What’s wrong with Geneva?

The BBC website has a rather breathless piece about the joys of Geneva today, declaring that “a cosmopolitan city known for diplomacy (and watches), is now gathering steam as a business and corporate hub.”  It suggests that the city’s reputation as a diplomatic center, hosting innumerable UN offices, is a big plus for its overall appeal:

“Business travellers like to come to Geneva because of the extensive presence of international organisations,” said Van Beurden, the manager of business development at the Crowne Plaza Geneva hotel. “This brings global movers and shakers, both commercial and political, to one small place. That’s why we see international companies investing in offices and headquarters here to be close to these decision makers and financial institutions.”

By pure chance, I have also just published something about Geneva for the Politico Magazine:

There are lots of fun things to see in Geneva. There’s the Jet d’Eau, a 140-meter-high waterspout. There are the Alps. And, if you are especially lucky, there is John Kerry.

The U.S. secretary of state has visited the Swiss “city of peace” five times since he took office in February 2013. It’s far from his most frequent destination. His website records 11 trips to Tel Aviv alone in the same period as part of his doomed effort to revivify the Middle East peace process. Yet Kerry’s appearances in Geneva have played an outsized part in his efforts to save Syria, strike a nuclear deal with Iran and forge a strategic partnership with his Russian opposite number, Sergei Lavrov.

The city has thus served as the backdrop to Kerry’s effort to bring to heel an increasingly unruly world through his personal diplomacy. He sometimes seems more at home there—or in other historic centers of European diplomacy, like London and Paris with their ornate foreign ministries—than at the dowdy State Department in Foggy Bottom.

This year, Kerry’s diplomatie genevoise has started to go awry, with talks on Syria and Ukraine flopping. The Swiss backdrop can hardly be blamed for these failures—and the Swiss government has in fact done Kerry a huge service by directing European mediation and monitoring in Ukraine, keeping a lid on the crisis. But the secretary of state’s attachment to Geneva points to deeper flaws in how he views the world.

So what’s wrong with Geneva?  Read the rest of the piece here.

Implementing the Post-2015 Development Agenda in the United States

In a new report from the Center for American Progress, we explore the implications of implementing the post-2015 development agenda in the United States.

Given the massive changes in the world since 2000, when the Millennium Development Goals were adopted the United Nations headquarters, it should come as no surprise that the post-2015 development agenda is shaping up to be quite different from the MDGs. One of the most profound shifts is that the post-2015 will be a universal agenda.

To echo the High Level Panel on the Post-2015 Development Agenda (HLP), a universal agenda is based upon true global partnership, a joint endeavor to end poverty and promote sustainable development. Universality signals a transition away from the North-South dynamic that has defined development policy for decades.Though the specifics are still unclear – in particular how best to accommodate varying national circumstances and contexts – the basic idea is that every country would have work to do, both at home and as members of the global community, in order to achieve the post-2015 development agenda.

While an incredible amount of energy is focused on the what of the post-2015 development agenda, relatively less attention has been paid to the all-important question of how it will be implemented.

In this new report, John Norris, Casey Dunning, and I explore what implementing the post-2015 development agenda might look like from the perspective of the United States. The result of our analysis is a report, Universality In Focus. We use the illustrative set of goals and targets set out by the HLP as our starting point, identifying the achievability, measurability, and merit of each target, and as appropriate, the potential level of ambition for the U.S. in meeting such targets.

Rather than a definitive analysis of a very broad and complicated set of issues, it is our hope that this report is the start of a more specific and focused conversation on implementation and the practical implications of universality in the post-2015 development agenda. We would hope that others undertake similar analysis in different countries, to further inform the ongoing conversations among diplomats in New York.

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G20 gives U.S. until end of year on IMF reform

When finance ministers and central bankers from the G20 major economies met last week in Washington, they rapped the United States on the knuckles for its failure to ratify reforms of the International Monetary Fund. The reforms, which leaders from around the globe agreed in 2010 but which require U.S. Congressional ratification to be implemented, would increase the voice of emerging market economies on the IMF’s board and strengthen its general account (what the IMF calls “quotas”). In the G20 final communique, the global financial chiefs expressed how “deeply disappointed” they were, and fired off a stern warning, giving the U.S. until the end of the year before they request the IMF to proceed on reform (without the United States, to insert the subtext). Given that the U.S. was instrumental in founding the IMF and has always been its largest shareholder and exercised a veto over major institutional changes, the warning is serious stuff. Whether or not the IMF can actually do anything without the buy-in of its largest shareholder remains in question, but certainly the rest of the world is growing impatient with the extended delay.

