Finding unanimity on substantial change
The world is at a turning point in history, when global cooperation is at risk of diminishing and the idea of a global community could be lost – that is, unless consensus for the long term is found
What major economic challenges are facing the global economy due to the COVID-19 pandemic?
We are in as perilous a situation as at any time in my memory. But the election of Joe Biden as US president, coupled with news of Pfizer’s positive vaccine efficacy, brings renewed hope for the situation in the United States and around the world. The recovery in the US has been a bit more rapid than expected, and the global spread of COVID-19 has been a bit less virulent than I would have expected three months ago. But the risks of aftershocks, second waves and double dips should be paramount in the minds of the leaders at the G20, as many face a second wave of lockdowns and curfews. We do not know for sure we have passed any peak on COVID-19. As patience frays, risks increase. Many employers who held onto workers because they believed this would be a short-term problem will likely capitulate soon and engage in substantial layoffs. There has been a perhaps necessary, but overdone, ramping back of stimulus efforts. Financial problems mount as households, companies and governments draw down their cash reserves, and any buoyancy in stock markets, however positive, is a risk factor given that markets can change on a dime. Getting ahead of possible future problems needs to be a central priority for the G20.
How well is the response matching the need?
The conspicuous and unfortunate feature of the policy response to the COVID-19 crisis has been that national boldness and ambition have been entirely unmatched by global imagination. Whereas fiscal and monetary policies are in uncharted territory for the US, the European Union and Japan, the global policy response is tepid, timid and timorous. We have seen almost nothing meaningful in terms of support to keep emerging markets emerging. In part that is a result of nationalist preoccupations. But responsibility for global cooperation inevitably sits with the US and to date it has abdicated that responsibility. I am hopeful for change. But to date, the US stands between the world and the substantial expansion of special drawing rights. The US stands between the world and the mobilisation of gold. The US stands between the world and the energising of the multilateral development banks. And the US stands between the world and substantial funding for global health. There is no reason – moral, financial or political – why funding for COVID-19 should come out of funding otherwise available for malaria, AIDS and tuberculosis. The case for that funding is as urgent as it ever has been. So the world needs to find the will to respond.
What do you think about the US withdrawal from the Paris Agreement on climate change and the World Health Organization?
I am not so dewy eyed or enthusiastic about the WHO or the Paris Agreement in terms of their efficacy, effectiveness and design. But abandonment has been the wrong way to bring about necessary improvement. I anticipate renewed commitments with a new US administration. Without the US voice in these forums and organisations, they will likely become even less effective in achieving US objectives. The right course for the US regarding the United Nations is the kind pursued by the Clinton administration in its last year, working with Congress. That administration had no cheerleaders or fundraisers without expectations of change and reform. But they were not abandoners either.
What do you expect from the G20 leaders at Riyadh?
This moment may be remembered as a hinge in history. There is the risk that global cooperation will diminish, and the idea of a global community will be lost. There is the possibility that the 50-year trend towards global integration and the emergence of markets, and the trend of the standards of living, health indicators and literacy indicators in developing countries converging with those in the globally top countries – that those trends will be lost. There is the possibility of superpower confrontation with a vigour and danger that we have not seen in more than a generation. And so the risks are enormous. But equally, and ultimately more significant, are the prospects for a new age of progress and inclusion and a turn for the better – as the laissez-faire wave moves out, as institutions that promote fairness loom larger, as technology shrinks and connects the world and enables, if surely not mends, a focus on our common humanity. That is the choice that we face.
I do not think it is likely in Riyadh that we will see historic agreements. In fact, it is exceedingly unlikely. But some meetings are remembered as culminations and moments of announcement, and others are remembered ultimately for the consensus that forms in the corridors, virtual or otherwise, and only congeals months or years later on the need for substantial change. It is my hope for this G20 summit that its fruition will be found not in its communiqué but in what its conversations anticipate for future meetings down the road.
