The consequences are predictable:

This weight limits their speed, mobility, range, stamina, agility and all around fighting capability. They can’t go out far and they can’t stay out long with all of this gear. It is simply too much. Combat patrols are typically four hours, and even that short amount of time is exhausting. Our Marines are being consistently outrun and outmaneuvered by an enemy with an AK, an extra magazine and a pair of running shoes.

Sergent Hansen believe that the flight to security  (“all the best equipment for our soldiers”) – ends up making soldiers less secure. You’ll find a similar sentiment in General Petraeus’s admirably concise counterinsurgency guidelines. Walk, is one of his directives. You can’t commute to this fight, is another.

But where does this leave civilian agencies? I doubt there is a single British or American embassy in the world that hasn’t seen dramatically increased security since 9/11. Many now resemble prisons.

Aid agencies, meanwhile, operate from fortified compounds in a growing number of countries, while the Iraq operations of some international NGOs are said to have hidden their use of armed guards from their own head offices. Both struggle against the prospect of an ‘armed humanitarianism.’

Petraeus calls on soldiers to live among the people, deepening their cultural understanding and ability to navigate informal networks, through prolonged and regular face-to-face contact. Diplomats, of course, need to do the same.

He advises them to “understand how local systems are supposed to work – including governance, basic services, maintenance of infrastructure, and the economy-and how they really work.” That’s the mission of development workers.

I am not trying to make a glib point here. Soldiers have the means to defend themselves (and to prevent the kidnaps that, once amplified by the media, can be strategic game changers). Diplomats and aid workers do not.

But how can civilian agencies deepen engagement with populations, while responding to growing insecurity? And what will they do if they find that – like the overloaded marine – security measures are eroding their ability to do their job?

Image Author: mike_is_scrumptious

Assume a robust global deal on climate and the world’s cities will have to transform their infrastructure, economies and societies in little more than a generation.

Assume uncontrolled emissions growth and they face growing impact from a less hospitable and more volatile climate.

Either way – big changes are on the way. Few cities’ leaders grasp the scale of the challenge, especially in developing countries, where towns and cities will have an additional 1.5bn residents to cope with by 2030.

This new think piece has been prepared as part of the British Council’s Climate and Cities programme. Download the pdf (which has full references) or read the full text below the jump.

A Tale of Two Cities
29 January 2009

A think piece for the British Council’s Climate and Cities programme

“It was the spring of hope, it was the winter of despair,
we had everything before us, we had nothing before us”

Charles Dickens

The Best of Times

The World in 2030 – Take 1

Imagine a world where governments agree a robust global deal on climate change. 

The 2009 Copenhagen agreement is the first step, setting out a broad framework for emissions control. A green ‘new deal’ helps the world tackle the global economic downturn and pushes investment in clean tech into top gear. By 2012, detailed negotiations have triggered a wave of institutional innovation, at global, regional, national and local levels.

From that date onward, a price for carbon is set and emissions are traded globally. Growing numbers of countries take on binding targets, with carbon markets providing finance to help poorer countries develop along a low carbon pathway. Forests and other sinks receive investment in return for the ecosystem services they provide. Adaptation funding is used to make countries more resilient to all the climatic threats they face.

As a result, global emissions are already ten years past their peak in 2030, and have fallen to more than 10% below today’s levels. The world is gradually converging on equal per capita emissions. By mid-century, the average American is projected to emit a tenth of the carbon they do today, and Chinese per capita emissions will have fallen by half. Meanwhile, Brazilian emissions will have risen for a time, but then fallen back to 2009 levels, and the average Haitian will still be below the global average, but receiving some cash in recompense.

There’s been some friction along the way. In 2030, the carbon market is big business, trading over $5 trillion annually, as part of a global financial system extensively remodelled after the depression. But the price has been volatile, creating systemic instability that the International Carbon Fund struggles to contain. In spite of this, the US, European Union and Japan have managed to maintain some unity within an increasingly assertive G20, while the new powers (China, India, Brazil) have assumed enhanced rights and responsibilities on the global stage.

Non-state global networks, meanwhile, have continued to grow in influence, while a new commitment to subsidiarity has strengthened the hand of provincial and local actors. The nation state has not disappeared, but it has a growing number of rivals on the international stage.

The climate, of course, is still warming. The IPCC has just published its eighth assessment report, with a headline finding that emissions will stabilize around 465ppm CO2e, leading to eventual warming of 2.6ºC above pre-industrial levels. By 2030, the world has already warmed by about 1ºC (a rise locked in by 20^th century emissions). The impact of this is obvious for all to see. The climate has become less dependable; floods, famine and drought have all increased in frequency and severity.

In general, however, communities have proved surprisingly resourceful and innovative – both in reducing emissions, and in coping with a changing climate. Top down political action has been met and matched by an effective bottom-up response. The 20^th century’s climate legacy may have presented the world with its greatest market failure, but the 21^st century seems to up to the task of designing and implementing a collective response.

Low Carbon City

In this world, what will the future city look like?

Here’s what we know:

• It will be bigger… Today, 3.3 billion people live in the world’s towns and cities. By 2030, this figure will have leapt to 5 billion. There will be eight ‘hypercities’ with more than 20 million inhabitants; another nineteen ‘megacities’ with at least 10 million citizens, and 48 or so large cities where more than 5 million people live.
•  …or smaller... Half the world’s urban dwellers live in a ‘long tail’ of towns of less than 500,000 inhabitants. These towns are too numerous to be counted, but by 2030 there will be at least 700 million more people living in them (that’s twice the population of the USA).
• …but considerably poorer. Even if economies grow strongly, 2030′s average urbanite will have a lower standard of living than he or she does today. Cities in rich countries will barely grow over the next twenty years and some will shrink. But developing countries will have 1.4 billion more urban dwellers, with the very poorest cities growing fastest of all.

But while tomorrow’s towns and cities face massive challenges, they still act as dynamos in the global economy. Even poor cities have huge economic importance, with a country’s largest city commonly accounting for 20% of its GDP. As the World Bank points out, “No country has developed without the growth of its cities. As countries become richer, economic activity becomes more densely packed into towns, cities and metropolises.” Not only do cities offer residents the chance of a better life, over time the benefit tends to spread to the surrounding countryside as well.

But tomorrow’s city must perform a tricky balancing act. It will have to grow at breakneck speed, while providing both services and economic opportunity to its people. And it must do this in a world with severely constrained access to the carbon-rich energy sources that underpinned the twentieth century’s complex urban environments.

This will require a revolution in energy use:

• At present, towns and cities account for 67% of the world’s energy consumption and 71% of energy-related CO2 emissions.
• Assume business as usual, and urban emissions will grow by 55% over the next twenty years – equivalent to double the US’s current emissions. Almost 90% of this growth will be in the developing world.
• Under this scenario, cities and towns in 2030 will be using 70% more coal, 60% more gas, and 35% more oil than they are today. Fossil fuels would make up 85% of all urban energy use, virtually unchanged from current levels.

But the world we have described is one where such rapid emissions growth has been made impossible, where fossil fuel use is below current levels, and where carbon constraints on trade will have changed the relationship between a city and its hinterland.

By 2030, then, the future city will have substantially reconfigured its energy and transportation systems. It will have found a way to house, feed and clothe a growing population using materials that have drastically reduced levels of ‘embedded carbon’. And it will have set new standards for energy efficiency (low hanging fruit that have accounted for over a third of its decarbonisation).

The Worst of Times

The World in 2030 – Take 2

Now imagine a world where things don’t work out so well, where 2009 is remembered as the high water mark of global interdependence – the year that globalization began a slow and painful retreat.

Copenhagen produces a deal, but it’s simply Kyoto II – delivering short term targets, with patchy coverage. The treaty is hard to ratify, poorly implemented, and has negligible impact on global emissions. Developed countries continue to relocate their energy intensive industries to countries without targets. They produce a little less carbon, but – once imports are taken into account – consume even more than before. Subsequent talks tighten the regime a little, but by 2030 it’s clear that there’s little chance of stabilization below 650ppm.

At the same time, there is a broader loss of confidence in international cooperation. A deep and persistent global depression triggers increasingly nationalist and protectionist responses the world over. The result is a demographic disaster. Rich countries struggle to cope with their retiring baby boomers, while poor countries produce growing numbers of workers, but have decreasing numbers of jobs to offer them. The news is not universally bad, but most countries in most years see their economies perform at levels well below their theoretical potential.

To make matters worse, a nasty scarcity dynamic creeps up on policymakers while their attention is focused elsewhere. Energy, food, water, land and, to a lesser extent, emissions, become increasingly constrained, as the world’s population rises towards 8 billion. Oil production peaks (partly as a result of chronic underinvestment), and alternative energy sources continue to underperform. Food prices are driven up by increased demand, competition for land, water scarcity and the rising cost of energy. Conflict over water becomes increasingly common – both between and within states.

The consequences of this are toxic. On the one hand, economic growth tends to trigger, and then be limited by, a series of resource price shocks. On the other, successive waves of resource nationalism do little to enhance prospects for global co-operation. Tit-for-tat is now the dominant force at the heart of the international system, as nations and regions jostle and compete for the resources the world has left.

By 2030, climate change is beginning to accelerate all of these problems. Rich countries have been hit, but poor countries have suffered worst. In the coming decades climate change may push the number of displaced people in the world up to one billion. With conflict on the rise, a remodelled UN Security Council is spending a growing proportion of its time on climate security.

But the worst of the impacts are yet to come. Within another fifty years, 600 million more people are likely to be acutely malnourished; 1.8 billion people will suffer from water shortages; 200 million will experience coastal flooding; each year and up to 400 million more people will be at risk from malaria.

In 2030, then, this future is an increasingly bleak one for hundreds of millions and perhaps billions of people. And for their children and grandchildren, things are by now certain to get much worse.

The Feral City

So what are the prospects of the future city in this darker world?

