Summits, Panels everywhere – but to what end?

We are now officially beginning some sort of post-credit crunch global governance feeding frenzy.  We now have the following to look forward to:

– The report of a new High Level Commission on modernisation of the World Bank, chaired by former President of Mexico Ernesto Zedillo;

– A UN General Assembly task force on the global financial system, chaired by Joseph Stiglitz (composition and terms of reference to be announced on 30 October);

– An EU summit on the financial crisis and reform of global financial institutions on 7 November, to prepare for…

– A G20 summit on international financial institution reform in Washington DC on 15 November (though no-one seems to have told the G20 secretariat);

– A UN Financing for Development summit from 29 November to 2 December – it’s been in preparation since last year, but Ban Ki-moon has now suggested turning it into a UN summit on the financial crisis, in NYC rather than Doha as planned (Ban says:

“I strongly believe that holding the summit at the United Nations, the symbol of multilateralism, will lend universal legitimacy to this endeavour and demonstrate a collective will to face this serious global challenge…”)

I make no claim to this being a comprehensive list (and will add to it as I find more baubles to hang on the tree).  But it all invites the question: how much is really going to be achieved through all this pannelling and summitry?  As Eurodad, the civil society network on debt relief, notes on its website:

Several meetings that Eurodad staff have had in recent days reveal that senior European policy makers have few precise reform proposals for this summit meeting and have not started negotiating a common EU position. Indeed smaller European countries are unhappy that they will be excluded from the 15 November meeting. The summit – with its extravagant “Bretton Woods II” billing – may reveal a very dangerous gap between expectations and delivery,

Too right.  Over the summer, there were no fewer than three summits (FAO; G8: WTO) that claimed in advance that they were riding to the rescue on food prices, and which then failed to deliver anything interesting.  Now it looks like we’re about to do the same on the credit crunch…

Update: Eurodad have produced a helpful FAQ on the ‘Bretton Woods II’ summit – download it here. Thanks to Alex Wilks.

Update 2: David and I have published a briefing paper on the Summit.

What the credit crunch means for multilateralism

If you haven’t read it already, World Bank President Bob Zoellick’s speech on multilateral reform earlier this month is definitely worth a read.  One of best nuggets in it is his call for “a Facebook for multilateral economic diplomacy” – the rationale for which goes like this:

The G-7 is not working.  We need a better group for a different time. The G-20, though valuable, is too unwieldy in moving from discussion to action. We need a core group of Finance Ministers who will assume responsibility for anticipating issues, sharing information and insights, exploring mutual interests, mobilizing efforts to solve problems, and at least managing differences.

For financial and economic cooperation, we should consider a new Steering Group including Brazil, China, India, Mexico, Russia, Saudi Arabia, South Africa, and the current G-7. Such a Steering Group would bring together over 70 percent of the world’s GDP, 56 percent of world population, 62 percent of its energy production, the major carbon emitters, the principal development donors, large regional actors, and the primary players in global capital, commodity, and exchange rate markets. 

But this Steering Group would not be a G-14.  We will not create a new world simply by remaking the old.  It should be numberless, flexible, and over time, it could evolve.   Others may be added, especially if their rising influence is matched by a willingness to help shoulder responsibilities.

This new Steering Group should meet and videoconference regularly to foster group responsibility.  The Deputies should have frequent and informal discussions.  An active network of bilateral consultations within and beyond the group will support it.  We need a Facebook for multilateral economic diplomacy.

It’s a timely reminder that there’s no hard and fast rule to say that multilateral cooperation has to revolve around formal multilateral organisations – and especially refreshing to hear this coming from the head of the World Bank.  (And yes, he does have a Facebook page, since you wonder.)

Responses to the financial crisis over the last few weeks seem to bear out Zoellick’s point.  Although multilateral cooperation has been central, multilateral organisations haven’t been: the IMF, for example, has been largely absent from the main action, and while the EU managed in the end to be at the forefront of marshalling a collective response, it was the Council of Ministers – not the Commission – that pulled it all together.

