How does the world best prevent against shocks to food prices?

Food and grain prices hit record highs over the summer. This was helped in part by the drought in the United States.  The record high prices is prompting an emergency meeting of G-20 agricultural ministers to discuss the issue. The cost of food has dropped since the summer. Still, world leaders are debating what should be done to prevent steep price increases for the future.

France proposes returning to a food stockpile system, similar to how the U.S. has "strategic" stockpiles of oil. Other countries in E.U. disagree and say we should concentrate in increasing crop yields.

From Reuters Alert Net, writer Silvia Aloisi looks into this debate.

Building strategic agricultural stocks to curb market volatility, as proposed by France, would not be the most effective way to tame food prices, EU Development Commissioner Andris Piebalgs said on Monday.

He said what was needed instead was an increase in food production in the world's poorest countries, which remain vulnerable to the threat of a new food crisis despite the recent easing in grain prices from record highs hit this summer.

Last month, French President Francois Hollande launched a global campaign to win support for creating strategic stockpiles of food commodities after a year of drought renewed fears of a new crisis in agricultural supplies.

Paris has also called an emergency meeting of G20 farm ministers for mid-October to discuss ways to curb price volatility.

"I believe it is one of the instruments but it is not the most effective," Piebalgs told Reuters in an interview on the sidelines of an international cooperation conference in Milan when asked about the French stockpiles proposal.

"The answer to food insecurity is sufficient food production in the world's poorest regions," he said, adding that increasing investments in agriculture was the best way to keep a lid on prices.

"Resilience in farming, access to water, fighting against climate change, crops, access to the markets - it's a lot of elements, one element does not help sufficiently," he said.

G-20 comes up with an action plan to deal with food prices

On Thursday, the agricultural ministers of the world's 20 largest economies met to deal with surging food prices. While it is encouraging that there was discussion, the action plan they came up with falls short of what many advocates for the poor were hoping for.

From the Guardian, writer Mark Tran reports from the meetings in Paris.

The French agriculture minister, Bruno Le Maire, called agreement on a 24-page action plan unveiled in Paris as a "tour de force" and a victory against hunger in the world.

Analysts and campaigners were less enthusiastic at the outcome, which followed two days of talks in the French capital. "The plan of action tries to address the symptoms of price volatility on agricultural markets," said Olivier De Schutter, the UN special rapporteur on the right to food, "but it fails to address the causes."

De Schutter argued that food markets are highly dependent on energy markets, irresponsible mandates to increase the production and use of biofuels, and speculation that cannot be reduced to investors manipulating prices but which is the result of the "financialisation" of the commodities markets.

A key element of the action plan is a call for more transparency in commodity markets linked to an early warning system – an agricultural market information system – that would collect information on stocks, and the supply and demand of crops. Le Maire said India and China, which have been reluctant to provide such information on grounds of national security, would be given more time to come up the data.

The action plan encourages the private sector to come forward with this information, but there is no compulsion on big traders like Cargill and Bunge to release data, and they may be less than forthcoming on grounds of commercial sensitivity.

Has the time come for the Robin Hood Tax?

From Wikimedia Commons

An idea that many advocates for the poor have been campaigning for is the so-called "Robin Hood Tax." The idea should finally see some recognition by the powers in the international community this year. France is now behind the idea and plans to talk about it when they chair the G-20 meetings later this year.

The Robin Hood Tax would tax a small percentage on international finance transactions. This would be the trading and speculating that deals with currencies. The idea is gaining traction with governments because they feel the tax would help the value of their money from being at the mercy of speculators. Current proposals for the tax only call for the rate to be at 0.05%.

From the Guardian comment section, writers Duncan Green from OXFAM and Ha-Joon Chang from the University of Cambridge say that the time has come for the Robin Hood Tax. Green and Chang compare the tax to the establishment of the income tax in Britain during the 18th century.

The same destiny may now await the Financial Transactions Tax (FTT) – or Robin Hood tax, as it is widely known. Although the French government, which chaired meetings of the G20 finance ministers and the IMF/World Bank member states last weekend, supports a global FTT, American opposition means that initial progress is more likely within a smaller "coalition of the willing", including France, Germany, and South Africa. French and German support may ensure that the eurozone is the first international forum that agrees an FTT.

Even a decade ago, when it was doing the rounds under the alias of "Tobin tax" (named after James Tobin, the Nobel laureate economist who first raised the idea), the levy was an absolute taboo in polite society. But after the great financial crash of 2008, the case for it is looking "obvious" to many, as indeed the income tax did in the late 19th century. Its time, too, has come.

