The Secretary-General said he recognized the financial demands faced by host communities and partner governments as they seek to support the international response.

He expressed his “sincere gratitude to governments and their citizens for their generosity.”

Nick Hartmann, Director of the Partnerships Group at UN Development Programme (UNDP) told delegates Monday the important agreements that Member States had come to in 2015 called for increased policy support.

To deliver that, adequate and predictable resources were required.

He said core resources were the foundation of UNDP’s support to the poorest and most vulnerable.

UNDP, he pointed out, had responded to a range of crises over the past year and had ensured that 11.2 million people benefited from improved livelihoods. Almost a million jobs were created in 77 countries, with half of those reaching women.

“However, he said reduced contributions from many top partners and unfavourable exchange rate movements had caused a downward trend in funding.”

Hartmann said a number of partners faced overwhelming pressures, including the migrant crisis, he thanked those who had submitted pledges at Monday’s pledging conference.

The UNDP is described as the UN’s global development network covering 177 countries and territories.

The writer can be contacted at thalifdeen@aol.com

Jomo Kwame Sundaram. Credit: FAO

By Jomo Kwame Sundaram
ROME, Sep 14 2015 (IPS)

Many well-meaning people who would like better governance have been misled into insisting on so-called ‘good governance’ reforms, with the expectation that this would lead to development.

There is no clear or systematic evidence that good governance – as an approach — is necessary for development. However, the evidence favours the converse: governance improves with development.

No one is advocating bad governance, or corruption, or however one wants to define whatever good governance is meant to address. Nor is anyone saying that governance does not matter.

Clearly, no one is opposed to good governance in the sense of governance that is good. On the contrary, everyone wants to improve governance in many aspects of human affairs.

When the policy prescriptions of the conventional wisdom of the last three decades did not result in sustained development, good governance reforms became the great hope. After all, the statistical correlation between good governance indicators and economic performance has long fuelled hope that good governance would bring development.

Thus, good governance became a convenient way to explain away the failure of the development economics orthodoxy of the last two decades of the 20th century — when Latin America lost more than a decade, and Sub-Saharan Africa a quarter century due to enforcement of the so-called ‘Washington Consensus’!

Market liberalization was supposed to be the necessary complement of freedom and democracy — following the late Friedrich Hayek and Milton Friedman, both Nobel laureates in economics with considerable name recognition.

Thus, good governance was touted as the great miracle cure for development failure and corruption, usually simplistically attributed to big government. After all, who favours corruption, red-tape or ineptitude?

These were easy targets, and when conventional analysis could not explain development failures and corruption, bureaucracy, bad governance and governance failure could conveniently be blamed.

But unfortunately, all good things in life do not necessarily go together. And while most people want democracy, or want to see an end to corruption, development does not necessarily follow. And that is the problem.

Unfortunately, unrealistic expectations have been created by presuming that good governance reforms are necessary for development. When good governance reforms are imposed as aid conditionalities, recipient developing country governments often end up mimicking donor expectations.

And when you have well over a hundred good governance indicators, reforms become so wide-ranging, impossible to achieve, beyond the means of most developing countries and, worst of all, a major distraction from needed development efforts.

To make things worse, many ostensible good governance solutions favour particular vested interests, with grossly unfair consequences. Also, many good governance reforms have had unexpected, if not perverse outcomes, sometimes worsening governance problems, e.g. when decentralization and devolution have led to powerful local political patrons — which some call ‘cacique’ democracy.

So, let us improve governance by all means. But let us not overload the governance reform agenda unnecessarily. As Harvard Professor Merilee Grindle has put it, we need ‘good enough’ governance — meaning we must prioritize, and strategically.

There is no systematic evidence that the much touted good governance reforms are necessary for development. We cannot presume that the advocates of good governance have been always right about how best to improve governance.

Take the claims about the ostensible necessity to strengthen property rights.

In reality, the tragedy of the commons is not inevitable, and strengthened property rights are not the only solution. The late, much maligned Nobel laureate Elinor Ostrom showed that human societies have long coped with ecological, resource and other constraints with a variety of arrangements other than by strengthening property rights.

As governance improves with development, let us prioritize development-enhancing governance reforms, or developmental governance. A pragmatic approach to improving governance cannot be dogmatic, pre-conceived, and one-size-fits-all, where one has the solution even before one knows the problem.

Identify the major constraints, analyse, and then address them, perhaps sequentially. Draw from relevant experiences, lessons learned. Do not presume there are best practices regardless of context. We need to be humble, not presumptuous, and that is never easy for those of us deemed experts.
(END)

Excerpt:

The Finance Ministers and Central Bank Governors of the G20. Credit: TCMB/cc by 2.0

By Jaya Ramachandran
BERLIN, Sep 9 2015 (IPS)

Finance ministers and central bank governors of the world’s 20 major economies, accounting for 66 percent of world population, have pledged to “promote an enabling global economic environment for developing countries as they pursue their sustainable development agendas”.

In this context, they are looking forward to “a successful outcome” of the U.N. Summit in New York for the adoption of the 2030 Agenda for Sustainable Development. The summit will be held from Sep. 25 to 27 in New York as a high-level plenary meeting of the General Assembly of the world body.

The G20, meeting in Turkey’s capital Ankara on Sep. 4-5, reviewed ongoing economic developments, their respective growth prospects, and recent volatility in financial markets and its underlying economic conditions. They welcomed “the strengthening economic activity in some economies” but said that global growth was falling short of their expectations.

To remedy the situation, they vowed to take decisive action to keep the economic recovery on track and expressed confidence that the global economic recovery would gain speed. With this in view, they would continue to monitor developments, assess spillovers and address emerging risks as needed to foster confidence and financial stability.

The G20 welcomed “the positive outcomes of the Addis Ababa Conference on Financing for Development (FFD)”. In support of these, they aim to scale up their technical assistance efforts to help developing countries build necessary institutional capacity, particularly in the areas specified in the Addis Ababa Action Agenda.

The agreement was reached by the 193 U.N. Member States attending the Conference, following negotiations under the leadership of Ethiopian Foreign Minister Tedros Adhanom Ghebreyesus.

U.N. Secretary-General Ban Ki-moon said: “This agreement is a critical step forward in building a sustainable future for all. It provides a global framework for financing sustainable development.”

He added, “The results here in Addis Ababa give us the foundation of a revitalized global partnership for sustainable development that will leave no one behind.”

The G20 includes 19 individual countries – Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, South Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom and the United States – along with the European Union (EU). The EU is represented by the European Commission and by the European Central Bank.

The Group was founded in 1999 with the aim of studying, reviewing, and promoting high-level discussion of policy issues pertaining to the promotion of international financial stability.

It seeks to address issues that go beyond the responsibilities of any one organisation. Collectively, the G20 economies account for around 85 percent of the gross world product (GWP), 80 percent of world trade (or, if excluding EU intra-trade, 75 percent), and two-thirds of the world population. The G20 heads of government or heads of state have periodically conferred at summits since their initial meeting in 2008.

The G20 are responsible for 84 percent fossil fuel emissions worldwide. To support the climate change agenda of 2015, they welcomed the Climate Finance Study Group (CFSG) report, took note of the inventory on climate funds developed by the OECD (Organisation for Economic Cooperation and Development), and the toolkit developed by the OECD and the GEF (Global Environment Facility) to enhance access to adaptation finance by the low income and developing countries, especially those that are particularly vulnerable to the adverse effects of climate change.

While recognising developed countries’ ongoing efforts, they called on them to continue to scale up climate finance in line with their commitments.

“We are working together to reach a positive and balanced outcome at the 21st Conference of Parties of the UNFCCC (COP 21). Based on the outcomes and towards the objectives of the COP21, CFSG will continue its work in 2016 by following the principles, provisions and objectives of the UNFCCC,” they added.

UNFCC is the United Nations Framework Convention on Climate Change that emerged from the Earth Summit in June 1992 in Rio, Brazil, which is currently the only international climate policy treaty with broad legitimacy, due in part to its virtually universal membership.

The CFSG was established by Finance Ministers, in April 2012, and was welcomed by leaders in the Los Cabos Summit, in Jun 2012, with a view “to consider ways to effectively mobilize resources taking into account the objectives, provisions and  principles of the UNFCCC”.

In November 2012, Finance Ministers agreed to “continue working towards building a better understanding of the underlying issues among G20 members taking into account the objectives, provisions and principles of the UNFCCC”, and also recognised that the “UNFCCC is the forum for climate change negotiations and decision making at the international level”.

Following the mandate of the group, and building on the CFSG 2013 Report, the Group identified four areas to be studied in 2014, namely: (a) Financing for adaptation; (b) Alternative sources and approaches to enhance climate finance and its effectiveness; (c) Enabling environments, in developing and developed countries, to facilitate the mobilization and effective deployment of climate finance; (d) Examining the role of relevant financial institutions and MDBs in mobilizing climate finance.

This report aims to present to the G20 Finance Ministers and Leaders a range of non-exhaustive policy options (“toolbox”) for voluntary consideration, related to these four areas, and to suggest further work on other important issues on climate finance.

The G20 said they were “deeply disappointed” with the continued delay in progressing the 2010 International Monetary Fund (IMF) Quota and Governance Reforms. In their view, their earliest implementation is essential for the credibility, legitimacy and effectiveness of the Fund and “remains our highest priority”.

As part of continuing efforts to promote market confidence and business integrity, G20 Finance Ministers also endorsed a new set of G20/OECD corporate governance principles.

The G20/OECD Principles of Corporate Governance provide recommendations for national policymakers on shareholder rights, executive remuneration, financial disclosure, the behaviour of institutional investors and how stock markets should function.

Sound corporate governance is seen as an essential element for promoting capital-market based financing and unlocking investment, which are keys to boosting long-term economic growth.

“In today’s global and highly interconnected world of business and finance, creating trust is something that we need to do together,” OECD Secretary-General Angel Gurría said during a presentation of the new Principles with Turkish Deputy Prime Minister Cevdet Yilmaz,‎ who chaired the G20 finance ministers meeting.

Edited by Kitty Stapp

Ambassador Selim Yenel. Credit: Permanent Delegation of Turkey to the EU

By Selim Yenel
BRUSSELS, Jun 7 2015 (IPS)

Turkey assumed the Presidency of the Group of 20 (G20) on Dec. 1, 2014. It will culminate in the Antalya Summit on Nov. 15-16. Our priorities build upon the G20 multi-year agenda, but also reflect particular themes we see as important for 2015.

(The G20 comprises a mix of the world’s largest advanced and emerging economies, representing about two-thirds of the world’s population, 85 per cent of global gross domestic product and over 75 per cent of global trade. They include Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom, the United States and the European Union.)We have a moral obligation to address inequality, which also hinders economic growth.

We want to channel the influence of the G20 also for the benefit of the global community. Spain, Azerbaijan, Singapore and the Chairs of ASEAN (Malaysia), African Union (Zimbabwe) and NEPAD-New Partnership for Africa’s Development (Senegal) are invited to G20 meetings.

We have an ambitious agenda, a clear focus and an intense work plan. We frame our priorities as ‘3 Is’. – Implementation, Inclusiveness, Investment.

Implementation:

– Turning words into actions. Implementing our collective G-20 commitments.

– G20 members committed themselves to policy measures over 1,000 in total, estimated to lift collective G20 growth by an additional 2.1 percent over the next five years. (the so-called “2 in 5” target)

– The IMF and OECD calculate that implementing G20 growth strategies can generate additional two trillion dollars to the world economy, an output equivalent to the size of the Indian economy.

– The first accountability report on how much progress we have collectively made towards our growth target will be presented to the G20 Summit in Antalya.

Inclusiveness:

– The G20’s overarching aim has been to foster strong, sustainable and balanced growth. One of our primary goals is to add “inclusive” growth to this, both at the national and international level.

– We have a moral obligation to address inequality, which also hinders economic growth. It has been worsened by the effects of the global financial crisis. (Among OECD countries, inequality is at its highest level in 30 years)

– Last year, the G20 made a commitment to reduce the gender gap in labour force participation by 25 percent until 2025 (our 25 by 25 target). Its implementation will bring additional 100 million women into the workforce.

– We will strive to achieve a collective G20 target for youth unemployment.

– SMEs (small and medium enterprises) are another important element. They are the powerhouse of employment, innovation and entrepreneurial spirit.

– We launched the World SME Forum (WSF) on May 23. Turkey’s Deputy Prime Minister Ali Babacan announced the official launch of this forum, a major new initiative to drive the contributions of SMEs to global economic growth and employment. For the first time, there will now be a united and global voice of SMEs.

– Low Income Developing Countries (LIDCs) are an important focal point. Our message: the G20 is not only concerned about its own interests but its policies should also benefit the entire community, resulting in a better global dialogue.

Investment:

– Investment is key to unlocking growth and generating new jobs.

– The public sector cannot meet the global investment gap alone. Effective public and private sector partnership is a must. Nine out of 10 new jobs are created as a result of private investment.

– We proposed that G20 countries prepare national investment strategies to support their national growth strategies adopted last year. We have started to work on our national investment strategies and plan to have them submitted for the approval of at the Antalya Summit.

2015 is a critical year for shaping the global sustainable development agenda for the future.

We have the Sustainable Development Goals (SDG) Summit in New York in September. It is important that the G20’s decisions and actions strengthen the work of the U.N. (SDGs will follow and expand on the Millennium Development Goals agreed in 2000, due to expire at the end of 2015)

We aim to support the universal nature of the post 2015-development agenda. Our work on food security and nutrition, access to affordable and reliable energy to all, efforts to reduce the gender gap in female labour force participation, skills development and infrastructure are directly relevant to many of the proposed goals and targets.

The main topics of the G20 Agriculture Ministers Meeting on May 8, the second in G20 history (first was in 2011), were developing sustainable food systems and the challenges of food loss and waste.

Some 1.3 billion tonnes of food is lost or wasted each year. If we can reduce food losses and waste to zero, it would give us additional food to feed two billion people.

Our work on energy access in Sub Saharan Africa is another important element of our agenda. We are working in partnership with various African institutions.

Almost one-fifth of the global population still does not have access to electricity. Nearly 2.6 billion people lack access to modern cooking facilities. In Sub-Saharan Africa the problem is most acute. More than 620 million people, out of the region’s total population of 915 million, have no access to electricity.

A high-level conference with the participation of African leaders, investors, private sector and relevant international organisations back to back with the G20 Energy Ministers meeting is also planned. The G20 Energy Ministers Meeting on Oct. 2 will be a first in G20 history.

We are also working closely with the ILO and other international organisations on a range of employment and labour market outcomes.

Trade is an important part of our agenda. Representing 76 percent of world trade, G20 should lead by example in collective work to ensure an open and functioning multilateral trading system.

We are also working to strengthen outreach with engagement groups and non-members. Under our Presidency, G20 countries agreed to establish a new G20 engagement group: The Womens-20, to promote gender inclusive growth and enhance the role of women in business.

We also value direct outreach and dialogue with countries, regional groups and institutions. On Apr. 13, we convened in Washington the first Caribbean Region Dialogue with the G20 Development Working Group together with the Central Bank of Trinidad and Tobago. This was an opportunity to deepen the G20-Caribbean relationship.

Overall, Turkey believes it has a responsibility to use its Presidency of the G20 as a positive influence regarding growth, sustainability and development in all areas. Independent of the G20, Turkey in the last decade has been more and more involved with the African, Caribbean and Pacific (ACP) Group of States.

It has developed its relations in the political, economic, commercial and development fields. Turkey has opened a large number of embassies in all the ACP countries and will continue to increase its contacts in the years to come for a mutually beneficial relationship.

Edited by Ramesh Jaura / Kitty Stapp

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, IPS – Inter Press Service.

Excerpt:

Luis Almagro, Minister for Foreign Affairs of Uruguay, addresses the opening of the 16th session of the Human Rights Council, in Geneva, Switzerland. Credit: UN Photo/Jean-Marc Ferré

By Luis Almagro
MONTEVIDEO, Jan 18 2015 (IPS)

Two decades after the first Summit of the Americas, a lot has changed in the continent and it has been for the good. Today, a renewed hemispheric dialogue without exclusions is possible.

Back in the mid-1990s, at the time of the Miami summit, it was the time of imported consensus, models of economic and social development exclusively based on the market and its supposed perfect allocation of resources through the invisible hand.Today, all voices count, and if they do not, they will have to. The powerful club of the G8 turned into the G20; still, this is not enough to embrace the new reality of our hemisphere.

Hidden under a development rationale, the greatest wave of privatisation and deregulation took over the continent. The role of the state was reduced to be a facilitator of a process based on the principle of survival of the fittest. Solidarity, equity and justice were all values from the past and poverty a necessary collateral damage.

