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G20UPDATE                                                                 E-NEWSLETTER
October 2010




                                       CC-License by istockphoto.com




               !




               Topics covered in this Update
                Policies, Politics and             Must reads                  The development agenda of      The G20 - Where to next?
                Priorities                         A selection of documents,   the Seoul G20 Summit           A comment on the future
                A summary of the initiative of     speeches and papers that    An outline of the process      of the G20 in light of a
                public, private and civil          provide more in-debt        within the G20 development     broadening agenda and a
                society actors leading up to       information                 working group, including a     proposal for dealing with
                the Seoul Summit                   Page 4                      critique on their agenda and   this dilemma
                Page 2-3                                                       recommendations                Page 8-9
                                                                               Page 5-7




   1
G20UPDATE                                                  office of the Heinrich Boell Foundation      member states, the IMF, OECD and the
            Policies, Politics and                         comments on the recent developments         World Bank. No communiqué was
            Priorities                                     and discussions within the G20 around       released at the conclusion of the
                                                           development. She will provide first hand     deputies meeting. Finance ministers and
            Global Governance actors
                                                           information from the so-called Civil        central bank chiefs are set to meet in
            gearing up for Seoul                           G20 Dialogue taking place from              Korea on October 22 and 23 to finalize
                                                           October 14-15 in Seoul, which she was       the agenda for the upcoming summit.
            A summary report by Sandro                     able to attend.                             
       Also in September, Korea invited
            Gianella                                       
         Interestingly, Korea has          African economic leaders and bankers
                                                           recently announced that it will invite      to deepen partnerships and economic
                 The next G20 Summit in Seoul,             five non-member states (Malawi,              cooperation. Commentators have
            South Korea, is only about a month             Vietnam, Spain, Singapore and               argued that this created the possibility of
            away and global governance watch               Ethiopia) to the summit. In order to        Seoul helping the continent to
            organizations from the public, private         strengthen Africa’s representation at the   “Africanize” the Korea development
            and civil society sector are making clear      upcoming summit, Malawi was invited         model. The participants included 45
            what they expect from the first meeting         as the chair of the African Union and       ministers from 35 African countries -
            chaired by a non-G8 member country.            Ethiopia as the chair of the new            the largest African delegation to ever
                 The attention the international           partnership for Africa’s Development.       visit South Korea. This effort
            media puts on the discussion about             In addition, Vietnam is represented as      exemplifies that as G20 host, Korea
            China’s currency policy has once again         the ASEAN chair and Singapore as            seems to understand that the success of
            put the G20 front and centre in global         representative for the Global               the summit to a large extent depends on
            economic and financial policy making.           Governance Group (3G). Jinho Song of        whether the views of non-G20 countries
            French finance minister Christine               GCAP Korea applauded this                   are reflected. However, these
            Lagarde has also entered the debate            development, saying that “fighting           attempts are still neither
            with a recent speech at the Carnegie           poverty will be near the top of the         institutionalized nor formalized.
            Endowment in Washington on the                 agenda when the group meets in              Moreover, the Korean government has
            French G20 agenda regarding currency           November and Africa must be at the          reached out to the think tank
            policies.                                      table for this discussion.”                 community by co-organizing the G20
                                                                As mentioned above, all interested     Seoul International Symposium under
 “Fighting poverty will be near the                        members in the international
 top of the agenda when the group                                                                      the theme “from crisis committee to
                                                           community are preparing for the             global steering committee” with the
 meets in November and Africa must                         upcoming summit and the following           Korean Development Institute and the
 be at the table for this discussion”                      paragraphs will outline several of the      Brookings Institution on September
 Jinho Song (GCAP Korea)
                                                           most important meetings and                 28-29.
                                                           developments in a chronological order.            Probably most important to the
                                                                On September 4-5, the G20              topic of this edition of the newsletter,
            	       However, rather then focusing on       Deputies Meeting was held in Gwangju,       on October 13 the official G20 high-
            this particular debate, this version of the    Korea to discuss the main agenda for        level development conference will take
            G20 Update will focus on the fact that         the G20 Seoul Summit. (A Korea-FSB          place in Seoul. In the words of the
            South Korea has brought the issue of           Financial Reform Conference on              chairman of the presidential committee
            international development on the               emerging markets took place just days       for the G20 Seoul Summit, Il SaKong,
            agenda, look at the consequences of a          before, many of the documents can be        “the conference will serve not only to
            possible agenda overload for the G20           accessed online.) Since the Toronto         facilitate the exchange of views on key
            as a whole, as well as critically assess the   Summit in June 2010, this was the first      development issues, but also to generate
            balance of representation from                 meeting of high-level officials from G20     international public interest in the
            civil society and the business
            sector. It is clear that facilitating
            growth in developing and emerging
            markets and the idea of global financial
            safety nets are issues that the Korean
            government feels particularly strong
            about. Lim Won-Hyuk, director of the
            Korea Development Institute, has
            stated: "In order to really make a dent
            in poverty, you have to have self-
            sustaining growth in developing
            countries. So instead of just
            emphasizing basic human needs like
            health and so on, Korea will try to
            emphasize issues like infrastructure,
            trade, and human resource
            development." In her article, Nancy
            Alexander from the Washington DC                   License from istockphoto.com


   2
G20UPDATE                                                            “There is broad agreement that
            development work of the G20.” It needs to be             important decisions are made at the
            noted here that among 38 speakers addressing an          level of the G20, while many also point
            audience about the plight of low-income countries        to the clear deficiencies in terms of
            (LICs), there was not one speaker from a LIC and         legitimacy and accountability of the
            only seven female speakers. The lack of voice and        forum.”
            participation from LICs mirrors the problem with
            the G20, where only three participants from LICs
                                                                   official website, the organizers argue that the
            will attend as observers which particularly for a
                                                                   Business Summit “aims to underscore and
            discussion of development in their countries is
                                                                   improve the G20’s role as the premier forum for
            completely inadequate.
                                                                   global economic cooperation and further bolster
                  Civil society will gather on October 14-15 for
                                                                   the credibility of the G20 Summit.” This type of
            the so-called Civil G20 Dialogue, a gathering of
                                                                   commitment by comparison, shows the grave
            representatives of 150 civil society groups, which
            will convey their policy advice to an unofficial        imbalance in representation between civil
            group of G20 Sherpas. Nancy Alexander, from            society and the business sector.
            the Boell Foundation office in Washington, is one            In conclusion it becomes apparent that actors
            of them and her views are reflected in her article      from all three sectors want to shape both the
            on pages 5-7. It is a joint initiative of the          governance process of the G20 as well as push
            presidential committee for the G20 Summit of the       their issues and items on the agenda. Hence, it
            Korean government and Global Call to Action            does seem like there is broad agreement that
            against Poverty (GCAP) Korea, following the            important decisions are made at the level of the
            practice of the Civil G8 dialogue since 2005. It       G20, while many also point to the clear
            will indeed be the first Civil G20 dialogue between     deficiencies in terms of legitimacy and
            international civil society and Sherpas in the         accountability of the forum. Nonetheless, in times
            history of the G20. However, while this step is        of “messy multilateralism” these types of
            welcome, it is clear at the same time that this type   discussions seem almost unavoidable, due to the
            of involvement for CSOs is neither binding for         enormous number of players involved and their
            G20 countries, nor institutionalized in order          widely diverging interests and capacities.
                                                                        Hence, for the Heinrich Boell Foundation it is
            to guarantee continuous access. Moreover, access
                                                                   crucial to monitor these developments closely in
            is very limited through GCAP channels and can
                                                                   order to assess the balance of this new governance
            therefore not be considered sufficiently inclusive.
                                                                   process between the three sectors and get involved
            Topics covered include pro-poor policies, financial
                                                                   in the setting, analyzing and criticizing of the
            reform, international financial institutions, anti-
                                                                   agenda discussed at the level of the G20.
            corruption, climate change, governance and
            development.                                           Therefore, the Foundation is dedicated to
                  The private sector is being included in the      increasing the voice and expertise of a broader
            consultations around the G20 Summit through the        spectrum of parliamentarians, NGOs and policy-
            Seoul G20 Business Summit on November 10-11,           oriented think tanks in countries where we are
            which will bring together 120 of the world’s           represented with an office in order to balance
            leading business executives in order to establish an   the apparent shift towards public-private
            infrastructure, where the private sector is            linkages within the G20 process and to
            incorporated into the G20 framework. On the            make it more inclusive.



