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A more ambitious G20 for a sustainable post-pandemic recovery and transformation

8. April 2021 - 13:54

The COVID-19 pandemic submerged the world for more than a year now, and global infection numbers are still rising. There are huge differences in the ability of governments and societies to cope with the pandemic: while Europe and the Americas remain epicentres of the disease, there are signs that infections are now also picking up across the African continent.

In an interesting turn-of-tide in discussion, the IMF calls for more public expenditure and higher taxation of the wealthy. The IMF states that economic recovery is possible in 2021 but dependent on both, access to vaccines and other medical interventions, and continuous effective policy support. Policy support needs to cushion the effects of the economic contraction, to decarbonize energy systems and economies, and for intensified multilateral cooperation to ensure universal access to vaccines and therapeutics and adequate financial liquidity of highly indebted countries.

While the IMF focusses on the dual challenge of recovery and decarbonisation, the G20 has committed to implementing the 2030 Agenda as a whole since 2016. All of this means a full agenda for the G20 (and the G7), domestically and globally. In this piece, I want to discuss the advantages and difficulties of such an integrated approach to recovery and transformation, and what the G20 can do for implementing it effectively.

Why choose an integrated approach towards recovery and sustainable development?

In 2020, the argument for integrated approaches was that states faced a dual challenge: they had to react immediately to the social and economic emergencies of the Covid-19 crisis, and invest into the long-term transformation of social and economic infrastructures and consumption habits towards sustainability. This transformation encompasses the reduction of poverty and inequality as much as climate neutrality, the transition to a circular economy and the protection of biological diversity and natural habitats. Integration of the two agendas was not only timely –so many years had been lost with sterile debates and negotiations – but was also needed because public and private budgets are limited. Sequential or disconnected parallel processes cannot be afforded.

Today, one year after, this has not changed; yet, tonality in the debate is different. Covid-19 and its socio-economic consequences will stay with us much longer than anticipated due to the lack of domestic effectiveness and insufficient efforts at multilateral cooperation. Viruses don’t negotiate; if left to “their business”, they mutate. Thus, public budgets and political institutions are under extraordinary pressure and policymakers are having a hard time understanding that wrong decisions lead to irreversible costs in terms of infections and deaths. Adequate decisions are those informed by a variety of scientific disciplines and careful ethical considerations.

Economic recovery is one important aspect of coping with the pandemic – but just one. Living with the virus requires to adjust the ways in which we live and work, we take care of children, youth and the elderly, the sick and the vulnerable in order to enhance social and institutional resilience, domestically and globally. These broader dimensions of coping are reflected in the 2030 Agenda; decarbonisation is but an important part of it. If these adjustments are designed to last, they can support further transformation processes. Citizens expect governments to do what they can to cope with the pandemic; they demand reliable conditions for public and private life. Naturally, the process of coping creates experiences both with failure and with other, alternative ways of doing things. These experiences raise societal expectations.  And alternative experiences can also raise readiness for reform and further change; the population might be more ready for transformation than some decision-makers dare to believe.

It depends on the quality of crisis management now whether in retrospect from 2050 the Covid-19 pandemic will just seem a short episode, compared with the structural transformation process we will hopefully have substantially progressed on by then. Huge impacts on personal lives and expectations, on the economy and on public budgets will shape the next decades. This is why it is so important to get the pandemic under control as quickly as possible and in ways that do not obstruct efforts to create sustainable and attractive futures on this planet. Recovering and transforming have to be integrated processes, and cannot come one after the other.

How can the integrity of public and private investments towards recovery with sustainable transformation be achieved?

Governments need a clear understanding of where to direct public investments to, and how to align private decisions and investments with a sustainable recovery. A clear and reliable strategy and communication helps. Governments should use their national strategies for SDG implementation and decarbonisation plans for these purposes, link these with public budgets so that funding resources are clear and adequate, monitor their implementation with the support of independent scientific commissions, learn from successes and failures, and invest in clear and regular communication around it – with the general public, with stakeholders in the economy, in society and in academia, and with subnational levels of government.

This will allow for reliable framework conditions for private investors (and households) and make uncertainties manageable. One example is dynamic carbon pricing, another one public support for new infrastructures and for new technologies. Work on sustainable finance by central banks and finance ministers, globally, in the G20 and the European Union is crucial.

Equally, clear and reliable strategies, investments in improved social safety nets (e.g. universal health coverage), in economic infrastructure and transparent communication and accountability help to protect and increase cohesion within society and trust in political institutions. This are vital resources for coping with crises and for sustainable transformation and decarbonisation processes.

What can the G20 do?