However, these values were in the top of the minds of the people of the hemisphere, who turned their backs to these policies and instead during the past 15 years, have forcefully supported the alternatives that combine economic growth with social inclusion, broadening opportunities for all citizens.

Economic growth went hand in hand with social inclusion, adding millions to the middle class – which today accounts for 34 percent of Latin Americans – surpassing the number of poor for the first time in the history.

If this was possible it was because governments added to the invisible hand of the market, the very visible hand of the state.

And this took place within the context of the worst post war global financial crisis that led to an unprecedented recession in the United States and Europe, which the latter still strives to leave behind.

Growth with social equity turned out to be the new regional consensus.

Today, this binds the region together.

Today, conditions are present to set up a more realistic cooperation in the Americas, where all members could partner in equal conditions, from the most powerful to the smallest islands in the Caribbean.

Today, nobody holds the monopoly over what works or does not; neither can anybody impose models because the established truths have crashed against reality. While in the 1990s social exclusion in domestic policies and voice exclusion at the international level were two sides of the same token, this in not any longer acceptable.

Today, all voices count, and if they do not, they will have to. The powerful club of the G8 turned into the G20; still, this is not enough to embrace the new reality of our hemisphere.

To the existing bodies, the region has added in this past decade the dynamic UNASUR in South America and CELAC in the Americas, thus leaving the OAS as the only place for dialogue among all countries of the Americas, whether large, medium, small, powerful or vulnerable.

But, governmental or inter-governmental actors by themselves are not the only answer to the problems of today´s world. Non-state actors of the non-governmental world, the private sector, trade unions and social organisations must be part of the process.

Leaders need to interpret the time in order to generate an agenda for progress, but progress that is tangible for people, for citizens, to whom we are accountable to.

Therefore, in a more uncertain international economic environment, we should focus on maintaining and expanding our social achievements and a new spirit of cooperation in the Americas can be instrumental for that.

The Summit of the Americas in Panama, in April 2015, may be the beginning of this new process of confidence building, where all countries can feel they can benefit from a cooperative agenda. This will be a historical moment because this time there will be no exclusions.

The recent good news on the diplomatic front related to the normalisation of diplomatic ties between the U.S. and Cuba and the participation of Cuba in the Summit represent an additional positive signal. Panama deserves the support of the entire region before and during the Summit.

This will be a great opportunity to strengthen democratic values, the defence of human rights, institutional transparency and individual freedoms together with a practical agenda for cooperation for shared prosperity in the Americas.

Edited by Kitty Stapp

Excerpt:

By Roberto Savio
ROME, Nov 21 2014 (IPS)

Less than a week after everybody celebrated the historical agreement on Nov. 17 between the United States and China on reduction of CO₂ emissions, a very cold shower has come from India.

Indian Power Minister Piyush Goyal has declared: “India’s development imperatives cannot be sacrificed at the altar of potential climate change many years in the future. The West will have to recognise we have the needs of the poor”.

This is also a blow to the Asia policy of U.S. President Barack Obama, who came back home from signing the CO₂ emissions agreement in Beijing, touting his success on establishing U.S. policy in the region.

Roberto Savio

But, more importantly, will give plenty of ammunition to the Republican Congress, which has been fighting climate control on the grounds that the United States cannot engage on climate control unless other major polluters make similar commitments. This was always directed to China, which had refuse to make any such commitment until President Xi, to the surprise of everybody, did so by signing an agreement with Obama.

India is a major polluter, not at the level of China, which has now reached 9,900 metric tons of CO₂, against the 6,826 of the United States. But India is coming up fast. “The incestuous relations between energy corporations and governments are out of the public's eye. It is yet further proof that, even when nothing less than survival is at stake for islands and coastlines, agriculture and the poor, governments are unable – or unwilling – to see beyond their immediate existence”

Goyal has promised that India’s use of domestic coal will rise from 565 million tons last year to more than a billion tons by 2019, and he is selling licences for coal mining at a great speed. The country has increased its coal-fired plants by 73 percent in just the last five years. In addition, Indian coal is of poor quality, polluting twice as much as coal in the West.

Nevertheless, newly-elected Indian Prime Minister Narendra Modi has announced that he will embark on a major programme of renewable sources of energy, and there is an apparent paradox in the fact that many of the climate scientists who form the Intergovernmental Panel on Climate Control (IPCC) are from India. Its Director-General is an Indian, Dr. Rajendra K. Pachauri, who is also chief executive of the Energy Resources Institute in New Delhi.

The IPCC’s last report was much more dramatic than previous ones, stating conclusively that climate change is due to the action of man, and providing an extensive review of the damage that the agricultural sector is bound to face, especially in poor countries like India. At least 37 million people would be displaced by rising seas.

Indian towns are by far the most polluted in the world, surpassing several times each year the worst polluted day in China.

But what is more worrying is that governments are reacting too slowly. It would take a very major effort, which is not now on the cards, to keep temperature from rising by more than 2 degrees Centigrade, and therefore to start to reduce emissions by 2020. Emissions in 2014 are expected to be the highest ever, at 40 billion tonnes, compared with 32 billion in 2010.

The consensus is that to limit warming of the planet to no more 2 degrees Centigrade above pre-industrial levels, governments would have to restrict emissions from additional fossil fuel burning to about 1 trillion tons of carbon dioxide.

But, according to the IPCC report, energy companies have booked coal and petroleum reserves equal to several times that amount, and they are spending some 600 billion dollars a year to find more. In other words, governments are directly subsidising the consumption of fossil fuel.

By contrast, less than 400 billion dollars a year are spent to reduce emissions, a figure that is smaller than the revenue of one just one U.S. oil company, ExxonMobil.

The last meeting of the G20 in Brisbane earlier this month gave unexpected attention to climate, but the G20 alone is spending 88 billion dollars a year in subsidies for fossil fuel exploration, which is double that which the top 20 private companies are spending to look for new oil, gas and coal.

The G20 spends 101 billion dollars to support clean energy in a clear attempt to make everybody happy but, according to the International Energy Agency, if G20 governments directed half of their subsidies, or 49 billion dollars a year, to investment for redistributing energy from new sources, we could achieve universal energy access as soon as 2030.

Another good example of the total lack of coherence from Western governments is that they have pledged an amount of 10 billion dollars for a Green Climate Fund, whose task is to support developing countries in mitigating and adapting to climate change. That amount is two-thirds of what those countries have been asking for and, since its creation in 1999, the fund has still to become operational.

And it was only after the last G20 meeting that the United States pledged three billion dollars and Japan 1.5 billion, bringing the total so far to 7 billion dollars – one-third is still missing.

And now we have the upcoming Climate Conference in Lima, in December, where opinion is that governments will once again fail to reach a comprehensive agreement on climate change – and the amount of time left for the planet will reduce even further.

Besides the fight to be expected from the Republican Congress in the United States, there will be also be opposition from countries that depend on fossil fuels, such as Russia, Australia, India, Venezuela, Iran, Saudi Arabia and the Gulf countries.

So, governments show a total lack of consensus and responsibility. If a referendum could be held asking citizens if they would prefer to pay 800 billion dollars less in taxes to avoid subsidising pollution, there are few doubts what the result would be. And there would be same result if they were asked if they would prefer to invest those 800 billion dollars in clean energy or continue to pollute.

But the incestuous relations between energy corporations and governments are out of the public’s eye. It is yet further proof that, even when nothing less than survival is at stake for islands and coastlines, agriculture and the poor, governments are unable – or unwilling – to see beyond their immediate existence. We are direly in need of global governance for this kind of globalisation. (END/IPS COLUMNIST SERVICE)

(Edited by Phil Harris)

Excerpt:

Water pouring through the sluice gates at Gariep Dam in Port Elizabeth, South Africa. Credit: Bigstock

By Carey L. Biron
WASHINGTON, Nov 18 2014 (IPS)

Industrialised countries have agreed to collaborate on a new programme aimed at funnelling significant private-sector investment into global infrastructure projects, particularly in developing countries.

The Global Infrastructure Initiative, agreed to Sunday by governments of the Group of 20 (G20) countries, will not actually be funding new projects. But it will seek to create investment environments that are more conducive to major foreign investors, and to assist in connecting governments with financiers.In developing countries alone these needs could require up to a trillion dollars a year of additional investment, though currently governments are spending just half that amount.

The initiative’s work will be overseen at a secretariat in Australia, the host of this weekend’s G20 summit and a government that has made infrastructure investment a key priority. This office, known as the Global Infrastructure Hub, will foster collaboration between the public and private sectors as well as multilateral banks.

“With a four-year mandate, the Hub will work internationally to help countries improve their general investment climates, reduce barriers to investment, grow their project pipelines and help match investors with projects,” Australian Prime Minister Tony Abbott and Treasurer Joe Hockey said Sunday in a joint statement. “This will help improve how infrastructure markets work.”

Some estimate the undertaking could mobilise some two trillion dollars in new infrastructure investment over the next decade and a half. This would be available to be put into electrical grids, roads and bridges, ports and other major projects.

The G20 has emerged as the leading multilateral grouping tasked with promoting economic collaboration. Together, its membership accounts for some 85 percent of global gross domestic product.

With the broad aim of prompting global economic growth, the Global Infrastructure Initiative will work to motivate major institutional investors – banks, pension funds and others – to provide long-term capital to the world’s mounting infrastructure deficits. In developing countries alone these needs could require up to a trillion dollars a year of additional investment, though currently governments are spending just half that amount.

In recent years, the private sector has turned away from infrastructure in developing countries and emerging economies. Between 2012 and last year alone, such investments declined by nearly 20 percent, to 150 billion dollars, according to the World Bank.

“This new initiative very positively reflects a clear-eyed reading of the evidence that there are infrastructure logjams and obstacles in both the developing and developed world,” Scott Morris, a senior associate at the Center for Global Development, a Washington think tank, told IPS. “From a donor perspective, this indicates better listening to what these countries are actually asking for.”

Still, Morris notes, it remains unclear what exactly the Global Infrastructure Initiative’s outcomes will be.

“The G20 clearly intends to prioritise infrastructure investment,” he says, “but it’s hard to get a sense of where the priorities are.”

Lucrative opportunity

The Global Infrastructure Initiative is the latest in a string of major new infrastructure-related programmes announced at the multilateral level in recent weeks.

In early October, the World Bank announced a project called the Global Infrastructure Facility, which appears to have a mandate very similar to the new G20 initiative. At the end of the month, the Chinese government announced the creation of a new Asian Infrastructure Investment Bank (AIIB).

Many have suggested that the World Bank and G20 announcements were motivated by China’s forceful entry onto this stage. As yet, however, there is little clarity on the G20 project’s strategy.

“With so many discreet initiatives suddenly underway, I wonder if the new G20 project doesn’t cause confusion,” Morris says.

“Right now it’s very difficult to see any division in responsibilities between the G20 and World Bank infrastructure projects. The striking difference between them both and the AIIB is that the Chinese are offering actual capital for investment.”

The idea for the new initiative reportedly came from a business advisory body to the G20, known as the Business 20 (B20). The B20 says it “fully supports” the new Global Infrastructure Initiative.

“The Global Infrastructure Initiative is a critical step in addressing the global growth and employment challenge, and the business community strongly endorses the commitments of the G20 to increase quality investment in infrastructure,” Richard Goyder, the B20 chair, said Monday.

“The B20 estimates that improving project preparation, structuring and delivery could increase infrastructure capacity by [roughly] 20 trillion dollars by 2030.”

Goyder pledged that the business sector would “look to be heavily involved in supporting” the new projects.

Poison pill?

Yet if global business is excited at the prospect of trillions of dollars’ worth of new investment opportunities, civil society is expressing concern that it remains unclear how, or whether, the Global Infrastructure Initiative will impose rules on the new projects to minimise their potential social or environmental impacts.

“Private investment in infrastructure is crucial for closing the infrastructure funding gap and meeting human needs, and the G20 initiative is an important move by governments to catalyse that private investment,” Lise Johnson, the head of investment law and policy at the Columbia Center on Sustainable Investment at Columbia University, told IPS.

“It is key, however, that the initiative and the infrastructure hub develop procedures and practices not only to promote development of infrastructure, but to ensure that projects are environmentally, socially and economically sustainable for host countries and communities.”

Prominent multilateral safeguards policies such as those used by the World Bank are typically not applied to public-private partnerships, which will likely make up a significant focus of the G20’s new infrastructure push. Further, regulatory constraints could be too politically thorny for the G20 to forge new agreement.

“In the 2013 assessment of the G20’s infrastructure initiative by the G20 Development Working Group, only one item of the whole infrastructure agenda ‘stalled’ – and that was the work on environmental safeguards,” Nancy Alexander, director of the Economic Governance Program at the Heinrich Boell Foundation, a think tank, told IPS.

“I’ve always gotten the feedback from the G20 that such policies are matters of national sovereignty.”

The G20 is now hoping that trillions of dollars in infrastructure spending will create up to 10 million jobs over the next 15 years, spurring global economic growth. Yet Alexander questions whether this spending will be a “magic bullet” or a “poison pill”.

“Some of us are old enough to remember how recklessly the petrodollars of the 1970s and 1980s were spent – especially on infrastructure … Then, reckless lenders tried to turn a quick profit without regard to the social, environmental and financial consequences, including unpayable debts,” she says.

“Seeing the devastation wrought by poorly conceived infrastructure, many of us worked to create systems of transparency, safeguards and recourse at the multilateral development banks – systems that are now considered too time-consuming, expensive and imperialistic.”

Edited by Kitty Stapp

The writer can be reached at cbiron@ips.org

IPS U.N. Bureau Chief Thalif Deen interviews Secretary-General Ban Ki-moon. Credit: Lyndal Rowlands/IPS

By Thalif Deen
UNITED NATIONS, Nov 11 2014 (IPS)

The continued widespread economic recession – aggravated by the recent Ebola outbreak in West Africa – is threatening to undermine the U.N.’s highly-touted post-2015 development agenda.

Still, Secretary-General Ban Ki-moon is placing his trust and confidence on two key upcoming summit meetings: a G20 gathering of world leaders in Brisbane, Australia later this week, and the International Conference on Financing for Development (ICFD) in Addis Ababa, Ethiopia, next July.

In an interview with IPS, just before his departure to Brisbane, he described the G20 as “the world’s primary global economic forum”, while the ICFD, he predicted, will be “one of the most important conferences in shaping sustainable development goals (SDGs).”

Ban has already cautioned world leaders of the urgent need for “a robust financial mechanism” to implement the proposed SDGs – and such a mechanism, he said, should be put in place long before the adoption of these goals in September 2015.

In a letter to G20 leaders, he says the successful implementation of the growth and sustainable development agendas will depend largely on mobilising “all sources of financing”.

“It is difficult to depend on public funding alone,” he told IPS, stressing the need for financing from multiple sources – including public, private, domestic and international.

The G20, a rare mix of both developed and developing countries, includes Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom and the United States, plus the European Union.

Overall, the G20 represents about two-thirds of the world’s population, 85 per cent of global gross domestic product and over 75 per cent of global trade.

The G20 president, this time around Australian Prime Minister Tony Abbott, usually invites several guest countries to participate in the summit. The presidency rotates on a geographical basis.

The countries which previously hosted the G20 summit include the United States (in 2008 and 2009), the United Kingdom (2009), Canada (2010), the Republic of Korea (2010), France (2011), Mexico (2012) and Russia (2013).

At the meeting in Brisbane Nov. 15-16, Abbott will welcome Spain as a permanent invitee; Mauritania as the 2014 chair of the African Union; Myanmar as the 2014 chair of the Association of South-East Asian Nations (ASEAN); Senegal, representing the New Partnership for Africa’s Development; New Zealand; and Singapore.

The ICFD, scheduled for July 2015, is billed as a U.N. conference and will be attended by all 193 member states.

Speaking of financing for development, Ban said official development assistance (ODA), from rich nations to poorer ones, “is necessary but not sufficient.”

According to the latest available statistics, only five countries – Norway (1.07 percent), Sweden (1.02), Luxembourg (1.00), Denmark (0.85) and the United Kingdom (0.72) – have reached the longstanding target of 0.7 of gross national income as ODA to the world’s poorer nations.

Meanwhile, the economic recession is taking place amidst the millions still living in hunger (over 800 million), jobless (more than 200 million), water-starved (over 750 million) and in extreme poverty (more than one billion), according to the United Nations.

Asked about a proposal for innovative sources of financing for development – including a tax on foreign exchange transactions – Ban said he has appointed a former French cabinet minister, Philippe Douster-Blazy, as his special adviser to explore these funding sources.