              Worth clicking - G20 related Links & Documents

              Official G20:                       Civil Society:                       Information Sources:

              G20 Seoul Summit                   The making of a Seoul                G20 Information Centre
                                                 Development Consensus                (G20 Research Group,
              G20 High-Level Development         (Oxfam)                              University of Toronto)
              Conference
                                                 G20 and Global Development           Summit Speak Blog
              Seoul G20 Business Summit          (German Development                  (CIGI)
                                                 Institute)
                                                                                      G20 Monitor
                                                 What is missing in the G20           (Bruegel)
                                                 agenda
                                                 (IBON International)                 G20 Voice

                                                 The G20 & Development - a
                                                 new era
                                                 (interaction.org)
   3
G20UPDATE


                                    G20 MUST READS
            Development Issue                           A development agenda                         Prospects for the G20
            Paper	                                      for the G20                                  Seoul Summit
            by the Presidential                         by FRIDE                                     by G20 Research Group
            Committee for the G20                       By Rajiv Kumar
            Summit                                      	                                            By John Kirton
            	                                               Link: http://www.fride.org/
            Link: http://www.boell.org/                 publication/801/a-development-
            downloads/                                  agenda-for-the-g20                                Link: http://www.g20.utoronto.ca/
            Development_Issue_Paper.pdf                                                              biblio/kirton-seoul-100920.html
                                                             This policy brief is part of the
                  This leaked position paper            project - the G20s role in the post-crisis         John Kirton, from the Munk
            prepared by the Korean G20                  world - jointly undertaken by the Club       School of Global Affairs at the
            Presidential Committee is indicative of     of Madrid, FRIDE and the                     University of Toronto, takes stock of
            both the way in which the host-nation       Government of Korea. It argues that          what he expects from the upcoming
            intends to push development on the          first, while it is important to include       G20 Summit in Seoul. He draws on his
            agenda, as well as their understanding      development issues in the G20 agenda,        wide-ranging experience and research
            of development policy. In addition, this    this could be done with greater impact       on club governance with the G8 and
            paper served as part of the background      once the future existence and efficacy of     G20 Research Group.
            of Nancy Alexander’s analysis and           the group is ensured. The second                   He argues, that the central
            critique of the G20’s development           argument Kumar makes, is that the G20        challenges for Seoul lie in the G20’s
            policy on the next pages of this            should focus on a selective number of        core financial realm. First, they are
            newsletter.                                 development issues related to critical       expected to accept the new rules on
                  Surprisingly, the paper argues that   constraints to achieving rapid, equitable    banking that were put forward by the
            by including development issues in the      and sustainable growth in developing         Basel Committee. Secondly, and far
            Seoul Summit agenda, the G20 will           economies. If the G20 spreads itself too     more difficult, is to complete the
            affirm it’s legitimacy by providing          thinly, it risks becoming yet another        promised shift of at least 5 per cent of
            inclusive and broader economic              layer in the hierarchy of agencies           the quota share of the International
            leadership. Moreover, it becomes clear      overseeing global efforts for promoting      Monetary Fund (IMF) to the rapidly
            that the group wants to embed the           development.                                 rising emerging economies from Asia,
            development discussion into the                  In addition, Kumar makes a rather       from the declining, established
            “Framework for Strong, Sustainable and      interesting argument, saying that            continental European ones. Kirton
            Balanced Growth”, which came out of         suggestions for achieving greater            argues that this constitutional change is
            the Pittsburgh Summit in 2009. As a         legitimacy such as establishing objective    one worthy of leaders alone to make
            result, the discussion of development is    criteria for membership strike at the        and that if they fail to do so in Seoul, it
            very much situated within a growth-         very basis of the formation that is by       will be more difficult for China, India
            oriented model focusing on low-income       definition and design an informal group.      and Brazil to adjust on other agenda
            countries (LIC’s). In their words,          Hence, he believes that for groups like      items to ensure a successful summit.
            “development is more than simply an         the G20, legitimacy is necessarily                 However, progress on issues such as
            issue of narrowing the income gap           derived from their ability to deliver on     the Doha Development Agenda, climate
            between North and South; rather, it         their chosen mandate and objectives. It      finance and the promised elimination of
            should be viewed as an integral part of     is the implementation of decisions and       fossil fuel subsidies will be very difficult,
            the larger framework to ensure a more       the ensurance of necessary follow-ups in     as China insists that climate change
            resilient and balanced global economy.”     a timely manner that will bring              should be dealt with within the United
                  The paper then outlines the           legitimacy to the G20.                       Nations. In terms of development, with
            following key pillars of economic                In terms of the development             impressive domestic environmental
            growth: infrastructure, private             agenda, therefore, taking on practically     credentials, Korea could make valuable
            investment and job creation, human          the entire range of development              progress in making green growth the
            resources development, trade, financial      activities is far too ambitious and          foundation for shared prosperity in the
            inclusion, growth with resilience, food     impractical as an agenda for a Summit-       future. Finally, as a new member of the
            security and governance. To conclude, it    level forum.                                 OECD’s Development Assistance
            proposes the formation of the G20                                                        Committee, it could also do much to
            development working group that has               Other policy-briefs from the same       build on its initiative to help the world
            since been put into place and is co-        project can be found at: http://             meet the G20-endorsed Millenium
            chaired by South Korea and South            www.fride.org/project/21/the-g20's-          Development Goals.
            Africa.                                     role-in-the-post-crisis-world


   4
G20UPDATE        The Development Agenda of the
                  Seoul G20 Summit
                  Critiques and Recommendations
                  By Nancy Alexander

                   The June 2010 G20 Summit                sector in order to promote the provision            Even though South Korea is an
             Declaration called for the formation of       of public goods was barely mentioned.               economic powerhouse, it scores poorly
             a Development Working Group (DWG)             There was an uncritical stance that                 on some measures of the World Bank’s
             with a mandate to design measures to          infrastructure (particularly public-                ranking of the performance of 87
             promote economic growth and                   private partnerships) should be a                   countries on restrictions on foreign
             resilience, a development agenda and          dominant means for boosting growth                  investment. The World Bank’s rating of
             multi-year action plans to be adopted at      levels in LICs and only one speaker                 country performance gives the highest
             the Seoul Summit. The DWG – co-               from China discussed the preconditions              scores to countries without any
             chaired by South Korea and South              for successful infrastructure investments.          restrictions.
             Africa – met in July and October 2010                                                                  However, regulations can help the
             to hammer out the elements of a                    The G20 appears to view                        state build inclusive markets and pursue
             “Development Partnership for Shared           development not as a democratic                     broad policy objectives, whereas their
             Growth” for consideration by Heads of         process led by sovereign governments,               absence can facilitate a “race to the
             State at the G20 Summit next month.           but as something done to and for low-               bottom” as corporations locate in areas
                   Because the proceedings of the          income countries. The most substantial              with the fewest labor or environmental
             DWG meetings are not publicly                 contribution that the G20 could make                protections.
             disclosed, little is known about the          to development would be to curb the
             Framework. However, a June 2010               payments and flows that „leak“ from the              ‣ Taxes
             “Development Issues Paper” (see must          Global South to the North through debt              Competition among governments for
             read recommendation) by the South             service, tax evasion, capital flight,                FDI leads to low or no taxation
             Korean government is a call to carry          payments for intellectual property rights           requirements or import duties on
             out an 8-point agenda, to which the           and, in the area of trade, transfer                 corporations and inadequate levels of
             French government – the host of the           mispricing and false invoicing. If                  royalties paid by extractive industries.
             2011 G20 Summit – has reportedly              developing countries were able to reap              Unless norms are established to ensure
             agreed. With some exceptions, the             revenues and retain financial resources              just levels of taxation and compensation
             Framework appears to be a                     that are rightfully theirs, they would not          to governments, they will lack the
             throwback to the Washington                   need to rely on the „beneficence“ of                 resources to support sustainable human
                                                           donors and expensive inducements to                 development.
             Consensus in its calls for unfettered
                                                           woo private investors.
             market based growth and its
                                                                The following paragraphs will                  ‣ Regulatory capture
             obliviousness to global warming or
                                                           outline the main points of the G20 in               Collusion and regulatory capture by
             gender and human rights
                                                           terms of development (in italics),                  private interests has been a dominant
             considerations.
                                                           followed by a critical assessment of the            cause of the global financial crisis; the
“Despite the lessons of recent crises,                     agenda points and recommendations.                  Gulf oil spill; and food safety problems,
the role of the state in regulating the                                                                        among others. Any serious rating of a
private sector in order to promote the                           The G20’s 8-Point Agenda                      country’s investment environment
provision of public goods was barely                                                                           should measure the presence of
mentioned.”                                                   1 - Increase private investment                  regulations to protect the public interest;
                 This article critiques the 8-point         flows mainly from domestic sources, but also        application of the rule of law; and the
             Korean agenda as expressed at the G20          foreign direct investment (FDI) and help low-      extent of collusion between public and
             High-Level Development Conference             income countries negotiate with foreign investors   private spheres. According to the Global
             which was hosted by the Korean                          and obtain access to finance.              Competitiveness Report, the absence of
             Government on October 13 in Seoul                                                                 collusion is a greater determinant of the
             and attended by hundreds of high-level        Assessment and recommendations:                     business environment than factors such
             officials from G20 countries and               ‣ Investment regulations and                        as anti-corruption laws and investment
             representatives of universities and think     restrictions                                        promotion efforts.
             tanks.                                        Low-income countries have weak
                                                           domestic markets and limited ability to             ‣ Volatility
                  The Conference gave only passing         attract FDI. In fact, according to                  The volatility of official and private
             mention to issues such as climate             UNCTAD, low-income countries (LICs)                 financial flows has led governments to
             change in discussions about growth,           currently attract only 0,25% of global              accumulate large amounts of foreign
             infrastructure (including in energy),         FDI. To help attract FDI, will the G20              exchange reserves to address
             agriculture and food security. Moreover,      pressure LICs to create a better business           imbalances. Reduction in volatility,
             despite the lessons of recent crises, the     environment for investment by reducing              including through the use of capital
             role of the state in regulating the private   regulation and cutting corporate taxes?             controls, is essential in order to liberate

