Paul Martin, Joseph Stiglitz Question Relevance of G8 SummitJoseph Stiglitz
Four months before today’s G8 summit, the Shadow G8 held the first of two meetings to consider which issues should be most important to the representatives in Heiligendamm. The Atlantic Community editorial team has prepared a summary of Shadow G8 recommendations, along with a commentary of what to expect from this week’s Summit participants.
The group agreed that climate change, a top priority of Merkel’s G8 presidency, requires a concerted, global response. Actions suggested were:
- Define a set of principles with clear guidelines, incentive structures, monitoring mechanisms and global standards on the elimination of oil subsidies and distortionary taxes on biofuels, power-generating plants and public measures
- Establish a Global Research Fund with sufficient funding to purchase existing patents
- Give separate assistance funds to developing nations not part of current G8 aid commitments
- Design a post-2012 agenda that moves away from ad hoc measures to create a fair and efficient system based on equal emission targets per dollar, per capita or incorporating a “polluter pays” approach
The discussion at Heiligendamm may not produce tangible results, especially now that the United States has rejected Merkel’s original agenda through the announcement of a new initiative. The US proposal has since been labeled everything from laudable to a poison pill.
There is a high probability of disorderly global economic readjustment, the costs of which will fall disproportionately to developing countries. To address this imbalance, G8 nations should:
- Apportion blame correctly: European and Chinese imbalances cannot compare to US deficits, and the yen is almost never mentioned
- Rectify serious deflationary biases in the global economy, such as Europe’s Growth and Stability pact
- Take stronger action to mitigate risks, such as expanding unconditional lending facilities of the IMF and supporting the development of credit markets in developing countries
- Provide greater scope for developing countries to impose capital interventions for short-term capital without facing repercussions
This should be another high-priority subject during the Summit. The agenda proposed, however, does not give a particular emphasis to rebalancing global patterns of growth, savings and investment, instead favoring the traditional approach of focusing on single countries and regions.
Promoting Growth/Reducing Poverty
Although growing Asian economies show that the current global economic system allows for development, the gap between the richest and the poorest countries continues to increase. The Shadow G8 recommends that Summit nations:
- Live up to previous commitments made at Gleneagles, and not substitute increases real aid flows with debt relief
- Call a moratorium on bilateral trade agreements to reverse the current trend
- Create a system to give developing nations access to generic medicines for all diseases, and create incentives to find cures for diseases primarily affecting developing nations
- Reduce conditionality and improving transparency in conditionality of lending
- Move away from the single-minded focus on corruption
- Allow countries to make their own development choices and still provide access to international funds
After an initial statement that the G8 should get “back to its roots” and discuss primarily issues of international finance, the German government has put development back on the Summit agenda. How comprehensive this turn-around is, however, remains to be seen.
The Shadow G8 held the unanimous opinion that the G8 Summit is no longer the best forum to resolve today’s major global challenges. The non-G8 nations currently not only house 80% of the world’s population, but also generate 50% of the world’s GDP. Developing nations generate an increasing portion of global greenhouse gas emissions. A forum in which China, set to soon become the world’s top emitter of greenhouse gas, is not treated as an equal partner risks becoming irrelevant. Many of the problems facing the world today have a disproportionate effect on developing nations.
The German Presidency has opposed a meaningful expansion of the G8 forum, although invitations to potential new leaders, such as the BRIC countries, have been discussed. The Shadow G8 proposes a new “G-N” format, comprised of the current G8, rising nations such as India, China and Brazil, regional leaders such as South Africa, and heads of organisations such as the African Union in order to represent the populations of smaller countries.
Members of the Atlantic Community, what do you think of the Shadow G8’s recommendations? Would you make the same suggestions if you were invited to participate in such a forum? What are your thoughts and predictions for the 2007 Summit at Heiligendamm? Leave your comments below.
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Prepared by Niklas Keller