The underlying demographic drivers, of course, will not have changed. Urban areas will see the same surge in population (or perhaps an even greater one, given that poverty tends to keep birth rates high). But with the global economy stagnating, people will no longer be pulled into cities by economic opportunity. Instead, they’ll be pushed out of the countryside by disaster, war and famine.

Worse still, new arrivals will often be moving to the wrong places. 13% of the world’s urban population lives in coastal areas that are less than 10 metres above sea level. Today, there are over 3,000 cities and many more smaller towns close to the waterfront – a figure that will have risen substantially by 2030. As sea levels rise by a metre or so, Buenos Aires, Rio de Janeiro, Los Angeles, New York, Lagos, Cairo, Karachi, Mumbai, Kolkata, Dhaka, Shanghai, Osaka-Kobe, Tokyo and thousands of smaller towns and cities will all come under threat.

By 2030, many, if not all, urban areas will have experienced a gradual intensification of their current vulnerabilities. Natural disasters reveal how fragile modern cities can be. Katrina shut down New Orleans, causing $80 billion damage, and costing 1,836 lives. But by 2030, there’s a good chance that the US will have experienced its first $500 billion hurricane. The winds won’t need to be any stronger – poor planning and pressure to build in vulnerable areas will have inexorably driven up the level of risk.

Nor does the breakdown of a city have to be so dramatic. In Europe, the heat wave of 2003 killed 35,000 people, most of them old and living in urban apartments. Families had abandoned the city centres for the beach, while hospitals were short staffed. No-one realised that the region’s worst peacetime disaster was underway. By 2030, the world can expect to see a doubling of heat related deaths.

But the threat from climate will be at its most acute in the chaotic, sprawling, endless cities of the developing world. Today, 800 million urban dwellers live in slums, and most of them lack proper water, sanitation and housing. By 2030, without rapid economic growth, that number will have grown by 50% or more.

These cities will be beset by a growing ‘dirty’ environmental burden. At present, 800,000 people die each year from urban air pollution and many more suffer from ill health. Indoor air pollution is prevalent in slums and shanty towns, where many women cook using wood fuel and dung, often in poorly ventilated rooms. Uncollected waste and sewage is another pressing problem, and causes at least as many additional deaths. Slums also tend to be built in the most hazardous places, with little or no drainage, where the risk from flooding is high.

Without economic growth and better planning, these problems will steadily worsen, making the future city a dangerous and unpleasant place to live. The result will be an inevitable wave of crime, social unrest and, at worst, conflict. Some cities will be simply unable to cope, and will fail in the face of an insupportable social, environmental and economic burden.

These will be tomorrow’s feral cities. No longer a driver of growth and increasing prosperity, but “a vast collection of blighted buildings, an immense petri dish of both ancient and new diseases, a territory where the rule of law has long been replaced by near anarchy in which the only security available is that which is attained through brute power.”

The City of the Imagination

Signals from the Future

Climate change presents cities with an immense challenge.

Assume the best of times (a rapid, co-ordinated effort to stabilize the climate) and they must undergo revolutionary transformation in little more than a generation. Very few city leaders grasp the scale, depth and speed of the changes that will be required.

Assume the worst of times (uncontrolled emissions growth, with three, four or five degrees of warming on the way) and cities will lose their place on the cutting edge of an advancing civilization. All will struggle to adapt. Some are certain to fail.

Which path we take depends on signals from the future. The tipping point is a psychological one, with actions taken today being influenced by what people believe the future holds:

• If politicians, investors and citizens expect a rapid transition to a low carbon world, then their incentive is to act now – locking in leadership in emergent industries, while avoiding decisions that make meeting future targets more painful and expensive than they need to be.
• If however, they think the change is going to come slowly, or not at all, then their incentive is to delay action and free ride where possible. Countries then have a strong incentive to block global agreements. The logic is circular: why should a state take on targets now that it is so poorly positioned to meet them?

A strong signal from the future, then, promotes a self-fulfilling cycle of action, co-operation, and binding international enforcement. With weak signals, the logic turns vicious, leading to intense and equally self-fulfilling zero sum competition.

That’s why today’s policy disconnect is so corrosive. Citizens are highly sceptical that their leaders will ever make, implement and enforce a robust global deal. That belief, while understandable, further erodes the political conditions needed to make a deal possible.

So what role can cities play in breaking this double bind? As the world’s creative hubs, they bear much of the burden of developing fresh approaches and innovative solutions. The example they set (or fail to set), the way their citizens think about and tackle the climate problem, and the advocacy of their leaders will have a huge influence on the future direction of their countries. Without leadership from cities, climate stabilization will not happen quickly, or at all.

A New Cosmopolitanism

In the coming years, the need for greater innovation will be great. Cities must:

• Revolutionise their economies, squeezing four or five times as much value out of every tonne of greenhouse gas they emit, and pioneering new ways to meet global consumer demand.
• Rebuild their infrastructure, investing in new energy and transportation systems, and buildings that are massively more frugal in their use of resources.
• Develop the political, regulatory, and financial institutions needed to track, control and price national emissions with sufficient transparency and accuracy to satisfy international standards.

The scale of what’s required goes far beyond developing a few new technologies. Innovation will need to reach deep into both formal and informal economies, with the latter certain to remain critical in developing country cities throughout much, if not all, of the twentieth first century.

But the challenge is more than just an economic one. For the climate to be stabilized, cities must be at the head of a profound cultural, social and psychological transformation, one that touches all aspects of their citizens’ lives, changes the way people think and behave, and creates a world that is different in many unanticipated ways from the one we live in today.

And this shift must happen across most (and probably all) major cities. Climate change, as Scott Barrett has argued, depends on the aggregate efforts of all rowers in the boat. Pioneers will find their effort is wasted, unless they share their experience widely, and in particular with the sprawling megacities of the developing world.

Climate, meanwhile, will be only one of many challenges that cities face. As we have seen, urban centres of all sizes will continue to grow at a staggering rate, with population, power and influence shifting steadily from the developed to the developing world. Resources will be tight, while global systems are likely to struggle under the demands that are placed on them. Even optimists expect the road to 2030 to be a rocky and uneven one.

Cities must therefore also invest in resilience – the capacity of a system to “absorb disturbance and reorganise while undergoing change.” Many of today’s urban centres are brittle and over-centralized, and have worryingly few reserves. It’s as if citizens believe their city is immune to the impact of climate change, and that the brunt of the impact will be felt somewhere else (by the poor, in the countryside, in other countries etc.).

Cities are perceived by their population as immune to the impact of a changing climate, with the worst consequences thought to lie somewhere poorer and more rural.

Increasing resilience is thus not simply about being ready for the occasional natural disaster, but about a broader effort to build a coherent, long-term and inclusive response to a range of risks. That means mobilising urban networks and communities, and building a new understanding of risk all the way from a city’s government to its grassroots.

Resilience may have to substitute for innovation, if global co-operation on climate breaks down. But the two will be stronger if they go hand in hand, with resilient cities better able to respond in creative and dynamic ways to the climate challenge. Taken together then, they provide a recipe for a new cosmopolitanism – one that brings the energy of cities to bear on the most complex problem the world has ever faced.

For references, see the PDF

Download Article

You can download my talk here (with pictures, references etc) – or the text only is available below the jump. There’s a webcast too.

Headlines:

• It’s going to be a tough year. The financial meltdown has a long way to go, and the downturn is risking turning into a global depression.
• Trade is a bell wether. Protectionist pressures are already on the rise. If they gain traction, take that as a warning of a wider loss of confidence in global institutions.
• The unravelling of global economic imbalances could prove corrosive to the international order. If countries start to devalue to protect exports, expect a tit-for-tat dynamic to kick in.
• Scarcity issues (energy, water, land, food, atmospheric space for emissions) remain the key medium term driver of global change. Commodity prices will spike again as soon as there’s recovery.
• The downturn has stemmed the uncontrolled growth of emissions, but also lessened the chance of a robust global deal on climate.
• Economic bad times could well drive increased conflict. A major new security threat might be the fabled black swan – hitting just when the global immune system is already overloaded.
• If we experience a long crisis (or a chain of interlinked crises), we are likely to see either a significant loss of trust in the system (globalization retreats), or a significant increase in trust (interdependence increases). 
• You need to stretch time horizons to get the latter – shared awareness (joint analysis of risks and challenges), as a basis for shared platforms (loose coalitions of leaders), which can lobby for a shared operating system (a new international institutional architecture).
• 2009 sets a challenging agenda for the G20 (financial reform and economic recovery – but framed by a broader vision on climate, resources, security etc.)…
• …the G8 (caucus of rich countries able to tee up Copenhagen and kick start development assistance if developing countries begin to teeter)…
• …the UN (especially Ban Ki-Moon’s proposed high level ‘friend’s group’ on climate, but also as a fora for getting to grips with scarcity issues)…
• and the Bretton Woods institutions and the WTO (first of all ensuring they keep their heads above water, then looking to ‘save globalization from itself’).
• Oh and be ready for the backlash – people are angry and rightfully so, but that may well lead us down some populist blind alleys.

2009 – A Year for International Reform
Talk to the Reforming International Institutions – Meeting the Challenges of the 21st Century conference
David Steven, 21 January 2009 

Introduction

In the run up to November’s G20, I published A Bretton Woods II worthy of the name, a paper co-authored with my colleague, New York University’s Alex Evans.

In a nutshell, our argument was that leaders needed to respond to extreme global stress by:

• Becoming more ambitious in their attempts to reform the international system, despite temptations to focus narrowly on fire fighting a growing number of immediate problems.
• Focusing on the long-term in order to increase the basis for co-operation, thinking in decades where national interests tend to converge, rather than in years where often they will not.
• Working towards integrated solutions, and not imagining that a ‘global deal’ on finance could be divorced from the other big deals that must be struck on trade, security, climate and other resource issues.

