Highlights from the G20

I know that you have all been eagerly awaiting ONE’s analysis of the G20 economic summit that took place this past Saturday. To re-cap, in October, President Bush called for a first-ever meeting of the G20 to discuss solutions to the global financial crisis, and mechanisms to prevent future crises. The G20 is a group of finance ministers from the world’s leading economies (the G8, the European Union and Australia), as well as a group of ten emerging economies including Argentina, Brazil, China, India, and South Africa. After the summit, officials issued a communiqué detailing their resolutions. Here are a few highlights:

1. Developing Country Representation: The G20 calls for better representation of developing countries – both emerging economies and poor countries - in the Bretton Woods Institutions like the IMF and World Bank, in order to accurately reflect the world economy and increase the legitimacy and effectiveness of these institutions. The G20 calls for these reformed institutions to play a role in identifying future crises and responding to them.
2. Trade: The G20 rejects the impulse to turn to protectionist measures to stabilize their economies and promises to refrain from raising new barriers to trade or investment in the next 12 months. The G20 also calls for a successful completion to the World Trade Organization’s Doha Round trade talks.
3. Official Development Assistance (ODA): Considering the impact of the financial crisis on developing countries, and particularly on the most vulnerable in those countries, the G20 countries reaffirm the importance of the Millennium Development Goals (MDGs) and their development assistance commitments. They urge all countries to undertake commitments consistent with their capacities, and re-iterate the principles agreed upon at the UN Conference on Financing for Development that took place in Monterrey in 2002 that emphasize country ownership of and mobilizing all sources of financing for development.
4. Anti-Corruption: (more…)

Readings: G20 Summit

Here are a handful of articles we rounded up about this weekend’s G20 summit:

The Economist looks at this weekend’s G20 meeting, saying that while the rules of the global financial system cannot be rewritten in a five-hour powwow, some useful things can come out of the meeting, such as commitments on trade and on reforming the IMF.

Ban Ki-moon has appealed to leaders meeting at a financial summit in Washington this weekend not to let the global crisis become a “human tragedy” for people in poor countries. In a letter to leaders of the G20 Ban said, “The poorest and most vulnerable everywhere, but particularly in the developing countries, will be the most affected” by the world growth slowdown now being predicted. We need most of all to join forces to take immediate action to prevent the financial crisis from becoming a human tragedy.”

In Great Britain, Gordon Brown has called for a new international financial architecture, citing the Bretton Woods conference in 1944 as an example. The Bretton Woods agreement, which resulted in the creation of the IMF and World Bank, is particularly relevant today as we address the “need for global policy co-ordination in tackling” this financial crisis.

The New York Times editorial board today examines some of the challenges that confront the G20 during America’s presidential transition. The Times champions the need for all the participating 20 of the world’s leading economies to reach fundamental agreements as a platform to “begin a serious discussion about the roots of the financial crisis and set the stage for future meetings to discuss substantive reforms.”

-Steve Wilson and Chris Scott

G20 To Meet in D.C. to Address Global Financial Crisis

Beyond Wall Street and Main Street here in the U.S., experts are also warning that the financial crisis will have repercussions on streets throughout the developing world. Growth in sub-Saharan Africa is expected to slow, inflation is on the rise, and the effects of the food and fuel crises will likely be exacerbated. These developments could have serious implications for the world’s poorest people - the World Bank estimates that the rise in food prices alone could push at least another 100 million people into poverty, equivalent to seven years lost in the fight against poverty.

This Friday, President Bush will host leaders from the G20 in Washington D.C. to address the financial crisis, with an aim to identify mechanisms to deal with the current situation and implement measures to ensure that future crises are avoided. Discussions will include the question of reshaping global financial governance and imposing greater regulation on the global financial sector. As the New York Times reports, European leaders are pushing for “…regulation, “or at least oversight,” of all financial institutions, accountability and transparency, new approaches to risk assessment…” in addition to a central role for the IMF. While some have likened this meeting to a second Bretton Woods – the post-WWII gathering of Allied Forces that created global monetary bodies like the IMF and World Bank – the adjustment of existing institutions and policies seems a more likely outcome of the summit than the establishment of new institutions.

