Following the adoption of the Sustainable Development Goals (SDGs) by the UN General Assembly, I would like to highlight a focal point of sustainable human development–utilizing natural resource revenue as a tool for sustainable human development.
“There’s only so much amount of aid countries can rely on. Indeed, often you can’t rely on aid in the sense of relying on certain amounts every single year… it goes up, it goes down… governments fall in and out of love with the donors… so it’s not so reliable,” said Mr. Nolan.
“At the end of the day, a State operates on the basis of its own revenue collection. And a developmentally-oriented State, a State that actually wants to promote development through infrastructure, health, education spending, needs to raise most of the money itself.”
He added that raising revenue does not necessarily mean going into the rural areas and heavily taxing people. “It actually means taxing the better off in the society and also taxing companies, both domestic and foreign, more effectively.”
Tax rates, he noted, are very low in many low-income countries, in some cases under 15 per cent of gross domestic product (GDP). This could easily be increased by a series of reforms, as well as by better structuring of taxation in the extractive industries and greater attention to the transfer of money out of the country.
Meeting UN-backed climate goals requires leaving the vast majority of natural energy resource in the ground. But sustainable development is contingent on both the intrinsic (electricity) and market value of natural resources; one would be hard pressed to find a development practitioner that does not believe this revenue source is an essential piece of the development financing puzzle.
Developed countries have had decades, if not centuries, of using natural resources limitlessly in their pursuit of development; reliable access to energy is an indispensable part of poverty alleviation, economic growth, and modernization. We are essentially asking the worlds poorest countries to forgo the cheapest form of electricity available in the name of environmental sustainability (do as I say, not as I did). To reconcile this clear mismatch between ability to pay and necessity, the developed world must do more to reach it’s target of $100 billion per year by 2020 to help poorer countries fight climate.
The “Natural Resource Curse”–the misappropriation of resource revenue–robs the worlds poorest countries of a needed source of development finance. Often times the natural resource curse finances armed conflicts, which cause immeasurable human suffering, roll back development gains, and make future development much more difficult (conflict is often associated with poverty and malnutrition which stunts physical and cognitive development, can prevent children from going to school, and can cause trauma that leads to lifelong psychological issues).
The Natural Resource Curse is not inevitable, but fighting it requires good governance and the security capacity to counter those who wish to extract revenues for their own privilege. Battling the Natural Resource Curse also requires effective sanctions regimes–by driving ill-gotten natural resource revenues to the black market, and attacking that black market and related international money laundering, international criminals and terrorists would lose an important source of funding.
Sanctions, of course, require broad based cooperation. There is a risk that in this era of disorder and instability, the international community might “ease up” on bad-but-stable governments. The importance of good governance of natural resource revenues shows this would be a short-sighted and ultimately counter-productive strategy for fighting international crime and promoting sustainable human development.
If the world is to simultaneously address the needs of Least Developed Countries (LDCs) and reach climate targets, we must focus on making sure LDCs leverage all the resources they do extract to maximize social welfare. Effective “South-South Cooperation“–the sharing of best practices between developing countries–would greatly enhance this effort.
Given the importance of the source, the propensity for corruption (“Resource Curse”), and the need to leave much of the existing deposits in the ground, when it comes to properly managing natural resource revenues for sustainable human development, there is little margin for error.
Natural Resources and the SDGs:
Fortunately, proper natural resource revenue management is addressed many times throughout the proposed SDG text:
Goal 1. End poverty in all its forms everywhere
1.4 by 2030 ensure that all men and women, particularly the poor and the vulnerable, have equal rights to economic resources, as well as access to basic services, ownership, and control over land and other forms of property, inheritance, natural resources, appropriate new technology, and financial services including microfinance.
Goal 5. Achieve gender equality and empower all women and girls
5.a undertake reforms to give women equal rights to economic resources, as well as access to ownership and control over land and other forms of property, financial services, inheritance, and natural resources in accordance with national laws
Goal 12. Ensure sustainable consumption and production patterns
12.2 by 2030 achieve sustainable management and efficient use of natural resources
Goal 16.Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels
16.4 by 2030 significantly reduce illicit financial and arms flows, strengthen recovery and return of stolen assets, and combat all forms of organized crime
16.5 substantially reduce corruption and bribery in all its forms
16.6 develop effective, accountable and transparent institutions at all levels
16.7 ensure responsive, inclusive, participatory and representative decision-making at all levels
Goal 17. Strengthen the means of implementation and revitalize the global partnership for sustainable development
17.1 strengthen domestic resource mobilization, including through international support to developing countries to improve domestic capacity for tax and other revenue collection
17.3 mobilize additional financial resources for developing countries from multiple sources
Inside the Bill and Melinda Gates Visitor Center in Seattle, WA
While finishing up my first business trip in Seattle, WA, I walked by the Bill and Melinda Gates Foundation. Due to my studies and interests, I was familiar with the organization’s important work in the related fields of Education, Healthcare, and Poverty Eradication both in the US and abroad. Intrigued, I went in.
While walking around the visitors center, I was struck by something I read. Explaining the origins of the foundation, a plaque stated that Bill and Melinda gates started their mission by providing Internet access to public libraries in America. Then, in the 1990s, Bill and Melinda “learned” of the extreme poverty affecting children around the world (specifically lack of access to medical care), and expanded the scope of their work.
This line took me a while to comprehend. Growing up during the age of globalization and global news coverage, the plight of people in the developing world was something I had always taken as obvious. How could it be that someone, let alone one of the smartest people in the world, would have to “learn” about these injustices later in life?
Then I began to think about what growing up in a hyper-connected world meant. For those who grew-up in previous generations, understanding the plight of people in the developing world required an active and time consuming search for information. Conversely, growing up in generations Y / Z, with globalized news coverage and internet access, not knowing about the existence of extreme poverty requires willful ignorance.
There are many self-interested reasons for wanting to promote sustainable human development and end poverty, including: stopping violent extremism, stemming the “offshoring” of jobs to lower income countries through economic convergence, and creating new markets for sustainable trade-based growth (the Great Recession was a perfect example of the unsustainability of relying too heavily on financial innovations for growth).
But universal awareness will also play a large role in ending poverty (much like the first step to finding a solution is admitting there is a problem). The “silent majority” of the global community believes in basic rights and human dignity for all. It is in the long run interests of the global community, and resonates with mankind’s central tenets as ethical, social beings. Ultimately, it is this awareness which will galvanize the global effort to end poverty.
The Post 2015 Development Agenda is an important element of the fight to end poverty, as it will help direct trillions of dollars of public and private development resources over the next 15 years. Building on the successes (and learning from the shortcomings) of the Millennium Development Goals (MDGs), the Post 2015 Development Agenda is being drafted in an inclusive and consultary manner. Incorporating input from the very people it is intended to help, the agenda recognizes the importance of civil / political rights, good governance, multi-sectoral accountability, and self-determination in ending poverty. With human rights and empowering the world’s most vulnerable people at its core, the Post 2015 Development Agenda is poised to make great strides in poverty eradication.
As the world continues to get “smaller” and more interconnected, the costs of environmental degradation, human rights abuses (in relation to terrorism and protracted social conflict / genocide), and economic inequality will more acutely impact not only to the world’s most vulnerable, but also people in first-world countries (who have historically have considered themselves largely immune to such issues).