This levy on financial transactions, even at the very low level that is currently proposed (0.05%), is expected to slow down the most speculative elements of international capital flows and raise the significant sums needed to provide the newly required global collective goods – especially green technologies and development aid.

Of course, the FTT alone will not achieve much in terms of stabilising our financial system. It needs to be implemented as a part of a comprehensive package.

First, countries that cannot issue "hard currencies" should be allowed to use capital controls. The significant change of position by the IMF in this regard following the 2008 crisis is encouraging, but capital controls should be seen as normal policy tools – rather than a measure of last resort, as the IMF still suggests.

Second, we have to reform the rating agencies. Despite their incompetence and even cynicism, revealed both in the 1997 Asian crisis and in the 2008 crisis, these agencies are still deciding what is a good financial asset and dictating how governments should conduct their policies – not just fiscal policies but also monetary and social welfare policies. They need to be regulated more heavily, and a non-profit public agency should be set up to provide a credible alternative to their ratings.

Third, if we are serious about the revenue implications of our financial policy, tax havens need to be reined in, if not totally abolished. That single act would generate sums on a par with a global FTT.

Last but not least, overly complex financial instruments should simply be banned, unless they can be shown by their inventors to bring significant net benefits in the long run, in a manner similar to the drugs approval procedure. Otherwise our ability to manage the system will be outstripped and we will repeat the crisis of 2008.

G-20 finance minsters meeting concludes

The finance ministers of the G-20 wrapped up meetings in Washington over the weekend. As usual, the tension between what the powerful actually work on and what they should be working on was in full display.

The G-20 announced plans to review the policies of the biggest economies to make sure they are not making the world economy unstable. The biggest target will be the undervalued Chinese Yuan.

While the G-20 focused on this, advocates for the poor tried to make their voices heard to the finance ministers. Speaking out on how the policies of the rich nations have helped to increase food and fuel prices.

From the Inter Press Service, writer Kanya D'Almeida gives us the details on the World Bank and International Monetary Fund statements that concluded the meetings.

Following a few steps behind their biggest shareholders, the Development Committee – a forum of the Bank's and Fund's board of governors – held a press conference here Saturday to brief the public about the urgent need for "change", albeit in a framework that stays staunchly loyal to economic dogma.

Stressing the need for renewed focus on rising food prices and energy volatility, Development Committee chairman and Bahraini finance minister Mohammed Al Khalifa told the press that the World Bank Group "shared concerns over the world's most vulnerable populations" who were suffering the impacts of price hikes in basic foodstuffs and bearing the brunt of "overheating".

Echoing him, World Bank president Robert Zoellick warned that 44 million people have fallen into poverty as a result of rising food prices in 2011 alone.

"A further 10 percent rise in the food price index could put 10 million more into poverty this year," he said, adding, "In revolutionary moments, status quo is not the winning hand."

Officials of international financial institutions (IFIs) have this week reinforced their ability to jump on any bandwagon that offers quick profits, no matter how inconsistent their policies are with the real revolutionary changes unfolding across the globe.

Swarms of global organisations joined hands in the last week to protest the banks' decrepit policies, struggling to make their voices heard over the din of elites in "emerging markets" claiming a bigger stake in corporate-capitalism's pie.

Oxfam International's spokesperson Max Lawson said, "Leaders today claim the food crisis is desperately urgent, so urgent they will act on it at their next meeting in June - that's 66 days away. Nearly half a million children will have died of hunger by then."

Lawson added, "The World Bank says we're one shock away from a full- blown crisis but makes no mention of the three things rich countries have done to cause it – burning food for biofuels, gambling in commodity casinos, and subsidising farmers in rich countries."

Robert Zoellick calls on G-20 to rein in food prices

Food prices have surged above the levels of 2008 when prices were then termed to be at crisis levels. Riots occurred in the food crisis of a few years ago and were seeing an historic surge of anti-government protests now. This in part because of the pressures of trying to buy food and trying to obtain a job has pushed people to the point of revolt.

In an interview with Reuters, World Bank President Robert Zoellick calls on government to do more to curb food prices. Speculation of food commodities has helped to drive up prices and Zoellick says as long as speculators are allowed to do that food prices will remain volatile. Writer Lesley Wroughton says Zoellick wants the G-20 to make food prices a priority this year.

"We are going to be facing a broader trend of increasing commodity prices, including food commodity prices," Zoellick told Reuters.

"This can put pressure but also create opportunities," he added, noting that developing nations could boost revenues by increasing food production to meet rising global demand.

He said increased consumer demand, especially for sugar and meat, in fast-growing emerging economies was a major factor pushing prices higher compared with the 2007/2008 crisis.