    5
G20UPDATE   reserves for sustainable development
            purposes.


                   2 - Promote private sector
             development and jobs through deeper
             involvement of the World Bank and regional
             development banks; participation by sovereign
                  wealth funds (SWFs); improved cost-
               effectiveness of public-private partnerships
             (PPPs); better infrastructure governance (e.g.,
                 tax policy designed to mobilize domestic
            finance; regulatory and property rights reforms).                CC-License by racetraitor
               There are some suggestions that, in order to
               mobilize financing, the G20 may consider         PPPs) should deliver basic services                 sacrifice inclusive growth for
              securitizing a portion of aid, representing an   (health, education, water) or supervise             stabilization. Under excessively tight
             advanced commitment to major infrastructure       management contracts in ways that                   policies, often implemented as a result
                                investment.                    ensure high quality and universal                   of IMF policy prescriptions, high
                                                               services. All PPP contracts should be               interest rates and fiscal austerity
            ‣ MDBs                                             publicly disclosed so that risks assumed            (including wage ceilings) reduce access
            Support for the multilateral                       by the government and taxpayers,                    to finance, spending on environmental
            development banks (MDBs) should be                 including through contingent liabilities            protection, and the hiring of teachers,
            contingent upon the phase-out of                   and explicit or implicit guarantees are             doctors, and other critical service
            support for fossil fuels and the rigorous          broadly known and accepted.                         personnel.
            implementation of safeguard policies to
            protect vulnerable groups and                      ‣ Infrastructure plans
            ecosystems. According to the Bank                  Such plans should be implemented in                  4 - Promote trade with an emphasis on
            Information Center, World Bank Group               conjunction with an industrialization                   “aid for trade” and duty-free quota-free
            support for fossil fuel projects hit a             strategy as called for by the World                  (DFQF) market access for the least developed
            record $6.3 billion, an increase of                Bank’s Chief Economist Justin Lin.                                     countries.
            138% over the previous year.
                                                                                                                   In addition, the G20 should call for:
            ‣ Property rights
                                                                     3 - Achieve greater financial                  ‣Eliminating rules of origins that
            Reforms should respect communally-
                                                               inclusion through means such as: expanding          restrict input sourcing to increase
            held lands and the rights of women to
                                                               access to finance for vulnerable groups; reducing    market access for LICs.
            hold title to land. Large or speculative                                                               ‣Addressing impediments to market
                                                               barriers to flows of remittances; and increasing
            purchases of land should be subject to
                                                                private investment in small and medium-sized        access for developing countries that
            conditions, including the Free, Prior,
                                                                     enterprises. The G-20 SME Finance              arise outside of the trade preference
            Informed Consent of affected                                                                            programs.
                                                                  Challenge - a partnership between the G20,
            communities and the mitigation of any                                                                  ‣Ensuring that trade agreements
                                                                   Ashoka Changemakers, and the Rockefeller
            adverse impacts of the purchases on                                                                     strengthen agriculture and food
                                                                    Foundation, which would combine “the
            food security, land ownership and                                                                       security, curb global warming, and
                                                                 political and legislative power of the world's
            productivity.
                                                                 leaders and the creativity and ambition of the     support decent work for the poor.
                                                                   private sector.” In response to the “call for   ‣At the Civil G20 Dialogue in Korea,
            ‣ Sovereign Wealth Funds                                                                                the Sherpas side-stepped the question
                                                                  proposals,” hundreds of entrants entered the
            The World Bank’s private sector arm,                                                                    of why the G20 is urging member
                                                                   competition by the deadline of August 25,
            the International Finance Corporation                                                                   countries to respect trade and
                                                                2010 (e.g., Affinity Macrofinance). Up to 15
            (IFC) has an Asset Management                       winners will be invited to the November 2010        investment law, but not non-trade law
            Company which has launched a model                    G-20 Summit in Korea to be recognized for         (human rights, multilateral
            for these funds to co-invest in IFC                  their innovative ideas.  In addition, the G-20     environmental agreements, etc.) by
            infrastructure and other transactions.             has committed to mobilizing funding (about $1        saying that since the crisis is financial
            Before scaling up engagement by SWFs                                                                    in nature, they are applying financial
                                                                     million per recipient) to scale them up.
            in infrastructure operations (including                                                                 instruments to address it.
            those of financial intermediaries),                      Unless massively scaled up, this
            analyses should determine that policies            initiative is more appropriate for a
            (economic, social, and environmental)              philanthropic foundation than for the                5 - Develop human resources with
            governing these transactions are applied           twenty most powerful economies in the               an emphasis on higher education and enhancing
            and supervised effectively.                        world. If the G20 is to go beyond                            employment-related skills.
                                                               bandaids on the financial system, it
            ‣ PPPs                                             should include an emphasis on ensuring                   This initiative should support
            The government (rather than                        that macroeconomic policies do not                  effective, gender-sensitive health and


   6
G20UPDATE   education programs, including the                   knowledgeable investors who deal with      Development in Context
              Education for All challenge (namely,                such instruments on the basis of
              providing an education for 72 million               expectations regarding market                   The Development Framework will
              children in low-income countries who                fundamentals, rather than mainly or        be implemented in the context of
              are out of school), basic health care,              only by speculative motives.”              another Framework adopted at the
              and the Global Fund for HIV/AIDS,                                                              Pittsburgh Summit - the Framework for
              TB and Malaria.                                     ‣ Correct the bias against small-scale     Strong, Balanced and Sustainable
                                                                  and labor intensive forms of agriculture   Growth – in which each G20 country
                                                                  and in favor of intensive, large-scale     implements specific policies. This
                  6 - Enhance resilience by erecting              and input-intensive forms of farming;      mutual assessment process (MAP) is
               barriers to protect against adverse shocks, such   and                                        monitored by the International
               as the food, fuel, and finance shocks witnessed                                                Monetary Fund (IMF) with input from
                in recent years. Risk mitigation instruments,     ‣ Respond to climate change                the World Bank, the OECD, the ILO
              such as weather-based crop insurance, are cited     adaptation needs as well as the needs of   and the WTO. The November Summit
                            as one such “barrier.”                women farmers (the majority of             is scheduled to bring together individual
                                                                  farmers in many countries).                country plans designed through the
              In general, risk mitigation efforts are                                                        MAP into a comprehensive G20
              less important than efforts to:                                                                strategy that is intended to facilitate
              ‣ Minimize or prevent shocks by,                 8 - Improve the governance,                   multi-polar growth.
              among other things, sharply                  accountability and transparency.
              diminishing speculative capital flows        In this regard, the G20 may ramp up its efforts        If implemented, the MAP could
              (including commodity speculation,            to curb tax avoidance and illegal capital flight undermine development because of
              which can raise the price of food);          which cost developing countries of an estimated four major problems:
              ‣ Effectively employing capital control         $1 trillion per year in foregone resources.
              to protect countries against boom, bust                                                      ‣ its call for coordinated and draconian
                                                          The G20 should:                                  fiscal consolidation in the advanced
“Both the development framework                           ‣ Improve its representativeness                 economies (i.e., halving deficits by 2013)
and the framework for strong,                             (particularly of low-income countries)           which will slow growth, exacerbate the
balanced and sustainable growth                           and its accountability for promises              global demand deficit, and fuel even
                                                          made; elevate its engagement with civil higher unemployment levels.
largely ignore the potential for a
                                                          society as it already has with businesses;
green new deal, which could boost                         and increase its transparency, including ‣ the risk that emerging economies will
job creation through greening the                         by revealing the representatives on              not significantly boost domestic
economy.”                                                 working groups and the nature and                demand, which would be necessary to
       and buy-out cycles, as for instance,               content of their proceedings.                    offset the decline of demand in
       South Korea and Indonesia have done.                                                                advanced economies.
                                                          ‣ Recognize the links between illicit
                                                          outflows of capital from developing               ‣ particularly for the advanced surplus
         7 - Enhance food security by helping countries, absorption of those resources economies, the MAP calls for lowering
       to close agricultural productivity gaps, including by tax havens and financial institutions          non-wage costs (e.g., health insurance,
         through technological advances; mitigating the in international financial centers, and             pensions); reducing the minimum cost
           effects of food price volatility; mobilizing   the adverse impact those flows have on of labor; lowering hiring costs;
          private sector investment in agriculture; and   poverty alleviation and economic                 decentralizing wage bargaining; and,
            clarifying the mandates of organizations      development.                                     limiting the extent of administrative
         working in this area, such as the new Global                                                      extension of collective agreements.
             Agriculture and Food Security Program        ‣ Require that the beneficial ownership This will cause explosive unrest and
             established by the World Bank and the        of all companies, trusts, foundations            exploitation of workers and lower
                        L’Aquila Initiative.              and charities be a matter of public              demand of workers for goods and
                                                          record.                                          services. Such demand is critical to
       These initiatives should:                                                                           rebalance the global economy.
       ‣Fully engage civil                                ‣ Recommend that the International
       society, including women and small-                Accounting Standards Board adopt a                     Importantly, both the Development
       scale producer groups, as full partners.           standard that all multinational                  Framework and the Framework for
                                                          corporations report their income and             Strong, Balanced and Sustainable
       ‣Eliminate speculation in commodities, taxes paid on a country-by-country                           Growth largely ignore the potential for
       especially staple foods, which can raise           basis.                                           a global green new deal, which could
       food prices, as called for in number 6,                                                             boost job creation through greening the
       above. The United Nations Special                                                                   economy. Without an ecological
       Rapporteur recommended in                                   9 - Knowledge sharing                   dimension, the frameworks represent
       September 2010 that “dealing with food                  This information was provided by the        business as usual, thereby threatening
       commodity derivatives is restricted as                             Ethiopian Sherpa                 the survivability of the planet in an
       far as possible to qualified and                                                                     attempt to increase short-term growth.