While it will not be easy, ours is the generation that must make meaningful strides towards ending poverty and promoting sustainable human development in the worlds least developed countries (LDCs). Failure to do so would gravely affect us all, and this (now) common knowledge is (slowly) creating unstoppable momentum towards positive, sustainable change.
In the week following the unveiling of the new American-led anti-ISIS plan, one thing has become clear. This plan, while theoretically sound, will be very difficult to implement.
Regional allies have been reluctant to commit to specific responsibilities in the fight against ISIS. This reluctance highlights some American hubris that I failed to account for in my previous post. Even if taking on specific responsibilities is ultimately in these countries best interests, America cannot simply delegate responsibilities to other countries and decide for them that they will accept them. Generally speaking, the dearth of political will, lukewarm attitudes towards American intervention, and protracted grievances between potential allies are to blame for these seemingly irrational responses.
But despite these issues, the American plan is still the best way forward in a less than ideal situation. For sustainable peace and development, what is known in the conflict resolution field as “positive peace”, a pluralistic, inclusive, human rights based approach to development is needed. This is, unfortunately, far from the current reality in the Middle East.
However, in order for development to take hold, there must be “negative peace”–an absence of fighting. And it is fostering negative peace that the American plan is primarily focused on. There are elements of positive peacebuilding–capacity building for allies that share American values of pluralism and human rights–but these are secondary to the goal of “degrading and ultimately defeating ISIS”. “Negative peace” is a necessary precondition for “positive peace” to truly take hold. The foundations of “positive” peace can be laid, but in order for it’s benefits to reach people–to begin the process of sustainable human development–an atmosphere of security / “negative peace” must exist.
Ideally, “positive peace” is built preventatively; should conflict erupt, the partnerships and trust needed to negotiate an end to the fighting already exist. There is nothing “ideal” about the fight against ISIS; the group moves with blinding speed, destroying everything that opposes its radical version of Islam. To do nothing would amount to a de-facto death sentence for anyone who dares to oppose ISIS, while enabling the group to cement it’s control in the region. This would make “negative peace” even more difficult to attain.
Unfortunately, it is too late for preventative peacebuilding in the fight against ISIS. The American-led plan must try to simultaneously build “positive” and “negative” peace–admittedly a difficult task. To this end, the plan must be inclusive of all Muslims, Sunni and Shiite (as well as minority groups). Furthermore, it must minimize actions that ISIS can use as anti-Western propaganda–something the group has proved itself adept at.
This fight against ISIS will not be quick or easy. It would be easier if regional allies would take stronger stands and commit to specific responsibilities in the fight against ISIS, but early indications suggest this is currently not the reality. Short of putting boots on the ground, America must make up for the current shortfalls of our regional partners. If we do not, no one else will, and the ISIS threat will become even more difficult to confront.
The first time in a while I have been able to talk about America scaling back it’s direct military presence in remote areas of the World. Obama hinted at the limits of American intervention at his speech at the UNGA last month. However, burying our heads in the sand and pretended threats don’t exist is not an option either. It seems the U.S. has a plan which allows it to remain a global security presence without relying on American “boots on the ground”.
Here on the Kansas plains, thousands of soldiers once bound for Iraq or Afghanistan are now gearing up for missions in Africa as part of a new Pentagon strategy to train and advise indigenous forces to tackle emerging terrorist threats and other security risks so that American forces do not have to.
“Our goal is to help Africans solve African problems, without having a big American presence,” said Lt. Col. Robert E. Lee Magee, a West Point graduate and third-generation Army officer whose battalion has sent troops to Burundi, Niger and South Africa in the past several months, and whose unit will deploy to Djibouti in December.
“Africa is one of the places,” President Obama said at a news conference three days after the commando raids, “that you’re seeing some of these [terrorist] groups gather. And we’re going to have to continue to go after them.”
But with the United States military out of Iraq and pulling out of Afghanistan, the Army is looking for new missions around the world. “As we reduce the rotational requirement to combat areas, we can use these forces to great effect in Africa,” Gen. David M. Rodriguez, the head of the Africa Command, told Congress this year.
Missions that were once performed largely by Special Operations Forces, including the Army’s Green Berets, are now falling to regular infantry troops like members of the Second Armored Brigade Combat Team here at Fort Riley, nicknamed the Dagger Brigade.
“We’re never going to teach them anything about Boko Haram they don’t already know, but we can help them develop their capacity as a military,” said Maj. Bret Hamilton, 38, an Iraq and Afghan war veteran who led the team in Niger.
Before deploying, the troops in Kansas receive six days of cultural training and instruction from Africa-born graduate students at nearby Kansas State University. “The soldiers trained are able to ask about things not in their books,” said Daryl Youngman, an associate professor at the university who oversees the instruction.
Some Africa specialists say that if the goal is to build a cadre of regional specialists, this training seems lacking. “There needs to be a concentrated effort for these forces to have sustained regional language training and expertise,” said Lesley Anne Warner, an Africa analyst with CNA’s Center for Strategic Studies in Alexandria, Va., who has studied the regional brigade concept. “Not having such training defeats part of the rationale for having regionally aligned forces.”
For the South Africans, it was a chance to learn tactics and techniques that American troops refined in Iraq and Afghanistan. For the Americans, it offered an opportunity to gain new insights on African counterinsurgency.
“When the tire meets the tar, that’s when you actually learn the most lessons,” Brig. Gen. Lawrence Reginald Smith, the South Africa force commander there, said in a telephone interview. “What we bring to the table is knowledge of the indigenous people and the rebels who come from those people, including how they act.”
Obama, in referring to “places these groups go”, was talking about how terrorist groups tend to fill the governance-void, buying goodwill through essential services in exchange for a base of operations. Africa certainly has governance and public service delivery issues, making it an ideal place for extremists groups to try to setup shop.
Initially, this program will not be a scaling back of American military expenditure, but rather a shift from fighting to training. In the long run it will allow America to allocate less resources into military programs without compromising our national security and/or that of our allies. While there may still technically be “boots on the ground”, it is much more desirable to have Americans training on ally grounds then fighting in enemy territory.
It would be nice if American troops had language and cultural sensitivity training beyond the 6 days currently being allocated to troop preparation, and perhaps in time more resources will be invested into this aspect. However, language training is a long term task, and generally is outside the pay-grade of the average American soldier. With English as a primary language globally, it makes more sense to have African’s learn English and act as translators then expecting our troops to learn a new language (and expect them not to demand greater compensation for such training). The economic benefit of our troops knowing African languages is virtually non-existent; the economic benefit of teaching African’s English (which many will already know) goes beyond just the training of soldiers and can have a meaningful impact on their earning potential for their whole lives.
This is certainly a long term project, but one which alongside preventative peace-building projects I believe will lead to a more secure Africa. With peace being a prerequisite to sustainable human development, I believe this is a worthwhile project for America to pursue, in both our own and African economic / security terms. It is also a mutually beneficial relationship; America brings in our military expertise and advanced weaponry, while the Africans train us on the local realities we would otherwise not know about.
The NYT released an article today, highlighting the rare opportunities for diplomacy between the U.S. (presumably representing the interests of the international community) and various Middle-Eastern nations. First I will recap some highlights of the article, then I will give my input on the situations in Syria, Iran, and Egypt:
Only two weeks after Washington and the nation were debating a unilateral military strike on Syria that was also intended as a forceful warning to Iran about its nuclear program, President Obama finds himself at the opening stages of two unexpected diplomatic initiatives with America’s biggest adversaries in the Middle East, each fraught with opportunity and danger.