These tasks are universal and all countries are confronted with them. Still, the resources needed for accomplishing them are very unequally distributed – be they financial, human, technological, knowledge, cultural or social. Securing fiscal space for low-income countries and middle-income countries under stress is vital for controlling the pandemic, for recovery and sustainable transformation. The G20 and the international community at large needs to define clear perspectives for mutual support over the next decade in order to enable public and private action towards these goals.

In principle, the G20 is a very good platform for making recovery converge with implementation of the 2030 Agenda, but its current form of organisation prevents it from using its full potential. The Global Sustainable Development Report published by the UN Independent Group of Scientists in 2019 distinguishes thematic entry-points for sustainable development, such as “human well-being and capabilities” and “sustainable and just economies” from policy-related levers for delivering change. In 2020 we analysed the workstreams of the G20 under the Saudi presidency, and we could see that most of the lever-related workstreams belong to the Finance Track, while all entry point-related workstreams fall under the Sherpa Track. For shaping recovery in a way conducive to sustainable development, both tracks need to work closely together to ensure that transformative policy objectives (often owned by the Sherpa track) are equipped with the levers of adequate financial, fiscal and economic policies (owned by the finance track). The G20 is particularly strong on finance, fiscal and economic policies. However, it needs to expand its political and financial clout to a second lever: science, technology and innovation (STI) policies, and gear it towards sustainable recovery and transformation. Sharing technologies and engaging in joint knowledge creation is vital for sustainable recovery and transformation. Scientific cooperation by G20 members is primarily motivated by strengthening competitiveness. In the 21st century, much more funding is needed for scientific cooperation that envisages the global common good.

The priorities of the Italian presidency of the G20 – grouped under the keywords people, planet, and prosperity taken directly from the 2030 Agenda – are a very good first step for enhancing the collective capacity of the G20 towards integrating recovery and sustainable transformation measures.

In this context, the Development Working Group (DWG) can play an important role in the Italian presidency: it is grouped in the Sherpa track, and it has been tasked in 2016 to coordinate and inspire the G20’s work for sustainable development across all working groups. The Italian presidency has planned four DWG meetings; the first one took place just before the first meeting of finance ministers and central bank governors, while the last meeting will be back-to-back with the meeting of finance and central bank deputies. Timing offers great potential for coordination and even cooperation, on the broader theme of shaping recovery towards sustainable development, and for ensuring that the G20 engages in expanding fiscal space of developing countries, in particular of least developed countries. For realising the potential, national delegations to the DWG need to include representation beyond development departments.

Furthermore, the DWG needs to be ambitious. It should go beyond updating the G20 Action Plan on the SDGs as it has done annually since 2017, and focus on fresh action in the aftermath of the Covid-19 pandemic. The perspective needs to be how to enhance universal implementation of the SDGs, expanding the horizon beyond instruments of development cooperation, and understanding implementation of the 2030 Agenda as what it is: a universal task that includes cooperation relations across all countries, with the G20 strength to go beyond the boundaries of North-South and South-South cooperation and their instruments.

Der Beitrag A more ambitious G20 for a sustainable post-pandemic recovery and transformation erschien zuerst auf International Development Blog.

Rethinking cooperation with Africa

3. März 2021 - 14:33

What could international cooperation look like that promotes economically, socially and environmentally sustainable development in the interests of the global common good? A few weeks ago, Andreas Freytag and Stefan Liebing argued here that modern cooperation with Africa had to be based on private-sector investment, market principles in project selection, and competition between partner countries for international investment. Paternalism in development policy should be replaced with principles of competition and the social market economy.

Private-sector investment and a better link between the private sector and development policy are indeed absolutely necessary for creating jobs and long-term prosperity. However, against the backdrop of the health and socio-economic challenges of the COVID-19 pandemic, the consequences of climate change, resource degradation, and the effects of demographic change in Europe and Africa, introducing more market principles into development policy will not be sufficient to create sustainable cooperation. Interlinkages and interdependencies in our immediate and broader neighbourhood affect us all, one way or the other. Consequently, cooperation with Africa must be refined into a transformative partnership. Depending on the regional and country contexts in question, this partnership should be designed differently. This requires a shift in perspective, or “attitude” to quote former Federal President Horst Köhler, and innovative cooperation structures.

 

Why a shift in perspective? For decades, cooperation with Africa has been characterised by the unilateral perception that the problems are in Africa and Europe helps to solve them through knowledge, technology and finance. This one-dimensional view is simply inaccurate. There is too much overlap between global issues that Europe, Africa and others can only tackle together. Conventional development models with a one-sided focus on economic growth are outdated. Instead, the priority is to create sustainable employment and achieve social cohesion and ecological compatibility. The European Union aims at the ambitious goal of becoming climate neutral by 2050. The African Union has adopted ambitious development goals with its Agenda 2063 and is discussing issues such as how to expand access to energy and what role renewable energies could play in this. European and African partners need to work together to organise the process of identifying ways to shape key areas of transformation. Transregional value chains must be restructured jointly.