     7
The G20: Where to next?
G20UPDATE

            An experiment in institutional innovation
            By Inge Kaul
                    The present G-20 was born out of        and the promotion of         “A lengthening of the agenda at G20
                    necessity and under pressure from       private investment in        Summits could have the effect of
                    the 2008 world financial crisis.         developing countries.        pressing assembled world leaders to
                    Although the emerging new world         Some even suggest a new consider a broad gamut of concerns
                    powers, notably the BRICS states,       development paradigm briefly - but without sufficient focus to
                    had for some time expressed             of inclusive growth might generate concrete follow-up action
                    dissatisfaction with their marginal     emerge from the Seoul and lead real change”
                    involvement in meetings like the        summit.
                    G-8 summits, their concerns found       The host country, Korea, has been a to realize and benefit from the many
                    a response only when it became          strong advocate for the inclusion of promises that the world’s
                    more and more inevitable for the        development into the G-20 agenda      opportunities hold, has in recent
                    conventional major powers to reach      because the country’s leaders are     years been receding further and
                    the conclusion that many of today’s     convinced that they have a lot of     further into the background of
                    global policy challenges, including     valuable development experience to policy dialogues.
                    international financial regulation,      share. Additionally, addressing the   There is thus a risk that the G-20
                    can no longer be resolved effectively   existing global development gap       will suffer from the same weakness
                    by any one nation or group of           might enhance the Group’s             that marks many other multilateral
                    nations acting alone. These             legitimacy in the eyes of the 170     organizations and debates: that
                    challenges call for international       some countries that are not           everyone’s “pet topic” finds mention
                    cooperation.                            members of the G-20.                  - often without translating into new,
                    So, the present Leaders’ G-20                                                 decisive policy action. The
                    started as a forum for fostering a      Waning leadership?                    predecessor of the G-20, the G-8,
                    global response to the global           No doubt, the recent summit           suffered from such an agenda
                    financial crisis.                        meeting at the United Nations on      overload.
                                                            the Millennium Development Goals
                    A lengthening agenda                    (MDGs) showed all too clearly how Towards G-20 Plus: Adding
                    Yet, when meeting in Seoul, South       far away the world still is from      Issue G’s
                    Korea, in November this year, the       attaining the Goals by 2015.          Let us assume that the G-20 leaders
                    G-20 leaders will consider a            Development issues deserve decisive do in fact want to be world leaders
                    lengthened agenda. In addition to       action and so do many other global and that the lengthening of the
                    financial stability issues, it will      concerns, notably climate change,     Group’s agenda is not just a way of
                    especially include a wide gamut of      energy policies, food and cyber       distracting our - the global public’s -
                    development concerns, ranging           security, and migration.              attention away from earlier
                    from reducing maternal mortality,       But, a lengthening of the agenda to commitments. That is, unrealized
                    fostering education, developing         be considered at G-20 summit          promises are not simply abandoned
                    human resources for the private and     meetings could have the effect of     because the worst of the crisis that
                    public sectors, and assuring food       pressing assembled world leaders to had put them on the agenda has
                    security to issues like physical and    consider a broad gamut of concerns passed and a new crisis is grabbing
                    institutional infrastructure building   briefly—but without sufficient focus the political and media spotlight.
                                                            to generate concrete follow-up        If that is the case and the G-20 is at
                                                            action and lead real change.          the same time to maintain its
                                                            With an expanded agenda, will         leadership capacity, a way out of
                                                            leaders have enough time to check     this agenda dilemma needs to be
                                                            whether they have lived up to past    found. One possibility could be to
                                                            commitments? For example, will the complement the leaders’ G-20
                                                            Seoul meeting leave room for          forum with several other G-type
                                                            assessing how far we have come in     bodies each focused on a specific
                                                            forging a global, concerted response global challenge like mitigation and
                                                            to the 2008 financial crisis?          adaptation to climate change,
                                                            Moreover, filling the leaders’ agenda fostering energy security, supporting
                                                            with too many concerns may leave      failed and failing states and other
                                                            insufficient time for developing a     development issues, enhancing
                                                            common, shared vision of a better     global disaster preparedness and
                                                            world in the future, say by 2050,     disease prevention, enabling conflict
                                                            and how we could get there.           resolution and peace building,
             CC-License by Image Zen                        Because of the many crises we have guaranteeing food security, and
                                                            faced lately, such envisioning of how

   8
G20UPDATE
              ensuring international financial stability    be missing is precisely what is to be         reform steps that still have to prove
              (which, of course, was the topic that the    added through the Issue G-20s: a more         themselves viable.
              original G-20 addressed before its           productive balance between                    However, it is time to recognize that in
              upgrading to the present leadership          representativeness and decisiveness of        today’s world fair and effective
              forum).                                      international decision-making - to            international cooperation is often the
              These issue Gs could meet at the             resolve existing problems in an effective, best way to pursue one’s own self-
              ministerial level with varying               efficient and equitable manner. The            interest. States and non-state actors,
              compositions depending on the issue          importance of such decision-making            notably firms, will continue to compete
              they consider. They could be tasked          has grown with globalization, greater         for market shares, investment funds,
              with finding breakthrough agreements          openness of national borders,                 and other resources. Competition has
                                                           deepening policy interdependence              its place. But where global public good-
“These issue Gs could be tasked with                       among countries, and the emergence of type challenges are concerned, that is,
finding breakthrough agreements and                        new world powers.                             challenges that affect us all and are not
policy options on issues where                             More policy challenges are now global,        resolvable by any one nation, we need
                                                           requiring cross-boarder cooperation;          encouragement to cooperate from
international negotiations are stalled,
                                                           and more actors, both state and non-          leadership bodies like those of a
wherever possible in close
                                                           state, expect to have a meaningful say in G-20 Plus - or the web of global crises
collaboration and consultation with all                    matters of global concern. The G-20 is        will become ever more dense and
stakeholders.”                                             an experiment in institutional                ruinous for all.
              on issues where international                innovation, an effort to adjust to
              negotiations are stalled. They could also    today’s new and still evolving realities. “What the present multilateral system
              explore new, neglected issues, but their     Most innovations happen by fits and seems to be missing is precisely what
              primary responsibility would be to find       starts. Therefore, the present G-20       is to be added through the Issue-G20
              breakthrough policy options, wherever        should be allowed to evolve toward the Model: a more productive balance
              possible in close collaboration and          proposed G-20 Plus. Along the way,        between representativeness and
              consultation with all stakeholders,          changes deemed desirable could be         decisiveness of international decision-
              especially existing multilateral technical   explored, notably alternative             making.”
              agencies and advisory bodies, as well as     membership formulas to foster the
              processes such as the climate change         Groups’ representativeness and                So, returning to the forthcoming Seoul
                                                           legitimacy, and perhaps, ways to              summit, the inclusion of development
              negotiations.
                                                           institutionalize them.                        on the agenda could prove to be a
              Only when issues cannot be resolved
                                                           A question that might arise in this           major milestone in the emergence of a
              without the special attention of G-20
                                                           context is the link between the various       new system of multilateralism. It could
              leaders should they be brought to their
                                                           Gs and other parts of the existing            draw attention to the risks of agenda
              attention - not to address nitty-gritty
                                                           multilateral system. Considering that         crowding and thereby encourage the
              technical details but for decision-
              making on possible tipping points and        several actor groups, public and private, exploration of a Issue G-20 model of
                                                           national and international are today          global policy leadership that would
              the opening of policy doors to possible
                                                           often involved in addressing global           potentially benefit all, developed and
              compromise solutions.
              Put differently, it is important to avoid    challenges, one could argue that the          developing nations alike.
              an over-centralization of policymaking       G-20 Plus should exist as a new,
              and an overloading of the leaders’           additional institutional arrangement,
              agenda, lest their capacity to exercise      separate from the many other entities
              genuine leadership suffer. This could be     that might have to act on a particular               The author is adjunct
              achieved by creating the proposed            issue. Such leadership at arm’s length               professor at the Hertie
                                                           could strengthen the Groups’ ability to              School of Governance in
              second-generation G-20: a G-20 Plus
                                                           nudge other actors forward. For                      Berlin, Germany and advisor
              composed of the leadership G-20 plus
                                                           example, if a development G were to                  to various governmental,
              issue-specific Gs to give the former a                                                             multilateral and non-profit
              strong, solid support base and free its      exist already, it could do what the
                                                                                                                organizations on issues of
              time and attention for the big               current G-20 working group on                        international cooperation,
              leadership issues.                           development does - but at the                        finance, public-private
                                                           ministerial level, and hence, perhaps                partnerships and global-
                                                           with more clout and continuity.                      issue diplomacy.
              Fitting the Issue G-20 Model into
                                                                                                         She was the first director of
              the Future Multilateral System
                                                           Conclusion                                    UNDP’s Human
              Although the existing multilateral                                                         Development Report Office
                                                           Given the incremental nature of most
              agencies, like those of the UN system,                                                     from 1989 to 1994, and
                                                           innovations, the current search for new
              have had their successes, and in many                                                      director of UNDP’s Office of
                                                           approaches to international cooperation
              respects continue to play important                                                        Development Studies from
                                                           should be allowed to evolve at an
              roles, it is nevertheless becoming                                                         1995 to 2005.
                                                           appropriate pace. There is no need to
              increasingly clear that the present
                                                           hasten into the institutionalization of
              multilateral system requires
                                                           what are so far only first, tentative
              fundamental reform. What it seems to

