Skip to main content

No Time to Slacken

PITTSBURGH – Almost six months ago, at a moment of great alarm about the global financial and economic crisis, G-20 leaders met for a historic summit in London. Their collective commitments to stimulate, regulate and restructure global economic activity helped to calm nerves around the world.

Many of the problems that spurred the London summit remain real. Anxiety levels may have come down, in board rooms and stock markets, but the daily drama for survival continues.  Indeed, for many people it has deepened, in the villages and streets of the world’s least-developed countries – particularly in Africa.

The United Nations and the World Bank predict that the direct and indirect effects of the economic meltdown will be felt in the developing world for a long time to come. Jobs have gone, incomes have been lost and opportunities foregone. Tens of millions of people have been added to the hundreds of millions already below the poverty line, reversing progress toward attaining the world’s Millennium Development Goals. 

The London G-20 meeting recognized that the world’s poorest countries and people should not be penalized by a crisis for which they were not responsible. With this in mind, the G-20 leaders set out an ambitious agenda for an inclusive and wide-ranging response. If the Pittsburgh summit is not to be an anticlimactic end to the G-20’s ascendancy as a forum for decisive action, the momentum generated must be maintained. Four issues provide the opportunity to do so.

First, G-20 leaders need to follow through with the commitments they’ve made to a Global Plan for Recovery and Reform. Having recognized its “collective responsibility to mitigate the social impact of the crisis and minimize long-lasting damage to global potential,” the group now needs to review how much support has reached or become accessible to developing countries.

There are some encouraging signs. For example, in July, the International Monetary Fund commendably announced a substantial increase in concessional lending to least-developed countries. Several of them, including Ethiopia, Malawi and South Africa, have already been allocated Special Drawing Rights to help them cope with the economic crisis. But some vulnerable countries are still struggling to finance countercyclical investment and expanded social protection services. It raises questions about the stringencies of the World Bank’s eligibility criteria and allocation models which can prevent support of the most needy.

Subscribe now
ps subscription image no tote bag no discount

Subscribe now

Subscribe today and get unlimited access to OnPoint, the Big Picture, the PS archive of more than 14,000 commentaries, and our annual magazine, for less than $2 a week.

SUBSCRIBE

This underscores the case for a second area of action – ensuring that developing countries, including least-developed countries, have a greater say in global financial institutions, and strengthening regional bodies such as the African Development Bank. An equitable and fair global architecture means not only giving a greater say to the major emerging economies. It also means systematically including other developing countries.

The Bretton Woods Institutions such as the World Bank and IMF themselves recognize that becoming more inclusive would make them more relevant to the reality and diversity of today’s global community and more effective as vehicles for addressing climate change adaptation and poverty reduction. But the pace of change needs to be speeded up, ensuring that the IMF in particular is able to adapt to post-crisis challenges.

This calls for a broadening of the IMF’s surveillance mandate beyond macroeconomic and monetary policies so that it can deal with wider financial and regulatory issues.  It means establishing a very high-level political council to take strategic decisions critical to global stability.  And it also requires reforming the voting system to ensure decisions command the support of the majority of members.

Architectural and institutional reform has to be complemented by a third achievement: agreement on a timetable for tackling the variety of biased trade rules, bloated subsidy regimes, intellectual property rules and other forms of market distortion which heavily disadvantage the developing world. Here the G-20 could play a particularly constructive role, especially when it comes to the revival of the Doha Trade Round, the reduction of duties, tariffs and quotas on exports from the least-developed countries, and the gradual elimination of domestic subsidies.

Lastly, the G-20 could also help drive momentum on climate change. Its members represent the vast majority of global greenhouse gas emissions; agreement among them at Pittsburgh would go a long way towards ensuring that December’s international Climate Change Conference in Copenhagen does not end in hot air.

Progress is needed on emission-reduction targets and on sharing knowledge and technology more widely. We also have to find a way to provide funding for adaptation and mitigation – to protect people from the impact of climate change and enable economies to grow while holding down pollution levels – while guarding against trade protection in the name of climate change mitigation.

The challenges of our time are many, complex and intertwined. The G-20 in London was responsive to the concerns and special circumstances of the developing world, which resulted in some big thinking. Sceptics fear that now that the collective financial threat is perceived, rightly or wrongly, to be manageable, the Pittsburgh Summit will result in a weak compromise that reflects divergent national interests rather than a sense of urgency about tackling climate change, chronic poverty and ineffective global governance. G-20 leaders need again to manage difficult domestic pressures, overcome narrow agendas and resist populist temptations – and prove the sceptics wrong.

https://prosyn.org/pNNzhq5;

We hope you're enjoying our PS content

Subscribe

To have unlimited access to our content including in-depth commentaries, book reviews, exclusive interviews, PS OnPoint and PS The Big Picture, please subscribe

  1. palacio101_Artur Debat Getty Images_earthspaceshadow Artur Debat/Getty Images

    Europe on a Geopolitical Fault Line

    Ana Palacio

    China has begun to build a parallel international order, centered on itself. If the European Union aids in its construction – even just by positioning itself on the fault line between China and the United States – it risks toppling key pillars of its own edifice and, eventually, collapsing altogether.

    1
  2. rajan59_Drew AngererGetty Images_trumpplanewinterice Drew Angerer/Getty Images

    Is Economic Winter Coming?

    Raghuram G. Rajan

    Now that the old rules governing macroeconomic cycles no longer seem to apply, it remains to be seen what might cause the next recession in the United States. But if recent history is our guide, the biggest threat stems not from the US Federal Reserve or any one sector of the economy, but rather from the White House.

    0
  3. eichengreen134_Ryan PyleCorbis via Getty Images_chinamanbuildinghallway Ryan Pyle/Corbis via Getty Images

    Will China Confront a Revolution of Rising Expectations?

    Barry Eichengreen

    Amid much discussion of the challenges facing the Chinese economy, the line-up of usual suspects typically excludes the most worrying scenario of all: popular unrest. While skeptics would contend that widespread protest against the regime and its policies is unlikely, events elsewhere suggest that China is not immune.

    3
  4. GettyImages-1185850541 Scott Peterson/Getty Images

    Power to the People?

    Aryeh Neier

    From Beirut to Hong Kong to Santiago, governments are eager to bring an end to mass demonstrations. But, in the absence of greater institutional responsiveness to popular grievances and demands, people are unlikely to stay home.

    1

Cookies and Privacy

We use cookies to improve your experience on our website. To find out more, read our updated Cookie policy, Privacy policy and Terms & Conditions