A mix of high oil and fuel prices, growing use of biofuels, bad weather and soaring futures markets pushed prices to record levels in 2007 and 2008, sparking violent protests in Africa.

Zoellick said the Food Price Index of the U.N. Food and Agriculture Organization, or FAO, which measures monthly prices changes for a food basket of cereals, oilseeds, dairy, meat and sugar, showed food prices surging to above 2007/08 levels.

Higher food prices are set to push the index on Thursday to a record high in January for a second straight month.

The higher prices, together with political repression and growing inequality between the rich and poor, have fanned protests across the Middle East, including Egypt, Tunisia, Yemen, Algeria and Jordan.

G-20 to announce change in poverty fighting strategy

The G-20 plans on releasing a statement that says they will change their approach to combating poverty. The G-20 will announce that they will begin to focus on creating private sector jobs. From now on, aid to governments will focus on building infrastructure.

South Korea did invite business executives to be guests to this years meeting, and perhaps this is what helped to spur the change. Meanwhile, NGO's were hoping for pledges of more money from the G-20.

From the Globe and Mail, writer Bill Curry and Kevin Carmichael received a leak of the G-20 statement.

The Globe and Mail has learned that South Korea has secured G20 support for a standalone communiqué dedicated to this business-focused approach to development. (While G20 officials have worked on the aid plan as a standalone package, it is not yet certain that it will remain a separate statement, or be wrapped in to the final communiqué.)

“An enduring and meaningful reduction in poverty cannot be achieved without inclusion, sustainability and resilient growth,” states a draft communiqué, dated Nov. 3 and obtained by The Globe. “We recognize the unique role of the private sector to create jobs and growth.”

The Seoul Consensus includes an opening statement of principles and then a larger, multi-year action plan. The plan envisions a larger role for development banks to encourage more investment for small businesses and more infrastructure spending by governments.

Aid groups welcomed South Korea’s efforts to make development a priority for the G20, yet noted there are no indications the G20 will announce new funds when the final communiqué is released Friday.

“It’s important that this meeting doesn’t get totally distracted completely by the currency question,” said Jeremy Hobbs, a spokesman for Oxfam International. Mr. Hobbs welcomed the focus that the South Koreans are putting on development, but that he expressed concern that there is little talk of concrete financial commitments.

“We need to see money,” he said.

OXFAM's wish list for tomorrow's G-20

World leaders arrived today in Seoul, South Korea for latest G-20 meeting that begins tomorrow. There has been little said about if any development issues will be on the agenda. It is expected that recession recovery, and debt bailouts will be the focus of the G-20.

From this OXFAM press release, the NGO gives this wish list for the G-20 meeting. OXFAM hopes that the plans for ecomonic recovery will include those who live in poverty.

As the first non-G8 member to host a G20 heads of state summit, South Korea has made development a central part of its agenda with a focus on boosting poor countries’ growth. But Oxfam is concerned that progress towards tackling poverty could be derailed by rows over currency valuations and monetary policies.

Oxfam is calling on the G20 to forge a new Seoul Development Consensus to replace the failed Washington Consensus of the past. The new consensus should combine financial support for health, education and poor farmers in developing countries with action to make the global economy work in the interests of poor countries.

A narrow focus on growth would not be enough on its own to tackle poverty, the international agency warned. From 1981-2001, when the Washington Consensus was at its height, the world economy grew by $19 trillion but people living in extreme poverty received only 1.5 percent of that.

Takumo Yamada, Oxfam Policy Manager, said: “Too often in the past, the poorest have been denied the benefits of growth. The G20 needs to show that this time it will be different.

“Millions of people have been pushed into extreme poverty by the economic crisis and are facing cuts in already threadbare healthcare, education and social support.

“The G20 has the chance this week to make great progress in tackling poverty. It would be a tragedy if poor people became casualties of conflict over currencies.”

The World Bank estimates that the global slump has pushed 64 million more people into extreme poverty, forcing them to live off less than $1.25 a day. Research for Oxfam shows that 56 poor countries face a $65bn fiscal hole in their budgets as a result of the economic crisis.

Oxfam is pressing the G20 to agree a package of specific measures to help poor countries, including:

* A tax on the major OECD financial centers to fund development. A financial transaction tax could raise $400bn per year
* Rich countries to deliver on their aid promises. Investment in health, education and poor farmers is essential to economic development;
* Action to curb speculation on commodity markets that has contributed to almost 1 billion people going hungry;
* Regulation to protect poor people from the adverse effects of ‘land-grabs’ which have seen huge swathes of prime agricultural areas taken by foreigners;
* A real say for poor countries in the global economic decisions that affect them – at least 3 full seats at the G20 and root and branch reform of the IMF.