The proposal for innovative financing was approved at the 2002 ICFD in Mexico and it has raised about 2.0 billion dollars so far.

Ban’s most formidable task will be to ensure that rich countries deliver on their pledges, made in 2009, to provide a staggering 100 billion dollars by 2020 for a Green Climate Fund to prevent the most disastrous consequences of climate change.

“I need at least 10 billion dollars to operationalise the fund,” he said. So far, about 2.5 billion dollars have been made available.

Meanwhile, in his letter to the G20 leaders, Ban says new threats, including geopolitical tensions and the Ebola crisis, “have emerged to create further uncertainty” for the U.N.’s development agenda.

“The G20 Brisbane summit is well timed to provide the leadership that will translate into strong global growth and positive change in people’s lives,” he wrote. “Therefore, I urge you and your fellow leaders to seize the moment in Brisbane and set the stage for success in our shared work to build a more sustainable and prosperous world for all.”

The United Nations, he said, “stands ready to partner with you in your endeavour in Brisbane – and beyond.”

But a lingering question remains: how many of the world leaders will respond to the call?

Edited by Kitty Stapp

The writer can be contacted at thalifdeen@aol.com

Chandrasekhar Chalapurath, an economist at Jawaharlal Nehru University in New Delhi, talks about development banks in India, at the International Seminar on the BRICS Bank. Credit: Mario Osava/IPS

By Mario Osava
FORTALEZA, Brazil, Jul 17 2014 (IPS)

The creation of BRICS’ (Brazil, Russia, India, China and South Africa) own financial institutions was “a disappointment” for activists from the five countries, meeting in this northeastern Brazilian city after the group’s leaders concluded their sixth annual summit here.

The New Development Bank (NDB) and the Contingent Reserve Arrangement (CRA), launched Tuesday Jul. 15 at the summit in the northeastern Brazilian city of Fortaleza, represent progress “from United States unilateralism to multilateralism,” said Graciela Rodriguez, of the Brazilian Network for the Integration of Peoples (REBRIP).

But “the opportunity for real reform was lost,” she complained to IPS at the International Seminar on the BRICS Bank, held in this city Wednesday and Thursday Jul. 16-17 as a forum for civil society organisations in parallel to the sixth summit.

The format announced for the NDB “does not meet our needs,” she said.

The NDB will promote “a new kind of development" only if its loans are made conditional on the adoption of low-polluting technologies and are guided by the Millennium Development Goals and their successors, the Sustainable Development Goals. -- Carlos Cosendey, international relations secretary at the Brazilian foreign ministry
The bank’s goal is to finance infrastructure and sustainable development in the BRICS and other countries of the developing South, with an initial capital investment of 50 billion dollars, to be expanded through the acquisition of additional resources.

“We want an international system that serves the majority, not just the seven most powerful countries (the Group of Seven),” that does not depend on the dollar and that has an international arbitration tribunal for financial controversies, said Oscar Ugarteche, an economics researcher at the National Autonomous University of Mexico.

“It is unacceptable that a district court judge in New York should put a country at risk,” he told IPS, referring to the June ruling of the U.S. justice system in favour of holdouts (“vulture funds”) in their dispute with Argentina, which could force another suspension of payments.

“We need international financial law,” similar to existing trade law, and an end to the dominance of the dollar in exchange transactions, which enables serious injustice against nations and persons, like embargoes on payments and income in the United States, he said.

“Existing international institutions do not work,” and the proof of this is that they have still not overcome the effects of the 2008 financial crisis, said the Mexican researcher.

Major powers like the United States and Japan have unsustainable debt and fiscal deficits, yet are not harassed by the International Monetary Fund (IMF), in contrast to the treatment meted out to less powerful nations, particularly in the developing South.

During the seminar, organised by REBRIP and Germany’s Heinrich Böll Foundation, oft-repeated demands were for civil society participation, transparency, environmental standards and consultation with the populations affected by projects financed by the NDB.

These demands have not yet been included in the NDB but may be discussed during its operational design over the next few years, while the group’s parliaments ratify its approval, said Carlos Cosendey, international relations secretary at the Brazilian foreign ministry, in a dialogue with activists.

Participants at one of several panels at the International Seminar on the BRICS Bank, held Jul. 16-17 in Fortaleza, Brazil. Credit: Mario Osava/IPS

Cosendey said that a disadvantage of the multilateral bank was the need for its regulations not to be confused with infringement of national sovereignty of member states. The political, cultural, legal and ethnic differences between the five countries could pose a major obstacle to the adoption of common criteria, he said.

The NDB can be constructive “if it integrates human rights” into its principles and presents solutions for the social impacts of the projects it finances, said Nondumiso Nsibande, of ActionAid South Africa, an NGO.

“We need roads, other infrastructure and jobs, as well as education, health and housing,” but big projects tend to harm poor communities in the places where they are carried out, she told IPS. It is still not known what levels of transparency and social concern the bank will have, she said.

In the view of Chankrasekhar Chalapurath, an economist at Jawaharlal Nehru University in New Delhi, the NDB will alleviate India’s great needs for infrastructure, energy, long distance transport and ports. However, he does not expect it to make large investments in one key service for Indians: sanitation.

Having an Indian as the bank’s first president, as the five leaders have decided, will help attract more investments, but he said people’s access to water must remain a priority.

Cosenday said the NDB will promote “a new kind of development.”

But Chalapurath told IPS that this will only happen if its loans are made conditional on the adoption of low-polluting technologies and are guided by the Millennium Development Goals and their successors, the Sustainable Development Goals, as well as human rights and other best practices.

Adopting democratic processes within the bank will facilitate dialogue with social movements, parliaments and society in general, he said.

Incorporating environmental issues and gender parity is also essential, said Ugarteche and Rodriguez, who regards this as necessary in order to make progress towards “environmental justice.”

Not only roads and ports need to be built; even more important is the “social infrastructure” that includes sanitation, water, health and education, said Rodriguez, the coordinator of the REBRIP working group on International Economic Architecture.

Mobilising resistance to large projects that affect local populations in the places they are constructed will be part of the response to the probable priority placed by the NDB on financing physical infrastructure projects, she announced.

The social organisations gathered in Fortaleza, with representatives from Brazil, India, China, South Africa and other countries that are not members of the group, are preparing to coordinate actions to influence the way the bank and its policies are designed, and to monitor its operations and the actions of the BRICS group itself.

Brazilian economist Ademar Mineiro, also of REBRIP, said there was potential for national societies to influence the format and policies of the NDB, and time for them to organise and mobilise. “It is an unprecedented opportunity,” he told IPS.

Russia did not originally support the BRICS bank, preferring private funding. But Mineiro said its position changed after the United States and the European Union involved multilateral financial institutions like the World Bank in sanctions against Moscow for its annexation of Crimea, a part of Ukraine.

BRICS evolved “from the economic to the political,” with its members demanding more power in the international system. The alliance is one of the pillars of the Chinese strategy to conquer greater influence, including in the West, said Cui Shoujun, a professor at the School of International Studies of Renmin University in China.

“The BRICS need China more than the other way round,” he told IPS, adding that the Chinese economy is 20 times larger than South Africa’s and four times larger than those of India and Russia.

As well as seeking natural resources from other countries, among the reasons why China has joined and supports BRICS is strengthening the legitimacy in power of the Communist Party through internal stability and prosperity, the academic said.

(END)

The staff at the International Monetary Fund (IMF) has issued an unusually stark warning over the lack of harmonised global tax policies, pointing out that these gaps are allowing for widespread tax gaming by corporations with particularly negative impacts for developing countries.

Anti-poverty advocates are lauding a new staff paper from the fund released Wednesday. Its findings not only coincide with civil society calls for major taxation reforms at the national and international levels, but also repeatedly push back against longstanding tax-related dogma, including that offered by the Washington-based IMF itself.“As tax dodging knows no border, it makes sense to move to the international level to create such a worldwide entity.” -- Catherine Olier of Oxfam

“This is, frankly, a revolutionary paper,” Jo Marie Griesgraber, the executive director of the New Rules for Global Finance Coalition, a Washington-based international network, told IPS.

“It looks very carefully at many aspects of tax planning, and each time says that this has very negative impact on developing countries … Ultimately, it says that traditional tax theory is essentially uninformed by empirical knowledge.”

The paper is the result of a new focus on tax-dodging among the Group of 20 (G20) industrialised countries, which directed the fund to undertake related research. The findings are particularly notable in their sustained focus on the impacts on developing countries.

“Our technical assistance work in developing countries frequently encounters large revenue losses through gaps and weaknesses in the international tax regime,” Michael Keen, deputy director of the IMF’s Fiscal Affairs Department, said in a statement.

“The sums involved for them can be large, not just relative to corporate tax but relative to all tax revenue: 10-15 percent in some cases. The paper reports new evidence that these effects are in fact systematically more important for developing countries.”

Corporate tax rates in all countries have plummeted in recent decades, the paper notes.

Low-income countries have seen these rates degrade from near 50 percent in 1980 to under 30 percent last year. Others have seen similar plunges, with high-income countries seeing corporate taxation fall from around 40 percent three decades ago to little more than 20 percent today.

Such trends have been tracked for years. Yet in the aftermath of the global financial crisis, rich and middle-income countries have begun actively discussing how to maximise their tax revenues, with a focus on ending corporate accounting gimmickry.

Rich companies and individuals could be stashing away as much as 20 trillion dollars overseas in order to escape national taxation, according to some estimates.

“Developed countries today need more income and are mad because not everyone is paying their taxes,” Griesgraber says.

“And that anger is also translating into public pressure. People who pay their taxes even during a difficult recession are even madder than the governments.”

“Meaningless” designations

According to the IMF data, developing countries should perhaps be the most incensed by the impacts of today’s global taxation hodgepodge. The paper offers new findings on the ramifications of what the fund terms “spillover effects” – the ways in which one country’s tax rules impact on another country, which can also be thought of in terms of tax competition between countries.

This phenomenon has been significantly exacerbated as multinational companies have increasingly learned how to legally “move” their operations – largely on paper – for tax benefit. Such companies appear to be based in countries with low taxes, despite doing most of their work in another country that, in turn, is unable to place levies on the company’s full earnings.

“Current international tax arrangements rest on concepts of companies’ ‘residence’ and the ‘source’ of their income, both of which globalization has made increasingly fragile (some would say meaningless),” the paper states.

“At its core, a key issue in assessing any international tax arrangement is how it divides the rights to tax between source and residence countries … The allocation of rights is especially important for low-income countries, however, as flows are for them commonly very asymmetric – they are essentially ‘source’ countries.”

The fund staff found that the impact of these spillover effects on corporate tax bases are “significant and sizable” but are “especially pronounced for low-income countries”. Compared to rich countries, the paper notes, “the base spillovers from others’ tax rates are two to three times larger” in developing countries, and “statistically more significant”.

Particularly problematic has been the extractives industry, though the fund also calls out telecommunications companies. The paper recounts IMF experiences in multiple countries where corporate tax trickery has eaten up much of a project’s revenue, such as a “gold mining sector in which USD 100 billion has been invested over the last decade, but which is almost entirely debt financed”.

The fund ultimately goes so far as to suggest that countries should be extremely careful about signing any bilateral tax treaty, urging developing country governments instead to signal openness to investment by other means. Through such agreements, countries can sign away their right to levy full tax rates and give an upper hand to foreign corporations.

“The IMF analysis raises some very worrying concerns about the impact of tax rules and practices in rich countries on the ability of poor countries to raise their own revenues,” Diarmid O’Sullivan, a tax justice policy advisor with ActionAid, a watchdog group, said Wednesday.

“We see a clear message to … major capital-exporting countries to review their tax rules and make sure they are not harming the ability of poor countries to raise the revenues they need for their development.”

Comprehensive approach

One key step being pushed by governments and civil society today to cut down on corporate tax avoidance entails the automatic exchange of tax information between governments. Doing so, proponents say, would quickly clear up the discrepancies that can be exploited by tax-dodgers.

In February, the Organisation for Economic Co-operation and Development (OECD), comprised of 34 rich countries, unveiled just such a proposal. Still, anti-poverty campaigners have warned that developing economies were not included in discussions around the OECD plan – though a roadmap is due by September on facilitating poor countries’ participation in such exchanges, an OECD official told IPS.

Some are now hoping that this new flurry of work could be leading towards the formalisation of a stricter international framework on tax policy, in line with the globalised environment of today’s multinational corporations. Indeed, the IMF’s new paper notes that “the case for an inclusive and less piecemeal approach to international tax cooperation grows.”

Indeed, a decade and a half ago an IMF official proposed the establishment of a World Tax Authority, an idea that campaigners are now hoping to revive.

“As tax dodging knows no border, it makes sense to move to the international level to create such a worldwide entity,” Catherine Olier, a policy advisor with Oxfam International, an advocacy and humanitarian group, told IPS.

“Modalities about its functionalities and mandate would remain to be determined, but it could have a role in setting minimum standards to avoid harmful tax competition between countries – and, if ambitious, an international dispute mechanisms to fight countries that deliberately put in place tax policies with too much negative spillover effect on others.”

The IMF and OECD reports will both go before the G20 at a summit in November.

While Republicans complain relentlessly about U.S. President Barack Obama’s alleged failure to exert global leadership on geo-political issues like Syria and Ukraine, they are clearly undermining Washington’s leadership of the world economy.

That conclusion became inescapable here during this week’s in-gathering of the world’s finance ministers and central bankers at the annual spring meeting here of the International Monetary Fund (IMF) and the World Bank.The delays are clearly damaging Washington’s global economic and geo-political agenda: persuading other G20 countries to adopt expansionary policies and punish Moscow for its moves against Ukraine.

In the various caucuses which they attended before the formal meeting began Friday, they made clear that they were quickly running out of patience with Congress’s – specifically, the Republican-led House of Representatives – refusal to ratify a 2010 agreement by the Group of 20 (G20) to modestly democratise the IMF and expand its lending resources.

“The implementation of the 2010 reforms remains our highest priority, and we urge the U.S. to ratify these reforms at the earliest opportunity,” exhorted the G20, which represent the world’s biggest economies, in an eight-point communiqué issued here Friday.

“If the 2010 reforms are not ratified by year-end, we will call on the IMF to build on its existing work and develop options for next steps…” the statement asserted in what observers here called an unprecedented warning against the Bretton Woods agencies’ most powerful shareholder.

The message was echoed by the Group of 24 (G24) caucus, which represents developing countries, although, unlike the G20, its communique didn’t mention the U.S. by name.

“We are deeply disappointed that the IMF quota and governance reforms agreed to in 2010 have not yet come into effect due to non-ratification by its major shareholder,” the G24 said.

“This represents a significant impediment to the credibility, legitimacy and effectiveness of the Fund and inhibits the ability to undertake further, necessary reforms and meet forward-looking commitments.”

The reform package, the culmination of a process that began under Obama’s notoriously unilateralist Republican predecessor, George W. Bush, would double contributions to the IMF’s general fund to 733 billion dollars and re-allocate quotas – which determine member-states’ voting power and how much they can borrow – in a way that better reflects the relative size of emerging markets in the global economy.

In addition to enhancing the IMF’s lending resources, the main result of the pending changes would increase the quotas of China, Brazil, Russia, India, and Turkey, for example, at the expense of European members whose collective representation on the Fund’s board is far greater than the relative size of their economies.

Spain, for instance, currently has voting shares similar in size to Brazil’s, despite the fact that the Spanish economy is less than two-thirds the size of Brazil’s. And of the 24 seats on the IMF’s executive board, eight to ten of them are occupied by European governments at any one time.

The reforms would only change the status quo only modestly. While the European Union (EU) members currently hold a 30.2 percent quota collectively, that would be reduced only to 28.5 percent. The biggest gains would be made by the so-called BRICS (Brazil, Russia, India, China, and South Africa) – from 11 percent to 14.1 percent — although almost all of the increase would go to Beijing.

Washington’s quota would be marginally reduced – from 16.7 percent to 16.5 percent, preserving its veto power over major institutional changes (which require 85 percent of all quotas). Low-income countries’ share would remain the same at a mere 7.5 percent collectively, although their hope – shared by civil-society groups, such as Jubilee USA and the New Rules for Global Finance Coalition — is that this reform will make future changes in their favour easier.

Thus far, 144 of the IMF’s 188 member-states, including Britain, France, and Germany and other European countries that stand to lose voting share, have ratified the package. But, without the 16.7 percent U.S. quota, the reforms can’t take effect.

