G20
The G20 finance ministers and central bank governors met last week in Washington, D.C., alongside the World Bank and IMF Spring Meetings, and released a communiqué detailing the outcomes. The G20 reiterated that their main objective is to “improve the living standards of all our citizens through strong economic and jobs growth.” Maintaining a focus on reducing global financial imbalances from the 2010 Seoul Summit, the ministers and governors also agreed to a set of guidelines and indicators that would standardize how countries are managing balance sheets.
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At a time when financial anxieties have strained every corner of the globe, the G20, the nineteen leading world economies and the European Union, have been meeting this week for a summit in Seoul, South Korea. President Barack Obama has stated that his ambition is to utilize the opportune gathering to encourage balanced and sustainable growth for every country involved, with hope that these measures will lead to an expedited international economic recovery.
According to the NYTimes, as of Thursday evening, G20 leaders were drawing closer toward reaching consensus on a deal to reduce global economic imbalances hindering recoveries around the world. Amidst the flurry of talks, some notable meetings of the minds took place separately between President Obama and Chinese President Hu Jintao and German chancellor, Angela Merkel. As well as officials from the United States and South Korea, who failed to strike a free trade deal between the two countries ahead of the summit this week that would have drastically increased exports in the coming years.
The G20 are expected to issue a joint statement on Friday at the close of the summit. Speculations have largely surrounded the communiqué, considering that news coverage from Seoul cited inconsolable friction between many of the leading economies regarding currency and trade tensions that have stressed international financial markets over the preceding months. Many headlines have even warned over the possibility of an impending currency war.
These disagreements have regrettably overshadowed the G20 agenda for a push on successful development and aid policies for the world’s poorest. Regrouping from the G20 meeting in Toronto, and under the guidance of South Korea, governments have unanimously shifted focus on spurring economic growth as the foremost policy for poverty reduction through projects emphasizing improving infrastructure, increasing financial inclusion, securing private investments, assisting good governance and encouraging food security.
For continued news on the G20 Summit and the result of the joint statement, check in to the ONE blog in the coming days.
This is the first blog post from ONE intern Tom Wallace, who works in our UK office. Please give him a warm welcome!
The G20, a combination of finance ministers from twenty of the world’s most influential economies, meet in Seoul this week to discuss how to promote development in the poorest nations. Building on commitments made at the G20 in Toronto, under the leadership of South Korea, the G20 has been looking at the conditions that generate development success.
The findings of this research will be presented in Seoul. It is expected that the research will highlight the importance of economic growth as a driving factor in generating poverty reduction. Building on this, it is expected that G20 governments will make commitments to focus more of their efforts on helping generate the conditions needed to stimulate economic growth. This will most likely mean a shift in the focus of government support toward improving infrastructure, increasing financial inclusion, securing private investments, assisting good governance and encouraging food security.
While some may consider this a departure from the traditional poverty reduction techniques Jamie Drummond, executive director of ONE, said “This isn’t a false choice between aid on the one hand and growth or governance on the other — we need a joint agenda combining good aid, good growth and good governance because smart assistance will be needed to help build infrastructure for growth and strengthen governance systems, as well as tackle basic needs in health and hunger in the medium term. Sustainable equitable growth can create the long term prosperity to reduce and ultimately eliminate the need for any aid.”
Want to learn more? Download a copy of “The G20 and Africa: Can an Asian tiger help the African lions roar?”, our Seoul summit pitch on inclusive growth in Africa.
Last Friday, I attended a briefing on the upcoming G20 Summit at the Center for Global Development (CGD). It was really neat to hear about it from the experts’ perspective, especially because this year’s Summit will be pretty historic — it’s being held in a non-G8 country for the very first time: Seoul, South Korea.
It will be historic for a number of other reasons, too. This year’s Summit represents a real turning point in global economic leadership. G20 finance ministers are shifting toward a more representative steering body and paying more attention to development, climate change and anti-corruption, issues that were not focused on in previous Summits. The CGD hopes that this year’s Summit will make the switch from a crisis-driven approach to long term-driven — a notion that could potentially “save” the G20.
Nancy Birdsall, president of CGD, said that the Seoul Summit — other than what’s already on the agenda — should focus on a few specific things: creating growth with resilience, making growth that is inclusive and encouraging the public sector to invest in infrastructure. This Summit will not be about new money, the MDGs or charity, she said.
Apart from talking about how to make the Seoul Summit the best that it can be (which you can read about in detail on the CGD website), Vijaya Ramachandran, a senior fellow at the CGD, talked about how to make the G20 more “legit.” As it stands, there isn’t really an official process to get into the Group, and as a result, the G20 isn’t representative of the global economy or people. By creating a standard, clear criteria for “getting a seat at the table,” we can boost the Summit’s transparency and credibility.
We’ll be following the G20 Summit next week and we’ll give you more updates and analysis then. In the mean time, be sure to take a look at those links that I’ve hyperlinked in the text — they’re filled with great information about the Summit.
The G20 Finance Ministers meeting in South Korea over the weekend resulted in an agreement on voting right reform at the International Monetary Fund (IMF). The IMF will transfer power to under-represented emerging economies such as Brazil, China and India, although there is no indication African countries are set to benefit. About 6 percent of the voting rights will be transferred, although the U.S. will retain its veto by continuing to hold 17 percent of votes in a forum where 85 percent approval is needed for key decisions.
The move does, however, send a strong message about the future of the G20. Analysts predict the Group will now be more willing to address issues like trade distorting protectionism, an important move as the Doha trade talks continue at a glacial pace. A deal on agricultural subsidies, for example, would open up Western markets to African exports.