The G20 is a group of finance ministers from the world’s leading economies (the G8, the European Union and Australia), as well as a group of ten emerging economies including Argentina, Brazil, China, India, and South Africa. Many are hoping that the attendance of some developing countries indicates that the challenges facing poor countries in light of the current crisis will be high on the agenda. Questions include how to protect poor communities from the impacts of the crisis, how countries can prevent losing recent gains made in combating poverty, and how the developing world – who is the most vulnerable - can be shielded from such crises in the future. While the inclusion of emerging economies at the meeting is an important step towards prioritizing development on the international economic agenda, many are doubtful that the G20 group will be able to establish guidelines that will benefit the developing world in the long-run.

The meeting is a precursor to the Doha international trade and development talks scheduled for the end of the month. ONE will be sending a team to Doha, so keep your eyes peeled for future posts about important outcomes from the meeting.

-Beth Adler

World Bank Doubles Aid

The World Bank announced yesterday that they will be doubling aid to developing countries and companies based there. This will total approximately $100 billion over the next few years. The hope is that this can counter some of the lingering effects of the financial crisis as it spreads to developing countries.

Excerpts below, full piece here

“Virtually no country has escaped,” World Bank President Robert Zoellick said in a conference call. “In the face of these conditions, we need a global, coordinated, flexible and fast response to this crisis.”

Mr. Zoellick urged government donors to fulfill their pledges for development aid, adding that other countries also can direct funding into one of the IFC’s credit facilities, which lend money to projects in the developing world.

The IFC plans two new funds intended to recapitalize distressed banks and keep infrastructure projects financed. It plans to invest $1 billion over three years in the bank recapitalization fund, with another $2 billion expected to come from investors.

-Chris Scott

Status check: debt relief delivery

Last month, the World Bank and the International Monetary Fund released their annual report on the status of debt cancellation for the world’s poorest countries.

ONE’s debt expert and Berlin-based Policy Manager Andreas Huebers sent along the following summary after combing through the report:

In September, the IMF and World Bank released their annual report on the progress of debt cancellation. In the last year, two African countries have started to benefit from debt relief- Liberia (which ONE members helped make possible) and the Central African Republic. The Gambia has also completed its debt relief program. These developments bring the overall debt cancellation provided by the HIPC and MDRI initiatives from $105 billion to $111 billion. The next African countries that are expected to progress to the next stage in the coming months are Togo, Cote d’Ivoire Burundi and Guinea.

Debt relief is continuing to free up government resources to fight poverty. The report found that in post-decision point HIPC countries, government expenditures targeting poverty reduction increased on average from under 7% of GDP in 2000 to 9% in 2006. This translated to $17 billion in 2006, which represents a substantial increase of $3 billion since 2005. These expenditures are more than five times the level what countries now paying to service their debts, a major improvement from a decade ago when some countries were spending more repaying old debts than on health and education combined.

Read more about how the financial crisis might impact debt cancellation.

(more…)

UPDATE: World Bank, IMF Meetings Begin

I wanted to share with you this video of ONE European Director Oliver Burston speaking at the World Bank/ IMF meetings we reported on earlier. He helps shed some light on the proceedings and ONE’s role in them.

-Chris Scott

World Bank, IMF Meetings Begin

Today the World Bank and International Monetary Fund (IMF) annual meetings begin with press conferences by IMF Managing Director Dominique Strauss-Kahn, and World Bank President Robert B. Zoellick. All of the World Bank agencies, the IMF, and a broad range of NGOs are holding discussions and events on development issues this week. Many of the events are focused on complex challenges such as the global food crisis and climate change, and others provide an opportunity to discuss how these institutions are working with recipient countries and civil society.

The current climate of global economic uncertainty not only impacts Wall Street and global financial capitals, but will begin to create an additional burden for the poorest countries in the world, many of whom are already being adversely impacted by high food and fuel prices. Both Zoellick and Strauss-Kahn emphasized this point in the lead-up to this week’s meetings. The challenge facing finance ministers, central bankers, and World Bank and IMF officials this week will be to think creatively about how we can continue to keep our commitment to help the poorest people in the world. This may require utilizing innovative financing solutions, such as an additional 1 billion euro of EU budget money that could be provided to agriculture programs in poor countries, in order to keep these promises.

In their opening remarks today, both Strauss-Kahn and Zoellick stressed the need for rich countries to follow-through on their commitments to the world’s poor:

Strauss-Kahn said:

Countries’ budgets are strained, so it is difficult to deliver even when commitment has been made in the past. Advanced countries shouldn’t respond to the crisis by cutting aid to the poorest, most vulnerable countries.