The Obama administration has been criticised for not pressing Congress for ratification with sufficient urgency. But, realising that its allies’ patience was running thin, it pushed hard last month to attach the reform package to legislation providing a one-billion-dollar bilateral aid package for Ukraine during the crisis with Russia over Crimea.

While the Democratic-led Senate approved the attachment, the House Republican leadership rejected it, despite the fact that Kiev would have been able to increase its borrowing from the IMF by about 50 percent under the pending reforms.

House Republicans – who, under the Tea Party’s influence, have moved ever-rightwards and become more unilateralist on foreign policy since the Bush administration – have shown great distrust for multilateral institutions of any kind.

Both the far-right Heritage Foundation and the neo-conservative Wall Street Journal have railed against the reforms, arguing variously that they could cost the U.S. taxpayer anywhere from one billion dollars to far more if IMF clients default on loans, and that the changes would reduce Washington’s ability to veto specific loans.

They say the IMF’s standard advice to its borrowers to raise taxes and devalue their currency is counter-productive and could become worse given the Fund’s new emphasis on reducing income inequalities; and that, according to the Journal, the reforms “will increase the clout of countries with different economic and geo-political interests than America’s.”

Encouraged by, among others, the U.S. Chamber of Commerce and their Wall Street contributors, some House Republicans have indicated they could support the reforms. But thus far they have insisted that they would only do so in exchange for Obama’s easing new regulations restricting political activities by tax-exempt right-wing groups.

Meanwhile, however, the delays are clearly damaging Washington’s global economic and geo-political agenda – persuading other G20 countries to adopt expansionary policies and punish Moscow for its moves against Ukraine – during the meetings here.

“The proposed IMF reforms are a no-brainer,” according to Molly Elgin-Cossart, a senior fellow for national security and international policy at the Center for American Progress. “They modernise the IMF and restore American leadership on the global stage at a time when the world desperately needs it, without additional cost for American taxpayers.”

Further delay, especially now that the G20 appear to have set a deadline, could in fact reduce Washington’s influence.

While she stressed she was not prepared to give up on Congress, IMF managing director Christine Lagarde told reporters Thursday the Fund may soon have to resort to a “Plan B” to implement the reforms without Washington’s consent.

While she did not provide details of what are now backroom discussions, two highly respected former senior U.S. Treasury secretaries suggested in a letter published Thursday by the Financial Times that “the Fund should move ahead without the U.S. …by raising funds from others while depriving the U.S. of some or all of its longstanding power to block major Fund actions.”

C. Fred Bergsten and Edwin Truman, who served under Jimmy Carter and Bill Clinton, respectively, suggested that the IMF could make permanent an initiative to arrange temporary bilateral credit lines of nearly 500 billion dollars from 38 countries who could decide on their disposition without the U.S.

More radically, they wrote, the Fund could increase total country quota subscriptions that would remove Washington’s veto power over institutional changes.

“The U.S. deserves to lose influence if it continues to fail to lead,” the two former officials wrote.

Jim Lobe’s blog on U.S. foreign policy can be read at Lobelog.com.

Russian President Vladimir Putin awaits leaders arriving for the G20 Summit in St. Petersburg on Sep. 5, 2013. Credit: UN Photo/Eskinder Debebe

By Thalif Deen
UNITED NATIONS, Apr 1 2014 (IPS)

When Western powers, led by the United States, decided to throw Russia out of the Group of 8 (G8) industrial nations, it was aimed at punishing and “isolating” President Vladimir Putin for his intervention in Ukraine and “annexation” of Crimea.

“What’s next? Expel Russia from the United Nations and the G20?” an Asian diplomat jokingly asked one of his colleagues at the U.N. delegate’s lounge last week, hinting at what could only be construed as a Western political fantasy.The procedure the G7 followed to transform itself to G8 in 1998 (with the inclusion of Russia) was as opaque as the process that led to Moscow’s virtual expulsion.

The G8 move was pretty tame because it was a decision taken by seven Western industrial nations: the United States, Britain, France, Germany, Canada, Italy and Japan, along with the European Union.

But Russia is also a member of the G20, a coalition of both developed and developing countries, as well as the economic powerhouse called BRICS (comprising Brazil, Russia, India, China and South Africa).

Australia has reportedly warned that Russia may be excluded from the next G20 summit meeting in Brisbane in November. But that is more easily said than done.

On the sidelines of last week’s Nuclear Security Summit in The Hague, the foreign ministers of BRICS warned Australia against any such action.

In a statement released during the summit, the foreign ministers of BRICS said “the custodianship of the G20 belongs to all member states equally and no one member state can unilaterally determine its nature and character.”

The G20 members include Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, United Kingdom, United States and the European Union (EU).

At a General Assembly vote last Friday, on a resolution implicitly critical of Russia on the upheaval in Ukraine, Russia’s four BRICS partners abstained, joining 54 others.

The final vote was 100 for the resolution, 11 against, but with 58 abstentions in an Assembly with 193 votes.

Chakravarthi Raghavan, editor-emeritus of the Geneva-based South-North Development Monitor, told IPS, “The G7/G8 and the G20 are at best self-appointed informal gatherings, without any legitimacy, mere costly annual exercises, where occasionally side-event meetings are of some help.”

He pointed out that the G7/G8 originally came into being in the wake of the oil crisis to tackle economic issues and promote a dialogue of the G5/G7 with the Organisation of Petroleum Exporting Countries (OPEC) to promote agreements and avoid confrontations.

Soon, it became clear the G7 process was not effective, and the initial aim of informal but frank and spontaneous exchange of views among the leaders failed.

“Their own bureaucracies and ministries in governments did not want this process to move forward,” said Raghavan, a veteran journalist and a former editor-in-chief of Press Trust of India (PTI) who has covered the United Nations, both in Geneva and New York, for several decades.

But instead of abandoning the annual meetings, he said, the G7 continued to meet, with the original economic focus lost, and with costly preparations and meetings of “sherpas”, where the gatherings themselves became too formalised, and where the outcome had been already decided or agreed to at the lowest common measure of accord.

He also pointed out that the G7/G8 increasingly began pronouncing themselves on all kinds of subjects – with none of the leaders able to ensure the decisions were carried out in their own countries.

Vijay Prashad, author of “The Poorer Nations: A Possible History of the Global South”, told IPS the procedure the G7 followed to transform itself to G8 in 1998 (with the inclusion of Russia) was as opaque as the process that led to Moscow’s virtual expulsion.

The Group of Seven (Canada, France, Germany, Italy, Japan, UK and USA) came together in 1974 to consolidate their response to the major thrust from the Third World Project: an assault of the oil weapon of 1973 that consolidated in the U.N. General Assembly resolution 3201 in May 1974 for a New International Economic Order (NIEO).

The G7 was formed, as former U.S. President Gerald Ford put it, “to ensure that the current world economic situation is not seen as a crisis in the democratic or capitalist system,” Prashad said.

“It had to be seen as a momentary shock, not a systematic challenge,” he added.

The collapse of the Third World Project, the rise of a new International Monetary Fund (IMF)-driven neo-liberal dispensation and the demise of the Union of Soviet Socialist Republics (USSR) moved the G7 to welcome battered Russia into its arms, said Prashad, who is the Edward Said Chair at the American University of Beirut in Lebanon.

Membership in the G7 came with the promise that the North Atlantic Treaty Organisation (NATO) would not move one step closer to Russia than the German border, he added.

Raghavan told IPS the annual G20 meeting pronounces itself on a range of political, economic and other arenas — but with less and less effect — whether (as they have done several times) for concluding Doha trade negotiations or other areas.

Some of their views on global financial stability – addressed to the Bank of International Settlements – have factually been very diluted in actual decisions and norms because of the lobbying of the big financial groups, both in New York and London, said Raghavan, author of the just released “Third World in the Third Millennium”.

Prashad said when the credit crisis startled the West in 2007, the G8 hastened to China and India, asking for funds.

If the money came – as it did – the G8 would wind up its operations and the G20 (with Brazil, China, India and South Africa as members) would take over as the effective executive managers of planetary affairs – which it did not, he added.

The G20 had been formed during the Asian financial crisis of 1997-98 to ward off any nationalistic reactions to that crash.

“As the Western stock markets rallied by 2011, the promise was forgotten,” he said.

The G8 continued – much to the chagrin of the BRICS bloc, which had assumed it would now share power.

They agree the West’s move east is dangerous, and it is unlikely they will allow for the expulsion of Russia from the G20 – itself of limited consequence, he noted.

The Group of 20 (G20) industrialised and emerging economies on Sunday formally expressed frustration with the ongoing inability of the United States to approve a major reform package that would see governance at the International Monetary Fund (IMF) shift more towards developing countries.

The reforms were approved by the IMF in 2010 and have since been ratified by more than three-quarters of the fund’s member governments. Yet while the administration of President Barack Obama has been a key proponent of the reforms, the U.S. Congress has thus far been unwilling to approve the changes."The BRICS are wondering why they put up their money when nothing is happening." -- Jo Marie Griesgraber

Because the United States, with around 17 percent of voting rights (or “quota” shares) has an effective veto within the IMF, the reforms cannot go forward without the U.S. vote. The process has now missed a January deadline, while a second deadline for a subsequent round of changes is looming.

“Given that the U.S. is a big part of the G20, it is no small victory that emerging market and developing countries were able to get IMF reform so formally prioritised,” Kevin P. Gallagher, co-director of the Global Economic Governance Initiative at Boston University, told IPS. “Such pressure is basically the US administration and the rest of the world against the U.S. Congress.”

On Sunday, the G20, which has been a key organiser of the international financial response in recent years, strongly criticised the deadlocked reforms process. It also offered a new deadline for U.S. action.

“We deeply regret that the IMF quota and governance reforms agreed to in 2010 have not yet become effective,” the G20 stated in a communiqué on Sunday, following a ministerial meeting in Australia, which is hosting the grouping this year.

IMF chief Christine Lagarde. The quota changes would significantly increase the currently underweighted influence of fast-rising economies such as Brazil, China, India and Turkey. Credit: World Economic Forum/cc by 2.0

“Our highest priority remains ratifying the 2010 reforms, and we urge the US to do so before our next meeting in April. In April, we will take stock of progress towards meeting this priority.”

IMF Managing Director Christine Lagarde echoed this concern, saying Sunday that the fund “share[s] this view and urge[s] rapid progress on implementation.” The Washington-based institution is considered the world’s “lender of last resort”.

The quota changes would significantly increase the currently underweighted influence of fast-rising economies such as Brazil, China, India and Turkey. It would do so largely by decreasing the cumulative share of European members, considered outsized in terms of gross domestic product.

The Netherlands and Spain, for instance, both have voting shares similar in size to Brazil’s, despite the fact that the Spanish economy is less than two-thirds the size of the Brazilian. Given the problems in the eurozone, the European countries have also been prime beneficiaries of IMF support in recent years.

Under the quota reforms, the so-called BRICS countries – middle-income countries including Brazil, India and China – would see their vote shares expand the most significantly. The 2010 reforms would shift around nine percent of these shares towards developing countries, while also doubling the size of the fund’s overall lending capacity.

“The Europeans love it – they’re gloating. They have excessive power, are significantly overrepresented, and they love that [the United States] is not moving the reforms process forward,” Jo Marie Griesgraber, the executive director of the New Rules for Global Finance Coalition, a Washington-based international network, told IPS.

“On the other hand, the BRICS are wondering why they put up their money when nothing is happening. They’re most unhappy. In the long term, the BRICS countries could say this doesn’t work for them and move more seriously away from the IMF.”

On Sunday, a top Indian finance official warned that the failure to move forward on quota reform was threatening to undermine both IMF and G20 legitimacy.

“This is perhaps the first visible failure of G20. This has reduced the credibility of G20,” India’s economic affairs secretary, Arvind Mayaram, said in Sydney, calling implementation of the 2010 reforms “vital for the credibility, legitimacy and effectiveness of the IMF”.

Alternative institutions

Although an esoteric topic, the IMF governance reforms have received widespread approval from important constituencies in the United States, including major business and financial lobby groups as well as a long list of Republican luminaries.

In fact, President Obama bears some blame for the current situation, having decided in 2012 for political reasons not to request approval from the U.S. Congress. Yet since then, his administration has tried to do so repeatedly.

Each time, however, the Republican-controlled House of Representatives has rebuffed these requests, though apparently less for ideological than for political reasons. The last such attempt took place last month, when Republicans agreed to include the IMF reforms proposal in a major appropriations bill – but only if the Democrats would agree to stop the U.S. Treasury from imposing proposed restrictions on political “dark money”.

President Obama reportedly refused the trade, and there are few legislative options left for moving related legislation through Congress in coming months, particularly as national elections loom at the end of the year. (On Sunday, U.S. Treasury Secretary Jacob Lew told the G20 his office “will continue to work with Congress to pass legislation as soon as possible to secure the 2010 reforms, which are vital to our economic and national security interests.”)

Some observers say that such a situation should only strengthen an ongoing process under which developing countries are building multilateral structures outside the IMF.

“Upcoming Congressional elections may lead to further entrenchment by the U.S. on this issue. Thus it is imperative that the developing world continue to build alternative institutions such as the BRICS bank and the BRICS exchange reserve pool,” BostonUniversity’s Gallagher says.

“Just as important is for these bodies to have more equitable and transparent processes, so they can be held up as models against the arcane structures in the international financial institutions.”

The BRICS countries announced their intention to create a new multilateral development bank last year. Yet since then, progress has reportedly been slow, particularly as ongoing economic roiling is being felt particularly strongly in emerging economies.

“There is good talk about these projects, but most countries remain very reluctant to walk away from the [IMF]. Nonetheless, we are already seeing a gradual erosion in the use of the institution,” New Rules’s Griesgraber says.

“From our perspective, we need to get through this current reform process so we can move on to the larger governance issues that need to be addressed at the fund. Let’s equalise the power, introduce greater transparency around the board, and ensure that likely consequences for poor people are assessed before the IMF acts.”

Developing countries are likely losing more than a trillion dollars a year in “illicit financial flows” stemming from crime and corruption, according to new estimates. This fast-rising figure is already 10 times the total amount of foreign aid these countries are receiving.

Between 2002 and 2011, governments in the developing world are thought to have lost a total of almost six trillion dollars, largely due to poor governance and lax regulation, according to Global Financial Integrity (GFI), a Washington-based watchdog. Included in its estimates are ill-gotten wealth from purposefully incorrect trade invoices, the use of shell companies and tax havens, and other accounting gimmicks.

“This gives further evidence to the notion that illicit financial flows are the most devastating economic issue impacting the global South,” Raymond W. Baker, GFI’s president, stated in the introduction to a report released Wednesday, calling the numbers a “wake-up call to world leaders on the urgency with which illicit financial flows must be addressed.”

Particularly worrying is the fact that the rate at which these outward flows have been growing appears to be increasing substantially."Illicit financial flows are the most devastating economic issue impacting the global South."
-- Raymond W. Baker

In 2002, for instance, the earliest year that GFI’s researchers have examined, illicit financial flows are thought to have been around 270.3 billion dollars. By 2011, the latest year for which estimates are available, that figure had grown to 946.7 billion dollars, and has likely increased since then.

When adjusted for inflation, this translates into an average growth of more than 10 percent a year, while the 2011 number constituted a 13.7 percent increase over 2010.

“Outflows have certainly been increasing,” Dev Kar, GFI’s chief economist and a co-author of the new report, told IPS. “During the economic crisis both imports and exports declined, but as economic activity has recovered so too have these outflows.”

Kar also cautions that the GFI estimates are likely conservative. They include neither unofficial (“hawala”) financial flows nor large-scale cash transactions, and as such are unable to offer a glimpse of broader underworld economies, including drug or human trafficking.

Asia is seen as having the most significant problems, accounting for around 40 percent of all illicit outflows from developing countries. While Africa’s share was only around seven percent in 2011, the continent did have the highest ratio of average illicit flows to gross domestic product, at around 5.7 percent.

With Africa also the world’s most aid-dependent region, an increasing concern for many is how to staunch the flow of some of this illicit capital so it can be ploughed back into public sector spending such as on health, education and public infrastructure.

Shadow systems

Major development institutions have started paying attention to such discrepancies. The humanitarian group Oxfam estimates that some 32 trillion dollars are currently sitting in tax havens around the world, for instance, and suggests that taxes on this sum could raise nearly 190 billion dollars a year.

“Governments should agree to end global hunger by 2025 and an end to tax havens, which could help pay for this and much more,” Stephen Hale, advocacy head for Oxfam, said in a statement. “Tax-dodging effectively takes food from hungry mouths.”