This paper, prepared for presentation to the United Nation’s University and UK Foreign Office conference on International Institutions Reform in Tokyo, expands these points.

It has been written at the beginning of a critical year for the international system – a year of great peril, but also of some promise. Threats are building up globally, many of which are poorly understood and will strain our capacity for collective action. International institutions, as currently constituted, risk being overwhelmed. We could end the year confronted by a ‘new isolationism’.

But there are also opportunities to carve out an effective response. After all, a crisis always provides the conditions in which desperately needed reforms can best be achieved.

But policy-makers will find it much easier to work together if they focus on the big picture, or what Wittgenstein called ‘the single great problem’. Without ambition, long-term goals, and integration across issues, 2009 will go down in history as a year of lost opportunities – and possibly mark the point that a short-term international crisis turned into a much more deep-seated decline.

The financial crisis

So how can we expect 2009 to unfold?

First, it is a given that the financial crisis will continue to unravel, revealing some devastating economic consequences.

Japan knows better than most how pernicious a banking shock can be – and how long lasting. Her experience, however, is far from unique. On average, banking crises take around four to five years to unravel in a developed country, and cost around 12% of GDP to resolve – emerging economies tend to feel more pain, but get through the crisis slightly faster.

Their economic impact is also considerable. In a review of the fallout from past crises, Carmen Rheinhart and Kenneth Rogoff find that on average:

• 35% is lost from house prices and 55% from equities.
• Unemployment rises by 7% and output falls by 9%.
• Government debt increases by 86%.

The past does not predict the future, of course, but it should make us wary. The pattern, as Japan found, is for policy-makers to underestimate the seriousness of the problem and for financial institutions to spend years refusing to confront their predicament head on. The required psychological shift is a profound one.

Throwing money at the problem is, in many ways, the easy bit. Much more demanding is the process of unpicking and revaluing the poorly-understood risks that are at the heart of the financial sector’s difficulties. This is a process that has barely begun.

Back in April last year, I presented on multilateral reform to heads of state at the Progressive Governance summit. Then, bold action was promised to sort out the ‘bad’ from the ‘good’ banks, but nine months’ later that is only beginning to happen.

Instead, many countries have pumped money into their financial institutions, without having the tools to force these institutions to identify, value and dispose of toxic liabilities.

This mistake is likely to prove costly. As Ben Bernanke admitted last week, large quantities of “troubled, hard-to-value assets” have now become the primary obstacle to the financial system’s recovery. The UK and US are both now working on new mechanisms to tackle these toxic assets.

Meanwhile, the US Treasury’s Troubled Asset Relief Program (TARP) has been subjected to some fierce criticism. The Congressional Oversight Panel, for example, identified:

• ‘Significant gaps in Treasury’s monitoring of the use of taxpayer’s money’
•  A lack of clarity in asset evaluation, making it unclear whether the Treasury is able to distinguish between ‘healthy’ and ‘unhealthy’ banks, and
• ‘Shifting explanations’ of the fund’s purposes, leading the Panel to the conclusion that the Treasury does not have a clear strategy for spending the funds.

The situation in the US is not atypical; its system is simply unusually willing to wash dirty linen in public. Stimulus packages also pose risks, as they must be assembled and dispersed at high speed. Finding productive investment opportunities is a significant challenge.

We have already seen a massive market failure. The danger is that a similarly sized policy failure will now be layered on top.

The trade challenge

The trade system is also well worth keeping a close focus on.

It offers the best early warning system we have for any widespread loss of confidence in global integration. Protectionist pressures are already on the rise, as happens in every serious downturn. In 2009, will they overwhelm the will of governments to contain them?

If they do so, we may rue the opportunities that were missed on trade in 2008. In April, at the Progressive Governance Summit, there was genuine enthusiasm for returning to, and completing, the Doha Development Agenda. But the talks still collapsed in July, in a row between India, China and the US.

China thought the rich countries had been ‘selfish and short-sighted’, while Japan attacked the emerging economies for failing to recognise their new responsibilities. They had failed to think about the world economy as a whole, while pursuing narrow national self-interest.

At the G20 in November, Doha was back on the agenda, with heads of state promising a framework agreement by the end of the year. By mid December, however, Pascal Lamy had decided it would be dangerous even for ministers to meet, believing that an acrimonious failure could threaten not just the round, but the WTO system itself.

And the bad news spread beyond Doha. Russia, India, Indonesia, Brazil and Argentina – all G20 members, and key swing voters in the multilateral system – had announced restrictive trade measures within weeks of the G20, despite a promise to “refrain from raising new barriers to investment or to trade in goods and services.”

Doha, then, has become the ‘zombie’ trade round, staggering on, but never quite dying. Few expect that it can now be revived. But who knows? Given its resemblance to a B-movie, perhaps it will lurch back into life at the very moment when all hope appears to have been lost.

An alternative view is that the content of Doha doesn’t matter that much. As Paul Krugman has argued, “World trade is already so free, we’re really talking about stuff at the margins.”

But Doha has, at the very least, great symbolic importance. It is a yardstick for our ability to strike complex global deals; shows the extent of the world’s commitment (or otherwise) to developing countries; and – above all – acts as a bellwether for global confidence in free trade itself.

Global imbalances

If the global trade system is to come under a sustained attack in 2009, this will happen as global imbalances – built up over the past decade – unravel, revealing divergent interests between producer and consumer countries, and particularly between China and the United States.

Currency may well be the main battleground, with countries tempted by competitive devaluations as export markets shrink and domestic producers beg for protection.

Since the mid-1990s, we have seen:

• A ‘savings glut’ in Japan and old Europe, and more recently in China and the oil producing countries.
• A ‘money glut’ in the United States and a few other countries.

Effectively, US consumption was fuelled by a potent combination of cheap imports and cheap money, leading to a surge in consumption and debt. The causes for this were to be found both in the US and globally.

Within the US, monetary policy was lax (in part, as a response to previous economic shocks). From overseas came an avalanche of dollars, as China and other countries recycled their surpluses back into the US economy in order to stop their currencies from appreciating.

The debate as to who should be blamed for the imbalances – savers or borrowers – is a fruitless one. The arrangement was symbiotic, or to borrow language from those who treat addiction, an example of co-dependence.

More pertinent were two questions. Were the imbalances sustainable? And if not, could they be unwound in an orderly fashion? The answer to the first was ‘clearly not’. Much now depends on whether a gradual and controlled rebalancing is possible.

China is entering a critical period. The country has massive surplus capacity now the American consumer has stopped spending. Its exports have fallen fast and have much further to go. It is vulnerable to falls in the dollar, which will worsen its terms of trade while devaluing its massive dollar holdings ($1.94 trillion at the end of 2008).

Finally, there are signs that so-called ‘hot money’ may be beginning to flow out of the country, with analysts estimating that $120-140bn of capital left the country in the last quarter of 2008. China’s own banking system has significant weaknesses, despite recent efforts to address non-performing loans.

Some of the tensions can be seen in a fascinating interview in last month’s Atlantic magazine with Gao Xiqing, Chief Investment Officer at the China Investment Corporation, the sovereign wealth fund that manages the riskier part of China’s foreign exchange reserves.

Gao had harsh words for the Americans (“the simple truth today is that your economy is built on…the gratuitous support of a lot of countries”). He also provided an insight into how unpopular Chinese investment in the US can be at home. China’s citizens ‘hate’ its support of rich Americans (“people eating shark fins” at the expense of “poor [Chinese] people eating porridge,” he claims).

It seems unlikely that the Chinese can boost domestic consumption rapidly enough to soak up declining exports – though they must do what they can. A worrying prospect is that the Chinese government will devalue to prop these exports up. That would mean that Western stimulus dollars, euros and pounds were flowing to Chinese producers. It is hard to imagine anything more politically explosive in the current climate.

The US would almost certainly react to protect its producers, with Europe tempted to follow suit. The worst case would be the emergence of a nasty zero sum dynamic in the international arena – a series of tit-for-tat measures that are politically compelling in the short term, but lead to a marked, and even disastrous, loss of collective welfare over longer time scales.

The politics of scarcity

2009 will also see the world continue to grapple with the impact of a set of scarcity issues that are perhaps the most important long-term drivers of global change.

These issues have enormous geopolitical relevance (oil), are growing causes of poverty and conflict (food, water, land), and/or demand unprecedented levels of international collective action (climate change).

Neither can they be seen in isolation, as was shown by last year’s short, but pronounced, commodity boom. In the spring of 2008, oil prices spiked, reaching $147 dollars per barrel in July. Food prices also increased alarmingly, sparked to a large degree by the price of oil. Inputs such as fertilisers had risen in price, while biofuels were an increasingly strong competitor for productive land.

In rich countries, recent analysis suggests that higher energy prices were a significant factor in turning an incipient slowdown into a deep and painful recession. In poorer countries, rising commodity prices had seriously destabilising effects, with food riots across Africa and Asia.

The response: a wave of resource nationalism, with over thirty countries introducing export restrictions. Even with lower prices, countries have continued to try and protect their security of supply. Middle income food importers have signed long-term land deal with other – usually poorer – countries, while producers are re-examining the merits of self-sufficiency.

In the medium term, the drivers for commodities remain upwards. Population growth, economic development, underinvestment in supply, a lack of water, competition for land, and climate change are all likely to increase prices and volatility.

We therefore find ourselves in a damaging triple-bind:

• On the one hand, resource price shocks are likely when times are good, acting as a repeated challenge to economic recovery.
• On the other, political progress may prove hard in both good and bad times. When prices are high, national responses will be favoured. When prices are low, economies will probably be suffering too. Other priorities will thus seem more important.

Recent experience with climate change illustrates the problem. In the boom years, global emissions shot up, rising 2.9% a year between 2000 and 2006, compared to a figure of less than 1% that was assumed in the models that formed the basis of the Stern Review. Surveying this trend, analysts from the Tyndall Centre argued that “it is difficult to envisage anything other than a planned economic recession being compatible with stabilization at or below 650ppm.”