For Mr. Obama, it is a shift of fortunes that one senior American diplomat described this week as “head spinning.”
In their more honest moments, White House officials concede they got here the messiest way possible — with a mix of luck in the case of Syria, years of sanctions on Iran and then some unpredicted chess moves executed by three players Mr. Obama deeply distrusts: President Bashar al-Assad of Syria, President Vladimir V. Putin of Russia, and Iran’s erratic mullahs. But, the officials say, these are the long-delayed fruits of the administration’s selective use of coercion in a part of the world where that is understood.
“The common thread is that you don’t achieve diplomatic progress in the Middle East without significant pressure,” Benjamin J. Rhodes, a deputy national security adviser, said Thursday. “In Syria, it was the serious threat of a military strike; in Iran it was a sanctions regime built up over five years.”
Skeptics — and there are plenty in the National Security Council, the Pentagon, America’s intelligence agencies and Congress — are not so optimistic. They think Mr. Obama runs the risk of being dragged into long negotiations and constant games of hide-and-seek that, ultimately, will result in little change in the status quo. They argue that the president’s hesitance to pull the trigger on Tomahawk strikes on Syria nearly two weeks ago, and the public and Congressional rebellion at the idea of even limited military strikes, were unmistakable signals to the Syrian and Iranian elites that if diplomacy fails, the chances of military action ordered by the American president are slight.
All these possibilities could evaporate quickly; just ask the State Department diplomats who in the last years of the Bush administration thought they were on the way to keeping North Korea from adding to its nuclear arsenal, or the Clinton administration officials who thought they were on the verge of a Middle East peace deal.
Iranians are desperate for relief from sanctions that have cut their oil revenue by more than half, crashed their currency and made international banking all but impossible, but they may not understand the price of relief. “I suspect they are heading for sticker shock,” one official deeply involved in developing the American negotiating strategy said recently.
I am by no means a war-hawk; as a political / development economist, I understand that no MDG has ever been sustained in a conflict region. Peace and political stability are necessary preconditions for sustainable human development, which is the ultimate goal of development practitioners / human rights advocates around the world (it is also at the core of the UNDP’s strategic plan for 2014-2017, which is where I was introduced to the term). Sustainable development requires development not be achieved at the expense of the environment / future generations. The human-rights-based-approach to development requires that development not be achieved by exploiting the worlds most impoverished / violating their human rights. Put together, these two concepts form the concept of sustainable human development; this is the only truly sustainable form of development as it reduces the probability that conflicts–which tend to have human rights violations at their core–will undo otherwise environmentally sustainable development gains.
But I am also a realist. I understand that sometimes revolutions are needed in order to overcome structural impediments to sustainable human development, such as an autocratic regime. Such regimes are not accountable to their people, and while there may be “benevolent dictators”, there is nothing sustainable about someones rights being granted by an individuals benevolence (he may change his mind, or be succeeded by a less progressive ruler). In this vein, effective democracy is the only means to sustainable human development. It is not some “western value” that drives my passion for democratic governance, it is my belief in the power of people, self-determination, and “development as freedom” which fuels this passion.
In the real world, concepts such as human rights and effective democracy are kept at bay by vested interest who would lose power if civil societies as a whole were empowered. These vested interests rely on collective action problems (I gain a lot as-is, by changing each person only gains a little) to maintain the status-quo. When collective action problems are overcome (a process which has been aided by innovations in social media / ICTs), vested interests often turn to military power to maintain their positions. I find this to be unconscionable, and therefore give some of my time to doing what little I can to try to shape the world as I believe it should be.
Diplomacy is a powerful preventative tool. However, I am less sold on diplomacy’s “soft-power” when the gloves come off and all-out war begins. Diplomacy is always more effective in democracies (where governments are accountable to the will of the people) than in autocracies (where the survival of the regime is the governments number one priority).
Syria: As you could probably tell, I am not sold on the “solution” to destroy Syria’s chemical weapons. I think this is a stalling tactic, which will further entrench Assad’s grip on power and further marginalize the legitimate Syrian opposition. I hope I am proven wrong, but I am not optimistic.
The Syrians now face a series of deadlines. The first comes this weekend, when they must issue a declaration of their chemical stocks that “passes the laugh test,” as Gary Samore, Mr. Obama’s former top adviser on unconventional weapons, put it earlier in the week.
It is also concerning that, so soon after a deal was reached and before any part of the deal has been carried out, Russian Foreign Minister Sergei Lavrov is already calling for Western Nations to “force” the Syrian opposition into peace talks with Assad.Mr. Lavrov does not seem to understand that democratic governments cannot “force” people to do things; furthermore, Western powers do not have that sort of leverage as they have till this point been largely absent in aiding the Syrian opposition. It is not surprising Mr. Lavrov had this misunderstanding, in Russia the government can indeed force people to do things.
Even more concerning is President Putin’s recent assertion that the UN chemical weapons report, which did not explicitly accuse Assad but does does implicitly suggest his regime was responsible for the August 21st chemical weapons attacks, is “biased”. He later goes on to say the Assad regime has evidence suggesting the rebels are responsible. So Putin would have us believe the UN is biased, but Assad is not? Sorry, but I’m not buying that and neither should you.
“On delivering weapons we have always said that we want to control these supplies so that they do indeed go to the Free Syrian Army … because they represent the Syrian National Coalition that we recognise as the legitimate representative of the Syrian people and today they are caught between a hammer and an anvil,” Hollande said.
“The hammer is the air strikes and actions of the Syrian regime and the anvil is radical Islam,” he said.
If the U.S. also agrees to arm the FSA, and can garner international support to strike Assad in response to confirmed chemical weapons usage, the Syrian-stalemate can be overcome and the democratic aspirations of the Syrian people realized.
Egypt: With Chemical weapons use in Syria dominating news, unrest in Egypt has taken a back-seat on the international communities agenda. However, fighting between Islamic Militants and the Egyptian Army continues. It is the job of the Egyptian military to rid Egypt of these extremists and ensure stability. It is not the Egyptians army’s job to condemn all Muslim’s as terrorists (as it has in the aftermath of the Morsi ouster). The Egyptian military wishes to remain unaccountable to the Egyptian people–it is not committed to effective democratic rule–as expressed in a draft of the new Egyptian Constitutional Declaration.
The Islamist assembly pointedly excluded prominent feminist, activist and secularist voices. It’s unclear to whom the current committee — appointed by an interim president, backed by the army, packed with the heads of official institutions — is accountable beside the state itself. Organizations such as the Journalists’ Syndicate have already complained that their recommendations on press law and freedoms of speech have been overlooked.
And this assembly, just like the previous one, is rushing its work, and conducting it with little transparency. In fact, the Islamist assembly may have been better at sharing information about its progress: It maintained a Web site tracking the latest discussions and amendments. We learn of the workings of the current assembly only through sporadic interviews its members give to the press.
This issue could be addressed in the coming weeks. And there are many ways in which the current constitution could improve upon the last. Hoda Elsadda, a founding member of a prominent feminist research center who heads the freedoms and liberties subcommittee, says she want to include an article prohibiting discrimination and human rights violation by the security services. Several members of the assembly have voiced their opposition to military trials of civilians. The rights of religious minorities, women and children — given short shrift in the last document — will probably receive greater emphasis now.