 

This interconnectedness of the transformative pathways of Europe and Africa can be illustrated by two specific examples. First, if Europe is to achieve the energy transition, then some of its renewables will most likely need to be imported in future. Green hydrogen from African countries could play a key role here in the long term. Second, the situation is similar in the European electromobility sector, with its dependence on cobalt, the vast majority of which is imported in raw form from the Democratic Republic of Congo. Demand for cobalt imports continues to rise with the roll-out of electromobility. These dependencies need to be leveraged strategically in order to increase the added value of cooperation for both partners. Cobalt mining practices, for instance, should not only guarantee compliance with human-rights and social standards, but also increase the proportion of local value creation. The case of green hydrogen, our first example, local value creation implies that European and African partners should drive technological development together, first investing in energy access in Africa before exporting to Europe. This could benefit economic players and societies on both continents. However, this is predicated upon more in-depth dialogue in education, research and technology as the basis for joint development of solutions.

 

A transformative partnership must work with African partners to develop ambitious visions of the future, geared to reform needs in key areas of activity in Africa and Europe alike. To this end, reform projects have to be devised in close dialogue between the private sector, policy-makers, researchers and civil society on both continents. By way of example, the European Commission has set up a number of task forces since 2018 on sustainable investment in energy, agriculture, transport and digitalisation. This approach should be strategically expanded and systematised in conjunction with economic development measures in order to achieve a transformative partnership.

 

Shared interests and mutual dependencies are the strategic foundation for transformative, partnership-focused cooperation with Africa. It is not about a one-sided focus, whether on “African” or “European” challenges. As illustrated by the COVID-19 pandemic, the consequences of climate change and peacebuilding work in the Sahel region: market-based competition stands alongside, not above, state intervention and reflexive governance.

 

This blog contribution is based on an article “„Mehr Markt“ reicht für Kooperation mit Afrika nicht aus” in German language, published by the authors in Frankfurter Allgemeine Zeitung (FAZ).

Der Beitrag Rethinking cooperation with Africa erschien zuerst auf International Development Blog.

G20 Italy 2021 at the crossroad between closure and the revamp of multilateralism

17. Februar 2021 - 14:00

Multilateralism reached its low point in 2020 with the crystallization of the confrontation between major global powers, the further rise of nationalism, deglobalisation and trade protectionism that even threatened access to medical products and more recently Covid-19 vaccines in the midst of a pandemic. The latter profoundly affected global health, peoples’ livelihoods, and deteriorated existing systemic problems, from climate change to inequality, and intensified national reflexes as the G20 leaders turned their focus on domestic management of COVID-19. All these factors stood in the way of a successful G20 Riyadh Summit in November 2020 and still dominate the multilateral landscape in 2021.

The G20 Italian Presidency confronts such unprecedent challenges with an approach based on three broad and interconnected pillars of action: People, Planet and Prosperity. The agenda and attached priorities look beyond the immediate crisis by promoting a sustainable, just and resilient recovery, coherently with the spirit that inspires both the European New Green Deal and the European vision embodied in the Next Generation EU. Beyond the rhetoric of the three Ps, a set of key cross-cutting issues and three major areas of policy action seem to emerge from the Italian Presidency statements, documentation and early action.

Cross-cutting themes

Digital transformation, considered as both fundamental tool for a better quality of life and engine of increased inequalities, involves multiple G20 Working Groups such as Digital Economy, Labour, Education, Energy transition and climate sustainability, Health, Trade and Investment, and the Finance Track. Regarding the digitalization of industries, the G20 Italian Presidency shows a particular focus on micro, small and medium-sized enterprises’ (MSMEs) access to emerging technologies, by leveraging trustworthy Artificial Intelligence (AI) and promote traceability of products and services through blockchain technology. On the role of government in the digital transformation, it aims at further development on agreed digital government principles and the concept of secure digital identity.

The G20 responds to the health crisis by adopting a broader perspective to global health integrating human health with that of animals, plants and our shared environment in a holistic “One Health” approach.

The empowerment of women and youth is also pivotal in the 2021 agenda affecting multiple areas of cooperation, as they are deemed to play a crucial role in the promotion of a sustainable recovery.

The G20 Italy support to the Sustainable Development Goals (SDGs) and actions towards the mitigation of the pandemic crisis in the most vulnerable countries where health systems are less equipped, keeping a special focus on the African continent.