The past year has actually seen notable moves by the international community to close down certain avenues used to hide or shield unreported wealth from prying states. Major multilateral groupings including the Group of Eight (G8) rich countries and the Group of 20 (G20) industrialised countries, for instance, have put tax abuse at the top of their list of priorities.

This summer, a high-level United Nations panel negotiating the next phase of the Millennium Development Goals (MDGs), for which the deadline is 2015, stated that one of its highest priorities would be tackling the abuse of offshore tax havens and illicit financial flows.

The following month, nearly a dozen EU members agreed to the world’s first multilateral system of tax information exchange, based on similar bilateral U.S. requirements passed three years ago.

“The fact that illicit financial flows are being mentioned in the G20 and other international organisations – that didn’t exist before,” Brian LeBlanc, a junior economist with GFI and a co-author of the new report, told IPS. “Earlier, these issues were seen solely as a developing country problem but now we’re seeing developed countries taking action. So we’re making some progress.”

Yet transparency advocates urge that far more needs to be done, and GFI’s Kar says that he expects the moves that have been taken so far will have little impact on illicit financial flows in the near term.

“The G20 has basically not tackled the shadow financial system, which remains largely intact – there have been no moves to improve transparency, not much has been done on tax havens or blind trusts,” he says.

“Importantly, much of the conversation currently focuses on developed rather than developing countries. We believe that governance factors are the main engines of illicit flows, and in the major countries governance is simply not improving – in fact, it’s deteriorating in many countries.”

GFI has now put out research on illicit financial flows for several years in a row. Yet Kar says the startling estimates presented appear to have made little impact on government officials in many developing countries, even as state coffers in those countries continue to struggle in the aftermath of the global financial crisis.

“In most countries it’s had almost zero impact, with government officials refusing even to acknowledge that this is a problem. Malaysia, for example, will only say that our estimates are overstated,” Kar says, noting that Malaysia ranked fourth on GFI’s list of the largest exporters of illicit capital.

“There remains a powerful, corrupt nexus between politicians and business, covering the financing of elections, non-transparency of business conduct, kickbacks in government contracting,” Kar added.

“These are huge issues, and we expect a long process before countries come to accept the fact that illicit flows are a problem – and then to move to implement policies to deal with the situation.”

By Shyam Saran
NEW DELHI, Sep 17 2013 (Columnist Service)

The eighth G20 Summit convened in St. Petersburg on Sept. 5-6, 2013 was dominated by the Syrian crisis, deflecting attention from the mandate of the gathering to serve as the premier forum for international economic coordination.

When leaders of the most influential countries meet it is inevitable that the pressing political issues of the day take centre stage.

Shyam Saran

The G7 too began as a forum for economic consultation and coordination among the world’s advanced market economies in 1975, to cope with the fallout of the 1973 oil crisis.

Just three years later, in 1978, the G7 issued its first Political Declaration and became, thereafter, the political, security and economic steering committee of the most powerful nations.

The G20 has taken its first steps in the same direction and it is likely that its role as a political and security forum will evolve steadily though informally at first. This trend will be reinforced if the United Nations Security Council remains a relic of a bygone international order.

That the G20 provided a platform on which the U.S. and Russia initiated steps leading to an eventual understanding on Syria’s chemical weapons is an indication of the potential political utility of the forum. These steps were taken against a strong prevailing sentiment at the summit against a military strike against Syria, favoured by the U.S. and some, but not all, of its allies.

The emerging economies were able to reflect some of their key concerns in the Summit declaration. The unconventional monetary policies pursued by reserve currency countries such as the U.S. and lately Japan, involving significant injections of liquidity into the system and keeping interest rates at zero or near zero, have confronted emerging economies like Brazil and India with volatile capital flows and exchange rate instability.

The declaration acknowledged for the first time that monetary policies pursued by advanced economies should be “calibrated and clearly communicated”. This falls short of a coordinated approach of the G20 but will help calm markets by promising greater predictability.

Developing countries would also take satisfaction over the G20 consensus, reflected in the declaration that the profits of transnational corporations should be taxed in the country where they are generated. African countries, in particular, have been victims of the tax avoidance practices of such companies.

An Indian proposal to create an infrastructure financing facility at the World Bank to extend funding for infrastructure projects in developing countries will be the subject of a study. However, in a situation of financial stringency in most developed economies, it is doubtful whether any significant financing window for this purpose will see the light of day soon.

The leaders of BRICS (Brazil, Russia, India, China and South Africa) met on the sidelines of the G8 summit. Their deliberations focused on two landmark initiatives which were announced at their fifth regular summit in Durban on Mar. 27.

On the New Development Bank (NDB) it has been agreed that its initial capital will be 50 billion dollars, a somewhat modest amount given the expectations aroused when the proposal was first made. India had wanted a figure closer to 100 billion dollars.

It is still not clear how the equity will be distributed among the five partners. China has been willing to contribute a larger share but it is reported that Russia wanted each to have an equal share. South Africa is unable to contribute a significant amount given the smaller size of its economy.

On the Contingency Reserve Arrangement (CRA), the leaders announced a figure of 100 billion dollars, with China contributing 41 billion, Brazil, India and Russia 18 billion each, and South Africa five billion.

The CRA will serve as a multi-country currency swap mechanism which will help the BRICS deal with balance of payments problems. It is similar to the Chiang Mai initiative among ASEAN, China, Japan and South Korea, but which is currently 240 billion dollars and partially linked to a parallel though partial International Monetary Fund aid programme.

Whether the CRA will follow a similar pattern is not yet clear. Nevertheless China’s role as a leading partner among the BRICS is now amply apparent. It is possible that the equity distribution in the NDB may follow a similar pattern.

It may be noted that none of the BRICS members forms part of the U.S.-sponsored Trans Pacific Partnership (TPP) or the Trans-Atlantic Trade and Investment Partnership (TTIP) – regional trade arrangements which will fragment the global trading system and marginalise the emerging economies. It is surprising, therefore, that this challenge did not figure in the deliberations of the BRICS nor at the G-20 either.

China’s pre-eminence in the BRICS is a trend likely to be reinforced with the current economic slowdown and economic difficulties being faced by most emerging economies, in particular Brazil, India and South Africa.

Russia is a special case, not an emerging economy in the same category as the other BRICS members. It has escaped economic distress thanks to rising energy prices in the wake of spreading turmoil in the Middle East.

China’s economy is likely to decelerate in the coming months. Its growing debt, now over 200 percent of GDP, is causing concern. If the Chinese economy undergoes a major crisis as some analysts predict, its role as the prime mover in BRICS would certainly diminish.

For the present, however, China, with its seven percent growth and its three trillion dollars of foreign exchange reserves, is likely to be acknowledged as the most emerged of the emerging countries.

(END/COPYRIGHT IPS)

Excerpt:

With President Barack Obama facing increasingly certain defeat in his quest for Congressional authorisation to carry out military strikes against Syria, the Russian government Monday appeared to offer the White House a way out of the crisis.

Seizing on what seemed to be an offhand remark by Secretary of State John Kerry during a London press conference, Russian Foreign Minister Sergey Lavrov pledged that Moscow would support any effort to put Syria’s chemical weapons under international control and eventually destroy them.

Lavrov was meeting in the Russian capital with Syrian Foreign Minister Walid Al-Muallem, who immediately “welcome(d)” the idea.

The proposal, which in the course of the day was also embraced by U.N. Secretary-General Ban Ki-moon and French Foreign Minister Laurent Fabius, appeared initially to provoke as much scepticism among administration officials here as it did when Kerry first raised the idea in response to a question of what Damascus could do to avoid military action.

“Sure, he could turn over every single bit of his chemical weapons to the international community in the next week – turn it over, all of it, without delay and allow the full and total accounting,” Kerry replied. “But he isn’t about to do it, and it can’t be done.”

After Lavrov’s endorsement, State Department spokesperson Marie Harf asserted that Kerry “was not making a proposal” but was instead offering a “rhetorical statement about a scenario that we think is highly unlikely.” She said Washington was prepared to take a “hard look” at the idea which, said, should be met with “serious, deep scepticism”.

But, by mid-afternoon, that scepticism appeared to turn more to hope as former secretary of state Hillary Clinton, emerging from a White House meeting with Obama himself, called the plan an “important step” in defusing the crisis.

In an interview aired on the Public Broadcasting System’s Newshour Monday evening, Obama also suggested Washington would take it seriously.

“(M)y intention throughout this process has been to ensure that the blatant use of chemical weapons that we saw doesn’t happen again,” he said. “If in fact there’s a way to accomplish that diplomatically, that is overwhelmingly my preference. And you know, I have instructed John Kerry to talk directly to the Russians and run this to ground.

“And if we can exhaust these diplomatic efforts and come up with a formula that gives the international community a verifiable, enforceable mechanism to deal with these chemical weapons in Syria, then I’m all for it.”

The day’s surprising turn of events came amidst growing indications that, absent some unanticipated move, Obama faced a major political defeat in Congress over his requested authorisation despite the support of the most of the Congressional leadership of both parties and an all-out lobbying effort by his administration, the powerful American Israel Public Affairs Committee (AIPAC), and prominent neo-conservatives and former senior officials of the George W. Bush administration.

As of Monday, Obama took personal leadership of the effort, taping interviews on virtually all of the major television network and cable news programmes, in addition to PBS, and preparing a major policy address to the nation Tuesday evening.

According to a number of published reports earlier Monday, a vote in the Democratic-led Senate, which could come as early as Thursday, was expected to be extremely close despite the apparent support of a majority of the Democratic caucus there.

But in the Republican-led House, the authorisation faced almost certain defeat with even a majority of Democrats considered likely to vote “no”, while opposition to the measure among Republicans, despite their leadership’s support, was believed to be much greater.

“If I were the president, I would withdraw my request for the authorisation at this particular point,” said Democratic Rep. Jim McGovern, a liberal Democrat who has generally – if somewhat reluctantly – supported Obama on foreign-policy issues, said on CNN’s “State of the Union” public affairs programme Sunday.

Congressional opposition is strongly bolstered by the latest polling that shows that, if anything, Obama’s case for attacking Syria has lost ground significantly among voters across the country over the past week.

According to a Pew Research Center/USA Today survey conducted Sep. 4-8 and released Monday, 63 percent of respondents said they oppose a strike – 15 percent more than a week ago. Of that 63 percent, 45 percent said they are “strongly oppose(d)” to military action.

Despite the enlistment last week of former senior Bush officials in the administration’s lobbying effort, the erosion of support among grassroots Republicans has been especially severe. Four in 10 self-identified Republicans said they opposed strikes in the earlier poll; as of Sunday, seven in 10 Republicans voiced opposition.

Opposition has also grown among the independents, according to survey, with two-thirds now opposed, up from half the weekend before.

A less detailed CNN/ORC poll conducted over the past weekend gained a somewhat more-favourable result for the administration, with 59 percent of respondents voicing opposition and 39 percent in favour. Only 28 percent of Pew respondents said they favoured airstrikes against Syria.

Moreover, 71 percent of the CNN respondents said Obama should not attack Syria if Congress fails to pass the authorisation. In the Pew poll, 61 percent of respondents said Congress – not Obama -should have the final say on whether to take military action.

If domestic support for strikes appeared to plunge, Obama was not doing much better on the international front.

He was embarrassed last week when only half of the leaders of the Group of 20 (G20) – five of which (the U.S., Britain, France, Saudi Arabia, and Turkey) have been aiding Syrian rebels for some time – meeting in St. Petersburg, Russia signed on to a statement expressing support for “efforts undertaken by the United States and other countries to reinforce the prohibition on the use of chemical weapons” although it not explicitly endorse military action.

On Monday, the White House announced that 14 other countries had signed on – far less than the “several dozen” that, according to unnamed administration officials and Congressional supporters, allegedly support U.S. military action. Of the 14, the only G20 member was Germany; the others included mainly Central European nations, the three Baltic states, Denmark, Qatar, the United Arab Emirates, Morocco, and Honduras.

In this context, the possibility that the U.S. and Russia, Assad’s most important international supporter, could agree on a plan that would satisfy U.S. demands to eliminate any possibility that the regime could use chemical weapons would appear to be particularly attractive to Obama.

Early indications suggest that the administration will, as Clinton argued, use the proposal’s timing to persuade reluctant lawmakers to pass the authorisation in order to maintain pressure on Moscow and Damascus to follow through.

“It could be used either way; it could take the steam out of the administration’s lobbying effort or give it a new argument for making military action appear more credible if they don’t co-operate,” one lobbyist opposed to military strikes told IPS.

The idea that Syria would give up its chemical weapons arsenal to avoid an attack was circulated quietly on Capitol Hill by Democratic Sen. Joe Manchin last week in the form of an alternative resolution which demanded that Damascus sign and comply with the Chemical Weapons Convention (CWC) within 45 days or face an attack.

Some lawmakers reportedly objected to the idea because it would implicitly put pressure on Israel, which signed the treaty in 1993 but never ratified it, making it, along with Syria, the two Koreas, Egypt, Angola, and Myanmar, one of seven non-member states worldwide.

Jim Lobe’s blog on U.S. foreign policy can be read at Lobelog.com.

Some analysts suggest that Obama’s failure to line up support from more G20 leaders suggests that the U.S.-created global order is no longer sustainable. Credit: Official White House Photo by Pete Souza

By Jim Lobe
WASHINGTON, Sep 6 2013 (IPS)

With a week of intense lobbying behind him, U.S. President Barack Obama looks increasingly beleaguered – both at home and abroad – in his effort to rally support for a military strike against Syria to punish its government for its alleged Aug. 21 chemical-weapons attack outside Damascus.

At home, most political observers say Obama faces a particularly difficult task in bringing a majority of the Republican-led House of Representatives, which begins debating his proposed Authorisation for the Use of Military Force (AUMF) next week on return from its August recess, over to his side.“The lack of consensus within G20 is confirmation of what we already knew, which is that there is limited support for military action in Syria within the international community." -- Charles Kupchan of the Council on Foreign Relations

Congressional offices, even those whose bosses favour Obama’s position, are reporting overwhelming opposition in telephone calls and emails from their constituents, while public meetings held by lawmakers in their home districts have been dominated by anti-intervention forces from both the right and the left.

And polls released over the past week suggest that the administration has made little headway in moving public opinion its way.

A new Gallup poll taken at mid-week and released Friday found that support for U.S. military action “to reduce Syria’s ability to use chemical weapons” – 36 percent – was the lowest on the eve of any military intervention Washington has undertaken in the last 20 years. Fifty-one percent of respondents opposed a strike.

In a reflection of White House concern over opposition to military action, Obama himself announced Friday that he will address the nation about his intentions Tuesday. At a press conference at the Group of 20 (G20) meeting in St. Petersburg, Russia, he acknowledged that getting both house of Congress to approve an authorisation was “going to be a heavy lift”.

He spoke just after his deputy national security adviser, Tony Blinken, told National Public Radio (NPR) that, even though Obama retained the constitutional authority to strike Syria without Congressional authorisation, “it’s neither his desire nor intention to use that authority absent Congress backing him.”

Meanwhile, on the international front, Obama also appeared to be faring poorly in his bid to gain support for military action.

In St. Petersburg, The White House released a “joint statement” signed by the leaders of only 10 members, including the U.S., of the G20 plus Spain voicing “support efforts undertaken by the United States and other countries to reinforce the prohibition on the use of chemical weapons” and calling for “those who perpetrated these crimes (to be) held accountable.” The statement stopped short, however, of endorsing military action.

The signatories included the leaders of Australia, Britain, Canada, France, Italy, Japan, South Korea, Saudi Arabia, Turkey, as well as the U.S. Absent from the list, however, were all members of the BRICS bloc – Brazil, Russia, India, China, and South Africa – as well as Argentina, Indonesia, Mexico, and Germany.

The European Union (EU), a G20 member in its own right, also did not sign due to a lack of consensus among its membership.

Independent observers described the statement as a serious setback not only to Washington’s efforts to rally international support.

“It seems to have been a remarkable investment of American diplomatic energy not to have achieved the support of even a majority of the G20, and they tried to give the appearance of half plus one through sleight of hand,” noted Daniel Levy, the director of the Middle East and North Africa Programme at the London-based European Council on Foreign Relations (ECFR), who pointed to larger problems caused by the way the administration has acted over the Syria issue.

“Look at the institutions they’ve weakened in this process: the U.N. Security Council itself; the European Union by implicitly underlining its failure to gain consensus; the Arab League where the three most populous Arab states – Egypt, Iraq and Algeria – have all come out against military action; and even the G20 – all in order to achieve a statement that is far from an unequivocal endorsement of American military action,” he told IPS.

