So what should we all be watching out for at next week’s G20 summit? Let’s start with the obvious stuff.
– Expect to hear lots about bankers’ bonuses, in particular from Brown, Merkel and Sarkozy. I can’t find it in me to give a crap about this issue, but doubtless it will command saturation media coverage all week. More substantive on the banking front will be the question of whether concrete proposals are advanced for hedge fund rules or financial supervision regulation - lots of noise here, but not much specificity so far.
– We’ll also hear lots of debate about when to wind down stimulus programs – which was a big issue at the EU’s preparatory summit (continentals more hawkish, but Brown edgier about turning the taps off). Goldman Sachs’s Jim O’Neill has an op-ed in the FT this morning arguing that while co-ordination was needed for starting the stimulus off, it’s less necessary to have co-ordinated exit strategies.
– The IMF and the World Bank have been doing good advocacy about the need not to forget about low income countries. Zoellick and Strauss-Kahn are both arguing that LICs have an external financing deficit of around $59bn this year (for comparison, that’s exactly half the 2008 global aid total). On the plus side, G20 members have actually delivered the $500bn they promised the IMF – which means the Fund can front up around a third of the total needed. Strauss-Kahn is also talking about a breakthrough on IMF governance reform. (Believe it when I see it.)
– We’ll hear a lot about climate, but it’s hard to see what deal the G20 is supposed to cut (especially with Ban Ki-moon’s heads-level climate summit in New York the same week). The story the media runs with will be all about pressure on the US to do more, following Japan’s announcement of a tougher 2020 emissions target, and the EU’s long-awaited finance package. (Still, Obama ain’t the problem – the real issue here, of course, is that things don’t look great in the US Senate.)
The issue on the agenda that I’m most interested in for next week, though, is trade. First, what – if anything – will the G20 say on protectionism? For all the warm words at the London Summit in April, it’s increasingly clear that most G20 countries are in breach of their commitments – right now most notably in the case of the US, whose new tire tariffs are disastrous. Dan Drezner’s take on this is worth reading (things are “very, very scary”) – but on the other hand, Alan Beattie thinks White House chief of staff Rahm Emanuel may have a crafty and ultimately beneficial political calculus in mind.
On a related note, how intriguing to see US sherpa Mike Froman talking up Pittsburgh’s chances of tackling global economic imbalances (“we hope to reach agreement on a framework for balanced growth, for agreeing on how to address the imbalances that led to this crisis and on some process for holding each other accountable”). Not what I expected – but great, if he can pull it off. That said, I found myself wondering last night: is it conceivable that this is part of a messaging strategy to defend the tire tariffs? Hollow laughs all round if so.
Finally, the issue no-one’s talking about but everyone should be: the impending return of the food / fuel price spike. All these stories about oil companies finding new giant fields are so much straw in the wind. (So the new Jubilee field off Sierra Leone has 1.8bn barrels? Great: a whole twenty-one days’ global demand. Colour me thrilled.) The more fundamental point is about demand, which is picking up again in the non-OECD economies – and let’s remember that it’s in these countries that all the demand growth for oil will come between now and 2030.
The stage remains firmly set for a renewed oil supply (and hence price) crunch in the short term – and when that happens, food prices will go straight up too, as costs for transport, fertiliser and on-farm energy use race upwards and biofuels become even more competitive as a source of demand for crops. We’re already at a baseline of 1.04bn undernourished people (compared to 850m before the last food price spike) – do the maths. So my wish list for the G20?
- $6bn funding for WFP – now.
- Leave the trade round on hold, but agree emergency WTO rules against food export restrictions (like the ones that already exist in NAFTA).
- Build up a multilaterally managed emergency food stock – maybe part real, part virtual (see Feeding of the 9 Billion for full details).
- Commit to universal access to social protection systems by (say) 2015 – and lock the funding in place, now (only 20% of the world’s people currently have access to them – but these are the best-defence resilience mechanism for poor people facing price spikes, way better than price controls or economy-wide subsidies)
- Bring China and India into full IEA membership, so that they’re part of its emergency supply management mechanism.
- Start driving real inter-agency coherence by commissioning the most important multilateral agencies for scarcity issues – UN, Bank, Fund, OCHA, WFP, FAO, IEA – to produce a joint World Resources Outlook. We need the integrated analysis; we need the political momentum it will create.
- Ask Ban Ki-moon to set up a High Level Panel to look at the international institutional dimensions of climate, scarcity and development – covering not just the UN, but the entire international system. This is the bit of international system reform that both the 2004 and 2006 High Level Panels left for another day. Today is that day.