People

The economic crisis originated from the global pandemic amplified existing vulnerabilities and inequalities, reversing decades of progress in the eradication of poverty. Building on the realizations of the Saudi Presidency in the development domain, especially the G20 Support to COVID-19 Response and Recovery in Developing Countries and the G20 Financing for Sustainable Development Framework, the G20 agenda in 2021 will adopt a multi-dimensional approach through the advancement of Integrated National Financing Frameworks (INFFs) for the identification of financing needs and tools to support sustainable development of low-income countries.

In line with the Debt Service Suspension Initiative (DSSI) and the Common Framework for Debt Treatments beyond the DSSI adopted during the 2020 Presidency, the Italian G20, with a stronger role for the Development Working Group (DWG), seeks to identify guidelines and instruments to ensure that freed up resources are invested according to agreed global targets such as the SDGs.

Planet

The pivotal line of action of the G20 process in 2021 will engage the nexus between sustainable energy transition and climate change, as decisions taken in the next months are likely to determine the global fiscal and political space for climate action for the next decade.

The effectiveness of the G20 process in support of the energy transition and sustainable recovery would benefit from coordinated action with other relevant global processes. In this respect, the possible mutual synergies with the UK Presidency of G7 given the concomitant UK-Italy COP26 joint Presidency provide a unique opportunity to drive the global agenda to address simultaneously the multiple crises affecting the globe.

The Italian Presidency fosters members discussion on innovative energy technological solutions, green finance and the role of smart cities for a sustainable recovery.

Prosperity

Trade and investment flows experienced significant disruption due to the Covid-19 pandemic, even if growing complexities in the global trading system in the pre-Covid-19 world, such as increasing tensions between major global actors and the rise of global value chains, already weakened the global trade governance and lead to the current crisis of the World Trade Organization (WTO).

The Italian Presidency encourages discussions on different proposals of WTO reform, following up on the 2020 Trade and Investment Ministerial Meeting Communiqué and the Riyadh Initiative on the Future of WTO.

Two other central priorities and deliverables of the Italian G20 are i) MSMEs access to trade finance and the proposal to introduce an international passport to enhance their participation to international markets and global value chains (GVCs); ii) strengthening the resilience of GVCs of medical products and vaccines in order to prevent export restrictions, stockpiling and other forms of vaccine nationalism.

The future of multilateralism in a post-Covid World

Despite the postponement of the COP26 to November 2021, the Italian G20 Presidency has the opportunity to lead the progress of climate negotiations in a context of improved international relations, given the Biden Administration decision to rejoin the Paris Agreement. Italy has a strategic interest in promoting global cooperation on decarbonization considering its leading role in several renewables sub-sectors. At the same time, its traditional attention towards debt relief may favor initiatives for low-income countries’ investment in adaptation and mitigation strategies.

Nevertheless, if the intention of the international community to achieve the SDGs and proceed with the Paris Agreement is concrete, G20 initiatives such as the “Common Framework” has to be upgraded to the scale of the current crisis and coupled with debt cancellation measures, involving private sector creditors, multilateral development banks, and more than a subset of developing countries.

In the same spirit, the Italian G20 should formally launch a deliberative dialogue platform to help identify and resolve controversial issues on WTO reform. Extraordinary challenging times request for ambitious targets, such as building mutual trust among all the involved stakeholders, both in developed and developing country, without any intent to replace the WTO.

The international system is currently undergoing a real structural change. Other than the trends towards unilateralism discussed above, different directions lie ahead as it is becoming increasingly clear that the major global challenges that we face, from pandemic, to climate change, digital transformation, and economic recovery all are intrinsically transnational in nature.

The new Italian Government lead by Mario Draghi reinforce Italy’s international standing for the G20 leadership during 2021 unprecedented opportunity to revamp multilateralism.

 

Der Beitrag G20 Italy 2021 at the crossroad between closure and the revamp of multilateralism erschien zuerst auf International Development Blog.

Cooperation with Africa in the 21st Century: On Peer or Paternalistic?

5. Februar 2021 - 10:00

Modern development cooperation renounces paternalism. It relies on the market to negotiate projects and puts partner countries to compete with each other for favorable conditions for investments.

When talking about developing countries, we think primarily of miserable conditions. Too often the three „Cs“ characterize our view of Africa: crisis, corruption and conflict. Positive developments, such as the halving of the number of people living in poverty and the establishment of middle classes are rarely discussed. New, locally adapted technologies have emerged in developing countries. Unfortunately, we pay too little attention to these developments. Accordingly, German and European development cooperation is still far too often based on an outdated image of African countries. It rarely sees actors from African countries as peers.

Thus, the question arises whether development cooperation needs a hierarchy (“we” at the giving and “them” at the receiving end), and whether the entire Western set of governance standards must apply to all. We argue that is it possible to organize cooperation in such a way that all sides can contribute interests, knowledge and proposed solutions on an equal footing and suggest to replace the three „Cs“ with four alternative concepts: Dignity, Consistency, Effectiveness, and Efficiency.

