From continued turmoil in the Middle East and  the lingering effects of the financial crisis to stalled debates over the environment, 2012  gives us much to think about as we move forward as a global community. With a focus on the global economy, global security, global development and the environment and energy, we speak to CIGI experts Paul Jenkins, Mark Raymond, Barry Carin and Simon Dalby about the global governance challenges expected to receive attention in the new year.

CIGI: What do you foresee being the greatest governance challenges for 2013?

Paul Jenkins (Global Economy): First of all, I think the broad contours of the global economy for 2013 are largely understood, with significant risks and vulnerabilities to the downside. Virtually every international organization that has put out a projection for 2013 in the last month or so — including the International Monetary Fund and the Organisation for Economic Co-operation and Development — has revised down their projections.

The outlook is for very modest global growth, and it is against this backdrop that we face several key governance challenges going into 2013. First on the list is the euro zone, which is still in an acute crisis situation and will remain with us through 2013. It’s not yet clear that they’ve got the right policy mix to resolve the crisis and there’s very little evidence to suggest that countries are willing to give up sovereignty to put in place the appropriate pan-European structures to support the euro going forward. So that’s certainly one key challenge.

Another challenge is south of the border, in the United States, where we have also witnessed a breakdown of governance. The most immediate issue is the fiscal cliff. If it’s not addressed by the end of the year — and that’s very close — the equivalent of four percent of GDP or something in the order of US$600 billion-worth of spending cuts and tax increases will automatically be triggered. And that’s just one aspect of the governance challenges in the United States. It’s the most immediate fiscal policy challenge, but one needs to think about that in the context of what is required over the next, say, five to ten years. Numbers add up to something in the order of well over US$2 trillion needed in deficit reduction to stabilize the US debt-to-GDP ratio. So there, too, is a major governance challenge. The situation on Capitol Hill is not very encouraging.

And the third situation that I would point to is the transition of power in China, where there are still many unknowns about the direction in which the new powerbase will take China.

From the perspective of the global economy, the most immediate risk would have to be the situation in the United States because of the implications for the rest of us of the US falling back into recession. But as you look out over the medium term, and perhaps more from a political economy perspective, the big challenge will be the emergence of China and how they want to present themselves on the international stage.

So, as we look into 2013, we’ve got some very significant governance challenges. When you add it all up, it’s a very charged environment for global governance. 

Mark Raymond (Global Security): The security outlook for 2013 entails a handful of significant flashpoints. North Korea, for instance, recently had a missile launch test that was more successful than expected, which is not a good thing from a regional security point of view. While North Korea may be deterable, this is a very unpredictable regime that has played a key role in the proliferation of weapons of mass destruction. If this missile program eventually links up with their nuclear program, the risk is magnified.

The second flashpoint is the broader Middle East and the aftermath of the Arab Spring. With Russia signalling willingness to abandon the regime, Syria may ease into a transition. On the one hand, this could be a good thing because it will, in effect, stop a civil war. But on the other hand, if we look at countries such as Egypt and Libya, we see that a transition doesn’t necessarily mean that all will be well. These events can have an impact on regional security, especially for Israel. Beyond that, we should be worried about the negative human security consequences, not only in economic terms, but in terms of health, lost education, and disruption to family and social networks.

Internet governance is a key emerging issue, where we could wind up seeing a fragmented system. For the past several years, a group of countries (lead by Russia and China, with significant buy-in from Arab and Muslim states) has pursued a more or less coordinated agenda to fundamentally change how the Internet works. Internet governance had a recent flare up at the 2012 World Conference on International Telecommunications in Dubai. The result was a new, troubling treaty rejected by most advanced industrial democracies. Depending on how states interpret and implement it, this new International Telecommunication Regulations (ITRs) agreement could impact the cost of Internet activity (based on traffic routes) and also impact how states can monitor and manage the flow of information within their borders (given the new ITRs’ loose definition of spam). It also lets states exercise control over naming and numbering on the Internet, instead of leaving this up to the US-based Internet Corporation for Assigned Names and Numbers. Different naming systems would have huge commercial implications for global financial markets, causing confusion and disruption in where information is sent.  Expect these issues to come up in May 2013 at the World Telecommunication/Information and Communication Technology Policy Forum.

