What does 2013 hold for Global Governance of International Development? The American commentator Bill Maher has written he is looking forward to 2013 because he loves odd-numbered years – they are years without elections, Olympics, World Cups or weird extra days tacked on the calendar. We stand at least a fighting chance of getting something done. The Year of the Water Snake may be propitious - the snake is clever, wise and good at business and mediation. Chinacan lead the international community by championing two priorities – giving pride of place to climate change in the post-2015 revision of the MDGs and outlining desirable imaginative options for SDRs.
In 2013, will we see currents trends and problems continue (perhaps with imaginative rhetoric to make things appear new and better)? The austerity due to the financial crisis will likely aggravate donor fatigue. Official Development Assistance (ODA) levels will not rise, despite ballooning legitimate financial requirements. Instead donors will increase support to the private sector and emphasize trade and direct foreign investment. This essay reviews the definition of Global Governance. It identifies the main gaps in the objectives and the resources of the relevant international organizations and governance arrangements.Then, a potential “positive sum” approach is described, with predictions of events that may facilitate acceptance of the idea.
“Global Governance” means different things to different people. Some focus on the de facto limits on national sovereignty and the concept of the “responsibility to manage”. The UN Intellectual History Project characterized global governance as “the existing set of collective agreements and arrangements to set norms, make decisions, solve problems and monitor at the global level in the absence of a world government”. Another oft quoted definition is it “ [global governance] embraces the totality of institutions, policies, rules, practices, norms, procedures, and initiatives by which states and their citizens…try to bring more predictability, stability, and order to their responses to transnational challenge — which go beyond the capacity of a single state to solve”.
Governance Gaps in International Development
What are the most important gaps in the mandates and resources of the existing spectrum of international organizations and international governance arrangements? There are two glaring gaps – the shortcomings of the Millennium Development Goals(MDGs) as the universal mandate, and the absence of resources to finance development and international public goods.
The MDGs have been criticized on many grounds. They ignore economic growth. They omit reference to critical infrastructure. There is no provision for accountability. The focus on developing countries does not inspire any action by developed countries. The MDGs are weak on the environment and silent on global governance. Perhaps most important, they make no contribution to what seems to be our impending existential problem – climate change.
The second shortcoming is the gross inadequacy of financial resources for global public goods. Despite countless recommendations from official reports, decisions of international conferences and pledges from Leaders Summits for “new and additional funding”, the resources are not forthcoming.
What is to be done? There is a lot of discussion of the shift of economic and geopolitical power to Asia. 2013 may be the year when we get the definitive answer to Kishore Mahbubani’s question “Can Asians Think?”Further, it may be the year when Asia insists on changing the global rules. It may be the year when China no longer acts according to Deng Xiaoping’s advice to “Hide our capacities and bide our time. Be good at maintaining a low profile. Never Claim Leadership”.
It is time for China to take leadership – the way forward is clear. China can ensure that the post-2015 successor to the MDGs gives a prominent place to combatting climate change – there will be no successor unless China agrees. With China leading the way,financing can be based on amending the International Monetary Fund’s articles of agreement so that the world’s debtors are no longer in charge. Innovative use of special drawing rights is the solution to the global gap to financing the requisite research and funding adaptation.
A “Positive Sum” Approach
The IMF can create financial assets with incentives to increasingly value long-term sustainable development. All that is required is that we change some existing rules.The path to a solution does not run through the UNFCCC. Leaders at the Copenhagen and Cancun climate summits committed to mobilize $100 billion in climate finance for developing countries by 2020; at the Durban climate summit, they agreed on steps to launch the Green Climate Fund. The eighteenth Conference of the parties convened in Doha, November 26 to December 7, 2012. The results are disappointing. The unpleasant fact of life is that the promised $100 billion a year is never going to be mobilized.
The ultimate solution requires what appears to be a “free lunch” - a scheme where major countries will agree to a seemingly cost-free approach, analogous to the seignorage effect of issuing currency. Political obstacles will frustrate any initiativeunless countries “can have their cake and eat it too”. There are a range of ingenious proposals for the IMF to issue and allocate SDRs in innovative ways. Carefully deploying increased liquidity at a time of global recession will not lead to inflation. Ideas range from the conservative - using SDRs to capitalize a fund which would lever long term green bond issues - to the more ambitious of giving the IMF the central bank power to loan money at near zero cost, to the radical of making the IMF a real global central bank with the power to provide “quantitative easing” in numerous ways
In 2013, the bankruptcy of the current approach to climate change will be clearly demonstrated. Stein’s Law applies –“If something cannot go on forever, it will stop”. In 2013, the United Nations will digest the results and recommendations of its widespread consultative exercises to determine what should succeed the MDGs in 2015. Hopefully, with the priority development goals clearly identified, and some lateral thinking applied, it will become evident that dealing with climate change is not necessarily a negative sum game. Leadership will emerge to provide the impetus to reform the governance arrangements at the IMF.
If major countries get their share of the new liquidity for worthy climate change research programs and adaptation projects (e.g. Hurricane Sandy and New York City), then political obstacles can be overcome. But first, Deng Xiaoping’s sage advice, although appropriate for its time, should be relegated to its place of honour in history.