Now, of course, we have that recession – though it wasn’t planned. The IEA expects demand for oil to fall by around 0.6% next year, though the drop could be much more dramatic than that. Emissions will decline roughly in line with energy demand (though probably not as rapidly given substitution by dirtier forms of fuel). In theory, this should make emissions restrictions easier to swallow.

But yet, as we saw in Poznan, the reverse is true, with many governments arguing that a tough climate deal should be delayed until the economy recovers. At the same, investment in low carbon technologies (at least from the private sector) is also suffering.

The logic is insidious and, if unchecked, will have catastrophic long-term consequences, as countries persuade each other that it’s never a good time for a robust climate deal.

The security threat

Finally, with the economy on all our front pages, it is easy to disregard the potential impact of security threats on the world in 2009, and on prospects for international co-operation.

That would be a mistake. The situation in the Middle East again seems unsustainable, at a time when oil producer countries are coping with what was, for them, a very unwelcome decline in the oil price. Iran’s nuclear ambitions are a threat not just to Israel, but to many of its competitors in the Arab world, and indicate the ongoing threat from proliferation.

Key middle income countries, meanwhile, are experiencing extreme distress. Pakistan, for example, has been battered by fall-out from its highly ambiguous role in the Bush administrations ‘war on terror’; by the commodity price crunch which pushed large numbers of Pakistanis back into poverty; and by the credit crunch, which left it needing an IMF bailout.

Many other countries are feeling similar impacts. Higher food prices in 2008 are estimated to have pushed an additional 130-155 million people into poverty. That shock had barely worked its way through the system, before the financial crisis hit. The World Bank estimates that developing country growth will slow to 4.5% in 2009, well below recent levels. Many analysts are significantly more bearish.

2009 could see a wave of countries get into serious trouble. If so, the IMF may well struggle to cope, given that its reserves are only around $200bn. It can probably respond to a handful more crises in smaller, poorer countries. If a larger emerging market were to get in trouble, it would need new money and fast. Trouble for a major developed country would quickly take us into unknown territory.

Weak growth in the developing world is likely to fuel conflict and state failure, with poor countries facing a ‘demographic disaster’ if they fail to provide economic opportunities for growing numbers of young adults. There is a compelling link between income and civil war, while sudden income losses weaken the legitimacy of the state and exacerbate competition between groups for scarce resources.

The results are countries that are a threat to themselves, to their neighbours, and – as havens for terrorists – to the rest of the world.

Now is a good time to remember that Nassim Nicholas Taleb has said that the financial crisis is not a black swan, because it was too predictable that it would happen.

An unexpected security deterioration in one or more regions is precisely the kind of additional stress that could derail international efforts to tackle other problems. Terrorism is another potential threat that can be corrosive to international alliances, of course, while avian flu would see countries rush to close their borders, in a futile attempt to isolate themselves from the threat.

This, then, is not a time to lose focus on these risks. Instead, the question to ask is: how will global systems cope at a time when they are already compromised by a number of other serious stresses?

Lessons from Bretton Woods

Given the dramatic prospects we face in 2009, it’s tempting to look at past crises to see what historical precedents tell us about what is happening today.

In the run up to the G20 last year, a number of European governments became excited by the prospect of a grand redesign of the multilateral system. Gordon Brown and Nicolas Sarkozy were particularly enthusiastic about the prospects for Bretton Woods II – and have taken this energy into the G20 process.

The first Bretton Woods conference aimed, in the words of John Maynard Keynes, to find “a common measure, a common standard, a common rule” that would govern all parts of the economic system.

The impetus for agreement sprang from the exhaustion of the second world war; a decade of thinking and preparatory work by Keynes and others; and the ability of the United States – in its pre-Cold War period of undisputed hegemony – to impose agreement where necessary.

Today’s conditions are very different. Many policymakers are still in denial about the depth of the problems we face. There are few, if any, well-developed packages of solutions. And the United States is in no position to insist on a programme of global reform.

Perhaps then, a better example is the crisis that ended the Bretton Woods system – the so-called ‘Nixon Shock’ of 1971 when the US President broke the link between dollar and gold.

Although Nixon blamed speculators for his decision, in fact the problems were structural – global imbalances that are strikingly similar to today’s. Post-war European recovery had led to large US deficits and, with fixed exchange rates, the Europeans had little choice but to recycle dollars into US government debt, of which there was plenty, given America’s need to fund an expensive war in Vietnam.

The result was a series of runs on US gold reserves and growing pressure to devalue the dollar. Policy was made up on the hoof. Nixon’s shock decision to break the link with gold was taken with little preparation or forethought. The President spent less time on the policy itself, than he did on worrying whether he should interrupt a popular television programme to announce it to the American people, and the world.

So what happened? Predictably, the dollar went into a steep decline, losing around a quarter of its value against a basket of European currencies. And inflation was let loose, despite US attempts to control prices and wages. The resulting inflationary spiral was not tamed until the 1980s and only then through the ‘Volcker recession’.

Natural resources were also involved. The oil shock of 1973 can be seen, in part, as a response to the depreciation of the dollar, as Arab countries protected an oil price that, when denominated in gold, had seen a three-fold decline.

The Nixon shock illustrates the dangers of unilateral and reactive policy-making; and also the power of unintended consequences. In our response to a crisis, we often sew the seeds for the next breakdown, and can easily exacerbate not dampen volatility.

Stagnation in the thirties

For pessimists, however, comparison with the 1970s is not sufficiently dramatic. They prefer to reach for the stock market crash of 1929 and the subsequent ‘great depression.’

A few months’ ago, these were comparisons were regarded as distasteful, maybe even a little hysterical. In April last year, the IMF was predicting only a minor slowdown for Europe and a recovery in the US starting in 2009.

No longer. Now, rich countries are clearly all in a deep recession. The question is whether it will be U-shaped (deep but with a gradual recovery) or L-shaped (ongoing stagnation). As one economist quipped recently, it’s now too late to avoid 1929. Instead, we must focus on avoiding the mistakes of 1930, 1931 and 1932.

What were those mistakes? Deflation exacerbated by policy, of course. But also a tit-for-tit recourse to protectionism, as global trade came to a halt, and a series of sovereign debt defaults, leading to the collapse of the international financial system.

It is tempting to imagine that the period was a time of international policy paralysis, with policymakers simply unaware of the risks they were running. Far from it. There were plenty of attempts to tackle problems on an international level, culminating in a World Economic Conference in 1933 that brought 66 nations together.

The summit was supposed to launch a global ‘new deal’ – or, at least, that was what the Europeans were hoping for. But there was no shared platform to bind Europe, the UK and the US together. Franklin Roosevelt – just elected in a landslide – was focused on problems at home.

To European fury (and the discomfit of his own delegation), the new President derailed the summit with the so-called ‘bombshell message’, sent from a yacht where he was enjoying a vacation. It was to be the last attempt to forge a global approach to reform before Bretton Woods.

Surveying the conference’s wreckage, Keynes’s conclusion was a sobering one. 66 countries could never be expected to agree, he thought. Only a ‘single power or a like-minded group of powers’ could prevail – and only then if they were equipped with a new understanding of the world’s systemic problems, and a new toolbox with which to tackle them.

The first globalization

The 1930s offers salutary lessons to policy makers. However, it does encourage them to believe that our current troubles are purely economic in their nature – and can be solved through some deft re-regulation and a generous dose of stimulus.

This creates a real danger that other pressing issues will be kicked into the long grass for how ever long a recovery takes. This would be a mistake, especially given the strong links between economic and other global challenges.

To underline this point, it is worth looking back beyond the thirties, to the period before the First World War, when the world had its first experience with globalization and enjoyed unprecedented mobility of capital, goods and people.

It was then that Norman Angell argued in The Great Illusion that major wars were now almost inconceivably because of “the delicate interdependence of our credit-built finance.”

For Keynes, looking back, globalization then appeared “normal, certain, and permanent, except in the direction of further improvement.” But yet the forces that were to lead to war were already building:

The projects and politics of militarism and imperialism, of racial and cultural rivalries, of monopolies, restrictions, and exclusion, which were to play the serpent to this paradise, were little more than the amusements of his daily newspaper, and appeared to exercise almost no influence at all on the ordinary course of social and economic life, the internationalization of which was nearly complete in practice.

Rapid social, technological and economic development had brought about a new paradigm of ‘industrial war’. Countries were enmeshed in a system of diplomacy that was intricate in its operation, but in which levels of mistrust had steadily grown.

The result, in 1914, was the destruction of the European world order and a period of chaos that took two world wars and the intervening depression to resolve.

Today, the second period of globalization faces similar challenges and contradictions.

Modern economies are dynamic but unstable, as we have found out. Technological diffusion is putting unconventional weaponry in the hands of a growing number of states. Inevitably, non-state actors will also find some way of getting in on the act.

Power, meanwhile, is shifting to countries where most people are still poor, at a time when resource constraints are beginning to bite. Economies must decarbonise at a speed that will make the industrial revolution look pedestrian. Even so, the chances of disruptive climate change are now worryingly high.

The challenge then is to use the current systemic shock as an impetus for fundamental reform. The danger is that, as in 1914, the basis for international co-operation will disappear, just when globalization most needs to be ‘saved from itself’.

Signals from the future

Last year, in a paper for the United Nations University, I argued that international co-operation on climate depends on ‘signals from the future’.

Alex Evans and I have developed this work further, in a project for the UK’s Department for International Development that explores the radically different institutional architecture that will be needed to deliver a low carbon future.

One of our central arguments is that action taken on climate today is fundamentally influenced by expectations of what will happen in the future:

• If countries, companies and citizens expect a slow transition to a low carbon economy, then they have a strong incentive to block any climate deal, and to free-ride on carbon reduction measures implemented by others.
• On the other hand, if they expect the transition to happen rapidly, their incentive is to lead the change (in order to avoid misallocated investment, and to lead emergent industries), while supporting strong action against free-riders.