In this light, it’s perhaps ironic that while Gordon Brown has come to be seen as one of the main organisers of this non-organisationally-based but nevertheless fundamentally multilateral crisis response, his stated vision for multilateral reform is very organisationally focussed, what with emphasis on a new Bretton Woods, an enhanced early warning role for the IMF and so on.

Monday’s map: China’s 1.3 Billion people

Comparisons below:
1. Guangdong (113 million) Germany plus Uganda (3)
2. Henan (99 million) Mexico
3. Shandong (92 million) Philippines
4. Sichuan (87 million) Vietnam
5. Jiangsu (75 million) Egypt
6. Hebei (68 million) Iran
7. Hunan (67 million) France
8. Anhui (65 million) Thailand
9. Hubei (60 million) U.K.
10. Guangxi (49 million) Burma/Myanmar

Brought to you courtesy of the ever excellent Strange Maps

Developing countries are not shielded from the global financial crisis

So far, many observers and experts point out, developing countries seem to be holding out quite well amidst the global financial turmoil. In reality the current global financial crisis poses multiple and profound risks to development, which I will briefly outline.

Finance ministers from 24 developing countries (the Group of 24, or ‘G-24’) meeting last Friday at the IMF, noted that:

“many emerging markets and developing economies are not immune to the spillovers of the ongoing global financial crisis”

and that:

“preventing macroeconomic volatility from financial spillovers and sustaining continuous growth were key priorities for developing countries”

See the G-24 public communiqué here.

There are several ways in which the global financial crisis can impact on development. Impacts will be highly country-specific. Key factors include:

  1. Cuts in international development aid – Jakaya Kikwete, President of Tanzania and Chairman of the African Union, expressed his ‘deep concern’ about the financial crisis dampening rich countries’ commitment to development aid (see news report here). And for good reason: development aid tends to be strongly pro-cyclical, in other words a nation’s generosity to other nations tends to be proportional to its own good fortunes.
  2. Reduced access to international financial capital markets – The impact will likely be bigger for middle-income countries and some emerging markets (excluding China, given it is a super high saver). Much of sub-Saharan Africa had limited access to international private capital to start with, and will therefore not be strongly affected by this.
  3. Possible reversals in capital inflows to developing countries – due to the global credit crunch and as investors’ appetite for risk abates.
  4. The spread of stock market turbulence to emerging markets – in one day last week, markets in Brazil, Mexico, South Africa and Turkey plunged 10%.
  5. Downturn in global demand for developing country exports.
  6. Postponement of large investment projects. There is emerging evidence that large investment plans (e.g. in India’s power sector) are being delayed or cancelled as turbulence in capital markets undermine prospects for raising funds.
  7. Remittances will be impacted by the economic downturn, as well as inflation and a weak dollar. See a recent news report on how remittances to the Caribbean are being hit.

It is of course unrealistic to expect that developing countries can be wholly insulated from the global financial crisis. However, the one very powerful instrument that rich countries do have at their disposal to help keep development on track is aid. A cutback in aid at this point can have severe impacts, as high food and oil prices justify increases in aid. Aid will be needed for countries with reduced sources of revenue and finance, as social expenditures are typically the first to get cut when fiscal resources tighten. Emergency support should be targeted to countries that are fiscally highly vulnerable (the IMF has identified 22 such countries).

Palin brushes up foreign policy credentials

According to the Onion:

ORLANDO, FL—Republican vice presidential nominee Sarah Palin sought to silence those who have criticized her lack of foreign affairs experience Tuesday by announcing plans for a weeklong, 10-nation tour of Walt Disney World’s Epcot.

According to Palin, the trip—her first past Frontierland—will include speaking engagements at Norway’s famous Viking ride, sausages at Germany’s Kaufhaus, and, time permitting, a fact-finding mission to Future World.

“This ambitious trip should finally demonstrate that I am ready to assume the vice presidency, whether by standing in long lines at Morocco’s Tangierine Café or by sitting down face-to-face with Mexico’s Three Caballeros,” Palin announced during a campaign stop outside a Chinese restaurant in Tulsa, OK.