In a recent analysis, I point out that the delay is undue. The IMF has traditionally enjoyed support from Democrats and Republicans, and the current proposal for reforms builds upon a process that began under the George W. Bush administration. The IMF helps to maintain global financial stability and prevent and mitigate economic crises, something both parties can get behind. The reforms strengthen the IMF’s core capabilities and improve its governance, equipping the IMF to better prevent and manage economic crises of the twenty-first century and creating a platform for constructive relations with emerging market economies such as India, Brazil and China.

And despite some claims to the contrary, the reforms do not increase U.S. financial commitments, because the new U.S. contribution to the IMF general fund would be offset by an equal reduction in its commitment to another IMF fund (the New Arrangements to Borrow). The Congressional Budget Office, Congress’ official budget scorekeeper, estimates the technical cost of implementing the quota reforms at $239 million – but also estimates that shifting the funds away from the NAB would save $693 million over the same time frame. So the reforms don’t increase US financial commitments, and the US might actually recoup money on account maintenance costs. A pretty good deal.

The case for the reforms seems obvious, so why the delay? The toxic political environment in Washington is the primary culprit. The Obama administration has not made the case for reforms as clear and compelling as it could and should, and delayed proposing them, while Congress is loath to give the Administration any kind of victory. And with the rise of tea party influence in the Republican party and an increasingly isolationist American public, Congressional blockers may actually reap political rewards. In return for ratifying IMF reforms, some Republicans are demanding a delay in the Obama administration’s proposed rules to limit political activities of non-profits. (If that seems like a a non sequitur, that’s because it is. Such is political deal-making in today’s Washington.)

All of this is bad news for the U.S., and bad news for the world. The fact is that for now and the foreseeable future, the U.S. is still the world’s preeminent power. And that power must be exercised with commensurate responsibility. As the G20 warning made clear, the rest of the world will not wait indefinitely. They are already eying a plan B if the U.S. does not ratify the IMF reforms. Whether they act without the U.S. remains to be seen, but everyone loses if the U.S. does not step up to lead the modernization of an international system that emphasizes cooperation over competition. The IMF is an early but important step in a revitalized, rules-based global order that can manage the challenges of the twenty-first century.

 

IMF: To solve inequality, tax food, books and funerals

The IMF has attracted plenty of favourable attention from unfamiliar places with two ‘staff papers’ (we’re enjoined to consider them as the personal opinions of the authors, not the IMF itself, an injunction that we all merrily ignore). The first argues that inequality reduces growth, while redistribution is an effective tool for reducing it; the second explains how governments should use taxes and public expenditure to achieve this goal.

Inequality campaigners are over-the-moon to have the IMF on their side. Oxfam International hails the IMF for “mashing myths and debunking dogma in economic policy,” while the Oxfam inequality guru, Nick Galasso, is fulsome in his praise of an “ideological sea change” at the Fund (“if If it sounds like I have a crush on the IMF’s Managing Director, Christian Lagarde…”).

But what tools does the IMF think we should use to shrink inequality? Oxfam’s tweet leads to a Reuters article covering a speech by IMF deputy managing director, David Lipton. The speech is definitely worth reading in full – it’s a digestible summary of emerging IMF thinking, while the table on page 43 of the IMF report provides an overview of its suite of policy prescriptions.

Key recommendations for developed countries include substituting means-tested benefits for universal ones; raising the retirement age and making the rich work longer than the poor; charging more for university education in order to spend more on schools; and making income tax more progressive, while eliminating tax breaks.

Many of these are good policies, but let’s not pretend they’re all politically palatable. Take the last one as an example. In the United States, President Obama and the Republicans are locked into fruitless combat on eliminating a few of the most egregious pro-rich tax breaks. A recent revenue-neutral tax reform plan from a Republican has provoked a blizzard of protest from Wall Street and has been roundly condemned by his colleagues.

But the IMF is not interested in these small-bore controversies, it has the big one in its sights: the 37 million Americans who benefit to the tune of $70bn or so from tax relief on their mortgages. And that’s a political live wire. I’d speculate that any presidential candidate – Republican or Democrat – who ran for 2016 on a “tax the homeowners” platform would have as much chance of winning the nomination as I do.

This is not just an American problem. Look at the IMF’s core policy prescription for the United Kingdom – one good enough that it makes it into Lipton’s speech as well as into the report. The UK should move to a flat rate of VAT on all goods and services, Lipton argues, and use the money to increase benefits.