Yamada said: “The G20 should learn from its own experience of what works. Korea’s recent success in economic development was achieved with the help of billions of dollars of aid which helped fund vital health and education, as well as land reform to ensure fair access for the poor.

“Rich countries must not use the economic crisis or the G20’s focus on growth to wriggle out of their commitments to the world’s poorest at a time when they need help more than ever.”

Business leaders invited to next G-20

South Korea is the chair of the next G-20 summit coming in November. For each summit, the host country has influence over the agenda for the meetings.

South Korea would like the G-20 leaders to hear from the business world. 100 CEO's from the world's biggest companies have been invited to the next G-20 to participate in a round table discussion with world leaders.

From this AFP article that we found at Google News, we find out more about the invitation.

Previous G20 summits have also included business chiefs, but organisers of the November 10-11 business summit said it would be the largest such gathering and would be closely linked to the main summit.

The chief executives will freely discuss their economic concerns at a round table with the political leaders, organisers said.

The Seoul G20 summit, the fifth to be held by leaders of the 20 top world economies, will mark the start of a transition "from a crisis response mode to post-crisis mode", said Kwon Hae-Ryong, director-general of the organising committee.

"It will mean that the G20 will be able further to solidify its status as the premier forum for global economic cooperation."

South Korea wants to make the business summit part of the G20 process to open up a channel for participation by the private sector.

Comment on G-8/G-20 aid disappointment

The disappointment in the conclusions to the G-8 and G-20 meetings have been varied and widespread. Many were hoping that Canadian PM Stephen Harper calls to restore accountability would be heard. They hoped that the leaders world restore their commitments to paying up on the aid they promised before. Instead, other items took up the agenda in the meetings.

From The Vancouver Sun, this commentary from Mark and Craig Kielburger sums up the frustration quite well. Craig and Mark are the co-founders of Save The Children.

Canadians are rightfully angry to hear that $1.2 billion is going missing from public coffers to pay for the G8/G20 summits. Too bad we've heard little about the missing $19.5 billion.

Five years ago, the G8 leaders shook hands with superstars such as Bono and Bob Geldof as they pledged $50 billion in aid to developing countries. At the 2010 deadline, they came up $19.5 billion short. That's the real scandal of the G8.

Maybe the security price-tag and the disruption to daily lives in Toronto would be worthwhile if the G8 and G20 actually delivered on commitments.

(Then again, maybe if the leaders followed through, the protests and security bill would be smaller.)

Unfortunately, it's security that shows up on balance sheets -not broken promises. Lack of accountability means commitments are usually forgotten soon after the Summits close.
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In 1970, world leaders agreed to a pledge tabled by former Canadian Prime Minister Lester B. Pearson to give 0.7 per cent of their gross domestic product to aid. Despite resuscitating that commitment twice in 1992 and 2002, Canada is less than halfway to reaching this goal and has no timeline to see it through.

On top of this, we started the century with the now off-track Millennium Development Goals. Among other issues, it addressed maternal health. Today, the 2005 Gleneagles commitments are also collecting dust.

Gleneagles was ambitious. It cancelled $40 billion in debt. The leaders seemed serious about keeping their promises to increase aid. Unfairly, they raised our hopes before falling back into the perpetual cycle of promise, pose and put aside.

Going into the G8 and G20 Summits, the wealthy nations had delivered only 61 cents on the dollar committed. Think about it. If it was your mortgage, you'd face foreclosure.

But, despite the financial crisis, something started by greed on Wall Street, pushing an estimated 100 million more people in developing nations into hunger, some wealthy nations are actually lobbying to do less. These countries are France and Italy, two nations that have gone drastically off-course on their commitments.

Read more: http://www.vancouversun.com/business/pledge+comes+short+Surprised/3210277/story.html#ixzz0sAdgTT3B

G-20 meeting could be historic if they stick to their agreement

Over the weekend the G-20 reached an agreement that could be historic if the member countries stick to it. The leaders of the G-20 countries agreed to put their economic programs under peer review. Some believe that this could help to do away with policies that only help the rich nations and could remove trade imbalances.

From the Globe and Mail, writer Kevin Carmichael explains the agreement and gives a little history on how the global economic crisis helped to make it.

In a surprising show of faith in an institution that has met only four times, leaders from countries as disparate as Germany and Saudi Arabia agreed Sunday in Toronto to subject their domestic economic programs to peer review within the G20.