ButIn a country ruled by the military, and amid a declared war on terrorism, it seems very unlikely that the constitution’s biggest shortcomings will be addressed. The draft as it stands now subjects fundamental freedoms to vague qualifications that render them meaningless: These freedoms must be exercised “according to the law” or as long as they don’t hinder “national security.” The document places the army above oversight and accountability.
And it sets many Egyptians — not just supporters of the Muslim Brotherhood — on the sidelines of what should be a national conversation and a fresh start.
To be fair, Morsi’s constitutional drafting process was not exactly inclusive either. But Morsi’s regime was willing to work within the democratic process, while General Sisi is not. The democratic aspirations of the Egyptian people will likely come second to ensuring the military’s grip on power.
Iran: Iranian President Rouhani, a relative moderate, has been much more diplomatic towards the West than his predecessor Mahmoud Ahmadinejad. The Iranian economy has been crippled by 5 years of economic sanctions, and in order to have those sanctions lifted, Iranian leaders appear willing to negotiate an agreement on ending Iran’s nuclear weapons program (which it denies having):
American officials say they understand that Iran will need some kind of enrichment ability to assure its own people that it has retained its “nuclear rights,” as its negotiators say.The question is how much. Unless a good deal of the current infrastructure is dismantled, Iran will be able to maintain a threshold nuclear capability — that is, it will be just a few weeks, and a few screwdriver turns, from building a weapon. It is unclear whether Mr. Obama can live with that; the Israelis say they cannot.
The NYT article talked about “sticker shock”, the price Iran will have to pay in order to keep its nuclear rights and have sanctions against it removed. In a previous post, I laid out conditions I thought Iran should have to agree to in order to have sanctions removed:
The issue comes down to transparency, accountability, and ultimately governance. Can countries without the traditional checks and balances present in Western democracies be credible partners? Can they actually uphold their promises, or are they merely trying to buy time / have sanctions eased until it is beneficial to renege on their commitments?
The burden of proof falls on Iran and North Korea on this one. If either country wishes to be allowed to enrich uranium for peaceful purposes without dealing with crippling international sanctions, certain conditions must be met. Most notably, independent international inspectors must be given unrestricted access to known / suspected uranium enrichment facilities; if either country can fulfill this condition, then it will have earned the right to enhance uranium for peaceful purposes.
I still believe these conditions should be part of any talk to ending sanctions against Iran.
Diplomacy is a powerful tool, but it has it’s limits. Both diplomacy and military action, as well as economic leverage and intelligence sharing, combine to form the D.I.M.E foreign policy paradigm I believe the U.S. should pursue.
5 years of sanctions were needed to bring Iran to the bargaining table, and the threat of force was needed to get Assad to admit he had chemical weapons / agree to dismantle his arsenal. Only time will tell how / if these complex issues can be resolved thought diplomacy. One thing is certain; we cannot trust dictators or take them at their word, their commitments must be verifiable. In order to hold a dictator accountable for his concessions, international investigators must be given unfettered access to any point of interest. This requires relinquishing some “national sovereignty”, something no country–democratic or otherwise–likes to do.
The U.S. failed to drive a hard enough bargain (in my mind) on chemical weapons with the Syrian regime. At least as a starting point, Western powers should make their demands clear and strong heading into negotiations with otherwise unaccountable regimes.
The G20 Leader’s summit was held in St. Petersburg, Russia over the past 2 days. While much has been made over the lack of an international consensus on Syria, less attention has been given to agreements made on global political economy decisions. Global leaders reinforced the importance of cooperation, transparency and trust on global issues such as renewable energy / climate change, sustainable economic development, financial regulation and tax avoidance.
Furthermore, the international community reaffirmed its commitment to the UN Post-2015 Development Agenda, with a human rights based approach to sustainable human development at it’s core. It also reaffirmed the idea that certain issues (ex tax avoidance, financial regulation) require global policy coordination to be effective, and recognized the G20’s unique ability–by representing 2/3 of the worlds population and 90% of economic output–to hold countries accountable for “cheating” on international agreements.
The resolution reaffirmed the importance of rule of law, transparency, and judicial independence for fostering trust between civil society and governments, and conversely how corruption can undermine both this trust and the trust between governments in global governance mechanisms. In recognition of the destructive power of corruption, the resolution reaffirms a global effort to combat corruption through education campaigns and empowering civil society to practice “social accountability” via ombudsman’s offices / NHRIs.
(It should be noted that grandiose rhetoric is often used in global policy summits. There is a difference between resolutions and implementing / financing programmes to operationalize those resolutions. However, at least on the sustainable economic development and global policy coherence fronts, important groundwork was laid down at the summit)
G20 LEADERS’ DECLARATION Saint Petersburg Summit 5-6 September 2013 Preamble
5. We understand that sound and sustainable economic growth will be firmly based on increased and predictable investments, trust and transparency, as well as on effective regulation as part of the market policy and practice.
6. As Leaders of the world’s largest economies, we share responsibility for reinforcing the open and rules-based global economic system. We are committed to working cooperatively to address key global economic challenges:
Achieving a stronger recovery while ensuring fiscal sustainability. We have today agreed the St Petersburg Action Plan, which sets out our strategies to achieve strong, sustainable and balanced growth.
Unemployment and underemployment, particularly among young people. We are united in the resolve to achieve better quality and more productive jobs. Coordinated and integrated public policies (macroeconomic, financial, fiscal, education, skills development, innovation, employment and social protection) are key to reach this goal. We today committed to continue our efforts to support inclusive labour markets, with the exchange of country-specific plans or sets of actions, developed as appropriate according to our different constitutional circumstances.
(In line with the principle of self-determination)
Free and rules-based trade fosters economic opportunities. We stress the crucial importance of strong multilateral trading system and call on all the WTO members to show the necessary flexibility and reach a successful outcome in this year’s multilateral trade negotiations. We extend our commitment to refrain from protectionist measures and aim at enhancing transparency in trade, including in regional trade agreements.
Cross-border tax evasion and avoidance undermine our public finances and our people’s trust in the fairness of the tax system. Today, we endorsed plans to address these problems and committed to take steps to change our rules to tackle tax avoidance, harmful practices, and aggressive tax planning.
We have agreed and are implementing a broad range of financial reforms to address the major fault lines that caused the crisis. We are building more resilient financial institutions, making substantial progress towards ending too-big-to-fail, increasing transparency and market integrity, filling regulatory gaps and addressing the risks from shadow banking. We will pursue our work to build a safe, reliable financial system responsive to the needs of our citizens.
G20 countries have a responsibility to ensure that all people have an opportunity to gain from strong, sustainable and balanced growth. We endorse the St Petersburg Development Outlook to focus our efforts on concrete steps to improve food security, financial inclusion, infrastructure, human resource development and domestic resource mobilization.
(The universality of human rights based development)
Corruption impedes sustainable economic growth and poverty reduction, threatening financial stability and economy as a whole. We will hold ourselves to our commitment to implement the G20 Anti-Corruption Action Plan, combating domestic and foreign bribery, tackling corruption in high-risk sectors, strengthening international cooperation and promoting public integrity and transparency in the fight against corruption. Recognizing the need for sustained and concerted efforts we endorse the St Petersburg Strategic Framework.