Charles Kupchan, a senior fellow at the Council on Foreign Relations (CFR), also suggested that the administration’s latest diplomatic move underscored its weakness on the issue.

“The lack of consensus within G20 is confirmation of what we already knew, which is that there is limited support for military action in Syria within the international community,” he said.

Back at home, advocates of military action, the most vocal of whom are pro-Israel activists and organisations worried that Congress’ failure to back up Obama’s threats against Syria will embolden Iran and its regional allies, are increasingly making the argument that both the president’s and Washington’s international credibility is at stake.

“This is not longer just about the conflict in Syria or even the Middle East,” wrote former Sens. Joe Lieberman and Jon Kyl, co-chairmen of the American Internationalism Project of the American Enterprise Institute (AEI), a neo-conservative think tank that played a leading role in championing the 2003 invasion of Iraq.

“It is about American credibility. Are we a country that our friends can trust and our enemies fear? Or are we perceived as a divided and dysfunctional superpower in retreat, whose words and warnings are no longer meaningful?” they asked in an op-ed entitled “Inaction on Syria Threatens U.S. Security” published by the Wall Street Journal Friday.

Failure to authorise a strike will be a “green light” for Iran to “speed toward nuclear weapons” and “confirm the worst fears of our ally, Israel, and moderate Arab states like Jordan that the U.S. cannot be relied upon to stand by its commitments. This will dramatically raise the risks of a regional war that could upend the global economy,” they stressed.

But others have argued that the credibility argument is overdrawn in this case.

“We heard this argument many, many times before, and always when the objective case for war was weak,” according to Stephen Walt, a prominent international relations expert at Harvard University. “To refrain from using force when vital interests are not at stake and when bombing could make things worse is not weakness; it is good sense.

“The United States has fought five wars since the Cold War ended and is using drones and special forces in several countries already,” he told IPS. “Nobody is going to question U.S. credibility when its interests are genuinely engaged and it has a clear objective in mind.”

Some liberal interventionists, notably Secretary of State John Kerry in his various public remarks, have also stressed the credibility argument, arguing that Washington’s failure to act could have profound implications for world order.

“For better or worse…” William Galston of the Brookings Institution argued in the Journal earlier this week, “the United States is the guarantor of the global order, which we took the lead in creating.

“Mr. Obama will need to convey this idea to the American people …from the Oval office,” he wrote.  “He must be prepared to go all-in to win what is shaping up as a tough fight on Capitol Hill. One thing is clear: A loss would shatter his presidency, and a lot more.”

But Kupchan said Obama’s failure to line up support from more G20 leaders suggested that the U.S.-created global order was no longer sustainable in any case.

“It’s clear confirmation of the degree to which there is a fundamental difference in geopolitical perspective between developed and emerging powers,” he told IPS.

“That the BRICS countries voted as a bloc is a sign of how difficult it’s going to be to fashion international consensus as global power continues to diffuse.”

Jim Lobe’s blog on U.S. foreign policy can be read at Lobelog.com.

Finance ministers from the Group of 20 (G20) countries on Friday received a previously requested strategy under which the world’s largest economies could crack down on international tax avoidance, particularly on the part of multinational corporations.

The 15-point action plan was created by the Organisation for Economic Cooperation and Development (OECD), a Paris-based think tank funded by the world’s richest countries. The G20 requested the study in February, as tax avoidance has moved to the top of the global agenda, particularly in the context of governments struggling to fill state coffers in the aftermath of the global economic downturn."When multinational corporations game the system – and the evidence shows that they are – everyone else loses." -- Nicole Tichon of the Tax Justice Network USA

Yet some analysts have also suggested that, against the backdrop of countries such as Brazil, China, India and Russia quickly becoming some of the world’s most powerful economies, the current exercise could be developed countries’ last attempt to steer the conversation on international tax policy.

“The joint challenges of tax evasion and tax base erosion lie at the heart of the social contract,” Angel Gurria, secretary-general of the OECD, said Friday in Moscow, where he handed over the new blueprint to government officials gathered ahead of the G20 summit in September, which Russia is hosting.

“Our citizens are demanding that we tackle offshore tax evasion by wealthy individuals and re-vamp the international tax system to prevent multinational enterprises from artificially shifting profits, resulting in very low taxes or even double non-taxation and thereby eroding our tax base.”

The OECD strategy would now seek to strengthen coherence among its members’ tax systems, aimed at filling the gaps between those systems – through which multinational corporations, in particular, have become adept at slipping.

A major thrust of the new strategy deals with ways to corral the new powerhouses of the digital economy, which in recent years have become adept at extremely complex – some say only marginally legal – tax strategies. Such companies, making use of extensive offshore subsidiaries, have recently been the focus of a strengthened tax-avoidance discussion here in the United States and in Europe.

The action plan, which the OECD says it will roll out over a two-year rulemaking process, also tries to increase transparency. It would require companies to engage in country-by-country reporting of profits, for instance, in order to make it more difficult for phony “shell” offices to quietly shift profits made in one country to another that offers lower or nonexistent tax rates.

On Friday, Gurria noted that these 15 actions would “result in the most fundamental change to the international tax rules since the 1920s!”

Built on an earlier general report, the plan received widespread initial plaudits from government officials. Russian Finance Minister Anton Siluanov “commended” the report for hewing to “the basic tenets of fairness – that it allows multinational corporations to prosper without loading a higher tax burden on domestic companies and individual taxpayers.”

U.S. Treasury Secretary Jacob J. Lew also “welcomed” the action plan, which he said was created in part with U.S. participation.

“This is a major step toward addressing tax avoidance by multinational firms in the global economy and represents a concerted effort to raise standards around the world,” Lew noted in a statement sent to IPS. “We must address the persistent issue of ‘stateless income’, which undermines confidence in our tax system at all levels.”

Entrenching global inequality?

Yet the plan received a more cautious appraisal from certain civil society organisations, with some warning that the OECD’s membership has led it to overlook the importance of developing countries in combating tax avoidance in today’s context. Indeed, it is in these countries where illicit outflows of capital are having major, damaging impacts on already strapped governments’ abilities to fund their public sectors.

“We are encouraged to see this unequivocal acknowledgement that when multinational corporations game the system – and the evidence shows that they are – everyone else loses: governments, citizens and other businesses,” Nicole Tichon, executive director of the Tax Justice Network USA, an advocacy group here, told IPS.

“We agree that this is a global problem and will require a global solution, but this plan needs to more carefully consider the additional plight of developing countries.”

One of Tichon’s colleagues in Africa expanded on this point.

“In poor nations we are largely failing to capture tax revenue from major international corporations which should be harnessed to ensure better social and economic opportunities for citizens,” Alvin Mosioma, the director of Tax Justice Network Africa, says.

“This is why the current OECD reform process needs to include at its heart serious representation from developing nations rather than keeping them to the margins. That developing countries are kept out of this key process runs the real risk of further entrenching global inequality.”

Others are taking issue with the new plan’s failure to recommend that country-by-country reporting of corporate profits – seen as a critical tool in halting the currently rampant shifting of earnings among multinational companies – be made public.

According to the OECD’s top tax official, the action plan does recommend such reporting, but he admits that those reports would not be publicised.

“This country-by-country reporting will be for tax administrations and not [the] public,” Pascal Saint-Amans, director of the OECD’s Centre for Tax Policy and Administration, told IPS.

“What matters is that tax inspectors have the information. Confidentiality issues [could stop] countries from agreeing to public country-by-country reporting.”

Indeed, a similar fight is currently taking place here in the United States, which last year instituted a landmark regulation requiring multinational companies to publicly report all payments made to foreign governments. Yet earlier this month a court overturned that rule in part because of the requirement that these reports be made public.

Some anti-poverty groups are going so far as to suggest that the OECD’s tax fixes are already obsolete, having been far outstripped by the decentralised model that the most aggressive modern corporations have been able to follow.

“This plan is papering over the cracks in a broken system, rooted in an outdated and irrelevant model of corporate taxation,” Murray Worthy, a tax campaigner at War on Want, an advocacy group, said in a statement. “It might be able to tackle the worst of corporate tax dodging, but it won’t fix the system.”

By Marzieh Goudarzi
UNITED NATIONS, Apr 10 2013 (IPS)

As the global South claims a greater share of the world’s GDP, is it also progressing in terms of overall human development? How has this southward tipping of the scale affected the dynamics of international trade? What is the role of global governance in mediating this period of change?

José Antonio Ocampo. Credit: UN Photo/Mark Garten

The 2013 U.N. Human Development Report entitled, “The Rise of the South: Human Progress in a Diverse World” and its lead author, Khalid Malik, suggest that as the South grows economically, its citizens experience an “expansion of human capabilities and choices” that is leading to further social and political development.

Others are more sceptical of the purported “rise of the South”, pointing to the world’s widening income inequality, the lack of correlation between economic growth and equitable and sustainable socio-economic policies, and relatively unchanging global power dynamics.

On Monday, Columbia University’s Committee on Global Thought hosted a conference to discuss these issues with panelists including Malik, U.N. Ambassador Luis Alfonso de Alba of Mexico, and Dr. Jose Antonio Ocampo, a professor at Columbia’s School of International and Public Affairs and a former U.N. Under-Secretary-General of Economic and Social Affairs.

Ocampo called Malik’s characterisation of the rise of the South as a “tectonic change” a bit strong.

While he recognises the important changes that are occurring now, with regard to overall human development Ocampo says, “It’s a process that will have long-term implications.”

Excerpts from IPS’s interview with Ocampo on the impact of newly rising economies in international trade and global governance follow.

Q: Both you and Ambassador de Alba agree on the importance of multilateral global governance in terms of human development. Ambassador de Alba addressed the shortcomings of current institutions and, in particular, the U.N.’s inefficient decision-making processes. Discuss what productive, multilateral global governance would look like.

A: I have written extensively on the G20 and my perspective is that these informal institutions, which I call “elite multilateralism”, are not the best form of global governance. I like “the G’s” when they are part of multilateral institutions.

Global governance derives its legitimacy at the global level just as governance does at a national level, from universality. You have to have universal membership. For that purpose, the best way for these “G’s” to work is within a formal multilateral setting.

At the same time, I agree that you have to have effective decision-making mechanisms. Smaller decision-making bodies, in which everyone is directly represented, are fundamental. In all democracies, decisions are taken by a limited number of actors at the end, but those actors have to be representing all of the membership.

Q: What is the state of South-South trade relationships today? What constitutes an ideal South-South partnership that allows for progress toward a more advanced, dynamic economy?

A: There is one sort of South-South trade that is really part of North-South trade. For example, Southeast Asia is producing parts and capital goods that are assembled in China and then exported to the U.S.

In the case of China-India, it’s a huge deficit for India and surplus for China. There is a second China-centered relationship, in which China essentially imports raw commodities and exports manufactured goods. I would say, for commodity producers – i.e. sub-Saharan African, South America, and some of the Middle East – that’s an opportunity. But it’s still a very imbalanced trade relationship. In the long-term, you have to diversify away from that.

There is a third type which are legitimately South-South flows in which you have, more or less, a balanced relationship. For example, the inter-regional trade in Latin America is one relationship of that type – it starts and ends in developing countries. I think that’s the most positive of all, but it’s less common.

Q: As these newly rising economies close the income gap that separates them from developed countries, what do you think characterises fair and mutually-beneficial North-South partnerships?

A: In the past, the North-South relationship was considered to be an asymmetric relationship in which the North had to support the development of the South so it could cash out. I think that concept has become obsolete because of the heterogeneity of developing countries.

Ambassador de Alba mentioned this almost sacred principle of “common but differentiated responsibilities”. In the past, developing countries wanted to be treated according to the second part of that principle – “differentiated” – and I think, as de Alba pointed out, the “differentiated” still has to be considered today.

Even major emerging economies are developing countries – they are technologically dependent, they still have a large share of the labour force in low productivity activities, and the GDP per capita is still a fraction of that of developed countries. So they have a right to be treated with some differences internationally. But they are, at the same time, responsible and the responsibility those countries have is very important.

Q: How have Southern governments been an obstacle to human development and, on the other hand, what should they be prioritising in order to create positive conditions for growth?

A: The basic problem is that power ends up in the hands of the elite that uses power to further its own interests. This has been associated with developing countries, but it can also happen in developed countries, particularly in the financial sector. There has been a change in that regard during the recent crisis; now there is a bit more hope that financial policy will be detached from financial interests.

Successful human development strategy has to include very active social policy, including education, health, and social protections, and at the same time very active economic development policy, particularly the generation of employment.

We have seen so many cases of countries that have improvements in education and when an educated labour force comes to the market, there is no employment to absorb that population. You have to have an active social policy but also an active economic policy and the basic connection between the two is called employment.

Excerpt:

The Palestinian village Zaatara at the foot of Herodion. Credit: Pierre Klochendler/IPS.

By Pierre Klochendler
JERUSALEM, Mar 16 2013 (IPS)

If Herod the Great was a controversial figure of his time, 2,000 years on the controversy isn’t about his legacy; it’s about who holds the rights to excavate and preserve his artefacts.

A new exhibition at the Israel Museum which, for the first time, displays the king’s relics, might serve as a great tribute to him, but is also a powerful reminder of how the history of the Holy Land and today’s conflict between Israel and the Palestinians have become intertwined.

On top of a hill “raised to a greater height by the hand of man; rounded off in the shape of a breast,” as Flavius Josephus, Jewish historian of Rome described it, the old monarch had a fortress-palace erected as memorial for himself; and named it after himself – Herodion for Herod.

Herodion, from where the bulk of the exhibition originates, is visible from Jerusalem and dominates the Judaean desert, since 1967 part of the Israeli-occupied West Bank which the Palestinians seek as part of their future state.

Herodion is in Area C, namely 62 percent of the West Bank maintained under full Israeli control since the 1993 Oslo interim peace accords. An Israeli military base protects the site.

The Holy Land changed hands time and again since Herod’s time, but at 758 metres high, the lay of the land looks unchanged – at first glance.

Dotting the surroundings, Israeli settlements and Palestinian villages vie for rights to the land.

Appointed by the Romans, Herod ruled the vassal kingdom of Judaea, part of the Palaestina province of the Roman Empire, for 33 years between 37 and 4 BCE.

“He was a cultural bridge, working on both sides, caught between the exigencies of the Roman Empire and that of Judaism,” says David Mevorah, the exhibition’s curator. “By his people he was regarded as a convert Jew; by Rome as a client king. But Judaea prospered in his time.”

Exquisite tableware from glass and fine and glossy red roman pottery; a statue of Cleopatra, the last pharaoh of Ancient Egypt; a decorated basin, a gift from his patron Emperor Augustus, whose bust is on display; his royal highness’s bath – all were found in situ.

Adorned with stucco and rare frescoes of sacred landscapes and navy battles painted with pigments on plaster, also imported from Herodion is the royal chamber.

The jewel of Herod’s crown, so to speak, is the reconstruction of his mausoleum which sheltered what archaeologists believe is the sarcophagus in which his body was placed. The man surely possessed a taste for the arts – even on his deathbed.  “He was very aware of historic memory,” comments the curator.

Here nowadays, historic memory refers mostly to competitive national quests.

Excavations at Herodion began in 1972 under Israeli archaeologist Ehud Netzer. “No one asked us or consulted us, then or now,” protests Jamal Amro, a Palestinian scholar from Bir Zeit University familiar with the site.

“The Israelis plundered Herodion,” he adds. “Israel uses archaeology to shape history and validate the country’s occupation of the West Bank and East Jerusalem.”

After prolonged exploration, Netzer uncovered Herod’s tomb in 2007. Two years later, he died in tragic circumstances at the site.

It took three more years to move some 30 tonnes of carved masonry from Herodion to the museum. “We actually moved thousands of fragments to our laboratories, working intensively from here on restoration and reconstruction,” says Mevorah.

“We’ve performed quite an important role for world cultural heritage,” says Israel Museum director James Snyder. But the self-complimentary effusion has been short-lived.

Palestinians complain that Israeli archaeological activities in Palestinian territories are illegal. “According to international law, this is a crime,” declares Amro. “Israel must recognise the rights of the Palestinian nation to their historical sites.”

The Israeli government lists Herodion as a national heritage site. Granted full membership of the United Nations Educational, Scientific and Cultural Organisation (UNESCO), the Palestinian Authority now wants to nominate Herodion for recognition as a world heritage site.

“The Oslo Accord makes Israel responsible for custodianship over archaeology in the West Bank until a final settlement is reached,” retorts Snyder.

A ruthless ruler who had the last lineage of the Hasmonean dynasty that ruled before him executed, including high priests, opponents, his beloved second wife and three of his children, Herod was feared by his subjects. In Christianity, he’s ‘Horrid Herod’, thought of as a serial baby killer.