By this fall’s Seoul summit, countries have promised to explain in some detail how their domestic policies are helping to achieve the G20’s goal of reducing the excessive mismatches in spending and saving that exacerbated the financial crisis. Then, with the help of the IMF and its expertise in economic modelling, the other members will assess whether each partner is doing enough.

The commitment is historic.

The promise by each leader agreed to put his or her cards on the table adds a level of transparency and credibility that the process lacked until now. While economic co-ordination has been tried before, it has been with lesser officials or the International Monetary Fund as the arbiter. Now, the accountability rests at the highest levels. Where previous failures could be blamed on bureaucratic deadlock, global economic co-operation is now a political imperative in the hands of presidents and prime ministers.

The increased transparency could even encourage competition among members to implement policies that curry favour with investors.

Since the review remains a voluntary exercise without penalties, success will depend on G20 members taking the process seriously, both by submitting credible policies and showing the courage to offer tough, but fair, criticism. Given how these countries allowed the global economy to get so out of whack in the first place, there is reason to be skeptical they have what it takes to deliver, especially as the economy improves.
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In Pittsburgh, the G20 acknowledged that self-interested policy making had created the conditions for the global recession that was sparked by the 2008 credit crisis.

U.S. consumers spent too much borrowed money, an unsustainable circumstance that the world’s major exporters were all too happy to exploit.

In fact, China underwrote the spending by purchasing U.S. debt in an effort to keep its currency low against the dollar, a policy that had the effect of lowering American interest rates. Big oil exporters run up surpluses of their own by using their wealth to buy U.S. bonds instead of investing in their domestic economies. Continental European countries refused to confront rigid labour markets that constrained investment and productivity.
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The IMF and World Bank submitted studies that showed the G20 could generate GDP of $4-trillion, create tens of millions of jobs and lift even more out of poverty if countries actually made the changes necessary to achieve more balanced growth.
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The IMF warned recently that trade imbalances, which narrowed after the financial crisis, are starting to move back to pre-crisis levels. The U.S. still has a current-account deficit that is more than 3 per cent of GDP, while China and Germany run current-account surpluses that are about 4 per cent of GDP and 5 per cent of GDP respectively.

Canada will pledge 1 billion for maternal health

In a story that came out over the weekend, Canada announced it's development goal as host of the G-8 and G-20 meetings. The host country usually sets the agenda and a goal it would like to achieve during the meetings. Canada has said that it would pledge one billion dollars to fund maternal and child health, and will ask the other member countries to pledge big money as well.

From the Globe and Mail, we read more about the proposal and what may keep it from becoming a reality.

Prime Minister Stephen Harper announced in January that improving the health of mothers and their children in developing countries would be his signature initiative as host of the G8 summit next month.

Initially, the pitch was well received around the world. Concerns are on the rise that maternal health issues have been pushed aside in development assistance packages over the years.

But after Ottawa spent weeks sidestepping questions about whether the government would allow funding to go to groups or projects that encourage better access to safe abortion, Canada's maternal health idea lost momentum.

When G8 development ministers finally met in Halifax last month, they agreed on vaguely defined goals for the initiative, and made no mention of a target for funding.

Then Greece’s sovereign debt crisis spilled over its borders and dragged down Europe. The burgeoning deficits of G8 countries have now become a policy priority, prompting many anti-poverty advocates and experts to question whether the leaders would find the wherewithal to support a new aid project in poor countries.

“There’s nothing on the table. How serious are they about this?” NDP foreign-affairs critic Paul Dewar said last week.

The All-Girls G-20

From CTV, a group of women plan on having a All-Girls G-20 summit ahead of the real one in Toronto this summer.

Inviting poor countries to the G-20

With the G-20 meetings coming up, more people are demanding that the poor nations be included. Especially with the recent global recession, the poor nations should have a say in how the world gets out of the recession. For too long, the rich nations have talked about what to do for the poor, without hearing from the poor themselves.

To his credit, the current chairman of the G-20 has made steps in the direction of giving poor nations a voice. Canadian Prime Minister Stephen Harper has invited Malawi and Ethiopia to attend the Toronto meetings in June.

From the IPS, writer Isolda Agazzi attended a recent United Nations conference that had many calls for poor nations to participate.

"LDCs face a double challenge: they have to absorb the impact of the economic and financial crisis, but in the resolution of the crisis itself they have a very marginal role to play," stated Debapriya Bhattacharya, special advisor on LDCs at UNCTAD.

"This is not only a question of transparency, but also of inclusiveness and accountability. How to address these issues? Do we need new platforms or do we have to improve their participation in existing ones?" he asked.