An effective climate deal, then, is something of a self-fulfilling prophecy. With strong signals from the future, policy-makers are likely to behave in a way that makes a deal easier to achieve. In contrast, weak signals will lead to a vicious cycle and intense zero sum competition.

This argument can, I believe, be applied more generally to today’s international challenges. Let us characterise current international co-operation as medium trust, with considerable commitment to globalization, but relatively weak institutional arrangements for controlling the global system.

If we experience a long crisis (or a chain of interlinked crises), we are likely to see either a significant loss of trust in the system (globalization retreats), or a significant increase in trust (interdependence increases). The status quo is not likely to be stable over the medium-term.

Which way we move depends, above all, on our time horizons. Do they shorten, as countries focus on immediate domestic political concerns? Or do they lengthen, as institutions are built that can last a generation or longer?

The three ‘shareds’

Lengthening time horizons requires countries to work from a comprehensive view of the risks and challenges the world faces, and its opportunities for solving them.

This is why we need a new diplomacy – one that focuses its resources not on bilateral relationships, but on multipolar responses to global threats and challenges.

This is a diplomacy of ideas, not one of narrow self-interest, and it should take us a long way from the old geopolitics. In the new paradigm, countries need to co-operate to build a vision for the international institutions that we need, not just today, but over the next generation. They need to identify and further shared interests.

The goals of this diplomacy, then, are to build:

• Shared awareness – a joint analysis of future challenges, one that is sufficiently broad to bring together economic, security and scarcity issues, and that has buy-in not just from governments, but from non-state actors too.
•  Shared platforms – coalitions of countries that begin to harmonise their domestic policies and commitments (whether on banking reform, or climate change, or investment in agriculture), and use this as the basis for lobbying for more fundamental international reforms.
•  A shared operating system – new global frameworks and institutions, with a mandate to deliver security and sustainable growth over the long-term.

As Alex and I argued in our paper for the Progressive Governance summit, we need to drive through a programme a multilateral reform that focuses on delivering results, not restructuring organisations.

 This means building an international system that:

• Aims, over the long term, to manage risk and increase resilience.
• Embeds national sovereignty in a deeper context, in which the need for cooperative action between states is recognised and acted upon.
• Overcomes fragmentation between silos and distributes, as widely as possible, the responsibility for creating global public goods.
• Rebuilds international organizations, making them much more flexible, responsive, and able to interface with non-state global networks.

Building the platform

So what might this look like in practice?

The first priority is for the US, Japan and Europe to start acting as if they have a shared interest in a more stable, equitable and sustainable future. We have been through a period of US overreach and unilateralism, coupled with muddle and passivity from its key allies. That has to end.

The Obama administration will clearly be a breath of fresh air. It can be expected to:

• Develop the US’s piecemeal and reactive bailout into something that has greater coherence and strategy.
• Signal a more co-operative and less confrontational security stance.
• Begin the process of legislating on climate change, with the US potentially matching European commitment on the issue.

This will create considerable diplomatic space – across the UN system; at the G20, of course; but also at the G8, which will have a reduced, but important, role as a caucus for richer countries.

For the rich countries, the priority is to use domestic delivery to build a basis for international agreement. This is true for financial reform, trade, and action on climate and other resource issues.

But, assuming positive moves from the US, will Europe and Japan respond in kind? Or will they take a ‘wait and see’ approach to Obama’s overtures? The question is critical to the ongoing relevance of the post-1945 alliance.

Even united, the world’s traditional powerbrokers cannot act alone. They will need China, India and the other emerging powers not as reluctant negotiating partners, but as substantive contributors to a new global order.

Broader involvement becomes more, not less, important should the BRICs find themselves in serious economic trouble as the financial meltdown proceeds.

This will require more established powers to show considerable (and uncharacteristic) humility. In East Asia, memories of the financial crisis of the late 1990s are fresh. Bailout packages then came with stringent conditions and much lecturing from the international community. Countries were told there was no gain without much pain.

Things are very different today, now that rich countries are in trouble. Stimulus is all the rage, not austerity. The doctrine of deregulation has also been shattered, but it is as yet unclear what will take its place.

2009 will be a year that heads of state spend more time together than ever before. This time will be wasted unless the intellectual spadework is done to prepare for their discussions.

That means creating a vision for where globalization goes from here. Built into this vision, we need a renewed emphasis on the resilience and coherence of global systems. We cannot simply ‘redraw the organogram’ – the need for reform is much more fundamental than that.

Good signs

I want to end by sketching out some sense of what would constitute progress in 2009. This is not a comprehensive agenda for the year, just some positive signals that countries are choosing a long term, high trust and co-operative approach, not slipping into tit-for-tat, reactive and protectionist responses.

We should expect the G20 to:

• Embed its work on finance and economy within a broader vision of global reform and not simply focus on technical issues.
• Make clear its expectations for a deal on climate at Copenhagen and set out some parameters for the ambition of that deal.
• Make a shared commitment to a green stimulus, with arrangements to quantify the impact of stimulus packages on carbon productivity.
• Mandate the IMF to monitor the re-pricing and allocation of toxic assets, improving cross-border visibility of the pace of financial restructuring.
• Agree that members should report, on a quarterly basis, steps they have taken to control the financial crisis.
• Begin to develop a ‘super sherpa’ system to improve the capacity of Heads of State to cope with their growing responsibility for global issues.

From the G8, meanwhile, we should expect:

• A clear signal from each member state as to what it is prepared to offer to ensure an effective climate deal.
• Equally clear signals from the ‘+5′ countries (Brazil, China, India, Mexico and South Africa) on how they plan to reduce emissions over the long term.
• A renewed pledge to meet development commitments, especially as poor countries suffer growing impacts from the financial crisis.
• Reporting on national delivery of key G8 commitments in area such as climate and trade.

From the United Nations, we require:

• Renewed leadership from the Secretary General on climate, especially through the SG’s high-level ‘Friends Group’.
• A concerted effort to explore the shape and content of a climate deal, using previous High Level Panels as a precedent.
• A process that explores the global institutions needed to deliver a post-2012 climate deal (this could build on the model provided by the Task Force on the Global Food Security Crisis).
• An exploration of how global stocks of food and other commodities can be increased, using the International Energy Agency’s co-ordination of strategic oil reserves as a model.
• An initiative by the Security Council to explore the security implications of financial instability and growing resource scarcity, as part of a renewed commitment to forging a new global security consensus.

This year could be an exceptionally tough one for the Bretton Woods’ institutions and the WTO. As a minimum, we should therefore look to:

• Strengthen the IMF and World Bank to ensure they can cope with the risk of a cascading series of national liquidity crises.
• Defend the current free trade system and maintain confidence in the WTO.

Looking forward, the Bretton Woods’ institutions must address their lack of legitimacy in large parts of the world, while developing:

• An enhanced global surveillance function (though this must incorporate a new openness about the limits of economic forecasting).
• Tough international norms for the regulation of financial institutions.
• A framework that allows debtor countries to restructure their debts in a controlled fashion.
• Enhanced arrangements for working with the rest of international system to improve resilience in the face of short and medium term challenges.

Finally from the WTO, we should look for:

• A renewed attempt to breathe life into Doha, perhaps as part of a broader ‘grand bargain’ on finance and climate.
• An analysis of the relationship between trade and scarcity issues, exploring action to discourage export barriers and related restraints to trade.
• An analysis of how the world trade system can best be integrated with a comprehensive framework for emissions control.

Human drivers

Finally, I want to close with a warning.

We will make a grave mistake in 2009 if we persist in treating the world’s challenges as primarily technical ones, and we neglect the underlying human drivers.

The world’s economic and financial problems have deep-seated psychological and behavioural dimensions. As Paul Krugman has argued, “the expectations, even the prejudices of investors, [have] become economic fundamentals – because believing makes it so.”

Our security challenges result from the fact that conflicts are now fought ‘among the people’ rather than just between nation states.

Scarcity issues, meanwhile, trigger powerful popular responses – and could easily lead to debilitating conflicts within and between countries over how limited resources can be fairly distributed.

But we live at a time when public trust in governments is being shattered.

In a recent international poll, only half of respondents believe their leaders are up to the task of designing a suitable response to the financial crisis. Confidence was lowest here in Japan, the country that has the longest experience of financial turmoil.

In this atmosphere, populist movements are certain to thrive. We ignore them at our peril, as they will rarely support international action and, even if they don’t attain power, they may exert a blocking vote.

That makes it vitally important that reforms are designed in the open, not cooked up behind closed doors. Whatever solutions we come up with, they must emerge from a new engagement with citizens and efforts to develop domestic political conditions that allow international commitments to be made.

That means a concerted attempt to:

• Reach out to influencers and opinion formers at a national level, to debate and make the case for a new multilateralism.
• Build a narrative and vision that will communicate to a wider public the need for international approaches to global problems.
• Develop social protection systems that will insulate citizens from international volatility and instability.

Ultimately, any international reform agenda must be about the needs of global citizens. Lose sight of this fact and, however attractive new policies appear in prospect, in practice, they will fail.

For references, see PDF version.

Yesterday morning, many of us here in the UK heard from Mark Abell, a British lawyer, who spoke to British radio from the Oberoi in Mumbai, where he was barricaded in his room. Abell was extraordinarily calm – remarkably collected despite the danger he faced.

This morning it was a relief to hear that he’d been rescued, after long long hours in his room, communicating with others in the hotel using his Blackberry, and latterly with the British Council, who appear to have played some role in keeping in touch with UK hostages.

Abell is devastated by the experience – not so much by what happened to him, as by the fate suffered by others. In particular, he talks movingly of the death of the waitress who served him in the restaurant just before he went to his room, and of a Japanese businessman who he’d been chatting to (in Japanese) just before the attacks.