Sustainable Development

Development depends largely on the quality of domestic governance. Modern development research has summed this up succinctly: „Institutions matter!“ Development policy can support, but modesty is of particular importance. Today’s objectives of development are fairly well described by the Sustainable Development Goals (SDGs) of the United Nations, defining a decent life in a healthy environment. They are based on the concept of sustainability with its three dimensions of ecological, economic and social sustainability.

These dimensions are not subject to a hierarchy. That said, economic goals have special significance in that they prhttps://www.die-gdi.de/en/2030-agenda/omote the achievement of the goals of the other two dimensions as well. The creation of jobs and income for people also promotes the provision of improved social services such as health care and the application of more efficient and environmentally friendly technologies via the creation of demand with purchasing power. Thus, economic sustainability can be seen as an intermediate goal, thus subordinate. At the same time, it can be interpreted as a sufficient condition for achieving the other two goals, thus superordinate. In the development context, this logic is sometimes overlooked. Therefore, it is crucial that some basic principles be observed in its operational implementation.

Principles of modern development cooperation are often neglected

Dignity. Apparently there is still the image of immature developing countries whom the West has to teach basics of good governance. For this purpose, development aid is paid to governments in developing countries. This is problematic as still often the agenda is driven by donor interests. As a consequence, the beneficiaries lack ownership; they do not see the projects as their own. Finally, they suffer from so-called Samaritan’s Dilemma: through permanent aid and paternalism, beneficiaries lose their own initiative. Peter Bauer pointed out these problems as early as 1960, and many empirical studies have confirmed them.  „Ownership“ is crucial: democratically elected governments in Africa must determine the development pathways for their countries. Foreign partners can play a supporting role within this political agenda if proposed projects are of interest to both sides.

As for companies from Europe, they will consider factors such as political stability or legal security when selecting possible target countries for their projects. In this respect, African countries automatically compete for investment; they will be particularly successful if they provide the best possible institutional framework. A combination of intergovernmental cooperation and market-based competition can therefore ensure greater dignity in cooperation.

Consistency. Often, good intentions pave the road to hell! To achieve the desired goals, a precise understanding of market and incentive mechanisms is needed. Take the example of supply chain legislation in the EU and its member states: The obligation to secure human rights throughout most of their supply chains will definitely overburden German SMEs; as a consequence, they might pull out. Companies from other parts of the world, where human rights may play a lesser role, are likely to take the vacated places. This weakens the achievement of the Sustainable Development Goals and ultimately has the opposite effect. Similarly, the trade policies of OECD countries regularly block exports from developing countries, despite a number of preferential trade agreements. This is also adverse to development.

Effectiveness. Primarily for the reasons described above, development aid in the form most commonly practiced is generally not effective. A broad academic literature has intensively studied the question of „aid effectiveness“ and comes to similar assessments. Donors care about spending their money – they think in fiscal years. Many government agencies function like bureaucracies. William Niskanen showed conclusively 50 years ago that bureaus are not necessarily interested in optimizing results, but in maximizing their budgets, which is incentive-compatible. In addition, an aid payment acts like a resource fund, risking a Dutch disease problem. The currency of the recipient country will appreciate, and the export industry there will suffer.

Economic efficiency. Development cooperation is usually strictly separated from economic policy. However, potential development projects should be prioritized according to their contribution to the SDG, and only those projects that promise the highest contribution should be selected. Particular weight must be given to job and income creation, because it has a positive impact on all other sustainability goals.

Lessons learnt

A modern development policy approach that achieves sustainable economic, ecological and social development places private sector investment in the center. When investments emerge as a result of negotiations between investors, local private partners or governments as peers, they have gone through a process of market-based exchange. Not only the investor, but also banks, suppliers and buyers have reviewed the project for feasibility, effectiveness and economic viability.

The state can help where potential projects cannot be realized as an exclusively private investment, for example because of market failure due to incorrect risk assessments by stakeholders. For example, if a solar park is not built because banks refuse to lend to it out of fear that the local power company will default, a guarantee from the federal government could help such projects to be carried out privately. Thus, the investment can contribute to economic growth and job creation and enable the operation of businesses that depend on a stable power supply.

In addition, it would make sense for the departments of various ministries dealing with foreign trade and development to be combined in a joint ministry in the next federal government. The areas of responsibility would include foreign trade and investment promotion as well as development aid and consulting, if this is desired in the target country. Thus, development cooperation can be a positive sum game, as practiced in other European countries such as Denmark.