We share a common interest in developing cleaner, more efficient and reliable energy supplies, as well as more transparent physical and financial commodity markets. We commit to enhance energy cooperation, to make energy market data more accurate and available and to take steps to support the development of cleaner and more efficient energy technologies to enhance the efficiency of markets and shift towards a more sustainable energy future. We underscore our commitment to work together to address climate change and environment protection, which is a global problem that requires a global solution.
We will continue to develop comprehensive growth strategies to achieve stronger, more sustainable and balanced growth in the context of fiscal sustainability.
7. Too many of our citizens have yet to participate in the economic global recovery that is underway. The G20 must strive not only for strong, sustainable and balanced growth but also for a more inclusive pattern of growth that will better mobilize the talents of our entire populations.
(“no-person-left-behind” human rights based approach (HRBA) to development, inclusive growth to reduce inequalities of opportunity / break power asymmetries)
Global Economy and G20 Framework for Strong, Sustainable and Balanced Growth 10. We consider the main challenges to the global economy to be:
Weak growth and persistently high unemployment, particularly among youth, and the need for more inclusive growth in many economies;
Financial market fragmentation in Europe and the decisive implementation of banking union;
Slower growth in some emerging market economies, reflecting in some cases the effect of volatile capital flows, tighter financial conditions and commodity price volatility, as well as domestic structural challenges;
Insufficient levels of private investment in many countries, in part due to continuing market uncertainties, as well as internal rigidities;
High public debt and its sustainability in some countries that need to be addressed while properly supporting the recovery in the near-term, especially in countries with the highest actual and projected debt to GDP levels;
Volatility of capital flows as growth strengthens and there are expectations of eventual monetary policy recalibration in advanced economies;
An incomplete rebalancing of global demand; and
Continued uncertainties about fiscal policy deliberations.
15. We reiterate that excess volatility of financial flows and disorderly movements in exchange rates can have adverse implications for economic and financial stability, as observed recently in some emerging markets. Generally stronger policy frameworks in these countries allow them to better deal with these challenges. Sound macroeconomic policies, structural reforms and strong prudential frameworks will help address an increase in volatility. We will continue to monitor financial market conditions carefully.
16. We commit to cooperate to ensure that policies implemented to support domestic growth also support global growth and financial stability and to manage their spillovers on other countries.
(Accountability for extra-territorial human rights obligations)
Growth through Quality Jobs
26. Policy reforms to support higher employment and facilitate job creation and better matching of skills with job opportunities are central in our growth strategies. We commit to take a broad-ranged action, tailored to national circumstances, to promote more and better jobs:
Invest in our people’s skills, quality education and life-long learning programs to give them skill portability and better prospects, to facilitate mobility and enhance employability.
(Human capital investment for sustainable human development)
29. Promoting youth employment is a global priority. We are committed to quality apprenticeship and vocational training programmes, finding innovative ways to encourage firms to hire youth for example by, where appropriate, reducing non-wage labour costs, moving towards early intervention measures and effective job-search assistance for different groups of youth, and motivating youth entrepreneurship and business start-ups. Tailored strategies including youth guarantee approaches, developing school and university curricula that support entrepreneurship, and facilitating exchange of best practices among the G20 countries and the social partners are crucial in this respect.
(Recognizing youth as a critical stage of personal and professional development, and adequate investment reflecting this recognition)
Growth through Quality Jobs 81. Supporting strong, sustainable, inclusive and resilient growth and narrowing the development gap remain critical to our overall objective for jobs and growth. In this regard, we welcome the progress within the forum achieved this year, in particular on:
Food Security: Support to the Secure Nutrition Knowledge Platform, exchange of best practices through the seminar on “Food Security through Social Safety Nets and Risk Management”, and convening the second G20 Meeting of Agricultural Chief Scientists, along with its ongoing work to identify global research priorities and targets and support results-based agricultural research in 2014.
Infrastructure: Completion of the Assessment of Project Preparation Facilities (PPFs) for Infrastructure in Africa; a toolkit on Urban Mass Transportation Infrastructure Projects in Medium and Large Cities by the World Bank and the ADB; and a public-private partnerships (PPP) sourcebook by the World Bank, IDB and ADB, and progress in implementing the recommendations of the High Level Panel on Infrastructure.
(PPP for physical and human capital investments. Both governments and businesses rely on productive societies for growth.)
Financial Inclusion: Enhanced coherence with the G20 finance track through the Global Partnership for Financial Inclusion (GPFI) to pursue efforts to strengthen financial inclusion including work to further reducing the global average cost of transferring remittances to 5% including through innovative result-based mechanisms, to enhance financial literacy and consumer protection for the poor and to foster access to finance for investment, for SMEs for growth, job creation and poverty reduction; and together with the IFC launching the Women Finance Hub.
Human Resource Development: Launch of a global public-private knowledge sharing platform on skills for employment and the development of national actions plans on skills for employment in LICs and of a database on skills indicators.
Inclusive Green Growth: Further development, dissemination and implementation of the non-prescriptive, voluntary toolkit of policy options for inclusive green growth in the context of sustainable development, including a workshop with developing countries, and initiation of the G20 Dialogue Platform on Inclusive Green Investments for sustainable development and poverty eradication.
Domestic Resource Mobilization: Continued work on strengthening tax administrations in developing countries, particularly LIC’s, through both bilateral and multilateral programs, such as the work of the OECD and G20 members on BEPS, automatic exchange of information, the Global Forum on Transparency and Exchange of Information for Tax Purposes and “Tax Inspectors without Borders” and the expansion of the work of the World Bank Group and the IMF to support developing countries’ ability to raise domestic resources.
83. We welcome the Saint Petersburg Accountability Report on G20 Development Commitments, which sets out the progress achieved since we adopted the 2010 Seoul Multi-Year Action Plan on Development (MYAP) (Annex). This report demonstrates that many of our development commitments have now been implemented and identifies lessons learned and it highlights the successes achieved. The Accountability Report underlines the importance of continued monitoring and identifies areas where we must continue to work and opportunities to strengthen and streamline the G20 development agenda.
84. In this spirit, we endorse the Saint Petersburg Development Outlook, which states our core priorities, new initiatives and ongoing commitments (Annex). Building on the foundation of the 2010 Seoul Development Consensus for Shared Growth, the Outlook frames the approach to our future work. We ask the Development Working Group to focus on concrete actions under the core priorities of food security, financial inclusion and remittances, infrastructure, human resource development and domestic resource mobilization, and to deliver specific outcomes at the Brisbane summit. We commit to improve working practices for more effective outcomes by:
concentrating on fewer key areas where action and reform remain most critical to ensure inclusive and sustainable growth in developing countries;
enhancing policy coordination across different G20 work streams in order to ensure greater impact on developing countries;
implementing a forward accountability process to improve monitoring and coordination, and ensure greater transparency of our work;
continuing to expand engagement and partnerships with stakeholders, including non-G20 countries (especially LICs), international organizations, the private sector and civil society; ensuring flexible approaches to respond to new priorities and circumstances
(Post-2015 development agenda consultations—human rights (political and social empowerment) for inclusive global and national agenda setting)
85. We welcome the substantial progress towards achieving the Millennium Development Goals (MDGs) since 2000 and the success in galvanizing global action to reach specific targets globally, as well as in individual countries, particularly in eradicating extreme poverty and promoting development. However, the prospects for achieving all of the MDGs differ sharply across and within countries and regions. We remain committed to accelerating progress towards achieving the MDGs, particularly through the implementation of our development agenda and our focus on promoting strong, sustainable, inclusive and resilient growth.