      9
G20UPDATE
            G20 Database & E-Mail Group
            Stay informed
            Database                                                          E-mail Group
            
        If you would like to read more on the G20, recent             In addition, the Heinrich Böll Foundation is part of an
            changes in Global Governance and what it means for specific        international network of NGOs and policy-analysts, which
            regions or issues, the G20 Database of the Heinrich Böll          have set up a G20-related E-mail Group.
            Foundation is the right place to go. It is subdivided into the
            following folders, so you can easily access the analysis and      To subscribe, send email to: alternative-
            information that is of interest to you:                           g20+subscribe@googlegroups.com  

                                                                              To unsubscribe, send email to: alternative-
                                                                              g20+unsubscribe@googlegroups.com  
                            Folder Structure of the Database
                                                                              To customize your subscription, go to http://
                      1 - Background                                          groups.google.com/group/alternative-g20 (but you need to
                      2 - Summits                                             create a Google account, if you do not have one)
                      3 - Issues
                      	 3.1 - Finance                                         Replies automatically go the whole group. To minimize email
                                                                              traffic, please do only reply to the whole group if necessary.
                      	 3.2 - Climate Change
                                                                              There is no moderation.
                      	 3.3 - Development
                      	 3.4 - Energy
                      	 3.5 - Trade
                      4 - Country Specific                                        The G20 Database is meant as a way for the
                      5 - Power Dynamics                                         Heinrich Böll Foundation and its partners to share
                      	 5.1 - Within the G20                                     and collect information surrounding the G20 and
                      	 5.2 - G20 to non-members                                 related issues.
                      	 5.3 - International Organizations
                      6 - Civil Society


                 In addition, every folder contains both a Word and PDF
            document with annotations of the documents included in the                             Impressum
            folder.
            	                                                                                      Publisher
            The database is designed in a way that every member can                                Heinrich-Böll-
            add documents himself, which are then instantly                                        Foundation
            synchronized so that everyone can access it. This is a great                           Schumannstrasse 8,
            way to share information and build up institutional capacity.                          10117 Berlin
                                                                                                   T 0049 30 285 34 - 0
            	         If you would like to know more about the Database
            or sign up for access please send an Email to Sandro Gianella                          E info@boell.de
            at gianella@boell.de. To get started right away, here are the 3
            easy steps to install the Database on your computer:                                   Editorial
                                                                                                   Responsibility
            1. Install the Programm "Dropbox" from https://                                        Heike Löschmann
               www.dropbox.com/install                                                             Head of Department
                                                                                                   International Politics
            2. Write to Sandro Gianella, who will send you an Email
               invite to share the G20 Database folder.
                                                                                                   Assistance
            3. Accept the invite and you should be able to access the                              Sandro Gianella
               database through a Dropbox icon on your Desktop.
                                                                                                   Disclaimer
                                                                                                   The opinions
                                                                                                   expressed in this
                                                                                                   newsletter are those of
                                                                                                   the authors and not
                                                                                                   necessarily those of the
                                                                                                   Heinrich Böll
                                                                                                   Foundation

   10

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G20 Update Newsletter - Oktober Issue