It is often argued that African countries must strengthen their governance first before investment can take place. In contrast, we believe that every successful project can lead to better governance. It is sensible to accept the current situation as a given and work with it. Our model is to bring countries into competition with each other and thereby achieve improvements. Under otherwise comparable conditions, investors will choose the country for their projects that offers the best institutional setting; the German government can support this process with investment guarantees. If investment flows only go to such countries, this will put pressure on neighboring countries to improve their conditions in order to attract investment and new jobs. Governance can improve without paternalism. To the contrary: development cooperation based on the subsidiarity principle and competition treats partners as peers.

This blog contribution is based on an article “Entwicklung auf Augenhöhe: Mit sozialer Marktwirtschaft gegen veraltete Rollenbilder” in German language , published by the authors in Frankfurter Allgemeine Zeitung (FAZ).

Der Beitrag Cooperation with Africa in the 21st Century: On Peer or Paternalistic? erschien zuerst auf International Development Blog.

Political transition in the US – a tidal change for the Future of Globalisation? A collection of experts’ opinions

20. Januar 2021 - 14:09

Globalisation in the sense of increasing global connectedness has seen difficult times over the last years. The global financial crisis showed the vulnerability of our economic systems and middle classes. Multilateralism was challenged by “my country first” movements, not least so from the US, one of the godmother nations to the post-WWII world order. The other godmother, the UK, turned its back to the EU’s integration project. Furthermore, trade wars increased trade barriers and changed the setting for global production chains. And certainly in 2020, a global pandemic was (and is) most effectively curbed by the limitation of individual movements, often reducing cross-border linkages.

Challenges we can only tackle jointly did not receive the attention they’d require. The threat of climate change and a dramatic loss of biodiversity – in brief: managing limited resources on the common planet – saw interim respite, not least because of the aversion of the outgoing Trump administration against international cooperation in key fora such as the UNFCCC and the G20. These are, however, some of the root causes of the pandemic itself, with increasing occurrence of zoonosis in a human-shaped environment. The pandemic-related curbs on movement of people did reduced CO2 emissions to some extent and illustrated that clearer skies and waters are possible if governments and societies are willing to act. Yet, many societies are slipping back on years of social progress in a model that did not withstand the pressures of a pandemic.

With the inauguration of the Biden/Harris Administration, we might see a political tidal change in one of the key nations in the Northern world. Will the US return to the path of a promoter of international cooperation or will domestic issues hog the new Administration? Rebuilding the republic’s consensus will be an enormous challenge in the first place. How should other nations react to changes in the US? Where could, where should we see change in approaches to global challenges? We have asked leading experts from the US, China, South Africa, Argentina and Germany to assess the (changed) situation in key policy fields.

Sven Grimm and Axel Berger, editors of the Future of Globalisation Blog

Global engagement for development

Apart from wartime presidencies, a new US administration has rarely faced a more adverse set of domestic and global challenges on day one. An uncontrolled pandemic is killing thousands every day, the associated recession is leading to sustained job losses and declines in household income, a large share of the population believes falsehoods about the legitimacy of American democracy, and relations with the international community and other major powers like China and Europe are at a historic low. In the international development sphere, the Trump administration was by turns absent or belligerent, seeking repeatedly to cut budgets, scale back multilateral engagement – particularly with the World Health Organization, and – within USAID – appoint political activists to divide aid between enemies and friends, and to patrol against reproductive health measures they didn’t like. There is much to repair.

The Biden administration now enters with a decisive electoral victory, a mandate for policy change, and a science-based plan to battle COVID-19. Low borrowing costs and deficit reduction on the backburner mean that this could be an Administration with the wherewithal to deliver a rapid recovery if vaccine delivery scales up quickly and domestic political wars calm. There are the quick, positive actions announced for day one – rejoining the World Health Organization and the Paris Climate Accords, contributing to the global effort to immunize in low-income countries, nominating Ambassador Samantha Powers to head USAID and sit on the National Security Council.

Yet whether these moves will be accompanied by policy coherence and significant financial support to the UN system, the MDB, and low- and middle-income country governments depends on the speed of recovery at home and the bandwidth of a new set of policymakers dealing with the mess left behind. Few Americans are in the mood to share surplus vaccine when less than 1% are vaccinated to date. Likewise, the urgent multilateral development bank and UN replenishment requests have thus far gone unremarked by the transition team and will require a look across the asks to establish priorities and viable requests to Congressional budget appropriators. No clear direction has been set with regards to the Trump-nominated leadership of the World Bank and the IDB. At USAID, even with new elevated leadership, old problems and ambiguities are likely to persist. USAID’s Congressional budget earmarks saved spending levels on global health, humanitarian aid and economic assistance during the Trump administration, but their persistence also means that the space to innovate, change strategy or invest more in multilaterals and the UN is limited in the absence of increasing the overall envelope. Newer agencies like the Millennium Challenge Corporation and the US Development Finance Corporation continue to operate in parallel to USAID and their fit into the overall development strategy remains unclear. Global challenges like global health security and climate change demand action and funding that cut across multiple departments and sectors – and the US has not yet defined how these operate as part of development and aid, and how they operate vis a vis domestic policies and agencies. And so much of the US conversation on aid and development, and the UN system, has been dominated by anti-Chinese sentiment ahead of any other justification. And who will lead and decide on these matters?