Finally, there is pressure in the United States and Israel to do something militarily to prevent Iran from acquiring nuclear weapons, but it’s unclear whether or not that can actually be done. The Iranians have gone through great trouble to make sure their programs are hardened against such a strike, meaning that a strike could not only fail, but also cause civilian casualties, nuclear dispersion and inflammatory politics in the region. The re-election of President Obama makes that worst-case scenario of an attack or invasion less likely, but there is still cause for concern. 

Simon Dalby (Environment and Energy): The biggest challenge for 2013 will be getting everyone focused on the negotiations to reach a new deal on climate change by 2015. Doha (the UN Climate Change Conference or COP 18) has pushed the process ahead a little. But we don’t really have spare time to wait around on this if the planned treaty (to take effect in 2020) is to be finalized as scheduled in 2015.

The United Nations Environment Programme uses the term “emissions gap” to describe the difference between what’s being pledged to reduce emissions and what’s actually needed to achieve our target for 2020. The gap is growing not shrinking, so much urgent work needs to be done.

The drastic events in North America in 2012 — Hurricane Sandy, the drought that affected large parts of the continent, and so on — seem to have captured people’s attention as to the severity of the situation. Gradually, people are starting to realize that this is what climate change portends. But that understanding needs to become truly global if we’re going to act together on this.

Barry Carin (Global Development): The “main event” will be the debate on post-2015 Millennium Development Goals (MDGs). The post-2015 successor goals will determine policy priorities and heavily influence decision making and expenditure allocations.

The UN General Assembly will hold a special event on the MDGs in 2013 to resolve the development framework that should succeed the MDGs. The United Nations has initiated an ambitious schedule of consultations in more than 50 countries, plus 11 global thematic consultations, and has created a website for public input. The results of all this activity must be knitted together with the 2013 recommendations of the High-level Panel — co-chaired by the leaders of the United Kingdom, Liberia and Indonesia — as well as the conclusions of the Open Working Group on Sustainable Development Goals established at the Rio+20 Conference. Overseeing the process is a task team of experts from over 50 UN entities and international organizations, led by the Department of Economic and Social Affairs and the UN Development Programme. The challenge will be to synthesize the dozens of recommendations that will emerge from this complex process.

The consultative processes will unleash a flood of proposals. The original eight MDGs and 21 targets dealt with eradicating poverty and hunger, primary education, gender equality, health, environmental sustainability and a vague goal on “partnership for development.” Suggestions will be promoted for a long list of proposed goals, including, for example, food security, safe water, human rights, anti-corruption, disaster reliance, security from violence, climate change, economic growth, equality, equitable economic rules and governance. Decisions will be made as to whether the post-2015 goals apply universally or only to poor countries (a majority of poor people live in middle-income countries, but poor countries feel they will be ignored if successor goals are universal). Will goals refer to inputs (such as education enrollment), outputs (such as graduation rates) or outcomes (such as standardized test results)? Will there be universal targets, or will countries be charged with setting their own national targets to contribute to global goals? Will goals be selected for which reliable indicators are available to measure and track progress? Will investments be made to produce data allowing meaningful analysis? (For example, the World Health Organization reports that estimates of global mortality are based on data from only 34 countries that produce quality cause-of-death statistics.)

The challenge for the United Nations will be to produce a practical package, supported by rich and poor countries alike, that will motivate global action.

The opinions expressed in this article/multimedia are those of the author(s) and do not necessarily reflect the views of CIGI or its Board of Directors.
  • Paul Jenkins

    Paul Jenkins is the Interim Director of the Global Economy Program. He provides strategic advice to the Global Economy program, including activities related to CIGI’s partnership with the Institute for New Economic Thinking (INET) and broader macroeconomic issues. His own research focuses on international policy coordination and financial stability, with a particular interest in the G20. From 2003 to 2010, he served as senior deputy governor of the Bank of Canada.

  • Simon Dalby

    Simon Dalby is a CIGI senior fellow and professor of geography and environmental studies at Wilfrid Laurier University (WLU) in Waterloo, where he teaches courses on governance, security and environment in the Balsillie School of International Affairs.