  • 1. G20UPDATE E-NEWSLETTER October 2010 CC-License by istockphoto.com ! Topics covered in this Update Policies, Politics and Must reads The development agenda of The G20 - Where to next? Priorities A selection of documents, the Seoul G20 Summit A comment on the future A summary of the initiative of speeches and papers that An outline of the process of the G20 in light of a public, private and civil provide more in-debt within the G20 development broadening agenda and a society actors leading up to information working group, including a proposal for dealing with the Seoul Summit Page 4 critique on their agenda and this dilemma Page 2-3 recommendations Page 8-9 Page 5-7 1
  • 2. G20UPDATE office of the Heinrich Boell Foundation member states, the IMF, OECD and the Policies, Politics and comments on the recent developments World Bank. No communiqué was Priorities and discussions within the G20 around released at the conclusion of the development. She will provide first hand deputies meeting. Finance ministers and Global Governance actors information from the so-called Civil central bank chiefs are set to meet in gearing up for Seoul G20 Dialogue taking place from Korea on October 22 and 23 to finalize October 14-15 in Seoul, which she was the agenda for the upcoming summit. A summary report by Sandro able to attend. Also in September, Korea invited Gianella Interestingly, Korea has African economic leaders and bankers recently announced that it will invite to deepen partnerships and economic The next G20 Summit in Seoul, five non-member states (Malawi, cooperation. Commentators have South Korea, is only about a month Vietnam, Spain, Singapore and argued that this created the possibility of away and global governance watch Ethiopia) to the summit. In order to Seoul helping the continent to organizations from the public, private strengthen Africa’s representation at the “Africanize” the Korea development and civil society sector are making clear upcoming summit, Malawi was invited model. The participants included 45 what they expect from the first meeting as the chair of the African Union and ministers from 35 African countries - chaired by a non-G8 member country. Ethiopia as the chair of the new the largest African delegation to ever The attention the international partnership for Africa’s Development. visit South Korea. This effort media puts on the discussion about In addition, Vietnam is represented as exemplifies that as G20 host, Korea China’s currency policy has once again the ASEAN chair and Singapore as seems to understand that the success of put the G20 front and centre in global representative for the Global the summit to a large extent depends on economic and financial policy making. Governance Group (3G). Jinho Song of whether the views of non-G20 countries French finance minister Christine GCAP Korea applauded this are reflected. However, these Lagarde has also entered the debate development, saying that “fighting attempts are still neither with a recent speech at the Carnegie poverty will be near the top of the institutionalized nor formalized. Endowment in Washington on the agenda when the group meets in Moreover, the Korean government has French G20 agenda regarding currency November and Africa must be at the reached out to the think tank policies. table for this discussion.” community by co-organizing the G20 As mentioned above, all interested Seoul International Symposium under “Fighting poverty will be near the members in the international top of the agenda when the group the theme “from crisis committee to community are preparing for the global steering committee” with the meets in November and Africa must upcoming summit and the following Korean Development Institute and the be at the table for this discussion” paragraphs will outline several of the Brookings Institution on September Jinho Song (GCAP Korea) most important meetings and 28-29. developments in a chronological order. Probably most important to the On September 4-5, the G20 topic of this edition of the newsletter, However, rather then focusing on Deputies Meeting was held in Gwangju, on October 13 the official G20 high- this particular debate, this version of the Korea to discuss the main agenda for level development conference will take G20 Update will focus on the fact that the G20 Seoul Summit. (A Korea-FSB place in Seoul. In the words of the South Korea has brought the issue of Financial Reform Conference on chairman of the presidential committee international development on the emerging markets took place just days for the G20 Seoul Summit, Il SaKong, agenda, look at the consequences of a before, many of the documents can be “the conference will serve not only to possible agenda overload for the G20 accessed online.) Since the Toronto facilitate the exchange of views on key as a whole, as well as critically assess the Summit in June 2010, this was the first development issues, but also to generate balance of representation from meeting of high-level officials from G20 international public interest in the civil society and the business sector. It is clear that facilitating growth in developing and emerging markets and the idea of global financial safety nets are issues that the Korean government feels particularly strong about. Lim Won-Hyuk, director of the Korea Development Institute, has stated: "In order to really make a dent in poverty, you have to have self- sustaining growth in developing countries. So instead of just emphasizing basic human needs like health and so on, Korea will try to emphasize issues like infrastructure, trade, and human resource development." In her article, Nancy Alexander from the Washington DC License from istockphoto.com 2
  • 3. G20UPDATE “There is broad agreement that development work of the G20.” It needs to be important decisions are made at the noted here that among 38 speakers addressing an level of the G20, while many also point audience about the plight of low-income countries to the clear deficiencies in terms of (LICs), there was not one speaker from a LIC and legitimacy and accountability of the only seven female speakers. The lack of voice and forum.” participation from LICs mirrors the problem with the G20, where only three participants from LICs official website, the organizers argue that the will attend as observers which particularly for a Business Summit “aims to underscore and discussion of development in their countries is improve the G20’s role as the premier forum for completely inadequate. global economic cooperation and further bolster Civil society will gather on October 14-15 for the credibility of the G20 Summit.” This type of the so-called Civil G20 Dialogue, a gathering of commitment by comparison, shows the grave representatives of 150 civil society groups, which will convey their policy advice to an unofficial imbalance in representation between civil group of G20 Sherpas. Nancy Alexander, from society and the business sector. the Boell Foundation office in Washington, is one In conclusion it becomes apparent that actors of them and her views are reflected in her article from all three sectors want to shape both the on pages 5-7. It is a joint initiative of the governance process of the G20 as well as push presidential committee for the G20 Summit of the their issues and items on the agenda. Hence, it Korean government and Global Call to Action does seem like there is broad agreement that against Poverty (GCAP) Korea, following the important decisions are made at the level of the practice of the Civil G8 dialogue since 2005. It G20, while many also point to the clear will indeed be the first Civil G20 dialogue between deficiencies in terms of legitimacy and international civil society and Sherpas in the accountability of the forum. Nonetheless, in times history of the G20. However, while this step is of “messy multilateralism” these types of welcome, it is clear at the same time that this type discussions seem almost unavoidable, due to the of involvement for CSOs is neither binding for enormous number of players involved and their G20 countries, nor institutionalized in order widely diverging interests and capacities. Hence, for the Heinrich Boell Foundation it is to guarantee continuous access. Moreover, access crucial to monitor these developments closely in is very limited through GCAP channels and can order to assess the balance of this new governance therefore not be considered sufficiently inclusive. process between the three sectors and get involved Topics covered include pro-poor policies, financial in the setting, analyzing and criticizing of the reform, international financial institutions, anti- agenda discussed at the level of the G20. corruption, climate change, governance and development. Therefore, the Foundation is dedicated to The private sector is being included in the increasing the voice and expertise of a broader consultations around the G20 Summit through the spectrum of parliamentarians, NGOs and policy- Seoul G20 Business Summit on November 10-11, oriented think tanks in countries where we are which will bring together 120 of the world’s represented with an office in order to balance leading business executives in order to establish an the apparent shift towards public-private infrastructure, where the private sector is linkages within the G20 process and to incorporated into the G20 framework. On the make it more inclusive. Worth clicking - G20 related Links & Documents Official G20: Civil Society: Information Sources: G20 Seoul Summit The making of a Seoul G20 Information Centre Development Consensus (G20 Research Group, G20 High-Level Development (Oxfam) University of Toronto) Conference G20 and Global Development Summit Speak Blog Seoul G20 Business Summit (German Development (CIGI) Institute) G20 Monitor What is missing in the G20 (Bruegel) agenda (IBON International) G20 Voice The G20 & Development - a new era (interaction.org) 3
  • 4. G20UPDATE G20 MUST READS Development Issue A development agenda Prospects for the G20 Paper for the G20 Seoul Summit by the Presidential by FRIDE by G20 Research Group Committee for the G20 By Rajiv Kumar Summit By John Kirton Link: http://www.fride.org/ Link: http://www.boell.org/ publication/801/a-development- downloads/ agenda-for-the-g20 Link: http://www.g20.utoronto.ca/ Development_Issue_Paper.pdf biblio/kirton-seoul-100920.html This policy brief is part of the This leaked position paper project - the G20s role in the post-crisis John Kirton, from the Munk prepared by the Korean G20 world - jointly undertaken by the Club School of Global Affairs at the Presidential Committee is indicative of of Madrid, FRIDE and the University of Toronto, takes stock of both the way in which the host-nation Government of Korea. It argues that what he expects from the upcoming intends to push development on the first, while it is important to include G20 Summit in Seoul. He draws on his agenda, as well as their understanding development issues in the G20 agenda, wide-ranging experience and research of development policy. In addition, this this could be done with greater impact on club governance with the G8 and paper served as part of the background once the future existence and efficacy of G20 Research Group. of Nancy Alexander’s analysis and the group is ensured. The second He argues, that the central critique of the G20’s development argument Kumar makes, is that the G20 challenges for Seoul lie in the G20’s policy on the next pages of this should focus on a selective number of core financial realm. First, they are newsletter. development issues related to critical expected to accept the new rules on Surprisingly, the paper argues that constraints to achieving rapid, equitable banking that were put forward by the by including development issues in the and sustainable growth in developing Basel Committee. Secondly, and far Seoul Summit agenda, the G20 will economies. If the G20 spreads itself too more difficult, is to complete the affirm it’s legitimacy by providing thinly, it risks becoming yet another promised shift of at least 5 per cent of inclusive and broader economic layer in the hierarchy of agencies the quota share of the International leadership. Moreover, it becomes clear overseeing global efforts for promoting Monetary Fund (IMF) to the rapidly that the group wants to embed the development. rising emerging economies from Asia, development discussion into the In addition, Kumar makes a rather from the declining, established “Framework for Strong, Sustainable and interesting argument, saying that continental European ones. Kirton Balanced Growth”, which came out of suggestions for achieving greater argues that this constitutional change is the Pittsburgh Summit in 2009. As a legitimacy such as establishing objective one worthy of leaders alone to make result, the discussion of development is criteria for membership strike at the and that if they fail to do so in Seoul, it very much situated within a growth- very basis of the formation that is by will be more difficult for China, India oriented model focusing on low-income definition and design an informal group. and Brazil to adjust on other agenda countries (LIC’s). In their words, Hence, he believes that for groups like items to ensure a successful summit. “development is more than simply an the G20, legitimacy is necessarily However, progress on issues such as issue of narrowing the income gap derived from their ability to deliver on the Doha Development Agenda, climate between North and South; rather, it their chosen mandate and objectives. It finance and the promised elimination of should be viewed as an integral part of is the implementation of decisions and fossil fuel subsidies will be very difficult, the larger framework to ensure a more the ensurance of necessary follow-ups in as China insists that climate change resilient and balanced global economy.” a timely manner that will bring should be dealt with within the United The paper then outlines the legitimacy to the G20. Nations. In terms of development, with following key pillars of economic In terms of the development impressive domestic environmental growth: infrastructure, private agenda, therefore, taking on practically credentials, Korea could make valuable investment and job creation, human the entire range of development progress in making green growth the resources development, trade, financial activities is far too ambitious and foundation for shared prosperity in the inclusion, growth with resilience, food impractical as an agenda for a Summit- future. Finally, as a new member of the security and governance. To conclude, it level forum. OECD’s Development Assistance proposes the formation of the G20 Committee, it could also do much to development working group that has Other policy-briefs from the same build on its initiative to help the world since been put into place and is co- project can be found at: http:// meet the G20-endorsed Millenium chaired by South Korea and South www.fride.org/project/21/the-g20's- Development Goals. Africa. role-in-the-post-crisis-world 4
