The International System

Lecture given by Duncan GreenHead of Research at Oxfam GB

Notre Dame University, September 2009

Part of a series of From Poverty to Power lectures.

Main messages

International system must do more of some things, less of others. This includes:

More attention to governance of global public goods and bads, including climate change, migration, taxation, and knowledge

‘Stop doing harm’ on issues such as trade, arms trade, corruption, climate change

Support national development processes, by backing Active Citizens and Effective States

Increase democracy and accountability in global institutions themselves

Global governance growing but no overall plan. Ideally, role includes: Regulating the global economy

Co-ordinating big countries (e.g. via G8)

Redistributing wealth, technology, and knowledge

Averting environmental or health threats

Avoiding/managing war

Preventing powerful countries or corporations from harming weaker and poorer ones

Protecting the most vulnerable

Changing attitudes and beliefs via ‘soft law’ and norms

World Bank and IMF

Born at Bretton Woods, New Hampshire in 1944 as part of new post-war world order (along with UN)

One dollar one vote system; Washington v NY

Influence rose in 1980s debt crisis, leading to 25 years of adjustment-based lending

Failure and eclipse of Washington Consensus, but– Bank has changed more than the Fund– Washington changed more than ‘the field’

Global crisis has revived fortunes of IMF – funding trebled at April 2009 G20 summit – in return for promises of reform

FinanceFinance

Finance $3 trillion crosses borders every day (100 x trade)

Finance most volatile form of cross border flow and least suitable for rapid liberalization

Financial crises becoming deeper and more frequent, usually followed by massive bailouts, ratcheting up inequality

Capital controls can be useful tools, but are being pegged back by new rules (BITs, RTAs)

International action is needed to reduce tax evasion/avoidance (DCs lose an est. $160bn per year through tax havens)

International taxation (e.g. carbon, arms, Tobin) and global tax institutions could raise $, or agree global floor on corporation tax

Trade: rigged rules and double standards Prevalent in 5 areas: barriers, subsidies, forced

liberalization, intellectual property, and migration

Global focus on WTO has hidden growing importance of regional agreements with ‘WTO plus’ clauses

Paralysis of Doha Round is a symptom of shift to multi-polar world

Trade realities remain more important than trade rules

Intellectual property: knowledge protectionism IP = patents, copyrights, and trademarks

A developed, innovating “North” and a developing, imitating “South” makes knowledge flows crucial

Balance between encouraging innovation and spreading knowledge destroyed by TRIPs– In 2005, developing countries paid out $17bn in

royalty and licence fees– TRIPS keeps medicines expensive– Biopiracy is widespread

Replace TRIPs with an access to knowledge convention?

Migration A common and effective response to poverty

The last great protectionism (along with knowledge)

Those who do migrate face barriers and mistreatment

Current remittance flows to developing countries = $240bn – poverty reduction and protection against shocks

Objections are often misplaced, but a political minefield

Best option: enhanced temporary migration

Do we need a World Migration Organization?

Harnessing the transnationals

Privileges and powers but few responsibilities

Growth driven by changes in business, technology, and politics

Concerns include value chains, labour rights, extractive industries, and corruption

Good progress at UN and sectoral level, e.g. anti-corruption conventions

Disputed progress on ‘corporate social responsibility’

Rise in southern TNCs e.g. in telecoms, mining, forestry, infrastructure

Aid

Born with Harry Truman in 1949

$2.3 trillion since then

Successes: Marshall Plan, take-off countries, EU structural funds

Altruism, hubris, and self interest

Huge public debate: – Supporters: Jeffrey Sachs, Paul Collier– Sceptics: William Easterly, Dambisa Moyo

Turnaround since 2000, but donors backtracking on promises and serious quality problems

Good v Bad Aid

How can aid support development?

Do: fund watchdogs, fund long-term, support state capacity, put government in the driving seat, ensure downwards accountability– Measles vaccines save 7.5m lives 1999-2005– Education for All– Rise in General Budget Support (but still tiny %)

Don’t: overcomplicate, impose conditions, support parallel systems, poach staff or tie aid– Over 2 year period, Uganda had to deal with 684

different aid instruments from 40 donors, just for central government funding

US aid The public thinks it = 30% of the federal budget

The reality is 0.6% ($23.5bn in 2006)

Good and bad developments in recent years

Good– HIV (Pepfar) reaching 2m people with ARVs– MCC giving budget support to good governments– Signs of turnaround on aid volumes (but may not

survive recession)

Bad– Increased focus on war on terror/ national security

concerns– In-kind food aid

US aid – a lot of money, but small cf. GDP

And volume has been falling until start of this decade (debt and HIV)

And not that related to poverty

How change happens: How change happens: the Gleneagles agreementthe Gleneagles agreement

How change happens: the Gleneagles agreement 2005 G8 a high point for aid campaigners: leaders

agreed to raise aid levels by $50bn by 2010 and deepen debt write-off

Despite subsequent backsliding, still an important statement of intent

Combination of government (e.g. Commission for Africa) and civil society activism (Make Poverty History and celebrities)

Repetition important at G8 (cf. climate change)

Tsunami and London bombings were factors

Dilemma: is aid like oil?

Impact on

– Policy (conditionality)

– Institutions (transaction costs, paying the piper)

– Politics (severing the social contract)

How big is the political deficit, and how can good aid overcome it?

Further Reading from the Blog How UK government’s thinking on aid has evolved,

http://www.oxfamblogs.org/fp2p/?p=546

The new Papal Encyclical on aid and globalization, http://www.oxfamblogs.org/fp2p/?p=444

Successful aid in Nepal, http://www.oxfamblogs.org/fp2p/?p=298

Dambisa Moyo and the aid sceptics, http://www.oxfamblogs.org/fp2p/?p=273

US aid reform takes off, http://www.oxfamblogs.org/fp2p/?p=266

Further Reading and Links

From Poverty to Power, Part 5

On Trade

• Ha-Joon Chang, Kicking Away the Ladder (2001)

On Aid

• Jeffrey Sachs, the End of Poverty (2005)

• William Easterly, White Man’s Burden (2006)

• Paul Collier, the Bottom Billion (2007)

• http://www.reformaid.org