That would mean imposing a 20% tax on food (raising £16bn or so), and on rent and house construction (another £13bn), while increasing tax on household electricity and gas from 5% to 20% (£5bn). Tax would also go up on books, children’s clothing, tampons, condoms, stamps, charities like Oxfam, and… funerals. Yep – the IMF is proposing a burial tax.

All in all, this would give George Osborne £60bn to play with (table 4), more if he axes universal benefits in favour of greater means-testing (goodbye child benefit, winter fuel allowance etc). This would be enough to double benefits for working-age low earners and the unemployed (table 8.2).

Good news for inequality, maybe, but an act of political insanity. In the UK, we once had a manifesto that was derided as ‘the longest suicide note in history’. Flat rate VAT (for all its merits) would be the shortest. VAT on food? On books? On coffins? Just look at the disaster that befell the British government when it tried to tax Cornish pasties to see how badly this would go wrong.

There are equally obvious political bear traps when you look at the problem from the point of view of low and middle income countries. And the task ahead of them is daunting, given that inequality levels are higher in Asia and the Middle East than in the West, and much higher again in Africa and Latin America. A European minister told me that he was hoping for a post-2015 goal that would inspire the whole world to be as equal as his country by 2030. I shudder to think of the collective apoplexy this prospect would cause in the G77.

IMF Disposable Income Inequality

No-one is pretending that IMF-branded policies represent the final word on inequality. Oxfam issued a media brief this week, which proposes the UK tackles inequality by cracking down on tax dodgers, implementing a Tobin tax and a tax on land, and increasing the minimum wage.

But what the Fund’s excellent report does is underline the importance of going from high-level aspirations to detailed scrutiny of the policies we want governments to implement to bring inequality down. Only then can we understand how today’s high level debate on inequality will play out in the bruising world of retail politics. It would be good to see Oxfam’s proposals costed and their likely impact on inequality audited, so we can see what they’ll deliver and who’d foot the bill. Without that the politics remain hard to read.

A greater focus on policies and implementation, and the politics of both, is especially important for those arguing that we should stop being “belligerent” about the “unrealistic goal” of ending sub-$1.25 a day poverty and instead build a post-2015 agenda on the the more sustainable political foundations that inequality offers.

Sure, we have an ‘emerging consensus’ that something needs to be done to bring inequality down. But will that consensus hold when publics around the world, and assorted lobbyists, get a better sense of what that something looks like?

The gun-nuts ready to fight Obama’s Commie agenda need Commie ammunition

So, it turns out that all those hard-right National Rifle Association libertarians preparing for guerrilla warfare against Obama’s socialist seizure of America need to get their ammo from… Vladimir Putin.

American gun owners are gobbling up cheap Russian ammunition in huge quantities, worried that President Obama’s tussle with Vladimir Putin over Moscow’s grab for Crimea will result in new trade sanctions cutting off imports of bullets.

“We’ve seen an ammo-hoarding effect,” said Larry Hyatt, owner of Hyatt Gun Shop in Charlotte, N.C., one of the nation’s biggest gun stores. “It’s almost like milk and bread when it gets ready to snow: It’s just a mass of people running out and buying some of it, probably more than they need,” he told Secrets.

Driving the ammo binge are gun blogs warning that the supply of surplus AK-47 ammo and other cheaper bullets manufactured by Russian makers like Wolf and TulAmmo will be cut off if sanctions are expanded by the president. The two companies make the 7.62×39 ammunition used in the popular AK-47 and variations for the AR-15. They sell it for $3-$4 a box, versus the $9 charged by U.S. manufacturers.

Some websites are also warning that Putin is considering retaliating against the U.S. by cutting off the supplies. So far, none of the rumors appear true.

Like that matters.

A Fox News EXCLUSIVE on post-2015

This just in from Fox News:

EXCLUSIVE: The United Nations is planning to create a sweeping new set of “sustainable development goals”

Um… and we’ll have more from Fox News a bit later in the programme.

To be fair, though, their read of the implications – that the SDGs will “likely require trillions of dollars of spending on poverty and the environment, a drastic reorganization of economic production and consumption — especially in rich countries — and even greater effort in the expensive war on climate change” – hardly constitutes a distortion; it sounds pretty much spot on to me.

And tempting as it may be to chuckle, don’t forget how that the 1992 Earth Summit’s “Agenda 21″, became a bête noire for US conservatives, as David Steven observed here last year, quoting US right-wing author Nancy Levant among others:

Let me try to say it in one sentence: Agenda 21 is the end of America.

If they felt that strongly about Agenda 21 – about as inoffensive a sustainable development policy statement as I can think of – just imagine how much of a cause celebre the SDGs have the potential to be in US red states…