If you didn’t hear his interview with the Today programme, then make sure you listen. He’s a great guy.

We spent 48 hours, all but, with no food and little water, surrounded by explosions, gun shots, people running up and down the corridor screaming. It was grim, very grim…

The people here have been fantastic… the Indian authorities, the hotel people, they’ve just been incredibly good and kind…

The lobby was carnage. There was blood and guts everywhere. It was very very upsetting. Just before I went to my room, I had dinner in the Kandahar restaurant. I’ve now just found out that that was one of the places it started. Unfortunately…[he breaks down] the waitress who served me was one of the first to get shot….

It’s been a picnic for me. It’s all these other brave people who need acknowledgement and praise. 

Update: I just wanted to underline my gratitude for the role played by British Council staff, and by staff from the British embassy and consulates in emergencies such as these. They tend to see some dreadful things, but do their best under immense pressure.

Update II: More heroics from hotel staff:

[Prashant] Mangeshikar, 52, told Reuters that he had been in the foyer with his wife and daughter when the attackers arrived and started firing. Hotel workers ushered guests into an upstairs service area to escape, but they then came across another gunman.”He looked young and did not speak to us. He just fired. We were in sort of a single file,” said the Mumbai gynaecologist. “The man in front of my wife shielded us. He was a maintenance staff. He took the bullets.”

Mangeshikar added that the guests managed to take shelter inside a room, dragging the injured staff member, identified only as Mr Rajan, in with them. For the next 12 hours they attempted to stop the bleeding from his stomach wound. Rajan was eventually evacuated, but it is not known whether he survived.

“I’m going out today to the hospital to find out what happened to him,” Mangeshikar said. “I owe it to that brave man.”

Update III: Apparently members of the some people visiting the British Council were caught in the Taj restaurant – but have now been freed, while another British Council staff member visitor was shot in another incident at the hotel. Adrian Bregazzi speaks to the BBC World Service:

He was shot at close range by what appears to have been a teenager with an AK-47. He was left for dead, luckily for him, and managed to crawl into some bushes. He’s suffered from a huge blood loss, but is in surgery now.

[I have clarified the above - as it seems that those injured were visiting the BC - probably from the UK (and probably to promote British education] – not staff members]

Update IV – Great quote from Mark Abell as he arrived back in the UK: “Without food, information became our sustenance.”

Though he set out the challenges Britain faces in a period of tumultuous global upheaval, Mr Brown did little to challenge his audience’s preconception that the present mess was all the fault of greedy capitalists.

Reading that brought to mind another Labour Conference speech in times of global upheaval: Tony Blair’s back in 2001.  Remember this?

This is a moment to seize. The kaleidoscope has been shaken. The pieces are in flux. Soon they will settle again. Before they do, let us re-order this world around us.

I re-read the whole thing this afternoon, and was struck by a) its brilliance, b) its insight, c) how it soars compared to Brown’s speech today and d) the extent to which - in retrospect, with all that’s happened since – it shines with an eerie messianic fervour.  It’s well worth another look: full text below the jump.

In retrospect, the Millennium marked only a moment in time. It was the events of September 11 that marked a turning point in history, where we confront the dangers of the future and assess the choices facing humankind.

It was a tragedy. An act of evil. From this nation, goes our deepest sympathy and prayers for the victims and our profound solidarity with the American people.

We were with you at the first. We will stay with you to the last.

Just two weeks ago, in New York, after the church service I met some of the families of the British victims.

It was in many ways a very British occasion. Tea and biscuits. It was raining outside. Around the edge of the room, strangers making small talk, trying to be normal people in an abnormal situation.

And as you crossed the room, you felt the longing and sadness; hands clutching photos of sons and daughters, wives and husbands; imploring you to believe them when they said there was still an outside chance of their loved ones being found alive, when you knew in truth that all hope was gone.

And then a middle-aged mother looks you in the eyes and tells you her only son has died, and asks you: why?

I tell you: you do not feel like the most powerful person in the country at times like that.

Because there is no answer. There is no justification for their pain. Their son did nothing wrong. The woman, seven months pregnant, whose child will never know its father, did nothing wrong.

They don’t want revenge. They want something better in memory of their loved ones.

I believe their memorial can and should be greater than simply the punishment of the guilty. It is that out of the shadow of this evil, should emerge lasting good: destruction of the machinery of terrorism wherever it is found; hope amongst all nations of a new beginning where we seek to resolve differences in a calm and ordered way; greater understanding between nations and between faiths; and above all justice and prosperity for the poor and dispossessed, so that people everywhere can see the chance of a better future through the hard work and creative power of the free citizen, not the violence and savagery of the fanatic.

I know that here in Britain people are anxious, even a little frightened. I understand that. People know we must act but they worry what might follow.

They worry about the economy and talk of recession.

And, of course there are dangers; it is a new situation.

But the fundamentals of the US, British and European economies are strong.

Every reasonable measure of internal security is being undertaken.

Our way of life is a great deal stronger and will last a great deal longer than the actions of fanatics, small in number and now facing a unified world against them.

People should have confidence.

This is a battle with only one outcome: our victory not theirs.

What happened on 11 September was without parallel in the bloody history of terrorism.

Within a few hours, up to 7000 people were annihilated, the commercial centre of New York was reduced to rubble and in Washington and Pennsylvania further death and horror on an unimaginable scale. Let no one say this was a blow for Islam when the blood of innocent Muslims was shed along with those of the Christian, Jewish and other faiths around the world.

We know those responsible. In Afghanistan are scores of training camps for the export of terror. Chief amongst the sponsors and organisers is Usama Bin Laden.

He is supported, shielded and given succour by the Taliban regime.

Two days before the 11 September attacks, Masood, the leader of the opposition Northern Alliance, was assassinated by two suicide bombers. Both were linked to Bin Laden. Some may call that coincidence. I call it payment – payment in the currency these people deal in: blood.

Be in no doubt: Bin Laden and his people organised this atrocity. The Taliban aid and abet him. He will not desist from further acts of terror. They will not stop helping him.

Whatever the dangers of the action we take, the dangers of inaction are far, far greater.

Look for a moment at the Taliban regime. It is undemocratic. That goes without saying.

There is no sport allowed, or television or photography. No art or culture is permitted. All other faiths, all other interpretations of Islam are ruthlessly suppressed. Those who practice their faith are imprisoned. Women are treated in a way almost too revolting to be credible. First driven out of university; girls not allowed to go to school; no legal rights; unable to go out of doors without a man. Those that disobey are stoned.

There is now no contact permitted with western agencies, even those delivering food. The people live in abject poverty. It is a regime founded on fear and funded on the drugs trade. The biggest drugs hoard in the world is in Afghanistan, controlled by the Taliban. Ninety per cent of the heroin on British streets originates in Afghanistan.

The arms the Taliban are buying today are paid for with the lives of young British people buying their drugs on British streets.

That is another part of their regime that we should seek to destroy.

So what do we do?

Don’t overreact some say. We aren’t.

We haven’t lashed out. No missiles on the first night just for effect.

Don’t kill innocent people. We are not the ones who waged war on the innocent. We seek the guilty.

Look for a diplomatic solution. There is no diplomacy with Bin Laden or the Taliban regime.

State an ultimatum and get their response. We stated the ultimatum; they haven’t responded.

Understand the causes of terror. Yes, we should try, but let there be no moral ambiguity about this: nothing could ever justify the events of 11 September, and it is to turn justice on its head to pretend it could.

The action we take will be proportionate; targeted; we will do all we humanly can to avoid civilian casualties. But understand what we are dealing with. Listen to the calls of those passengers on the planes. Think of the children on them, told they were going to die.

Think of the cruelty beyond our comprehension as amongst the screams and the anguish of the innocent, those hijackers drove at full throttle planes laden with fuel into buildings where tens of thousands worked.

They have no moral inhibition on the slaughter of the innocent. If they could have murdered not 7,000 but 70,000 does anyone doubt they would have done so and rejoiced in it?

There is no compromise possible with such people, no meeting of minds, no point of understanding with such terror.

Just a choice: defeat it or be defeated by it. And defeat it we must.

Any action taken will be against the terrorist network of Bin Laden.

As for the Taliban, they can surrender the terrorists; or face the consequences and again in any action the aim will be to eliminate their military hardware, cut off their finances, disrupt their supplies, target their troops, not civilians. We will put a trap around the regime.

I say to the Taliban : surrender the terrorists; or surrender power. It’s your choice.

We will take action at every level, national and international, in the UN, in G8, in the EU, in Nato, in every regional grouping in the world, to strike at international terrorism wherever it exists.

For the first time, the UN security council has imposed mandatory obligations on all UN members to cut off terrorist financing and end safe havens for terrorists.

Those that finance terror, those who launder their money, those that cover their tracks are every bit as guilty as the fanatic who commits the final act.

Here in this country and in other nations round the world, laws will be changed, not to deny basic liberties but to prevent their abuse and protect the most basic liberty of all: freedom from terror. New extradition laws will be introduced; new rules to ensure asylum is not a front for terrorist entry. This country is proud of its tradition in giving asylum to those fleeing tyranny. We will always do so. But we have a duty to protect the system from abuse.

It must be overhauled radically so that from now on, those who abide by the rules get help and those that don’t, can no longer play the system to gain unfair advantage over others.

Round the world, 11 September is bringing Governments and people to reflect, consider and change. And in this process, amidst all the talk of war and action, there is another dimension appearing.

There is a coming together. The power of community is asserting itself. We are realising how fragile are our frontiers in the face of the world’s new challenges.

Today conflicts rarely stay within national boundaries.

Today a tremor in one financial market is repeated in the markets of the world.

Today confidence is global; either its presence or its absence.

Today the threat is chaos; because for people with work to do, family life to balance, mortgages to pay, careers to further, pensions to provide, the yearning is for order and stability and if it doesn’t exist elsewhere, it is unlikely to exist here.