86. We support the ongoing efforts in the UN for the elaboration of the post-2015 development agenda. We commit to participate actively in this process and engage in the discussion on the direction of the new framework and its key principles and ideas and effectively contribute to the timely conclusion of the process. The final outcome will be determined through an intergovernmental process in which we will all participate, but much preparatory work is still underway. We welcome the contribution of the report prepared by the High-Level Panel of Eminent Persons on the Post-2015 Development Agenda, which sets out some illustrative goals We also welcome the ongoing work of the UN General Assembly Open Working Group on Sustainable Development Goals and Intergovernmental Committee of Experts on Sustainable Development Financing. We stress the crucial importance of collective action, including international development cooperation, based on the principles outlined in the Millennium Declaration, the 2012 Rio+20 outcome document “The Future We Want”, the Istanbul Declaration and Programme of Action of the Fourth UN Conference on Least Developed Countries and the outcomes of other relevant UN Conferences and Summits in the economic, social and environmental fields.
87. We call for an agreement on an integrated post-2015 development agenda with concise, implementable and measurable goals taking into account different national realities and levels of development and respecting national policies and priorities, focused both on the eradication of extreme poverty, promoting development and on balancing the environmental, economic and social dimensions of sustainable development. We commit to ensure that G20 activities beyond 2015 are coherent with the new development framework.
Sustainable Energy Policy and Resilience of Global Commodity Markets
95. Sizable investment, including from private sources, will be needed in the G20 and other economies in energy infrastructure in the years ahead to support global growth and development. It is our common interest to assess existing obstacles and identify opportunities to facilitate more investment into more smart and low-carbon energy infrastructure, particularly in clean and sustainable electricity infrastructure where feasible. In this regard we encourage a closer engagement of private sector and multilateral development banks with the G20 Energy Sustainability Working Group (ESWG) and call for a dialogue to be launched on its basis in 2014 that will bring interested public sector, market players and international organizations together to discuss the factors hindering energy investment, including in clean and energy efficient technologies and to scope possible measures needed to promote sustainable, affordable, efficient and secure energy supply.
Intensifying Fight Against Corruption
103. Corruption is a severe impediment to sustainable economic growth and poverty reduction and can threaten financial stability and the economy as a whole. Corruption is corrosive, destroying public trust, distorting the allocation of resources and undermining the rule of law. To provide a better understanding of the factors constraining the economic potential of countries affected by corruption, we make available the Issues Paper on Anti-Corruption and Economic Growth and encourage the OECD, in collaboration with the World Bank to continue work in this area.
104. As a group of the world’s largest economies, the G20 has the potential to create unstoppable momentum towards a global culture of intolerance towards corruption. We will redouble our efforts to achieve this goal, in particular by enhancing transparency and closing implementation and enforcement gaps.
108. We renew our commitment to ensure the independence of the judiciary, as well as to share best practices and enforce legislation to protect whistleblowers, ensure the effectiveness of anti-corruption authorities free from any undue influence, and promote the integrity of public officials.
109. We also place a high value on implementing and raising awareness regarding effective anti-corruption education programs to build and reinforce a culture of intolerance towards corruption.
(The importance of “social accountability” and access to information in combating corruption, claiming human rights / holding violators accountable)
112. We recognize that a culture of intolerance towards corruption will only be achieved if we work in partnership with business and civil society. We commit to maintain and build on the enhanced dialogue between the G20 Anti-Corruption Working Group and the B20 and C20, and have taken note of the recommendations of these two groups. In particular, we welcome the business community’s initiatives to enhance anti-corruption collective actions and to develop institutional arrangements to promote anti-corruption compliance in the private sector.
(Consultative policy setting agenda, PPPs for shared programme financing, accountability / oversight, and technical assistance in realization of different stakeholders comparative advantages and common goals)
From the international financial and monetary systems to international tax-evasion to armed conflicts, the worlds leaders are getting together to figure out how to minimize human rights violations and hold parties accountable for their violations.
The ultimate goal is to put in place global and national policies needed for sustainable human development in the 21st century–an ambitious goal indeed! Difficulty must not deter our normative visions for the future; as a global community we must attack these issues proactively and in a preventative nature whenever possible.
I urge the NN community to stay up-to-date on G20 related news. I will be sure to write a blog upon the conclusion of the G20 leaders summit.
President Enrique Peña Nieto of Mexico on Monday, pushing one of the most sweeping economic overhauls here in the past two decades, proposed opening his country’s historically closed energy industry to foreign investment.
Mr. Pena Nieto’s goal, like those of presidents before him, is to recharge Mexico’s economy by tackling areas that analysts agree hinder its expansion, which has averaged just 2.2 percent a year since 2001, according to the Organization for Economic Cooperation and Development.
Perhaps the worst of those is the creaky energy sector. Demand for energy in the country is growing so fast that Mexico could turn from an energy exporter to an energy importer by 2020, the government says.
Already, Mexico must import almost half its gasoline, mostly from the United States. Mexican companies pay 25 percent more for electricity than competitors in other countries, the government says. Although Mexico has some of the world’s largest reserves of shale gas, it imports one-third of its natural gas.
“With the reform that we are presenting, we will make the energy sector one of the most powerful engines in the economy,” Mr. Peña Nieto said at a ceremony to present the plan on Monday.
Mexico’s left-wing parties have been adamant that the Constitution’s 75-year-old prohibition on private investment should remain ironclad. From the right, the National Action Party, or PAN, proposed energy reform last month that would go even further than Mr. Peña Nieto to invite in private investment.
Public opinion is also suspicious about opening up the industry. A survey last year by CIDE, a Mexico City university, found that 65 percent of the public opposed private investment in Pemex, the state-owned oil monopoly.
The proposal would allow private companies to negotiate profit-sharing contracts with the government to drill for oil and gas. Under such a scheme, the reserves would continue to belong to the Mexican state, but investors would get a share of the profits. Private investment would be allowed in refining, oil pipelines, and petrochemical production.
Since the 1994 North American Free Trade Agreement exempted energy from Mexico’s broad economic opening, presidents have attempted to loosen the prohibitions that give Pemex sole control over all oil and gas exploration and production. No joint ventures are allowed. Those past proposals have often withered in Congress.
But this time, the precipitous decline of Mexico’s energy industry may work in Mr. Peña Nieto’s favor.
Pemex, which was long an important source of crude imports into the United States, is spending more to pump less. As Mexico’s giant Cantarell oil field in the shallow waters of the Gulf of Mexico has declined, production has dropped 25 percent from the peak in 2004, to just over 2.5 million barrels of oil a day.
At the same time, the amount the government budgets for Pemex to invest has steadily climbed to $26 billion this year. To increase production and reserves, Pemex needs to drill in the deep waters of the Gulf of Mexico and in onshore deposits of shale oil and gas. But the company has neither the capital nor the expertise to increase production significantly, analysts say.