At the museum, he is mostly remembered as a master builder for his colossal projects, including expansion of the Second Temple in Jerusalem revered in Judaism. Centuries later, the Haram al-Sharif or Noble Sanctuary would be edified on its ruins.

For Amro, “Herod and Herodion are important not only to Jews but to Christians and Muslims. We should be in charge.”

“We borrowed the artefacts as authorised loans; we’ll retrocede them once the exhibition wraps by year’s end,” assures Snyder.

The question is where the relics will be returned to, and to whom. “To the authority in charge of archaeology in the West Bank,” clarifies Mevorah. That is, to the ‘Civil Administration’, a well-known euphemism for Israeli military authorities in the West Bank.

“They’ll never give back the artefacts to us, forget it,” protests Amro, not sure himself whether “it” refers to the site and its treasures or to the West Bank.

“When Israel signed the Camp David peace accord with Egypt in 1979 and withdrew from Sinai,” recalls Snyder, “there was a very intelligent division of material: what related to Egyptian heritage was returned to Egypt; what related to Jewish heritage stayed with Israel.”

Would such a model be applicable to Israel and Palestine were peace to be signed between them? “I’m just a museum director, but it was well done,” says Snyder.

Despite a sudden increase in July this year, prices of cereals on world markets remained fairly stable. But there are no grounds for complacency, as cereals markets remain vulnerable to supply shocks and disruptive policy measures. In this context, the good harvests that are expected in the Southern Hemisphere are important.

José Graziano da Silva, director-general of the Food and Agriculture Organisation of the United Nations (FAO). Credit: FAO News

In the last ten years we have seen major changes in the behaviour of food prices. Up until around 2002 real food prices were falling but they have now been above trend for longer than at any other time in the previous forty years.

Food prices have also been volatile and the combination of high and volatile food prices will continue to challenge the ability of consumers, producers and governments to cope with the consequences.

All this makes it timely to reflect on recent price events and the reactions of the international community, especially since price volatility is likely to continue for the foreseeable future.

Set against this backdrop, the Ministerial Meeting on Food Price Volatility held on World Food Day on Oct. 16 was particularly relevant.

Twenty-five ministers and 13 deputy ministers met to discuss the issues and exchange views on how to strengthen measures to contain food price volatility and to reduce its impact on the most vulnerable populations.

The meeting recognised that a lot was learned from the 2007-8 and 2010-11 price hikes about appropriate responses at international, regional and national levels. They also agreed that much more could be done based on the Action Plan on Food Price Volatility and Agriculture that was adopted by the G20 leaders in November 2011.

This action plan launched major international initiatives, in particular the Agricultural Market Information System (AMIS), hosted at the headquarters of the Food and Agriculture Organisation (FAO). AMIS monitors developments based on the latest available information, analysing the global supply/demand situation and providing objective assessments.

Born just one year ago, AMIS is already a fully functioning mechanism and played a key role this summer in calming markets and preventing the deterioration of a vulnerable food market situation into the potential crisis that countless commentators were so quick to predict.

AMIS is providing an objective assessment of the market situation and risks, while calling on G20 member states to refrain from adopting policy measures that might further destablise markets.

This experience shows that coordinated international action and enhanced transparency and information on agricultural markets can make a difference in limiting food price spikes and excessive volatility.

Even when they are affected by adverse weather conditions that reduce production and export capacity, it is important that governments of exporting countries act transparently and dialogue with commercial actors to assure local availability of cereals without creating uncertainty in international markets.

This coordination is crucial because it can stop a drought or a flood from becoming a crisis.

Other actions to limit price spikes and excessive volatility ­ adjustments to trade rules, the creation of emergency food reserves, reform of biofuel policies and control of speculation ­ are all still works in progress. ‘Excessive’ is the keyword, because some degree of volatility is a characteristic of agricultural markets.

Action also needs to be taken to build resilience to that volatility in the medium-term.

This requires substantially increased investment in agricultural production with a particular emphasis on support to smallholder farmers.

Financing will need to come primarily from the private sector including smallholders themselves and major companies. This is a controversial area and concerns, especially over large-scale land investments, are well founded.

It is vital that any investment is made responsibly and for the benefit of all stakeholders. This is where the Principles for Responsible Investment in Agriculture, which will be discussed by the Committee on World Food Security (CFS), and the Voluntary Guidelines on Land Tenure previously endorsed by the CFS, have an important role to play.

FAO is prepared to assist governments in implementation of these safety measures. AMIS, Voluntary Guidelines and the Principles for Responsible Investments are all elements of the new global governance on food security that we are building, and that has the CFS as its cornerstone. We are making up for lost time, as food security governance was neglected until a few years ago. Fortunately we are learning that, in a globalised world, it is impossible to ensure food security in a single country or region. (END/COPYRIGHT IPS)

*Jose Graziano da Silva is the director-general of the United Nations Food and Agriculture Organization (FAO).

In the aftermath of last week’s elections to the International Monetary Fund (IMF)’s executive board, Brazil and others are expressing frustration that a reforms process aimed at increasing the representation of developing countries is being stymied by European countries.

IMF chief Christine Lagarde has urged members to act on a suite of reform measures that would significantly increase the voices of developing countries, with mixed results. Credit: MEDEF/cc by 2.0

“There was some movement, but in my opinion this so-called reduction in the number of European chairs has petered out into a reshuffling that is largely cosmetic in nature,” Paulo Nogueira Batista, the IMF executive director for Brazil and several other Latin American and Caribbean countries, told IPS. “The Europeans have cleverly upgraded the representation of the emerging markets of the E.U., such as Turkey and Poland.”

The IMF’s executive board, based at the institution’s Washington headquarters, consists of 24 members, most of which represent shifting constituencies of the Fund’s 188 members. In 2010, a package of reforms was agreed to, aimed at rectifying longstanding concerns over the IMF’s governance imbalance.

While these reforms were meant to be finalised during the annual meetings of the IMF and World Bank, held Oct. 9-13 in Tokyo, and implemented this coming January, both deadlines now look set to be missed as the United States focuses on its presidential election and IMF members are deadlocked on key issues.

Part of this reforms package includes changes in who sits on the executive board, with the Europeans agreeing to give up two seats in order to increase the representation of developing countries. That process has now led to an unusually large amount of movement on which countries will align with which constituencies – the most significant changes in this regard since the early 1990s.

The second part of the reforms process has to do with voting rights, based on “quotas” arrived at through a contentious and complex formula that has favoured developed economies. Calls have mounted for the system to change, particularly to take into account a changed global economic situation in which so-called middle income countries (particularly the BRICS, referring to Brazil, Russia, India, China and South Africa) are increasingly crucial players.

Batista says that reforms of the quotas formula constituted the single most controversial topic discussed in Tokyo. Countries including the United States, Brazil and most of the BRICS want the formula to be based on gross domestic product, while the Europeans stress the issue of economic “openness”, which would specifically favour EU economies.

“The Europeans use a highly unusual definition for ‘openness’ – a definition so strange that I have proposed we rename this ‘Europeanness’,” Batista said, speaking not in his official capacity. “The main role seems to be to artificially inflate the quotas of European countries.”

In recent days, Batista, already one of the more outspoken of the IMF executive directors, has been openly critical of the European bloc at the Fund.

“What we’ve seen in Tokyo is that, unfortunately, some Europeans are backtracking on their pledges to quota review,” he told IPS shortly after arriving back to Washington from Tokyo. “This is a major concern, as the credibility of the Fund, of the G20 and of the individual countries is predicated on the faithful implementation of what they sign up to in the communiqués – and we’re not going to take this lightly.”

Post-crisis model

Over the past year, Brazil has played an increasingly central role in enunciating the demands of developing countries, a push that has been particularly embodied by the IMF reforms process.

“Brazil has been wonderful in that they have outright threatened not to turn over certain financial commitments to the IMF until the quota reforms move forward – not only regarding the 2010 agreements, but surrounding the 2013 deadline as well,” Jo Marie Griesgraber, the executive director of the New Rules for Global Finance Coalition, a Washington-based international network, told IPS.

“The Brazilians have been very forthright in this process – putting out notes on ridiculous anomalies, presenting these to the board and then, very unusually, making them public afterwards.”

Now the world’s sixth largest economy – larger than that of the U.K. – Brazil has in recent years been making a concerted effort to step up its bilateral relations throughout much of the Global South, particularly in Africa. Under former president Luiz Inacio Lula da Silva, the country opened more than a dozen new embassies across Africa, with the 37th reportedly opening soon, in Malawi.

Brazilian officials have increasingly focused on foreign aid funding, which a 2010 tabulation suggested was already reaching four billion dollars a year across all parts of the government, and growing rapidly. That’s a significant turnaround for a country that for decades was a net aid recipient.

More importantly, Brazilian aid has become characterised by a uniquely forceful emphasis on South-South technical assistance, particularly focused on agriculture and social issues. This is an approach that could increase substantially given new projects now in the works.

Today, Brazil is at the centre of a global push to define a new development paradigm, which has only received greater momentum – and focus – in the aftermath of the global economic crisis.

“What’s at stake here is not just about IMF voting share. Since the crisis, the previously preferred models, the so-called Washington Consensus, have been called into question,” Gregory Chin, a senior fellow with the Centre for International Governance Innovation, in Waterloo, Canada, told IPS.

“The BRICS countries are advocating a different understanding of best practices on national development, and the Brazilians have been the leading diplomatic force in pushing these changes.”

Such models, including what is known as countercyclical financing, directly contradict the approaches long pushed by institutions such as the IMF and the U.S. Treasury. Yet with several of the emerging economies having weathered the financial crisis better than anticipated, Chin says that such models are now gaining greater attention in the Washington headquarters of the IMF, the World Bank and beyond.

Beyond the BRICS

Even as Brazil and others work to strengthen the reforms process within the IMF, Chin points to the broader parallel effort to set up a BRICS-funded development bank.

“That is, they have one foot outside of the system versus one foot inside,” Chin says. “They’ve made sure to create for themselves this alternative track, because they’ve seen how slow things are happening in the IMF.”

Analysts are now looking to the next BRICS summit, to be held in Durban, South Africa, in March, with the South African hosts reportedly pushing hard for agreement on a major announcement on a BRICS development bank. Many are also weighing whether such an institution would be able to move beyond a BRICS-only institution to work throughout the developing world – potentially falling in line with Brazil’s focus on South-South cooperation.

“Brazil is trying to increase its role in the IMF and other international organisations and G20, and I think this is happening – all of the BRICS countries are raising their involvement in these institutions in the hope that these institutions will change fundamentally,” IMF executive director Batista says.

“Hopefully, the IMF will eventually no longer be a ‘North Atlantic monetary fund’, dominated by the North Atlantic. Although we are running up against a lot of institutional inertia, the IMF and other international fora must become truly international if they want to be relevant in today’s world economy.”

Large rich nations are falling short in their commitments to global aid and its effectiveness. Credit: Miriam Gathigah/IPS

By Sarah McHaney
WASHINGTON, Oct 16 2012 (IPS)

The United States is lagging far behind other developed countries in its policies aimed at improving global prosperity, according to new research.

The tenth annual Commitment to Development Index (CDI) was released this week by the Washington-based think tank Centre for Global Development (CGD). The report ranked the efforts of 27 developed countries to support developing countries.

As in previous years, Denmark, Sweden, Norway and the Netherlands vied for the top spots. This year the United Kingdom, in ninth place, was the sole country from the wealthy Group of Seven (G7) bloc to make the top 10, while the United States ranked nineteenth.

Unlike most rankings of its kind, the CDI does not focus primarily on the quantity of foreign aid each country gives per year. Rather, it takes into account seven different components of development and averages a country’s score in each area. It also focuses on the scope of the integration of a country’s policies.

“All nations are linked in many ways, not just through aid – many policies in wealthy nations affect people all around the world,” David Roodman, a senior fellow at CGD and the chief architect of the CDI, explained in an interview last week.

Comprising each of the index’s seven components, such as quantity and quality of foreign aid, or migration and environmental policies, are multiple factors that contribute to a country’s overall score. In the category of foreign aid, for example, the index looks at what percentage of a country’s gross domestic product is given away, and whether the money is “tied” to certain conditions, goes to corrupt governments, or is given in the form of loans.

After scaling the scores to an average of 5.0, researchers found Denmark to have the highest score in 2012 (7.0), while South Korea had the lowest (2.7).

The United States scores above average on only two of the seven components, and with a score of 4.8 it ranks behind all major industrialised nations except Italy and Japan. Meanwhile, Nordic countries repeatedly stand at the top of the list, for several reasons.

“Superficially it’s about foreign aid; each of these countries gives a large amount of foreign aid for the size of their economy, about 1 percent of GDP,” Roodman said of the Nordic countries. “They are also pretty good with environmental policy, doing more than most countries to reduce the use of fossil fuels.”

Citizens of these countries, Roodman explained, tend to trust more in their government and in how taxes are spent, a sentiment that could potentially allow government officials to feel more comfortable making significant commitments to developing countries.

Owen Barder, a senior fellow at CGD and director for Europe, offered a broader explanation for Nordic countries’ top rankings. In an interview last week, Barder said, “These smaller nations are forced to have an international outlook because of their size. I think this results in a sense of national pride in the role these countries play in international peace and environment negotiations.”

Barder regarded the CDI as an opportunity to evaluate how Europe as a whole scored in individual components and to begin a continent-wide conversation on how improvements can be made.

Not all countries look favourably on the CDI’s metrics. Japan, which is consistently ranked at or near the index’s bottom, responded to the 2006 CDI by criticising its method.

“By using its own method to measure aid effectiveness of each donor and publishing its results…the [CDI] has various problems and has not evaluated fairly developed countries’ policies for international development,” Japan’s ministry of foreign affairs wrote.

Japan received a low score in trade partly because of its high import barriers, especially on rice. Yet the Japanese government has argued that only the negative impact of its trade tariffs were considered, not the positive agricultural subsidies it also provides.

“The CDI does not reflect the fact that major developed countries…take development challenges by making maximum use of their comparative advantages and by complementing one another through aid coordination,” the ministry stated. (Roodman’s response can be found here).

Indeed, the CDI does have some structural flaws. The countries currently listed on the index are all democracies, for instance. These countries “preach concern for human life and dignity within their own borders”, the index’s overseers have written, noting that the CDI “looks at whether rich countries’ actions match their words”.

Yet in the past decade a host of “middle income” countries – China, India, Brazil – have emerged as global economic leaders.

“I don’t think changes in the world mean that Japan or the U.S. are any less obliged to contribute to the prosperity of developing countries,” Roodman said. He added that he is considering broadening the index to a group of countries similar to the Group of 20 (G20) to include rich developing countries that still have a large amount of poverty within their borders.

Incorporating such countries would require the index to be built on a paradigm different from its current “rich world, poor world” model.

The CDI has seen slight improvements in industrialised countries over the past ten years. Nevertheless, as Roodman pointed out, “The richest largest nations are still falling short of their potential.”

The release of the final communiqué of the Group of 20 (G20) summit in Los Cabos, Mexico, on Tuesday evening has been met with widespread derision from observers across the ideological spectrum.

Critics have been particularly scathing of the summit’s lack of discussion on development issues.

According to Oxfam International, an aid agency, the G20 countries “sidelined development” in Los Cabos.

“This is a hugely disappointing outcome for developing countries,” Oxfam spokesperson Carlos Zarco said on Tuesday. “Leaders failed to keep the world’s poorest in their sights, despite the fact that more than half these people live in G20 countries.”

Even while many had begun to forecast that world leaders attending the summit, held June 18-19, would be hobbled in making long-term commitments by roiling economic downturns at home, many had continued to hope that progress would be made on individual programmes.

Yet during the event, the financial problems in Europe seemed to eclipse much of the rest of the agenda.

U.S. President Barack Obama admitted as much in post-summit comments. “The (threat) that’s received the most focus…is the situation in Europe,” he said, despite the fact that “most leaders of the eurozone…are not part of the G20”.

Nonetheless, the entirety of Obama’s comments was devoted to European issues, a trend reflected in the Los Cabos declaration as well as the text of the signature Los Cabos Growth and Jobs Action Plan.

No new action

Some new initiatives did receive cautious praise from development experts. These included a new 100-million-dollar pot to fund agricultural innovations, as well as a renewed focus on nutrition and food security.

Even in Washington, however, critics noted that much of the momentum on these issues had already begun well prior to the Los Cabos summit, meaning that little new progress or detail emerged in Mexico.