While much remains to be seen, at least hope is on the horizon.

Amanda Glassman, Executive Vice-President, CEO of CGD Europe, and Senior Fellow, Center for Global Development (CGD)

‘Alternative Facts’ – Parallel Universes and the Presidency of Joe Biden

Questions such as what constitutes a ‘fact’, how ‘realities’ come into being and what ‘truth’ can legitimately be regarded as such, stand at the centre of phenomenology, philosophy and the sociology of knowledge. And yet, no sociologist of knowledge has fuelled the debate as controversially as Donald Trump, the 45th US-President. His national and foreign policy, from the moment of his inauguration, was accompanied and guided by ‘alternative facts’ – about the size of the crowd attending the ceremony, racial injustice in US-society, the nature of global climate change, to the scope of COVID19 as threat to citizens’ lives. ‘Alternative facts’ thus created space for, and contributed to the shaping of, ‘alternative realities’, tainted narrations of reality that divide rather than unify, that discriminate rather than respect diversity.

Dan Rather writes, facts and truths are the bedrock of democracy. The democratic fight is not possible if it is built on lies, deception and ‘fake news’. The Biden administration nevertheless inherits a machinery of ‘truth production’ that has to remind itself of how to decipher different readings of reality, and violations of the same. Bringing science back to Washington”, as explicitly stated by Joe Biden, is a much needed necessity. Insights from natural to social and human sciences yet, in addition, require careful consideration based on democratic values, human rights and the political will of building a socially just future, within the limits of our planet.

Joe Biden and Kamala Harris, choose your advisors well! The world expects from you reason rather than vanity, foresight rather than ostracism and integrity rather than shame.

Anna-Katharina Hornidge, Director of  the German Development Institute Deutsches Institut für Entwicklungspolitik (DIE)

Zero carbon emissions – An opportunity for the Biden Administration take the lead and demonstrate carbon neutrality

Carbon emitted from fossil fuel combustion is not a necessity good for human society.  On the contrary, it is a common bad. But the reduction of carbon emissions has been painfully slow since the start of negotiation under the UN Convention on Climate Change. The challenges come from, among others, climate equity concern, cost to the economy, technological barriers to zero carbon energy transformation, and the like. Some are real such as transitional cost from high carbon to zero carbon energy systems as it is a long process and we cannot get there in one step. Others might have been true in the past but not anymore. What we need is development, not the emission of carbon. Rapid technological progress has made zero carbon energy service more competitive than fossil fuels in many cases. Therefore, carbon equity should be translated into carbon opportunity. In China for example, the cost of one kilowatt solar PV electricity can be as low as one US cent.

It is good for the Unites States to be back to the Paris Agreement process. Under the Trump Administration, the US federal government was negative to climate actions but the market did not seem to follow. As a matter of fact, the statistics show that carbon emissions in the US has been decreasing both in aggregate and in per capita terms. The Ex-President said that coal is clean but the market responded that over 10 GW capacity of coal fired thermal power retired each year on average.  Zero carbon energy and zero carbon products like purely electric vehicles and batteries are highly advanced in the US. US leadership in global climate regime building is key to the success of reaching Paris goals. Cooperation among the developed countries and between the developing and developed countries will help the transformation of the global development into sustainability, which will in turn benefits all the nations, including the US.

Pan Jiahua, Member of the Academic Board, Chinese Academy of Social Sciences, and Director, Institute of Eco-civilization Studies, Beijing University of Technology

US’s relations with Africa

Joe Biden’s election was welcomed in many (although not all) parts of the world. It signalled a return to a more ‘normal’ and predictable diplomatic engagement. Yet, Africa is under no illusions that relations will be smooth.

Biden’s campaign commitments have emphasised democracy, governance and anti-corruption as key pillars in his foreign policy, as well as protecting the US’s economic future. These present opportunities but also areas of friction, not least among African elites, who have been instrumental in shrinking the democratic space in many countries. African civil society movements can expect support, although US resources may be limited. Biden has also signalled that he will lead efforts against illicit tax havens. This is a potential area of cooperation with African states, and one which South Africa and the AU have championed both at the G20 and the UN.

Africa has an interest in the reinvigoration of global governance institutions such as the World Trade Organisation, and its dispute settlement mechanism, as well as the resolution of the impasse surrounding the appointment of the new director general, former Nigerian finance minister, Ngozi Okonjo-Iweala.