Zoellick said:

Some 28 countries are already fiscally highly vulnerable from the twin shocks of food and fuel. Currently these countries, on average, are set to receive no increase in project and program aid. G7 countries as a group are still far behind on their Gleneagles commitments. The poorest cannot be asked to pay the biggest price. For the poor, the costs of crisis can be life-long.

Read ONE’s press release about the proceedings here.

We’ll continue to share what we see and hear this week as the meetings begin.

-Sara Rogge

World Bank President Lays Out Vision for New Multilateralism

Yesterday, World Bank President Robert Zoellick called for a new system of international cooperation to deal with the global impacts of the current U.S. financial crisis. In a speech at the Petersen Institute for International Economics, Zoellick said that the impact of the financial crisis will be far-reaching, warning that the “events of September could be a tipping point for many developing countries,” many of whom are already struggling to cope with soaring food and fuel prices. He explained:

A drop in exports, as well as capital inflow, will trigger a falloff in investments. Deceleration of growth and deteriorating financing conditions, combined with monetary tightening, will trigger business failures and possibly banking emergencies. Some countries will slip toward balance of payments crises. As is always the case, the most poor are the most defenseless.

The current multilateral system, he said, is ill-equipped to deal with the global ramifications of the financial crisis, pointing to the collapse of the Doha Round of trade talks, tense ongoing climate negotiations and the failure of markets to respond to the food crisis as evidence. Zoellick called for deeper international collaboration on everything from financial and economic issues to climate change and trade and called for a fundamental overhaul of the multilateral system.

The Wall Street Journal reports

The G-7 should be doubled in size to include rising powers such as China, Russia, Saudi Arabia, Brazil, India, Mexico and South Africa, Mr. Zoellick said. Along with the G-7 countries of the U.S., U.K., France, Germany, Italy, Japan and Canada, the new group would account for over 70% of the world’s gross domestic product, 62% of its energy production, as well as the biggest greenhouse-gas emitters and development-aid donors.

Instead of becoming merely a G-14, the new “steering group” would have a more flexible makeup and coordinate more actively with public and private institutions, he said.

Zoellick’s speech comes just days before government officials and activists gather in Washington, D.C. for the bi-annual meetings between the World Bank and the IMF. We’ll be giving you some updates from our team at the meetings. The global effects of the financial crisis are expected to be a high on the agenda.

You can watch the speech here and read the full transcript here.

-Nora Coghlan

Breaking News: $3 Billion in New Malaria Funding!!

Reporting to you live from outside the 2008 MDG Malaria Summit…

At the 2008 MDG Malaria Summit in New York today, global leaders in health, government and business announced over $3 billion in new malaria money to help spur the world toward ending malaria deaths by 2015 - making it the single biggest day for malaria announcements in the history of the fight against the disease.

Speakers including Bono, Gordon Brown, Bill Gates, President Kagame of Rwanda and President Kikwete of Tanzania discussed how far the world has come in recent years to combat malaria and how far we still have to go. Peter Chernin, President and COO of News Corporation and Malaria No More Chairman, helped moderate the event, adding that malaria is not an isolated disease but both a consequence and cause of extreme poverty.

Two of the biggest announcements were from the World Bank and the Global Fund to Fight AIDS, Tuberculosis and Malaria. Robert Zoellick, President of the World Bank, announced $1.1 billion as funding for Phase II of the World Bank Booster Program and Rajat Gupta, Chair of the Global Fund, announced Round 8 funding recommendations for malaria control efforts totaling $1.62 billion.

In celebrating the new commitments, grassroots support and political will that is driving the worldwide effort to end malaria deaths, event host UN Special Envoy for Malaria Ray Chambers urged the community not to become complacent. While today represents a big step forward, the race to end deaths - 3,000 children every day - is far from over.

For more information on the event and commitments, visit www.MalariaNoMore.org.

-Emily Bergantino, Communications Officer, Malaria No More

World Bank Offers 1.2 Billion in Food Aid

The World Bank will offer $1.2 Billion UDS in food aid, setting aside grants for the countries most at risk.

From BBC News.

“It is crucial that we focus on specific action,” said World Bank president Robert Zoellick.

“These initiatives will help address the immediate danger of hunger and malnutrition for the two billion people struggling to survive in the face of rising food prices.”>

Countries will be able to access money to provide food for schools and other core services as well as to buy essential items such as seeds and fertilizer.

UPDATE: See the WorldBank’s press release here.