  • 5. G20UPDATE The Development Agenda of the Seoul G20 Summit Critiques and Recommendations By Nancy Alexander The June 2010 G20 Summit sector in order to promote the provision Even though South Korea is an Declaration called for the formation of of public goods was barely mentioned. economic powerhouse, it scores poorly a Development Working Group (DWG) There was an uncritical stance that on some measures of the World Bank’s with a mandate to design measures to infrastructure (particularly public- ranking of the performance of 87 promote economic growth and private partnerships) should be a countries on restrictions on foreign resilience, a development agenda and dominant means for boosting growth investment. The World Bank’s rating of multi-year action plans to be adopted at levels in LICs and only one speaker country performance gives the highest the Seoul Summit. The DWG – co- from China discussed the preconditions scores to countries without any chaired by South Korea and South for successful infrastructure investments. restrictions. Africa – met in July and October 2010 However, regulations can help the to hammer out the elements of a The G20 appears to view state build inclusive markets and pursue “Development Partnership for Shared development not as a democratic broad policy objectives, whereas their Growth” for consideration by Heads of process led by sovereign governments, absence can facilitate a “race to the State at the G20 Summit next month. but as something done to and for low- bottom” as corporations locate in areas Because the proceedings of the income countries. The most substantial with the fewest labor or environmental DWG meetings are not publicly contribution that the G20 could make protections. disclosed, little is known about the to development would be to curb the Framework. However, a June 2010 payments and flows that „leak“ from the ‣ Taxes “Development Issues Paper” (see must Global South to the North through debt Competition among governments for read recommendation) by the South service, tax evasion, capital flight, FDI leads to low or no taxation Korean government is a call to carry payments for intellectual property rights requirements or import duties on out an 8-point agenda, to which the and, in the area of trade, transfer corporations and inadequate levels of French government – the host of the mispricing and false invoicing. If royalties paid by extractive industries. 2011 G20 Summit – has reportedly developing countries were able to reap Unless norms are established to ensure agreed. With some exceptions, the revenues and retain financial resources just levels of taxation and compensation Framework appears to be a that are rightfully theirs, they would not to governments, they will lack the throwback to the Washington need to rely on the „beneficence“ of resources to support sustainable human donors and expensive inducements to development. Consensus in its calls for unfettered woo private investors. market based growth and its The following paragraphs will ‣ Regulatory capture obliviousness to global warming or outline the main points of the G20 in Collusion and regulatory capture by gender and human rights terms of development (in italics), private interests has been a dominant considerations. followed by a critical assessment of the cause of the global financial crisis; the “Despite the lessons of recent crises, agenda points and recommendations. Gulf oil spill; and food safety problems, the role of the state in regulating the among others. Any serious rating of a private sector in order to promote the The G20’s 8-Point Agenda country’s investment environment provision of public goods was barely should measure the presence of mentioned.” 1 - Increase private investment regulations to protect the public interest; This article critiques the 8-point flows mainly from domestic sources, but also application of the rule of law; and the Korean agenda as expressed at the G20 foreign direct investment (FDI) and help low- extent of collusion between public and High-Level Development Conference income countries negotiate with foreign investors private spheres. According to the Global which was hosted by the Korean and obtain access to finance. Competitiveness Report, the absence of Government on October 13 in Seoul collusion is a greater determinant of the and attended by hundreds of high-level Assessment and recommendations: business environment than factors such officials from G20 countries and ‣ Investment regulations and as anti-corruption laws and investment representatives of universities and think restrictions promotion efforts. tanks. Low-income countries have weak domestic markets and limited ability to ‣ Volatility The Conference gave only passing attract FDI. In fact, according to The volatility of official and private mention to issues such as climate UNCTAD, low-income countries (LICs) financial flows has led governments to change in discussions about growth, currently attract only 0,25% of global accumulate large amounts of foreign infrastructure (including in energy), FDI. To help attract FDI, will the G20 exchange reserves to address agriculture and food security. Moreover, pressure LICs to create a better business imbalances. Reduction in volatility, despite the lessons of recent crises, the environment for investment by reducing including through the use of capital role of the state in regulating the private regulation and cutting corporate taxes? controls, is essential in order to liberate 5
  • 6. G20UPDATE reserves for sustainable development purposes. 2 - Promote private sector development and jobs through deeper involvement of the World Bank and regional development banks; participation by sovereign wealth funds (SWFs); improved cost- effectiveness of public-private partnerships (PPPs); better infrastructure governance (e.g., tax policy designed to mobilize domestic finance; regulatory and property rights reforms). CC-License by racetraitor There are some suggestions that, in order to mobilize financing, the G20 may consider PPPs) should deliver basic services sacrifice inclusive growth for securitizing a portion of aid, representing an (health, education, water) or supervise stabilization. Under excessively tight advanced commitment to major infrastructure management contracts in ways that policies, often implemented as a result investment. ensure high quality and universal of IMF policy prescriptions, high services. All PPP contracts should be interest rates and fiscal austerity ‣ MDBs publicly disclosed so that risks assumed (including wage ceilings) reduce access Support for the multilateral by the government and taxpayers, to finance, spending on environmental development banks (MDBs) should be including through contingent liabilities protection, and the hiring of teachers, contingent upon the phase-out of and explicit or implicit guarantees are doctors, and other critical service support for fossil fuels and the rigorous broadly known and accepted. personnel. implementation of safeguard policies to protect vulnerable groups and ‣ Infrastructure plans ecosystems. According to the Bank Such plans should be implemented in 4 - Promote trade with an emphasis on Information Center, World Bank Group conjunction with an industrialization “aid for trade” and duty-free quota-free support for fossil fuel projects hit a strategy as called for by the World (DFQF) market access for the least developed record $6.3 billion, an increase of Bank’s Chief Economist Justin Lin. countries. 138% over the previous year. In addition, the G20 should call for: ‣ Property rights 3 - Achieve greater financial ‣Eliminating rules of origins that Reforms should respect communally- inclusion through means such as: expanding restrict input sourcing to increase held lands and the rights of women to access to finance for vulnerable groups; reducing market access for LICs. hold title to land. Large or speculative ‣Addressing impediments to market barriers to flows of remittances; and increasing purchases of land should be subject to private investment in small and medium-sized access for developing countries that conditions, including the Free, Prior, enterprises. The G-20 SME Finance arise outside of the trade preference Informed Consent of affected programs. Challenge - a partnership between the G20, communities and the mitigation of any ‣Ensuring that trade agreements Ashoka Changemakers, and the Rockefeller adverse impacts of the purchases on strengthen agriculture and food Foundation, which would combine “the food security, land ownership and security, curb global warming, and political and legislative power of the world's productivity. leaders and the creativity and ambition of the support decent work for the poor. private sector.” In response to the “call for ‣At the Civil G20 Dialogue in Korea, ‣ Sovereign Wealth Funds the Sherpas side-stepped the question proposals,” hundreds of entrants entered the The World Bank’s private sector arm, of why the G20 is urging member competition by the deadline of August 25, the International Finance Corporation countries to respect trade and 2010 (e.g., Affinity Macrofinance). Up to 15 (IFC) has an Asset Management winners will be invited to the November 2010 investment law, but not non-trade law Company which has launched a model G-20 Summit in Korea to be recognized for (human rights, multilateral for these funds to co-invest in IFC their innovative ideas.  In addition, the G-20 environmental agreements, etc.) by infrastructure and other transactions. has committed to mobilizing funding (about $1 saying that since the crisis is financial Before scaling up engagement by SWFs in nature, they are applying financial million per recipient) to scale them up. in infrastructure operations (including instruments to address it. those of financial intermediaries), Unless massively scaled up, this analyses should determine that policies initiative is more appropriate for a (economic, social, and environmental) philanthropic foundation than for the 5 - Develop human resources with governing these transactions are applied twenty most powerful economies in the an emphasis on higher education and enhancing and supervised effectively. world. If the G20 is to go beyond employment-related skills. bandaids on the financial system, it ‣ PPPs should include an emphasis on ensuring This initiative should support The government (rather than that macroeconomic policies do not effective, gender-sensitive health and 6
  • 7. G20UPDATE education programs, including the knowledgeable investors who deal with Development in Context Education for All challenge (namely, such instruments on the basis of providing an education for 72 million expectations regarding market The Development Framework will children in low-income countries who fundamentals, rather than mainly or be implemented in the context of are out of school), basic health care, only by speculative motives.” another Framework adopted at the and the Global Fund for HIV/AIDS, Pittsburgh Summit - the Framework for TB and Malaria. ‣ Correct the bias against small-scale Strong, Balanced and Sustainable and labor intensive forms of agriculture Growth – in which each G20 country and in favor of intensive, large-scale implements specific policies. This 6 - Enhance resilience by erecting and input-intensive forms of farming; mutual assessment process (MAP) is barriers to protect against adverse shocks, such and monitored by the International as the food, fuel, and finance shocks witnessed Monetary Fund (IMF) with input from in recent years. Risk mitigation instruments, ‣ Respond to climate change the World Bank, the OECD, the ILO such as weather-based crop insurance, are cited adaptation needs as well as the needs of and the WTO. The November Summit as one such “barrier.” women farmers (the majority of is scheduled to bring together individual farmers in many countries). country plans designed through the In general, risk mitigation efforts are MAP into a comprehensive G20 less important than efforts to: strategy that is intended to facilitate ‣ Minimize or prevent shocks by, 8 - Improve the governance, multi-polar growth. among other things, sharply accountability and transparency. diminishing speculative capital flows In this regard, the G20 may ramp up its efforts If implemented, the MAP could (including commodity speculation, to curb tax avoidance and illegal capital flight undermine development because of which can raise the price of food); which cost developing countries of an estimated four major problems: ‣ Effectively employing capital control $1 trillion per year in foregone resources. to protect countries against boom, bust ‣ its call for coordinated and draconian The G20 should: fiscal consolidation in the advanced “Both the development framework ‣ Improve its representativeness economies (i.e., halving deficits by 2013) and the framework for strong, (particularly of low-income countries) which will slow growth, exacerbate the balanced and sustainable growth and its accountability for promises global demand deficit, and fuel even made; elevate its engagement with civil higher unemployment levels. largely ignore the potential for a society as it already has with businesses; green new deal, which could boost and increase its transparency, including ‣ the risk that emerging economies will job creation through greening the by revealing the representatives on not significantly boost domestic economy.” working groups and the nature and demand, which would be necessary to and buy-out cycles, as for instance, content of their proceedings. offset the decline of demand in South Korea and Indonesia have done. advanced economies. ‣ Recognize the links between illicit outflows of capital from developing ‣ particularly for the advanced surplus 7 - Enhance food security by helping countries, absorption of those resources economies, the MAP calls for lowering to close agricultural productivity gaps, including by tax havens and financial institutions non-wage costs (e.g., health insurance, through technological advances; mitigating the in international financial centers, and pensions); reducing the minimum cost effects of food price volatility; mobilizing the adverse impact those flows have on of labor; lowering hiring costs; private sector investment in agriculture; and poverty alleviation and economic decentralizing wage bargaining; and, clarifying the mandates of organizations development. limiting the extent of administrative working in this area, such as the new Global extension of collective agreements. Agriculture and Food Security Program ‣ Require that the beneficial ownership This will cause explosive unrest and established by the World Bank and the of all companies, trusts, foundations exploitation of workers and lower L’Aquila Initiative. and charities be a matter of public demand of workers for goods and record. services. Such demand is critical to These initiatives should: rebalance the global economy. ‣Fully engage civil ‣ Recommend that the International society, including women and small- Accounting Standards Board adopt a Importantly, both the Development scale producer groups, as full partners. standard that all multinational Framework and the Framework for corporations report their income and Strong, Balanced and Sustainable ‣Eliminate speculation in commodities, taxes paid on a country-by-country Growth largely ignore the potential for especially staple foods, which can raise basis. a global green new deal, which could food prices, as called for in number 6, boost job creation through greening the above. The United Nations Special economy. Without an ecological Rapporteur recommended in 9 - Knowledge sharing dimension, the frameworks represent September 2010 that “dealing with food This information was provided by the business as usual, thereby threatening commodity derivatives is restricted as Ethiopian Sherpa the survivability of the planet in an far as possible to qualified and attempt to increase short-term growth. 7