Mothae A. Maruping, ambassador of Lesotho to the United Nations in Geneva, pointed out that LDCs have been devastated by the economic crisis, contrary to the initial forecasts of the Bretton Woods institutions. The Bretton Woods institutions are the two international financial institutions called the World Bank and the International Monetary Fund (IMF).

LDC external trade has declined; remittances have dropped; official development assistance has been jeopardised; and foreign direct investment has slowed down or declined, with some countries even experiencing disinvestments, said Maruping.

Bhattacharya indicated that aid flows increased in 2008 – 2009 but remained below the level needed to reach the MDGs (millennium development goals). "In terms of its composition, if one takes out humanitarian aid there has not been a substantial increase. Also, aid goes to social sectors with little reaching productive sectors."

Maruping agreed that poor countries won’t achieve the MDGs: "In the aftermath of the crisis, LDCs are experiencing fiscal imbalances and destabilised monetary policies. They have relapsed into unsustainable external indebtedness and widespread and deeper poverty.

The World Bank and the IMF have special programmes for LDCs, but these are bound to so many conditionalities that they are almost unaffordable, he argued. On the World Trade Organisation (WTO) side, the Doha Development Round has stalled.

A summary of the G-20

Here is a look back as to what the G-20 agreed upon in regards to poverty at the meetings completed last week in Pittsburgh. Anti-poverty advocates like that the G-20 continued on the pledges to poor nations made earlier this year in London. However, the same advocates say the G-20 could have done more.

From the Pittsburgh Post Gazette, writer Karamagi Rujumba tells us what happened.

The leaders of the world's largest economies at the G-20 summit yesterday took great steps to address some of the issues that affect the world's poorest.

They started from the moral and pragmatic premise that there can be no sustainable global economic recovery without strengthening the support systems of the most vulnerable.

But even as they commended the G-20 for its proclamation that "all parts of the globe participate in the [economic] recovery," the international advocates who lobbied the summit on behalf of the poor said the challenge of developing impoverished countries, particularly in Africa, remains the same.

Key among the challenges, they said, remains a need to infuse short-term capital and development aid toward agriculture and food security, access to clean and affordable energy and steps to slow the devastation caused by climate change.

"We were very encouraged that they reiterated their commitments from [the April G-20 summit in] London," said Tom Hart, director of U.S. government relations for the advocacy group ONE Campaign, which is committed to fighting extreme global poverty and disease.

The commitments include agreement on the need to help poor countries weather the tumultuous financial climate; reform the membership of the International Monetary Fund and the World Bank to include more of the poorest countries; carry forward the framework of the G-8 agreement on food security in Italy; and to deliver on the $100 billion the G-8 promised to loan developing countries.

In addition, the Canadian government also committed to provide $2.6 billion in capital to the African Development Bank to help it increase its lending by 75 percent.

Read more: http://www.post-gazette.com/pg/09269/1000975-482.stm#ixzz0SQbZj2Rn

Some of the topics to come up during the G-20

From this NPR story, we find out some of the topics that will be discussed during the G-20 meetings today and tomorrow in Pittsburgh. Meetings begin tonight with a "working dinner" at the Phipps Conservatory and Botanical Gardens.

The president is expected to tell fellow leaders that the old economic model of massive Chinese exports being snatched up by borrow-and-spend consumers in America and elsewhere is unsustainable. In a preview of that message at the United Nations on Wednesday, Obama said, "Now is the time for all of us to take our share of responsibility for a global response to global challenges."

The leaders of the Group of 20 nations are meeting for the third time since the financial crisis threw growth into reverse a year ago. When the body last met in April, many economies, including the United States, were under severe strain, and world leaders largely agreed on common remedies such as dramatically increased government spending to provide some stimulus.

With the crisis calming, summit leaders are set to discuss how to redirect their focus on reinvigorating their economies without repeating past mistakes.
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European leaders are pressing for a deal on financial regulation reforms, but Obama's agenda is pressing for policies to even out the trade imbalances between China and the United States.

British Prime Minister Gordon Brown told reporters in New York on Thursday that Britain and the U.S. "would like to see China importing more from our countries."

Japan's new prime minister, Yukio Hatoyama, said his nation wants to be part of the discussion to "rein in the issues of poverty and economic disparity, which are difficult to coordinate by simply leaving them to market mechanisms."

Comment: G-20 still in crisis mode

Even though the economies of the developed world beginning to recover from the global recession, the G-20 however will still be in crisis mode. The G-20 meetings are about to begin in Pittsburgh, and the focus should be on the poor of the under-developed world still suffering from the global recession.