There are a number of reasons why now is the proper time for Mexico to open up its energy industry to FDI. Mainly;
1) Economic: Loose monetary policy is conducive to FDI. Investors can borrow at historically low rates, while energy is a relatively safe investment (if anything energy prices will only go up as the global economy strengthens). Even if Mexico puts strict regulations and high taxes on foreign operations (which it certainly should, more about this later), the opportunities for a relatively low risk-high reward investment exist. These factors will attract many potential investors, allowing Mexico to drive a harder bargain and secure the best deal for the Mexican people.
2) Political: Political instability and armed conflict in the Middle-East and Northern Africa make Mexico’s main competition for FDI much less attractive. Venezuela and Russia ramped up anti-Western rhetoric in recent months; the trust needed for large-scale investments may be compromised. Look at the updated 2013 Political Risk Map; Mexico is arguably the most politically stable major oil producing country, both in terms of internal stability and in a regional context. When considering investing in extractive industries–with high start-up costs and very asset-specific capital investments–peace, stability, and trust are very important components of any deal. These factors are often more important than traditional “race to the bottom” incentives.
The Mexican people are right to be wary of private investment in their natural resources. Natural resource rents can be a powerful tool for human development, if they are used the right way. However, globalization in extractive industries in the past decades has been marked with human rights violations, corruption, exploitation, and violence. This so called “natural resource curse” is not inevitable, but without proper oversight and accountability, “bad” governments will always be willing to cut lucrative deals from themselves and private corporations, at the expense of society as a whole.
I do not see this as an issue in Mexico for a few reasons. Primarily, the linkages between governance, extractive industries, corruption, and sustainable human development are now well understood by the international community. Mexico, by waiting to liberalize it’s energy sector, has the benefit of adopting best practices / avoiding worst practices from past ventures. There is also a strong belief in Mexico that the oil belongs to the people. Political opposition, once the energy sector is liberalized, will manifest itself as “watch-dog” organizations and other social accountability mechanisms. Social accountability (aided by social media and ICT), relatively good governance at the global and national level, alongside the comparative advantages addressed earlier, suggest that Mexico will have a very positive experience liberalizing its energy sector (assuming the political will to develop exists).
If Mexico’s natural resources stay underground, they cannot be utilized for development purposes. The article cites a lack of capital and expertise holding back the Mexican energy sector–FDI addresses both of these impediments. A new trend Mexico may want to utilize is having private investors pay for development projects–such as schools, hospitals, or other human capital enhancing institutions–as a way of signalling the investors desire for a mutually beneficial and long term relationship. Furthermore, because of high taxes, private companies will make it a point to run operations as efficiently as possible, maximizing both their share and Mexico’s share of profits. A quadruple layer of private, governmental, international and social accountability will exist, diminishing opportunities for embezzlement and corruption by state or private interests.
The time is right for Mexico to liberalize it’s energy sector from a policymaker and investors point of view. However, this does not necessarily mean that the Mexican lay-man will agree with this assessment. The Mexican people’s distrust of FDI in extractive industries is understandable; it is the Mexican governments job to educate the public, assuring them that policies and safeguards will be put in place to ensure that liberalizing the energy sector benefits society as a whole, not just vested interests.
“It is fine to appeal to rationality, but when it is about these issues, it’s indispensable to touch the audience’s heart,” wrote an analyst, María Amparo Casar, in the Excelsior newspaper last week.
In a democracy, big policy changes generally require popular support. The rational political economy argument for liberalizing Mexico’s energy sector is strong. The remaining road block is convincing the Mexican people that such liberalization is in their best interests.
A small clerical issue; I have decided to add a new category, “Green News”, because environmental issues are such an important component of sustainable human development. I also feel like I have been focusing too much on conflicts and economic news, this new category will hopefully help balance out the content I produce.
“K.S. Sivaprasad, an engineer from India, spent four decades perfecting a factory that accepts city trash, dries it, picks out the burnable elements and ignites them to create electricity. His first full-scale plant chews through 700 tons of garbage a day and delivers 5.5 megawatts to the power grid.”
In the U.S., waste-to-energy used to be unregulated and, as you could imagine, quite environmentally harmful. Burning trash, without taking the proper measures, released all sorts of greenhouse gasses into the atmosphere. Over time, the process has become more regulated and environmentally friendly:
“Proponents of WTE technology argue that thermal processing is a form of recycling and that new technologies and EPA regulations have eliminated the odor and air pollution many people connect with the process of incinerating trash. Professor Nickolas J. Themelis, director of the Earth Engineering Center at Columbia University, said he thinks that much of the opposition to creating WTE plants in the city stems from people’s memories of the bad old days.
“At one point New York had 30 municipal incinerators and about 15,000 residential incinerators with no regulation at all. It was a mess,” said Themelis. “There is this kind of animus among people who have been exposed to incinerators in the past. They associate them with black smoke and horrific pollution. But the truth is, those are all gone now. The pollution generated by trucking waste to landfills can’t compare to how little a modern WTE facility produces. The people who oppose these technologies are like the Flat Earth Society, they are holding back progress.”
“Mayor Michael R. Bloomberg announced on Tuesday that the city was looking for a pilot “state of the art facility” that could handle a maximum of 450 tons of trash a day — out of a total of 10,000 tons currently in need of disposal — with plans to double that capacity if successful. The plant, which must be in New York City or no farther than 80 miles away, would be privately built and operated.”
After months of frustrating delays, a chemical company announced Wednesday that it had produced commercial quantities of ethanol from wood waste and other nonfood vegetative matter, a long-sought goal that, if it can be expanded economically, has major implications for providing vehicle fuel and limiting greenhouse gas emissions.
The company, INEOS Bio, a subsidiary of the European oil and chemical company INEOS, said it had produced the fuel at its $130 million Indian River BioEnergy Center in Vero Beach, Fla., which it had hoped to open by the end of last year. The company said it was the first commercial-scale production of ethanol from cellulosic feedstock, but it did not say how much it had produced. Shipments will begin in August, the company said.
The process begins with wastes — wood and vegetative matter for now, municipal garbage later — and cooks it into a gas of carbon monoxide and hydrogen. Bacteria eat the gas and excrete alcohol, which is then distilled. Successful production would eliminate some of the “food versus fuel” debate in the manufacturing of ethanol, which comes from corn.
The plant has produced “truckloads” of ethanol, said Mr. Williams [Chief Executive of INEOS Bio], but still has work to do to improve its yield. Mr. Niederschulte [Chief Operating Officer of INEOS Bio] said, “Now we want to produce more ethanol from a ton of wood, rather than just making ethanol from a ton of wood.”
The Department of Energy hailed the development as the first of a kind, and said it was made possible by research work the department had sponsored in recent years.
If ethanol can be produced at reasonable cost from abundant nonfood sources, like yard trimmings or household trash, it could displace fuel made from oil, and that oil, and its carbon, could stay in the ground, reducing the amount greenhouse gases in the atmosphere, experts say. Carbon from wood scraps or garbage would enter the atmosphere via cellulosic ethanol, but cutting down a tree or trimming a garden creates space for new growth, which absorbs carbon dioxide from the air.
Funny enough, I recently had a conversation with a friend of mine about garbage and recycling. I was wondering how to overcome the obstacle of people simply throwing away recyclable waste. I argued there should be public sector jobs for people to perform such a task. His response was that the private sector already has incentive to sift through garbage, and does via waste management businesses. Duh!