  • 8. The G20: Where to next? G20UPDATE An experiment in institutional innovation By Inge Kaul The present G-20 was born out of and the promotion of “A lengthening of the agenda at G20 necessity and under pressure from private investment in Summits could have the effect of the 2008 world financial crisis. developing countries. pressing assembled world leaders to Although the emerging new world Some even suggest a new consider a broad gamut of concerns powers, notably the BRICS states, development paradigm briefly - but without sufficient focus to had for some time expressed of inclusive growth might generate concrete follow-up action dissatisfaction with their marginal emerge from the Seoul and lead real change” involvement in meetings like the summit. G-8 summits, their concerns found The host country, Korea, has been a to realize and benefit from the many a response only when it became strong advocate for the inclusion of promises that the world’s more and more inevitable for the development into the G-20 agenda opportunities hold, has in recent conventional major powers to reach because the country’s leaders are years been receding further and the conclusion that many of today’s convinced that they have a lot of further into the background of global policy challenges, including valuable development experience to policy dialogues. international financial regulation, share. Additionally, addressing the There is thus a risk that the G-20 can no longer be resolved effectively existing global development gap will suffer from the same weakness by any one nation or group of might enhance the Group’s that marks many other multilateral nations acting alone. These legitimacy in the eyes of the 170 organizations and debates: that challenges call for international some countries that are not everyone’s “pet topic” finds mention cooperation. members of the G-20. - often without translating into new, So, the present Leaders’ G-20 decisive policy action. The started as a forum for fostering a Waning leadership? predecessor of the G-20, the G-8, global response to the global No doubt, the recent summit suffered from such an agenda financial crisis. meeting at the United Nations on overload. the Millennium Development Goals A lengthening agenda (MDGs) showed all too clearly how Towards G-20 Plus: Adding Yet, when meeting in Seoul, South far away the world still is from Issue G’s Korea, in November this year, the attaining the Goals by 2015. Let us assume that the G-20 leaders G-20 leaders will consider a Development issues deserve decisive do in fact want to be world leaders lengthened agenda. In addition to action and so do many other global and that the lengthening of the financial stability issues, it will concerns, notably climate change, Group’s agenda is not just a way of especially include a wide gamut of energy policies, food and cyber distracting our - the global public’s - development concerns, ranging security, and migration. attention away from earlier from reducing maternal mortality, But, a lengthening of the agenda to commitments. That is, unrealized fostering education, developing be considered at G-20 summit promises are not simply abandoned human resources for the private and meetings could have the effect of because the worst of the crisis that public sectors, and assuring food pressing assembled world leaders to had put them on the agenda has security to issues like physical and consider a broad gamut of concerns passed and a new crisis is grabbing institutional infrastructure building briefly—but without sufficient focus the political and media spotlight. to generate concrete follow-up If that is the case and the G-20 is at action and lead real change. the same time to maintain its With an expanded agenda, will leadership capacity, a way out of leaders have enough time to check this agenda dilemma needs to be whether they have lived up to past found. One possibility could be to commitments? For example, will the complement the leaders’ G-20 Seoul meeting leave room for forum with several other G-type assessing how far we have come in bodies each focused on a specific forging a global, concerted response global challenge like mitigation and to the 2008 financial crisis? adaptation to climate change, Moreover, filling the leaders’ agenda fostering energy security, supporting with too many concerns may leave failed and failing states and other insufficient time for developing a development issues, enhancing common, shared vision of a better global disaster preparedness and world in the future, say by 2050, disease prevention, enabling conflict and how we could get there. resolution and peace building, CC-License by Image Zen Because of the many crises we have guaranteeing food security, and faced lately, such envisioning of how 8
  • 9. G20UPDATE ensuring international financial stability be missing is precisely what is to be reform steps that still have to prove (which, of course, was the topic that the added through the Issue G-20s: a more themselves viable. original G-20 addressed before its productive balance between However, it is time to recognize that in upgrading to the present leadership representativeness and decisiveness of today’s world fair and effective forum). international decision-making - to international cooperation is often the These issue Gs could meet at the resolve existing problems in an effective, best way to pursue one’s own self- ministerial level with varying efficient and equitable manner. The interest. States and non-state actors, compositions depending on the issue importance of such decision-making notably firms, will continue to compete they consider. They could be tasked has grown with globalization, greater for market shares, investment funds, with finding breakthrough agreements openness of national borders, and other resources. Competition has deepening policy interdependence its place. But where global public good- “These issue Gs could be tasked with among countries, and the emergence of type challenges are concerned, that is, finding breakthrough agreements and new world powers. challenges that affect us all and are not policy options on issues where More policy challenges are now global, resolvable by any one nation, we need requiring cross-boarder cooperation; encouragement to cooperate from international negotiations are stalled, and more actors, both state and non- leadership bodies like those of a wherever possible in close state, expect to have a meaningful say in G-20 Plus - or the web of global crises collaboration and consultation with all matters of global concern. The G-20 is will become ever more dense and stakeholders.” an experiment in institutional ruinous for all. on issues where international innovation, an effort to adjust to negotiations are stalled. They could also today’s new and still evolving realities. “What the present multilateral system explore new, neglected issues, but their Most innovations happen by fits and seems to be missing is precisely what primary responsibility would be to find starts. Therefore, the present G-20 is to be added through the Issue-G20 breakthrough policy options, wherever should be allowed to evolve toward the Model: a more productive balance possible in close collaboration and proposed G-20 Plus. Along the way, between representativeness and consultation with all stakeholders, changes deemed desirable could be decisiveness of international decision- especially existing multilateral technical explored, notably alternative making.” agencies and advisory bodies, as well as membership formulas to foster the processes such as the climate change Groups’ representativeness and So, returning to the forthcoming Seoul legitimacy, and perhaps, ways to summit, the inclusion of development negotiations. institutionalize them. on the agenda could prove to be a Only when issues cannot be resolved A question that might arise in this major milestone in the emergence of a without the special attention of G-20 context is the link between the various new system of multilateralism. It could leaders should they be brought to their Gs and other parts of the existing draw attention to the risks of agenda attention - not to address nitty-gritty multilateral system. Considering that crowding and thereby encourage the technical details but for decision- making on possible tipping points and several actor groups, public and private, exploration of a Issue G-20 model of national and international are today global policy leadership that would the opening of policy doors to possible often involved in addressing global potentially benefit all, developed and compromise solutions. Put differently, it is important to avoid challenges, one could argue that the developing nations alike. an over-centralization of policymaking G-20 Plus should exist as a new, and an overloading of the leaders’ additional institutional arrangement, agenda, lest their capacity to exercise separate from the many other entities genuine leadership suffer. This could be that might have to act on a particular The author is adjunct achieved by creating the proposed issue. Such leadership at arm’s length professor at the Hertie could strengthen the Groups’ ability to School of Governance in second-generation G-20: a G-20 Plus nudge other actors forward. For Berlin, Germany and advisor composed of the leadership G-20 plus example, if a development G were to to various governmental, issue-specific Gs to give the former a multilateral and non-profit strong, solid support base and free its exist already, it could do what the organizations on issues of time and attention for the big current G-20 working group on international cooperation, leadership issues. development does - but at the finance, public-private ministerial level, and hence, perhaps partnerships and global- with more clout and continuity. issue diplomacy. Fitting the Issue G-20 Model into She was the first director of the Future Multilateral System Conclusion UNDP’s Human Although the existing multilateral Development Report Office Given the incremental nature of most agencies, like those of the UN system, from 1989 to 1994, and innovations, the current search for new have had their successes, and in many director of UNDP’s Office of approaches to international cooperation respects continue to play important Development Studies from should be allowed to evolve at an roles, it is nevertheless becoming 1995 to 2005. appropriate pace. There is no need to increasingly clear that the present hasten into the institutionalization of multilateral system requires what are so far only first, tentative fundamental reform. What it seems to 9
  • 10. G20UPDATE G20 Database & E-Mail Group Stay informed Database E-mail Group If you would like to read more on the G20, recent In addition, the Heinrich Böll Foundation is part of an changes in Global Governance and what it means for specific international network of NGOs and policy-analysts, which regions or issues, the G20 Database of the Heinrich Böll have set up a G20-related E-mail Group. Foundation is the right place to go. It is subdivided into the following folders, so you can easily access the analysis and To subscribe, send email to: alternative- information that is of interest to you: g20+subscribe@googlegroups.com   To unsubscribe, send email to: alternative- g20+unsubscribe@googlegroups.com   Folder Structure of the Database To customize your subscription, go to http:// 1 - Background groups.google.com/group/alternative-g20 (but you need to 2 - Summits create a Google account, if you do not have one) 3 - Issues 3.1 - Finance Replies automatically go the whole group. To minimize email traffic, please do only reply to the whole group if necessary. 3.2 - Climate Change There is no moderation. 3.3 - Development 3.4 - Energy 3.5 - Trade 4 - Country Specific The G20 Database is meant as a way for the 5 - Power Dynamics Heinrich Böll Foundation and its partners to share 5.1 - Within the G20 and collect information surrounding the G20 and 5.2 - G20 to non-members related issues. 5.3 - International Organizations 6 - Civil Society In addition, every folder contains both a Word and PDF document with annotations of the documents included in the Impressum folder. Publisher The database is designed in a way that every member can Heinrich-Böll- add documents himself, which are then instantly Foundation synchronized so that everyone can access it. This is a great Schumannstrasse 8, way to share information and build up institutional capacity. 10117 Berlin T 0049 30 285 34 - 0 If you would like to know more about the Database or sign up for access please send an Email to Sandro Gianella E info@boell.de at gianella@boell.de. To get started right away, here are the 3 easy steps to install the Database on your computer: Editorial Responsibility 1. Install the Programm "Dropbox" from https:// Heike Löschmann www.dropbox.com/install Head of Department International Politics 2. Write to Sandro Gianella, who will send you an Email invite to share the G20 Database folder. Assistance 3. Accept the invite and you should be able to access the Sandro Gianella database through a Dropbox icon on your Desktop. Disclaimer The opinions expressed in this newsletter are those of the authors and not necessarily those of the Heinrich Böll Foundation 10