From Global Post, commentator Thomas Mucha desctibes some of the effects that the poor are still feeling from the increasingly connected world economy.

The question now is who will suffer the most from a crisis that swept from the casino canyons of Wall Street, to the smoke-choked factories of Guangdong, to the snowy peaks of the Andes. And, more importantly, what can be done about it?

We heard one troubling hint last week from World Bank president Robert Zoellick: the poor. The World Bank predicts an additional 89 million people will be thrown into extreme poverty by the end of next year, defined as those subsisting on less than $1.25 a day. “The poor and most vulnerable are at greatest risk from economic shocks — families are pushed into poverty, health conditions deteriorate, school attendance declines and progress in other critical areas is stalled or reversed," Zoelick said upon release of the Sept. 16 report, which focused on the world's 43 poorest nations.

So why does this matter, you ask?

While low-income countries contribute less in terms of output than G20 nations, they play an increasingly important role in the global economy. And most have been severely damaged by the darkness of the past 12 months, as GlobalPost coverage of the meltdown has consistently shown.

For starters, a drop in global trade is very bad news for countries that supply the raw materials and relatively cheap labor that go into making stuff. The World Bank says global export demand will drop as much as 10 percent this year. That's a staggering amount that has already triggered nightmarish consequences, from the 20 million Chinese migrant workers who lost their jobs last year, to the thousands of Mexican and Canadian auto workers laid off amid Detroit's collapse, to the army of South African and Zambian miners thrown out of work when global demand for copper, platinum and other industrial metals dried up.

Beyond trade there's private investment — money that goes to finance schools, hospitals, roads and other infrastructure projects critical to developing economies. This too, is way down amid the crisis: the World Bank estimates that net private capital flows to the world's poorest countries will drop to $13 billion this year, or less than half the amount in 2007 as private investors keep more money in their pockets.

The World Bank tries to influence the G-20 meeting

Whenever a meeting of industrialized nations approaches the World Bank usually issues a report to nation heads, with suggestions on what the leaders should discuss or decide. The G-20 will gather in Pittsburgh next week, so the World Bank is asking the leaders to not forget the poor nations.

The bank says it sees signs that the global economic crisis is over, but warns the under developed world will be the last to recover. The Bank is also calling on an increase in agricultural assistance which the G-8 promised to aid earlier this year.

From the Wall Street Journal we find out more about what World Bank has to say. Reporter Tom Barkley recieved some quotes from the Bank's president Robert Zoellick.

In a report prepared for G-20 leaders meeting in Pittsburgh next week, the bank warned that the global crisis is poised to push an additional 89 million people into extreme poverty by the end of next year if additional help isn't provided.

"The poorest countries may not be well represented on the G-20, but we cannot ignore the long-term costs of the global downturn on their people's health and education," World Bank President Robert Zoellick said.

The bank said recent developments suggest the global recession "may be coming to an end," including signs that the slowdown in production and trade may be over.

But low-income countries that were the last to get hit by the global slump are expected to take longer to emerge, still suffering from a drop in the capital, trade and remittance flows their economies depend on.

"With the world economy still fragile and signs of global recovery tentative, low-income countries face a long and muted recovery," the report said.

Low-income countries as a group are expected to face an external financing gap of $59 billion this year. With private financing flows on the decline, these countries will become even more dependent on external aid, the bank said.

Exports of low-income countries are poised to fall 5% to 10% this year, with remittances expected to decline 5% to 7%. Private capital flows are expected to drop to $13 billion this year from $21.4 billion in 2008, according to the bank.

New tax might come up during G-20 meetings

Momentum is growing on establishing a new tax on global financial transactions. The pressure will be great with the upcoming G-20 meetings. Finance ministers for the 20 countries meet in London later this week, and the heads of the states meet in a few weeks in Pittsburgh.

From this Guardian story, writer Nick Mathiason tells us more about the tax and why the pressure is accumulating now.

G-20 Finance ministers meeting in London next Friday will face concerted pressure to introduce a tax on financial transactions as a coalition of anti-poverty campaigners aim to force the issue onto the agenda.

An unprecedented coalition of health charities and development campaigners will ratchet up pressure on the G20 in the wake of comments made todayby Financial Services Authority chairman, Lord Turner supporting a Tobin-style tax on foreign exchange transactions.

Pressure on the G20 grew as senior officials at the United Nations also threw their weight behind a currency transactions levy. Philippe Douste-Blazy, the former French foreign minister now the UN's secretary-general's special adviser on innovative financing for development, told the Guardian: "I hope one head of state will propose this tax. I don't know who it will be. I think it's a good idea for two reasons.