I have long believed this interdependence defines the new world we live in.

People say: we are only acting because it’s the USA that was attacked. Double standards, they say. But when Milosevic embarked on the ethnic cleansing of Muslims in Kosovo, we acted.

The sceptics said it was pointless, we’d make matters worse, we’d make Milosevic stronger and look what happened, we won, the refugees went home, the policies of ethnic cleansing were reversed and one of the great dictators of the last century, will see justice in this century.

And I tell you if Rwanda happened again today as it did in 1993, when a million people were slaughtered in cold blood, we would have a moral duty to act there also. We were there in Sierra Leone when a murderous group of gangsters threatened its democratically elected Government and people.

And we as a country should, and I as Prime Minister do, give thanks for the brilliance, dedication and sheer professionalism of the British Armed Forces.

We can’t do it all. Neither can the Americans.

But the power of the international community could, together, if it chose to.

It could, with our help, sort out the blight that is the continuing conflict in the Democratic Republic of the Congo, where three million people have died through war or famine in the last decade.

A Partnership for Africa, between the developed and developing world based around the New African Initiative, is there to be done if we find the will.

On our side: provide more aid, untied to trade; write off debt; help with good governance and infrastructure; training to the soldiers, with UN blessing, in conflict resolution; encouraging investment; and access to our markets so that we practise the free trade we are so fond of preaching.

But it’s a deal: on the African side: true democracy, no more excuses for dictatorship, abuses of human rights; no tolerance of bad governance, from the endemic corruption of some states, to the activities of Mr Mugabe’s henchmen in Zimbabwe. Proper commercial, legal and financial systems.

The will, with our help, to broker agreements for peace and provide troops to police them.

The state of Africa is a scar on the conscience of the world. But if the world as a community focused on it, we could heal it. And if we don’t, it will become deeper and angrier.

We could defeat climate change if we chose to. Kyoto is right. We will implement it and call upon all other nations to do so.

But it’s only a start. With imagination, we could use or find the technologies that create energy without destroying our planet; we could provide work and trade without deforestation.

If humankind was able, finally, to make industrial progress without the factory conditions of the 19th Century; surely we have the wit and will to develop economically without despoiling the very environment we depend upon. And if we wanted to, we could breathe new life into the Middle East Peace Process and we must.

The state of Israel must be given recognition by all; freed from terror; know that it is accepted as part of the future of the Middle East not its very existence under threat. The Palestinians must have justice, the chance to prosper and in their own land, as equal partners with Israel in that future.

We know that. It is the only way, just as we know in our own peace process, in Northern Ireland, there will be no unification of Ireland except by consent – and there will be no return to the days of unionist or Protestant supremacy because those days have no place in the modern world. So the unionists must accept justice and equality for nationalists.

The Republicans must show they have given up violence – not just a ceasefire but weapons put beyond use. And not only the Republicans, but those people who call themselves Loyalists, but who by acts of terrorism, sully the name of the United Kingdom.

We know this also. The values we believe in should shine through what we do in Afghanistan.

To the Afghan people we make this commitment. The conflict will not be the end. We will not walk away, as the outside world has done so many times before.

If the Taliban regime changes, we will work with you to make sure its successor is one that is broad-based, that unites all ethnic groups, and that offers some way out of the miserable poverty that is your present existence.

And, more than ever now, with every bit as much thought and planning, we will assemble a humanitarian coalition alongside the military coalition so that inside and outside Afghanistan, the refugees, millions on the move even before September 11, are given shelter, food and help during the winter months.

The world community must show as much its capacity for compassion as for force.

The critics will say: but how can the world be a community? Nations act in their own self-interest. Of course they do. But what is the lesson of the financial markets, climate change, international terrorism, nuclear proliferation or world trade? It is that our self-interest and our mutual interests are today inextricably woven together.

This is the politics of globalisation.

I realise why people protest against globalisation.

We watch aspects of it with trepidation. We feel powerless, as if we were now pushed to and fro by forces far beyond our control.

But there’s a risk that political leaders, faced with street demonstrations, pander to the argument rather than answer it. The demonstrators are right to say there’s injustice, poverty, environmental degradation.

But globalisation is a fact and, by and large, it is driven by people.

Not just in finance, but in communication, in technology, increasingly in culture, in recreation. In the world of the internet, information technology and TV, there will be globalisation. And in trade, the problem is not there’s too much of it; on the contrary there’s too little of it.

The issue is not how to stop globalisation.

The issue is how we use the power of community to combine it with justice. If globalisation works only for the benefit of the few, then it will fail and will deserve to fail.

But if we follow the principles that have served us so well at home – that power, wealth and opportunity must be in the hands of the many, not the few – if we make that our guiding light for the global economy, then it will be a force for good and an international movement that we should take pride in leading.

Because the alternative to globalisation is isolation.

Confronted by this reality, round the world, nations are instinctively drawing together. In Quebec, all the countries of North and South America deciding to make one huge free trade area, rivalling Europe.

In Asia. In Europe, the most integrated grouping of all, we are now 15 nations. Another 12 countries negotiating to join, and more beyond that.

A new relationship between Russia and Europe is beginning.

And will not India and China, each with three times as many citizens as the whole of the EU put together, once their economies have developed sufficiently as they will do, not reconfigure entirely the geopolitics of the world and in our lifetime?

That is why, with 60 per cent of our trade dependent on Europe, three million jobs tied up with Europe, much of our political weight engaged in Europe, it would be a fundamental denial of our true national interest to turn our backs on Europe.

We will never let that happen.

For 50 years, Britain has, uncharacteristically, followed not led in Europe. At each and every step.

There are debates central to our future coming up: how we reform European economic policy; how we take forward European defence; how we fight organised crime and terrorism.

Britain needs its voice strong in Europe and bluntly Europe needs a strong Britain, rock solid in our alliance with the USA, yet determined to play its full part in shaping Europe’s destiny.

We should only be part of the single currency if the economic conditions are met. They are not window-dressing for a political decision. They are fundamental. But if they are met, we should join, and if met in this parliament, we should have the courage of our argument, to ask the British people for their consent in this Parliament.

Europe is not a threat to Britain. Europe is an opportunity.

It is in taking the best of the Anglo-Saxon and European models of development that Britain’s hope of a prosperous future lies. The American spirit of enterprise; the European spirit of solidarity. We have, here also, an opportunity. Not just to build bridges politically, but economically.

What is the answer to the current crisis? Not isolationism but the world coming together with America as a community.

What is the answer to Britain’s relations with Europe? Not opting out, but being leading members of a community in which, in alliance with others, we gain strength.

What is the answer to Britain’s future? Not each person for themselves, but working together as a community to ensure that everyone, not just the privileged few get the chance to succeed.

This is an extraordinary moment for progressive politics.

Our values are the right ones for this age: the power of community, solidarity, the collective ability to further the individual’s interests.

People ask me if I think ideology is dead. My answer is:

In the sense of rigid forms of economic and social theory, yes.

The 20th century killed those ideologies and their passing causes little regret. But, in the sense of a governing idea in politics, based on values, no. The governing idea of modern social democracy is community. Founded on the principles of social justice. That people should rise according to merit not birth; that the test of any decent society is not the contentment of the wealthy and strong, but the commitment to the poor and weak.

But values aren’t enough. The mantle of leadership comes at a price: the courage to learn and change; to show how values that stand for all ages, can be applied in a way relevant to each age.

Our politics only succeed when the realism is as clear as the idealism.

This party’s strength today comes from the journey of change and learning we have made.

We learnt that however much we strive for peace, we need strong defence capability where a peaceful approach fails.

We learnt that equality is about equal worth, not equal outcomes.

Today our idea of society is shaped around mutual responsibility; a deal, an agreement between citizens not a one-way gift, from the well-off to the dependent.

Our economic and social policy today owes as much to the liberal social democratic tradition of Lloyd George, Keynes and Beveridge as to the socialist principles of the 1945 Government.

Just over a decade ago, people asked if Labour could ever win again. Today they ask the same question of the Opposition. Painful though that journey of change has been, it has been worth it, every stage of the way.

On this journey, the values have never changed. The aims haven’t. Our aims would be instantly recognisable to every Labour leader from Keir Hardie onwards. But the means do change.

The journey hasn’t ended. It never ends. The next stage for New Labour is not backwards; it is renewing ourselves again. Just after the election, an old colleague of mine said: “Come on Tony, now we’ve won again, can’t we drop all this New Labour and do what we believe in?”

I said: “It’s worse than you think. I really do believe in it.”

We didn’t revolutionise British economic policy – Bank of England independence, tough spending rules – for some managerial reason or as a clever wheeze to steal Tory clothes.

We did it because the victims of economic incompetence – 15 per cent interest rates, 3m unemployed – are hard-working families. They are the ones – and even more so, now – with tough times ahead – that the economy should be run for, not speculators, or currency dealers or senior executives whose pay packets don’t seem to bear any resemblance to the performance of their companies.

Economic competence is the pre-condition of social justice.

We have legislated for fairness at work, like the minimum wage which people struggled a century for. But we won’t give up the essential flexibility of our economy or our commitment to enterprise.

Why? Because in a world leaving behind mass production, where technology revolutionises not just companies but whole industries, almost overnight, enterprise creates the jobs people depend on.

We have boosted pensions, child benefit, family incomes. We will do more. But our number one priority for spending is and will remain education.

Why? Because in the new markets countries like Britain can only create wealth by brain power not low wages and sweatshop labour.

We have cut youth unemployment by 75 per cent.

By more than any government before us. But we refuse to pay benefit to those who refuse to work. Why? Because the welfare that works is welfare that helps people to help themselves.

The graffiti, the vandalism, the burnt out cars, the street corner drug dealers, the teenage mugger just graduating from the minor school of crime: we’re not old fashioned or right-wing to take action against this social menace.