Back on topic, it certainly seems like recycling has reached a “golden age”. I am not just talking about conventional recycling, which people do themselves and other factors both private and public, formal and informal, supplement. This is about the possibilities of turning waste, garbage, rubbish, or whatever you wish to call it, into both electricity and liquid fuel. The only hurdle which remains (and admittedly a big one) is commercial viability.
Sustainable development requires innovative thinking, like harnessing electricity from the sun, or wind, or tidal power. This is a perfect example of why we need subsidies and government funded R & D into renewable energy (and public education in general), because the power of innovation is what will ultimately lead to sustainable development in the 21st century. The creative economy is a major engine for sustainable growth, and must be fostered through investment in human capital.
Innovations such as these will only become more important as the worlds population continues to balloon. We have reached a point where one mans trash is literally another mans treasure–a consistent and sustainable source of treasure.
“The Group of 20 nations pledged on Saturday to put growth before austerity, seeking to revive a global economy that “remains too weak” and adjusting stimulus policies with care so that recovery is not derailed by volatile financial markets.”
“Finance ministers and central bankers signed off on a communiqué that acknowledged the benefits of expansive policies in the United States and Japan but highlighted the recession in the euro zone and a slowdown in emerging markets.”
“Officials backed an action plan to boost jobs and growth, while rebalancing global demand and debt, that will be readied for a G20 leaders summit hosted by President Vladimir Putin in September.
“Sources at the meeting said Germany was less assertive than previously over commitments to reduce borrowing to follow on from a deal struck in Toronto in 2010, with the improving U.S. economy adding weight to Washington’s call to focus on growth.
With youth unemployment rates approaching 60 percent in euro zone strugglers Greece and Spain, the growth versus austerity debate has shifted – reflected in the fact that G20 finance and labor ministers held a joint session on Friday.”
“The G20 accounts for 90 percent of the world economy and two-thirds of its population – many living in the large emerging economies at greatest risk of a reversal of capital inflows that have been one of the side effects of the Fed stimulus.
‘One thing we would like to emphasize is the importance of coordination,’ said Indonesian Finance Minister Chatib Basri, cautioning that scaling back policies of quantitative easing elsewhere “immediately affects” emerging markets.”
“The International Monetary Fund warned that turbulence on global markets could deepen, while growth could be lower than expected due to stagnation in the euro zone and slowdown risks in the developing world.
‘Global economic conditions remain challenging, growth is too weak, unemployment is too high and the recovery is too fragile,’ Managing Director Christine Lagarde told reporters. ‘So more work is needed to improve this situation.'”
Fiscal stimulus efforts must be coordinated; if they are not, the benefits of an individual countries stimulus programs will not be fully realized. Consider a hypothetical jobs program in the U.S. If this program is enacted unilaterally, then depressed demand in export markets (ex E.U.) will cause increased production capacity in the U.S. to lead not to greater trade but surplus goods and lower prices–employment gains will not be sustained by the private sector and will likely be reversed once stimulus money runs out. However, if fiscal stimulus programs were coordinated, and both the U.S. and the E.U. increased productive capacity and income, then a basis for trade and self-sustaining growth could emerge, making fiscal stimulus a short-term “shot in the arm” (as it is intended to be) instead of a permanent program (which is not sustainable for governments and often leads to uncompetitive industries).
Monetary policy must also be coordinated. Quantitative Easing by the U.S. Federal Reserve and the Bank of Japan have injected cheap money into the global economy. Seeking higher returns, this cheap money is often channeled towards emerging markets (such as the “BRICS”). One fear is that once QE policies wind down, emerging markets will experience “capital flight” as higher returns become available in more stable markets. In order to temper this inevitable effect of monetary tightening, both monetary policy coordination and “forward guidance” are needed from major central banks. Bernanke recently reasserted that the Fed will continue bond-buying until U.S. unemployment drops to 6.5% or inflation rises to 2.5%. However, this forward guidance is slightly muddled by ideological differences within the Fed, and amplified by Bernanke’s presumed exit as chairman of the Fed early in 2014. Coordinated monetary policy can provide the clarity needed to assuage markets. In a surprise move a few weeks ago, ECB head Mario Draghi “promised rates will remain ‘at present or lower levels for an extended period of time.’”Indications that the ECB and BoJ are committed to providing liquidity to global markets will make the Feds (eventual and inevitable) retreat from QE less damaging to global markets.
This G20 meeting has ushered in much welcome news, “in contrast to an ill-tempered G20 meeting in February colored by talk of currency wars.”
About a month ago, I discussed the impacts of austerity programs on states human rights obligations. This post focused a study Spanish austerity and healthcare. The G20 is more concerned with global issues (although Spain and Greece are still a poster children for youth unemployment and the social deterioration that austerity can cause during a recession, and are therefore common examples for pro-stimulus / anti-austerity proponents).
People often consider human rights as positive or negative rights; either the government has to directly provide a good / service or prevent another party from violating human rights. Another aspect of human rights is creating an enabling environment for sustainable human development. “The right to development, which embodies the human rights principles of equality, non-discrimination, participation, transparency and accountability as well as international cooperation, can guide our responses to a series of contemporary issues and challenges. The right to development is not about charity, but enablement and empowerment. High Commissioner for Human Rights Navi Pillay has called on governments and all concerned…to move beyond political debate and focus on practical steps to implement the Declaration. ‘States have the duty to cooperate with each other in ensuring development and eliminating obstacles to development,’ according to the Declaration (full text here).”
One essential element of the right to development is the international recognized “right to work”. Article 23 of the Universal Declaration of Human Rights states, “Everyone has the right to work, to free choice of employment, to just and favourable conditions of work and to protection against unemployment.”This right is a particularly important aspect of the right to development, as work income provides a means of self-determination and the ability reduce dependence on welfare programs as people attempt to realize their personal goals and aspirations.
Sometimes people do not work because they are lazy, or suffer from physical or mental conditions which impede their ability to find or maintain work. However, when unemployment rates are above 20%, and youth unemployment is above 50%, this can hardly be attributed to laziness (unless you think the world’s lazy people are all collaborating and putting themselves through years of misery in order to remain lazy, but that argument is absurd hard to sell). Such high unemployment levels are due in large part to government inaction / inability to pass stimulus programs, and the negative effects of austerity programs in the face of inadequate private sector demand / personal consumption (this is not stipulation or a normative stance, but rather what textbook economics tells us).
Such high levels of unemployment represent a failure of states to uphold the universal human “right to work”, which undermines the internationally recognized “right to development”. For years now, economic policy has been dominated by politics and vested interests. It is heartening to see national labor and finance ministers finally coming together to “eliminate obstacles to development”. More concrete programs will probably hopefully be hammered out when heads of state come together in Moscow in September for the G20 leaders summit.
I hope this is not “too little too late”, and that the years since the Great Recession took hold have not lead to “lost generations” of young people who are doomed to a lifetime of anti-social, unproductive, and sometimes criminal behavior (as some people have argued). While there will inevitably be some lifetime dependents resulting from the Great Recession (as there always are from traumatic experiences, be they economic downturns, natural disasters or violent conflicts), I am optimistic that as a whole young adults and the unemployed in general are eager to get back to work once the global policy coherence needed to create those jobs is established. G20 meetings this past week represent a meaningful step in that direction.