A new global order, Bretton Woods II … San Francisco II

Published by openDemocracy, by Simon Maxwell and Dirk Messner, Nov. 12, 2008.

Global leaders are preparing to meet in Washington on 15 November 2008 for a summit of the G20 group of states and representatives of leading international financial institutions. The gathering is being ambitiously named “Bretton Woods II” – echoing the conference on 1-22 July 1944 which established the World Bank, the International Monetary Fund and the General Agreement on Tariffs and Trade (GATT). With George W Bush presiding, and Barak Obama waiting in the wings, the delegates’ task will be to fix a global financial system which has failed with spectacular and highly damaging results. They need to succeed …

… Meanwhile, the talk is of cutting aid, not increasing it. Italy, for example, has proposed cuts of up to 56% in its latest budget. Britain so far is holding firm, and Germany is working hard towards its target. Quite right: it would be a bad start for the project of building “a social-market economy on a global scale” of which Germany’s chancellor Angela Merkel has spoken if the bailout of the global banking system were to entail budget cuts affecting the poorest 30% of mankind. Those intent on preventing the emergence of further anti-western resentments should have no trouble understanding the logic of aid.

On 29 November-2 December 2008 in Doha, governments will meet to review progress since the Monterrey conference of 2002 on financing for development. The Doha declaration should be generous and unequivocal – and rich countries should be held clearly to account. That includes all the members of the G8, but also others. Is it not time that rich oil-exporters in the middle east signed up to 0.7% of GNP in aid, as many developed countries have done?

Fifth, the need for collective action is an inescapable conclusion of recent events. Coordinated action has been essential to prevent financial contagion. Even the outgoing George W Bush has recognised that new initiatives will be needed to buttress the security of financial markets, with new regulatory regimes.

It is important to make sure that developing countries are fully engaged in these discussions. Resentment is already evident about who is or who is not on the invitation list for Washington. It cannot be right for all except the richest members of the world community to be presented with a “done deal” imposed without consent.

Robert Zoellick, president of the World Bank, has observed that there is no time to argue the fine points of who might or might not have a United Nations Security Council seat or membership of the G20. A flexible, network solution is needed, open and participatory, but focused on decision-making. A middle way is needed between the closed-shop of the UN Security Council and what has come to look like the talking-shop of the World Trade Organisation  (WTO). It is important to make sure that developing countries are fully engaged in these discussions.

The European Union may have models to offer for more inclusive global governance. The model of qualified majority voting reflects many painful compromises in EU councils, but does offer a way of taking different interests into account. Could this be applied in the United Nations Economic and Social Council (Ecosoc), or even in the UN general assembly? Alternatively, is it time to revisit the idea of an Economic Security Council, taking into account the enormous challenges that global poverty, resource-scarcity and climate change imply?

2009 is an important year for the European Union, with elections to the European parliament in June and a new commission taking office in November. The survival or otherwise of the Lisbon treaty will also be decided. European partnership is difficult, even stressful. But this is Europe’s time. Not alone. Acting with others. Delivering Bretton Woods II – and also San Francisco II. (full text).

Comments are closed.