“With food prices swinging wildly and the planet burning, this was the moment for bold proposals from the G20,” Neil Watkins, with ActionAid USA, a watchdog group, said. “Instead, on food security and climate change, the G20 turned in last year’s homework, content to reaffirm old plans and commission more studies.”

World Vision’s Adam Taylor voiced similar complaints. “The summit focused more on recycling previous commitments and sharing best practices and not enough on making measurable political commitments in the fight against poverty and hunger,” he said.

John Ruthrauff, director of international advocacy with InterAction, a Washington-based network of nearly 200 international NGOs, offered support for several of the initiatives, but expressed exasperation that “these words … are not accompanied by concrete steps, action plans, or benchmarks for completion”.

More IMF funding

Perhaps the biggest news to come out of the summit was the International Monetary Fund’s (IMF) successful raising of an additional 456 billion dollars, a push that had encountered friction leading up to the talks.

While IMF head Christine Lagarde praised this doubling of the Fund’s lending capacity as a demonstration of “the broad commitment of the membership to ensure the IMF has access to adequate resources to carry out its mandate in the interests of global financial stability”, the new money is, in fact, aimed largely at shoring up faltering European economies.

A critical percentage of those commitments came from the “middle income” countries that define the G20.

Although last week these governments, led by Brazil, China, India and Russia, had threatened to withhold some or all of this additional funding pending assurance of the passage of a suite of reforms within the IMF’s voting structure, the money was ultimately given with little forward movement on the reforms, which would increase the voting power of developing countries.

The G20 “lost sight of developing countries reeling from aid cuts, climate change and volatile food prices”, Oxfam said in a statement. “Poor countries depleted their reserves defending themselves against the economic crisis caused by the rich world, and are also having to cope with massive aid cuts.”

“When confronted with a severe crisis on your own doorstep, it can be easy to sideline development issues,” said Samuel A. Worthington, the president of InterAction. “But these problems are real and they are not going away unless we take measurable steps to address them.”

“G-Zero”

Many commentators have interpreted the lack of results at the Mexico summit as indicative of a broader lack of global leadership at the moment, amidst economic crisis and with several heads of state facing election this year.

“Political courage seems to be in short supply in Los Cabos,” said Michael Elliott, the head of ONE, an international campaign against extreme poverty. “Too much of the work that was started (in previous summits) has not been advanced by leaders in Los Cabos.”

Oxfam’s Zarco agreed, saying, “This collective failure of political will is shocking, and must be dealt with in the last months of Mexico’s G20 presidency.”

While Mexico’s G20 secretariat will be expected to answer for any lack of focus during the proceedings, much handwringing is being reserved for European and U.S. leaders, particularly Obama.

“He may well be appropriately focused on economic issues at home, but there is no denying that at the G-20, in the UN, at the world’s international financial institutions, and confronting key challenges, no one is touting the transformational presence of Obama the multilateralist as they did a couple of years ago,” wrote David Rothkopf, the influential editor at large for Foreign Policy magazine, this week.

Citing the G20’s recent agenda as “almost laughably remote from the big issues of the day”, Rothkopf suggested that the world is currently seeing more of a “G-Zero moment”, using a term recently coined by an American political scientist named Ian Bremmer.

Another commentator, the noted Indian economist Jayati Ghosh, suggested that the events at Los Cabos underscored the G20’s overall lack of relevance.

The Mexico summit was “arguably the most important meeting of this group since it was formed”, Ghosh wrote in a recent blog post. “The reason for this significance is that for some time now, the G20 appears to have lost its way…(having) increasingly shied away from addressing the more important questions.”

Water shortages, hotel development projects, overfishing and the impacts of mining activities are among the main environmental problems in the region of Los Cabos, the venue for the summit of the Group of 20 (G20) leading economies.

Urban and hotel development have devoured the oasis of San José del Estero in Los Cabos. Credit: Courtesy of Niparajá

The G20 Leaders’ Summit, which took place Jun. 18-19 in Los Cabos with sustainable development and combating climate change at the top of the agenda, was held in the International Convention Centre, considered the ultimate in sustainable architecture.

Within its 66,000 square metres are 2,700 square metres of green walls, a water treatment system with the capacity to process 2.6 liters per second, more than 1,000 solar panels to supply electricity, and rainwater collection facilities. It is an artificial oasis in the midst of a region that exemplifies a host of bad practices.

The municipality of Los Cabos, in the state of Baja California Sur, is made up of the towns of San José del Cabo (the municipal seat) and Cabo San Lucas. Both are economically dependent on tourism, mainly foreign. They are connected by a 33 km strip of luxury hotels, which take a heavy environmental toll.

“The main problem is the scarcity of water. Because this is an arid region, it is the most limited resource. The aquifers are already overexploited, and new hotel development projects could seriously affect the water supply,” activist Ernesto Vázquez of the non-governmental Niparajá Natural History Society told Tierramérica*.

The organisation, founded in 1990, works for the conservation of natural resources in the state of Baja California Sur.

Located in what is essentially a desert region, Los Cabos receives about 270 mm of rain annually. Within its territory lie a number of protected areas, including the Sierra La Laguna Biosphere Reserve, the Cabo Pulmo National Marine Park, the Estero de San José del Cabo State Ecological Reserve and the Cabo San Lucas Submarine Flora and Fauna Refuge. All of them are home to protected, threatened and endangered species.

“For a long time now Los Cabos has been facing problems caused by tourism development and population growth without proper urban planning. Urban sprawl has eaten into areas that had significant environmental importance,” said Isaí Domínguez of the National Commission for Knowledge and Use of Biodiversity (CONABIO).

“It was an area of considerable ecological wealth. What is left is very little,” he told Tierramérica.

Los Cabos first took off as a luxury tourism destination in the 1950s, and underwent a boom in the 1990s. It has more than 10,000 hotel rooms and received more than 800,000 visitors in 2011, according to the state Ministry of Tourism.

The mining of gypsum, copper and phosphorite, which dates back to the 19th century in the region, has also left its scars.

CONABIO lists erosion, coastal pollution from solid waste and wastewater, tourism mega projects, the conflict between sports and commercial fishing, and environmental damage from ships among the main problems facing the area.

The Mexican branch of Greenpeace reports that average daily water consumption is 250 liters per inhabitant, but in the big hotels, it ranges between 1,000 and 2,000 liters.

On Jun. 15 Mexican President Felipe Calderón announced the cancellation of the Cabo Cortés tourism development project, although he did not rule out the possibility of a new project that better adhered to scientific and environmental criteria.

The Cabo Cortés project involved the development of an area of 3,800 hectares, with plans for around 27,000 hotel rooms, two golf courses and other recreational facilities, which would have posed a danger to the coral reef off Cabo Pulmo, a national protected area.

Cabo Cortés would have also caused harmful impacts on sand dunes that stretch over several kilometres.

Meanwhile, since 2009, the U.S. mining company Vista Gold has been waiting for permission to develop an open pit gold mine formerly known as Paredones Amarillos and now known as Concordia. Local residents are opposed, and approval of the environmental impact assessment for the project is still pending.

This mining operation would affect the Sierra La Laguna Biosphere Reserve, which was created in 1994 and encompasses both pine and oak forest and jungle areas.

“This is an important fishing area and the chemicals used to separate the metals would create wastes that would hurt the industry,” said Domínguez.

Every year, 26 million cubic metres of water are extracted from the San José del Cabo aquifer, but its recharge rate is only 24 million cubic metres annually, according to the National Water Commission.

*The writer is an IPS correspondent. This story was originally published by Latin American newspapers that are part of the Tierramérica network. Tierramérica is a specialised news service produced by IPS with the backing of the United Nations Development Programme, United Nations Environment Programme and the World Bank.

As leaders of the Group of 20 (G20) countries head into a second day of talks at the grouping’s seventh summit this week in Los Cabos, Mexico, calls are strengthening for a new debate around the group’s lack of accountability.

“The G20 has liberally imposed itself over other institutions to mandate those other institutions to take on its agenda,” Gawain Kripke, a researcher with Oxfam America, said in Washington on Monday.

“That’s potentially a problem, when you have this fundamentally unauthorised organisation setting the agenda and work plans for other institutions that do at least have bylaws and so forth.”

Kripke pointed, in particular, to the example of the current debate over a set of reforms being pushed through the International Monetary Fund (IMF). These reforms, which in part would see developing countries significantly increase their voting powers within the Fund, have been spearheaded by the G20 as a signature issue.

While these reforms are widely seen as positive, the fact that the G20 is a non-institutionalised grouping – it lacks a secretariat, for instance, and operates largely on the whim of rotating host countries – is worrying for many, particularly as the group’s scope has widened significantly in recent years.

The G20, which calls itself an “informal forum”, was created in 1998 by the finance ministers of 20 of the world’s most developed countries. In particular, the group included the fast-rising “middle-income” countries such as India, Indonesia, Brazil, Turkey, Russia and China.

For the first decade of its existence, though, the G20 was of little relevance. “No one cared about the G20 – no one wanted to work with them,” Bernardo Lischinsky, a senior advisor at the IMF, told a panel discussion here on Monday, at an event organised by New Rules for Global Finance, a Washington non-governmental organisation (NGO), and the Heinrich Boell Foundation.

In the midst of the 2008 economic crisis, former U.S. President George W. Bush made a surprise call on the G20 to come together for an urgent meeting in Washington. The group was tasked with devising a coordinated response to the unfolding events.

While that leadership proved critical then, Lischinsky said, the G20 has since expanded into numerous other areas. “I think they need to slow down, to go back to what they were doing before the crisis,” he said. “They need to focus on strengthening other institutions.”

Shadowy overreach?

Today, the G20 has expanded its number of working groups to ten. Beyond the group’s core focus of finance, these groups take on a broad swath of issues, including development, food security, trade and the “social dimension of globalisation”.

Yet the agendas, negotiations and even composition of these groups have remained shrouded in mystery.

“There is a whole second G20 agenda on development that gets absolutely no headlines,” said Nancy Alexander, director of the Economic Governance Programme at the Heinrich Boell Foundation in Washington.

“The G20 has created an action plan for development in all 173 countries that are not part of the G20, with no mention of issues such as climate change or equity. This plan does not request or suggest, but mandates actions for 25 national and regional organisations.”

The website of the Economic Governance Programme is considered a treasure trove of documents – otherwise impossible to find – relating to the G20’s inner workings. She added that in simply trying to obtain information on the membership of the development working group, she was turned down by four governments citing “confidentiality”.

“This is wrong – this stifles democracy,” she argued. “The G20’s role should be to give suggestions to qualified bodies. We need to have a discussion on whether the G20 is actually accountable to more representative bodies – the U.N., say, or the international financial institutions.”

Few people realise that the G20 is “actually far less accountable than the IMF”, she pointed out.

The lack of accountability can be particularly problematic given the degree of influence that large-scale corporate interests have recently built up over the G20.

The new working group on transparency, for instance, is comprised entirely of people from the banking industry, according to Jo Marie Griesgraber, the executive director of New Rules for Global Finance. Similarly, until recently, U.S. participation at the G20 was solely through the commerce department.

Los Cabos summit

Monday’s events in Los Cabos were arguably dominated by the so-called B20 – the “business 20” – while Tuesday morning started with a breakfast for heads of state and select business leaders.

Even within the group’s core focus on global finance, critics point out an overly heavy reliance on dogmatic positions. “In times of crisis you need a forum to address macroeconomic coordination,” said Thea Lee, a labour organiser in Washington.

“Unfortunately, the G20 has often come up with the wrong solutions, with an undue focus on neoliberal fiscal solutions – for instance, promoting more austerity when the problem today is a lack of demand.”

In the run-up to the Los Cabos summit, many have pointed out that the space for civil society engagement has very limited, a situation exacerbated by the high level of secrecy.

“The G20 is at heart a negotiating forum, and we have very little sense of how those negotiations proceed,” warned Oxfam’s Kripke.

“We have no understanding of countries’ intentions, positions – the process isn’t subject to public discussion and as such civil society can’t offer any help. Ultimately, that’s less likely to produce a good outcome.”

The head of the International Monetary Fund (IMF), Christine Lagarde, on Wednesday urged countries to act on a suite of reform measures that would significantly increase the voices of developing countries within the agency.

“I call on the remaining member countries to complete the necessary legislative steps and other legal measures quickly to implement these important reforms within the agreed timeframe,” Lagarde said following a review of progress towards implementation of the reforms, agreed upon in 2010 and set to be implemented by this fall.

According to the board’s progress report, 107 countries have given their consent so far, while 80 have yet to do so. “Time is running out,” it warns.

The topic is expected to constitute a key issue at the upcoming Group of 20 (G20) summit, taking place next week in Mexico. It was the G20 that first spearheaded the reforms process, and it is taking responsibility on seeing that the reforms are enacted on time.

“The resistance of the IMF’s major shareholders to even minor reforms of the institution’s governance has become a major item on the G20’s agenda,” Nancy Alexander, director of the Economic Governance programme at the Heinrich Boell Foundation here in Washington, told IPS.

“The problem is leading to more diverse monetary arrangements in geographical subregions and among the BRICS,” referring to the “middle income” countries of Brazil, Russia, India, China and South Africa.

Those countries could stand the most to gain from the reforms process, which will go some distance towards rebalancing voting rights within the IMF. Under the current package, for instance, China’s voting strength would become the third largest.

The reforms would also see a change in the make-up of the Fund’s board. Two of the European seats on the 24-member body would go to developing countries, with some advocating an additional seat be assigned to African countries specifically.

In addition, the Fund’s funding resources would double to about 730 billion dollars, in addition to the 430 billion dollars promised a few months ago aimed at faltering European economies. Such pots of money have become particularly important as the euro zone has continued to falter.

But with developing countries being called on to help bail out Europe, the BRICS have chosen to use the situation to their advantage and press the case for reform.

“The BRICS are saying, ‘We can go elsewhere – we don’t need the IMF. If you want the IMF to work, we’re willing to play with you, but we want our share and are tired of the promises,” Jo Marie Griesgraber, executive director of the New Rules for Global Finance Coalition, an international network based here, told IPS.

On Wednesday, Brazilian officials reportedly suggested that they are thinking of contributing less to the new IMF fund than the country had previously indicated. “We are frustrated because we see that countries that know they will lose influence are resisting” the reforms, Reuters quoted an anonymous Brazilian government official as saying this week.

Several other middle-income countries, including China, India and Russia, as well as G20 host Mexico, are said to support Brazil’s position. The BRICS will be meeting on the issue on Jun. 18.

“Emerging countries are right to hold out for a greater say in the running of the institution before they commit more money to it,” Oxfam International spokesperson Steve Price-Thomas told IPS.

“The old world needs to move over and let these growing economies take their rightful place at the table.”

The BRICS are particularly frustrated by the EU countries, Griesgraber says, which she suggests “by any stretch of the imagination are overrepresented” at the IMF.

“I am very encouraged that the BRICS are working together and considering the consequences for low-income countries,” she says.

“I am also encouraged by the newfound solidarity among the BRICS and the poorer countries that any benefits to the dynamic emerging markets should not come at the cost of the low-income countries.”

Strong solidarity for the BRICS position is also reportedly coming from President Barack Obama’s administration. Although many media outlets have suggested that the United States is stymieing the reform efforts – as the Congress is required to vote on the issue, an unlikely scenario before the November elections – Griesgraber says that Washington is firmly on board.

“The U.S. is allied with the BRICS but doesn’t want a public fight with the Europeans,” she says. “The U.S. administration is not presenting this to Congress yet because they don’t want it turned down, but they’ve said they will act as soon as they can.”

Beyond governance

Even if passed, the reforms have been criticised as being too tentative. According to one widely cited set of criticisms by a Brazilian IMF executive, following the reforms the BRICS would have about a 14 percent voting share, less than half the EU’s, despite the two groupings having almost identical collective gross domestic products.

Still, most see the reforms as a small, important step forward. Others, however, point out that the moves do not deal with longstanding structural critiques of IMF policy.

“It isn’t just the voting structure that’s the problem – it’s an institutional problem,” Mark Weisbrot, co-director of the Center for Economic and Policy Research, here in Washington, told IPS.

“Developing countries need to fight for their interests, and in the IMF they can’t do that. These countries are being badly hit because of the mess in Europe, and the IMF is one of the three players making this mess.”

Agrees Heinrich Boell’s Nancy Alexander: “Whatever the outcome of these power struggles and realignments, the key is whether the approach to monetary policy changes. What must change is the privatisation of gains and socialisation of losses.”

While IMF governance reforms are important, Alexander suggests such talk is pointless without also discussing the future priorities of the institution.

“We don’t want to just play musical chairs on board the sinking Titanic,” she says.