As preparations continue for the Seoul Heads of State meeting in a little under two weeks, attention will now turn to the findings of the Development Working Group, a committee set up by the G20 to come up with new ideas on pro-poor inclusive economic growth.
More details have emerged in the past couple weeks on the G8’s commitment to improve maternal, newborn and child health through the “Muskoka Initiative,” but not enough to deliver on the G8’s other critical commitment at the 2010 summit – to enhance their own accountability.
The initiative (which includes a $5 billion in funding from G8 countries, $2.3 billion from non-G8 donors and a handful of qualitative principles and targets) was unveiled by Canadian Prime Minister Stephen Harper on the first day of the summit and outlined in an annex of the final G8 communiqué. Harper specified that the $5 billion commitment from the G8 would be “additional” funding and that Canada would be contributing $1.1 billion in new resources over the next five years. Advocates and experts alike were disappointed by the G8’s lack of ambition (with $5 billion representing just a fraction of the estimated $30 billion needed from donors to meet maternal and child health targets), and without details on individual country commitments, it was also impossible to applaud the clarity of the announcement.
Last week, an official “methodology document” shed some light on the numbers behind the initiative, with details on how the G8 had calculated their current spending on maternal, newborn and child health (i.e. their collective baseline). To anyone familiar with the tedious business of tracking DAC purpose codes and calculating imputed percentages of multilateral organizations like the Global Fund and the World Bank, this analysis is both incredibly thorough and extremely valuable for advocates and recipient countries.
Yet some of the most critical details on the $5 billion G8 commitment are missing. It’s still unclear what each country is contributing towards the initiative and whether their commitments are truly additional to current spending. The United States, Germany and France have announced their contributions (though not necessarily their baselines) and some additional details have been unofficially reported.
For those of us accustomed to following international summit processes, this story is all too familiar: a vague commitment is made, advocates respond with tepid applause (and a reminder that more is needed), and the following year is spent haranguing governments to clarify what they promised to ensure that it is eventually delivered (if you haven’t seen my colleague Erin Thornton’s recent post on tracking G8 commitments, check it out here).
This year felt different though. Prime Minister Harper put accountability squarely on the summit agenda back in January, and one week before the summit the G8 released a self-evaluation of their progress towards meeting development commitments with the Muskoka Accountability Report. Although the G8 promised to “ensure follow-up” on the conclusions and recommendations of the report, they shunned the first opportunity to actually implement them through the development of a robust, transparent and accountable Muskoka Initiative.
The G8 would argue that advocates can now calculate each individual donor’s baseline using the agreed methodology- a somewhat painful exercise, but certainly not impossible. But by failing to offer up these details themselves, the G8 are not only allowing some countries to hide flimsy, potentially dishonest commitments behind a collective promise, they are missing the bigger picture on accountability.
And everyone loses in this scenario. Advocates are still ill-equipped to hold their governments accountable, recipient countries face another hurdle to planning their budgets for next year, and, in a critical year when the changing global architecture and emergence of the G20 is grabbing the lion’s share of media headlines, the G8 has missed another opportunity to flex their muscle and demonstrate their relevance.
Somewhat buried in the flow of announcements and press releases surrounding the G8/G20 meetings last weekend, the White House issued a statement Friday that President Obama had outlined his vision for a new US policy on global development. This is especially welcome news as it suggests that we’ll soon see the results of a delayed Presidential Study Directive (PSD) on Global Development, an effort the President launched last September. Not surprisingly, the White House release looks strikingly similar to a leaked draft of the PSD posted in April, although omissions in the June 25 statement point to continuing inter-agency disagreements over some portions of the PSD.
While the press release is important for a number of reasons, it puts President Obama squarely on the record of embracing a series of sound global development principles that will significantly advance his campaign promise to bring coherence to US development programs and to “elevate development as a central pillar of our national security strategy”. The President pledged to issue a new policy directive — presumably referring to the PSD — “in the near future”.
The new development policy will strengthen US efforts to reduce global poverty, promote economic growth, and enhance the impact and results-based approach of American foreign aid, all fundamental principles that ONE has championed for some time. Of particular note, the plan promises to:
- Support sustainable economic development and good governance;
- Meet basic human needs by building public sector capacity to deliver services;
- Hold recipients accountable;
- Be selective in where and on what the US will focus;
- Strengthen multilateral approaches; and
- Install rigorous standards for monitoring and evaluation
While all solid elements, I found one part of the plan a little too vague that hopefully will be explained more fully in the final PSD. The President’s approach stresses country ownership and mutual accountability, critical elements of successful development outcomes. But I would like to see further elaboration of this concept that instead of just focusing on well governed countries, as the White House statement suggests, it broadly includes a direct response to country priorities, whether they flow from national development strategies of the government or those articulated by citizens at the local level.
Much of what we see in the President’s policy statement is not new – many of these ideas have been discussed, and some applied, for a number of years and proven to be successful approaches to more effective development policy. And some are clearly evident in President Obama’s initiatives on food security and global health. But what is different is the effort to codify and consolidate these principles – for the first time ever – into a coherent and comprehensive strategy with clear goals and priorities against which the United States can shape its global development programs, policies, and funding allocations.
As we approach the MDG summit in September, the President has a unique opportunity to lead by example and demonstrate to the rest of the world that the United States is making it a priority to help raise people around the globe out of poverty, giving them opportunity, dignity, and a voice in holding their elected officials accountable to high standards of good governance. Nearly a year ago, President Obama told the United Nations that he would return in September 2010 with a plan to achieve the Millennium Development Goals. With the articulation of a new global development policy, as reflected in a signed and issued PSD, the President will strengthen his call to action in New York with a clear vision of how the United States itself plans to tackle poverty and foster global growth.