"Firstly, this economic crisis is going to have serious consequences on developing countries. The price of commodities will fall because investment from western countries will decrease and aid commitments will not come through. And second, this is a crisis of ethics, a problem of cynicism with the system. We can't continue like this. We have to redefine the system."

His intervention is crucial because he was the architect of a groundbreaking tax in France that skims a tiny sum from airline ticket sales to buy cheap medicines for those suffering from Aids, malaria or tuberculosis. The scheme now extends to 30 countries with more set to follow. In two years it has raised $1bn.

Next week's G20 finance meeting will be followed by a co-ordinated push by campaigners to persuade leaders of the world's 20 most powerful countries meeting at Pittsburgh in four weeks to adopt a currency transaction levy.

Jeffrey Sachs praises the results of the G-20 meeting

In his latest commentary, Jeffery Sachs praises the accomplishments of the G-20. He says that the results exceeded his expectations. Sachs attended the G-20 as a part of United Nations Secretary General Ban Ki-Moon's delegation.

We found Dr. Sachs commentary in the Huffington Post

The results were beyond what most, including myself, expected. IMF resources were raised significantly, to provide a liquidity cushion for global trade and production. The World Bank and regional development banks (such as the African Development Bank) were encouraged to boost lending, backed by commitments of the G-20 to raise the capital base of these multilateral banks. Taken together, the combination of new credit lines of all sorts - in effect, new liquidity - is on the order of $1.1 trillion. While this is much less than direct spending in its effect on aggregate demand, the contribution to increased global liquidity will certainly be helpful for many economies, especially emerging-market economies suffering from an intense credit squeeze since the Lehman bankruptcy last fall.

Serious progress was also made on a framework of tighter global financial regulations, including controls on executive compensation, crackdowns on tax havens, controls over hedge funds, and much-needed regulation of the "shadow banking" system (broadly meaning investment funds that depend on very short-term borrowing in forms that compete with bank deposits). There were also commitments to new forms of global cooperation in financial regulation, including procedures for removing toxic assets from bank balance sheets. The G-20 also agreed to do better in the fight against creeping protectionism.

The poorest countries, by and large, were not in the room. As usual, their plight came far behind the immediate concerns of the high-income and middle-income countries. Still, through the assiduous efforts of Secretary General Ban Ki-Moon and several other leaders, there was a clear re-commitment to the Millennium Development Goals, a strong reiteration of commitments on development assistance (implying an increase in development assistance from around $120 billion in 2008 to at least $160 billion by 2010), and an intention to launch new global efforts on stronger social safety nets for the poor (led by the World Bank). There was also and innovative support for smallholder farmers to raise the food production and food security of the poor, championed strongly by the Secretary General, President Obama, and Prime Minister Zapatero.

Two crucial issues remained almost wholly off the table, and will need to be brought in sooner rather than later into future G-20 deliberations. Exchange rates were hardly mentioned, despite the fact that exchange rate adjustments are surely needed to smooth the elimination of large and unsustainable global trade imbalances. Also, the increasingly fragile position of the dollar as the world's reserve currency was discreetly ignored. Monetary policy and exchange rates played a large role in the onset of the crisis, and we will need deep reforms of international monetary arrangements in order to secure a sustainable recovery.

Here is what the G-20 agreed upon

Well, they are done. The G-20 meeting is over. Perhaps the run-up and the protest were more exciting that the meeting itself. But the leaders did make a pledge, it may help struggling economies if they act upon it.

From this Associated Press article that we found at the Daily Herald, reporter Jane Wardell tells us what came from the meetings.

World leaders pledged $1.1 trillion in loans and guarantees to struggling countries and agreed Thursday to crack down on tax havens and hedge funds -- but failed to reach sweeping accord on more stimulus spending to attack the global economic decline.

The biggest headline figure was the new money for the International Monetary Fund, which helps out governments that run into financial trouble from the crisis, and other development organizations to send credit to countries that have seen it dry up.

French President Nicolas Sarkozy, who earlier had threatened earlier to walk out if unsatisfied with the outcome, also praised Obama for helping to create consensus and persuade China to agree to publish lists of tax havens.

"There were moments of tension," Sarkozy said. "Never would we have thought to get as big an agreement."

German Chancellor Angela Merkel called the measures "a very, very good, almost historic compromise" that will give the world "a clear financial markets architecture."
...

The G-20 leaders also said that developing nations -- hard-hit and long complaining of marginalization -- would get a greater say in world economic affairs. They said they would renounce protectionism and pledged $250 billion in trade finance over the next two years -- a key measure to help struggling developing countries.