We’re standing up for the people we represent, who play by the rules and have a right to expect others to do the same.

And especially at this time let us say: we celebrate the diversity in our country, get strength from the cultures and races that go to make up Britain today; and racist abuse and racist attacks have no place in the Britain we believe in.

All these policies are linked by a common thread of principle.

Now with this second term, our duty is not to sit back and bask in it. It is across the board, in competition policy, enterprise, pensions, criminal justice, the civil service and of course public services, to go still further in the journey of change. All for the same reason: to allow us to deliver social justice in the modern world.

Public services are the power of community in action.

They are social justice made real. The child with a good education flourishes. The child given a poor education lives with it for the rest of their life. How much talent and ability and potential do we waste? How many children never know not just the earning power of a good education but the joy of art and culture and the stretching of imagination and horizons which true education brings? Poor education is a personal tragedy and national scandal.

Yet even now, with all the progress of recent years, a quarter of 11-year-olds fail their basic tests and almost a half of 16 year olds don’t get five decent GCSEs.

The NHS meant that for succeeding generations, anxiety was lifted from their shoulders. For millions who get superb treatment still, the NHS remains the ultimate symbol of social justice.

But for every patient waiting in pain, that can’t get treatment for cancer or a heart condition or in desperation ends up paying for their operation, that patient’s suffering is the ultimate social injustice.

And the demands on the system are ever greater. Children need to be better and better educated.

People live longer. There is a vast array of new treatment available.

And expectations are higher. This is a consumer age. People don’t take what they’re given. They demand more.

We’re not alone in this. All round the world governments are struggling with the same problems.

So what is the solution? Yes, public services need more money. We are putting in the largest ever increases in NHS, education and transport spending in the next few years; and on the police too. We will keep to those spending plans. And I say in all honesty to the country: if we want that to continue and the choice is between investment and tax cuts, then investment must come first.

There is a simple truth we all know. For decades there has been chronic under-investment in British public services. Our historic mission is to put that right; and the historic shift represented by the election of June 7 was that investment to provide quality public services for all comprehensively defeated short-term tax cuts for the few.

We need better pay and conditions for the staff; better incentives for recruitment; and for retention. We’re getting them and recruitment is rising.

This year, for the first time in nearly a decade, public sector pay will rise faster than private sector pay.

And we are the only major government in Europe this year to be increasing public spending on health and education as a percentage of our national income.

This Party believes in public services; believes in the ethos of public service; and believes in the dedication the vast majority of public servants show; and the proof of it is that we’re spending more, hiring more and paying more than ever before.

Public servants don’t do it for money or glory. They do it because they find fulfilment in a child well taught or a patient well cared-for; or a community made safer and we salute them for it.

All that is true. But this is also true.

That often they work in systems and structures that are hopelessly old fashioned or even worse, work against the very goals they aim for.

There are schools, with exactly the same social intake. One does well; the other badly.

There are hospitals with exactly the same patient mix. One performs well; the other badly.

Without reform, more money and pay won’t succeed.

First, we need a national framework of accountability, inspection; and minimum standards of delivery.

Second, within that framework, we need to free up local leaders to be able to innovate, develop and be creative.

Third, there should be far greater flexibility in the terms and conditions of employment of public servants.

Fourth, there has to be choice for the user of public services and the ability, where provision of the service fails, to have an alternative provider.

If schools want to develop or specialise in a particular area; or hire classroom assistants or computer professionals as well as teachers, let them. If in a Primary Care Trust, doctors can provide minor surgery or physiotherapists see patients otherwise referred to a consultant, let them.

There are too many old demarcations, especially between nurses, doctors and consultants; too little use of the potential of new technology; too much bureaucracy, too many outdated practices, too great an adherence to the way we’ve always done it rather than the way public servants would like to do it if they got the time to think and the freedom to act.

It’s not reform that is the enemy of public services. It’s the status quo.

Part of that reform programme is partnership with the private or voluntary sector.

Let’s get one thing clear. Nobody is talking about privatising the NHS or schools.

Nobody believes the private sector is a panacea.

There are great examples of public service and poor examples. There are excellent private sector companies and poor ones. There are areas where the private sector has worked well; and areas where, as with parts of the railways, it’s been a disaster.

Where the private sector is used, it should not make a profit simply by cutting the wages and conditions of its staff.

But where the private sector can help lever in vital capital investment, where it helps raise standards, where it improves the public service as a public service, then to set up some dogmatic barrier to using it, is to let down the very people who most need our public services to improve.

This programme of reform is huge: in the NHS, education, including student finance, – we have to find a better way to combine state funding and student contributions criminal justice; and transport.

I regard it as being as important for the country as Clause IV’s reform was for the Party, and obviously far more important for the lives of the people we serve.

And it is a vital test for the modern Labour Party

If people lose faith in public services, be under no illusion as to what will happen.

There is a different approach waiting in the wings. Cut public spending drastically; let those that can afford to, buy their own services; and those that can’t, will depend on a demoralised, sink public service. That would be a denial of social justice on a massive scale.

It would be contrary to the very basis of community.

So this is a battle of values. Let’s have that battle but not amongst ourselves. The real fight is between those who believe in strong public services and those who don’t.

That’s the fight worth having.

In all of this, at home and abroad, the same beliefs throughout: that we are a community of people, whose self-interest and mutual interest at crucial points merge, and that it is through a sense of justice that community is born and nurtured.

And what does this concept of justice consist of?

Fairness, people all of equal worth, of course. But also reason and tolerance. Justice has no favourites; not amongst nations, peoples or faiths.

When we act to bring to account those that committed the atrocity of September 11, we do so, not out of bloodlust.

We do so because it is just. We do not act against Islam. The true followers of Islam are our brothers and sisters in this struggle. Bin Laden is no more obedient to the proper teaching of the Koran than those Crusaders of the 12th century who pillaged and murdered, represented the teaching of the Gospel.

It is time the west confronted its ignorance of Islam. Jews, Muslims and Christians are all children of Abraham.

This is the moment to bring the faiths closer together in understanding of our common values and heritage, a source of unity and strength.

It is time also for parts of Islam to confront prejudice against America and not only Islam but parts of western societies too.

America has its faults as a society, as we have ours.

But I think of the Union of America born out of the defeat of slavery.

I think of its Constitution, with its inalienable rights granted to every citizen still a model for the world.

I think of a black man, born in poverty, who became chief of their armed forces and is now secretary of state Colin Powell and I wonder frankly whether such a thing could have happened here.

I think of the Statue of Liberty and how many refugees, migrants and the impoverished passed its light and felt that if not for them, for their children, a new world could indeed be theirs.

I think of a country where people who do well, don’t have questions asked about their accent, their class, their beginnings but have admiration for what they have done and the success they’ve achieved.

I think of those New Yorkers I met, still in shock, but resolute; the fire fighters and police, mourning their comrades but still head held high.

I think of all this and I reflect: yes, America has its faults, but it is a free country, a democracy, it is our ally and some of the reaction to September 11 betrays a hatred of America that shames those that feel it.

So I believe this is a fight for freedom. And I want to make it a fight for justice too. Justice not only to punish the guilty. But justice to bring those same values of democracy and freedom to people round the world.

And I mean: freedom, not only in the narrow sense of personal liberty but in the broader sense of each individual having the economic and social freedom to develop their potential to the full. That is what community means, founded on the equal worth of all.

The starving, the wretched, the dispossessed, the ignorant, those living in want and squalor from the deserts of Northern Africa to the slums of Gaza, to the mountain ranges of Afghanistan: they too are our cause.

This is a moment to seize. The Kaleidoscope has been shaken. The pieces are in flux. Soon they will settle again. Before they do, let us re-order this world around us.

Today, humankind has the science and technology to destroy itself or to provide prosperity to all. Yet science can’t make that choice for us. Only the moral power of a world acting as a community, can.

“By the strength of our common endeavour we achieve more together than we can alone”.

For those people who lost their lives on September 11 and those that mourn them; now is the time for the strength to build that community. Let that be their memorial.

Improving intelligence cooperation and information-sharing inside the EU is important both to help combat terrorism and to provide the necessary intelligence for ESDP missions, such as the EULEX mission in Kosovo.
A first step towards improving intelligence-sharing was the establishment of the Joint Situation Center (SITCEN) for intelligence analysis within the Council Secretariat. One of its goals is to bring together experts from both the intelligence and security services.

For a while federalist-minded politicians have tried to push the idea further. In 2004, Finnish and Austrian politicians proposed to take this further, creating an EU intelligence service.

But this has gone – and will go – nowhere. Nor is it even clear how such a service would function. Creating trained and experienced staff, investing in technology, networks, agents etc is beyond what the EU can do.

Whilst EU-level bodies may develop their analytical functions, creating a cadre of analysts that may even sit in EC Delegations, no serious analyst believes that the member states will loose full control of operational decisions, information gatheredm their network of sources etc.

But don’t let that stop a story like the one the Telegraph is running.

Traditional British dinners are being replaced by ‘foreign quick fixes’ as they take too long to cook. Classic dishes such as toad in the hole, bubble and squeak and hot pots are dying out are diasppearing from the family dinner table, a survey shows.

Researchers found almost one in three people now opt for pizza or spaghetti bolognese at the majority of meal times. And more than a quarter of adults polled named Italian as their favourite type of food.

However, not all British classics are disappearing as the research found that roast dinners and jacket potatoes are still firm favourites.

Kathryn Race from The Potato Council, which carried out the poll, said:

“It’s a shame to see that some of our country’s best loved foods are no longer seen on UK dinner tables – they are our heritage and something we need to keep. We are travelling the world more than ever now, and it seems we are trying to recreate the dishes we sample abroad once we get back home. Foreign foods and the ingredients needed to make those dishes are readily available in supermarkets making it far easier to cook them back at home, although this is, it seems, at a price.”