“All of our neighbors deserve good diplomacy, from the Universe of Energy down to the French pavilion.” Palin also promised a visit to the American Adventure exhibit before returning home, adding that she hoped to learn more about her own nation and the diverse peoples within.

Sarkozy’s financial summit proposal

Over at the UN in New York, where it’s the annual jamboree that is the General Assembly, Nicolas Sarkozy has been calling on world leaders to hold a summit later this year on building a “regulated capitalism”.  Four thoughts:

1) if this summit were to go ahead, it would mark the continuation of a trend towards head of state / government level summits on specific issues (as opposed to gatherings that cover a whole range of foreign policy issues, like the G8 or the Security Council). Earlier this year heads of government turned out in force for the FAO food summit; last year, Ban Ki-moon got a good turn out for his high level event on climate change at the UN.

But there’s only value in getting heads engaged if a) their involvement is needed in order to join up the dots between different areas of ministerial or department responsibility within their goverments (e.g. cross-sectoral bargaining that involves energy, climate and trade all at once), or b) their political clout is needed to forge a deal.  I’m not sure that either of those conditions applies here – in which case, wouldn’t it make more sense to leave such a summit to finance ministers?

2) Sarkozy also said at a press conference yesterday that “we cannot wait any longer to turn the G8 into the G13 or G14, and to bring in China, India, South Africa, Mexico and Brazil”.  Interesting to see this idea reviving; the scale of the current crisis (‘perfect storm’ etc.) might appear to militate in favour.  But as ever, the big questions are less over who would be around the table and more about what it would do, how it would work and – above all – whether it would be any more effective than the G8 (which hasn’t achieved very much lately).  More on this in a paper I wrote on new global leaders’ forums a while back.

3) While Sarkozy knows he wants a summit, it’s also clear that – so far – he doesn’t have any specific proposals for multilateral action.  You can bet this will cause a frisson or two at Number 10, given that Gordon Brown does have a set of proposals for international financial reform, but so far lacks a coalition to push them.  There might be potential for France and the UK to team up quite effectively here, not least given that Sarkozy will have recognised that without at least one major financial centre involved front and centre, his idea’s dead in the water (n.b in that regard that Sarkozy mooted London as a possible venue for the summit, along with NYC, Paris and Brussels).

4) Whether Brown’s proposals are the right ones to deal with the current crisis is, of course, a separate question.  Looking at them again, the main impression is of the lack of specificity: calling for a “common approach to handling major global market disruptions”, a “clearer, more authoritative watchdog” or “common principles, shared analyses and information and collaborative management of crises” is all very well, but if there was ever a case of the devil being in the detail, this is it.  (As for his calls for a global early warning system for financial crisis – by all means, but is now really the time to be thinking about that?)

It’s good to see that someone’s asking the big questions about long term prevention and looking to facilitate a serious high level conversation about where we go from here, and the UK should certainly get involved and think seriously about offering to host.  But it’s way too soon to be thinking about shared operating systems or even shared platforms at this point: the key tasks now are a) to put out the immediate fire and then b) to build up shared awareness of what’s happened, why, and what we want to achieve as we consider a new financial architecture.

(For explanation of shared operating systems, platforms and awareness, see here.)

Hurricane Gustav

Hurricane Gustav has already swept through Haiti, the Dominican Republic and Jamaica. After Cuba, its projected path will take it over the Gulf of Mexico, before arriving on US shores. New Orleans has already begun a mandatory evacuation for coastal districts and parishes.

You can follow preparations for Gustav on the the Red Cross’ Twitter feed.

A wikipedia page for Gustav (2008) was created today and is being regularly updated.

The Eye on the storm blog is also offering a running commentay.

Update 1: The Gustav Information Center has been created for coordinating volunteer knowledge-sharing related to Hurricane Gustav.

Update 2: Predicted route of Gustav has been updated.

Update 3: New predicted route.