The AU and African countries will be looking carefully at how the Biden administration engages with the numerous conflicts on the continent and how they cooperate with the AU processes and in the UN. The appointment of a former assistant secretary of state for Africa as UN ambassador, bodes well for a potentially constructive relationship.

Lastly, as the COVID-19 pandemic continues to rage, the WHO and support of health institutions such as the African CDC with its important role in the continental response to COVID, and which the US helped establish, are likely to feature high on the Biden agenda and as opportunities for cooperation.

Elizabeth Sidiropoulos, Chief Executive of the South African Institute of International Affairs (SAIIA)

The Biden Administration and Trade

When President Joe Biden takes office, he will have the wreckage of the World Trade Organization (WTO) to deal with. All three core functions of the WTO – negotiation, dispute settlement, and transparency – are in varying degrees of disrepair. This sorry state of trade multilateralism derives partly from the actions of the Trump administration (e.g. unilaterally launched trade wars, blocking of the appointment/re-appointment of members of the WTO’s Appellate Body). Given Biden’s commitment to multilateral cooperation, expectations are high that the new administration will help restore the workings and credibility of the WTO. But a swift back-to-normal approach would be counter-productive. The problems of trade multilateralism have deep roots, and kneejerk reversals of Trumpian policy will not help solve them.

The Biden team has consistently and rightly signaled that it takes the issue of increasing inequality within its own society seriously, and also the geoeconomic threat posed by China. This makes it likely that the administration will, while pushing for multilateral cooperation, also seek a fundamental update of the rules of trade (in terms of both domestic and security implications). This will not be an easy task. Avid free traders will balk at a reform of the system in this direction. The European Union, by agreeing in principle to the Comprehensive Agreement on Investment, has signaled its disregard for Biden’s declared offer to work jointly on China; in so doing, it has already made the new administration’s task much harder. Biden himself will have to resist domestic and international pressures to find quick fixes through bilateral deals with China and other players. But if team Biden plays its cards right, working closely in cooperation with like-minded allies, this could be a tremendous opportunity to reboot the WTO and make trade multilateralism meaningful again.

Amrita Narlikar, President, German Institute for Global and Area Studies (GIGA)

International finance

The pandemic upsurge was brutal, but economic policy avoided a credit crunch as well as a banking crisis. Finance was an early stabilizer, indeed. Credit creation will help a rapid real recovery (and save emerging markets). Extraordinary fiscal and monetary support must stay until the war on Covid-19 is won. However, finance might not be on a sustainable track as debt accumulation defies the law of gravity, helped by very low or negative interest rates. Ultra-low rates are due to the world´s ample spectrum of fragilities but underpin excesses in risk-taking and financial assets valuations. Meanwhile, digital money and finance have arrived, both a threat and an opportunity, while climate change knocks at the door. Expect vast transformation in the years to come.

The Biden/Harris Administration arrives with sensible policy promises: strong urgent fiscal stimulus and vaccination plans, an experienced and trustful economic team led by Janet Yellen, within a moderate Cabinet, a multilateralist approach with a firm though not adversarial international agenda, the re-joining of the Paris Accord, among others. Will the US go back to (pre-Trump) normal? Rebuilding trust abroad (and at home) might not be so easy. The world has learned its lesson and changed, too. International finance will welcome guidance from the new Administration on issues that are outside its exclusive turf. Clear definitions on controversial topics like trade, digital regulation and taxation, investment transfer, security, clean energy, and, especially, relations with China will be extremely informative for action.

José Siaba Serrate, Counsellor and Member of the Argentine Council for International Relations (CARI)

Multilateral cooperation

Joe Biden faces high expectations abroad for an end to “America First” – a contempt for multilateralism that translated into the undermining of the United Nations (UN), confrontations with geopolitical rivals, disdain for allies, a refusal to help tackle pressing global problems, but also wide scale, and often wild, unpredictability. To repair some of the damage at the UN, Biden already pledged to re-join the Paris climate change agreement and preserve American membership in, and financing to, the World Health Organisation (WHO). He vowed to restore funding to the United Nations Population Fund (UNFPA). Biden also indicated he would sign up to the “30 X 30” pledge to protect 30% of land and ocean by 2030, a key element of the upcoming UN Summit to reverse biodiversity loss. Running for re-election in the UN Human Rights Council as pledged will signal not only renewed global American commitment to human rights at a time of domestic racial unrest. It also means American re-engagement with one of the UN’s most necessary, yet imperfect, institutions given the extraordinary deterioration in respect for human rights in so many places around the globe.

The ongoing pandemic response and recovery work at the UN awaits full US support, be it in the Security Council to take up the security implications of COVID-19 and its multifaceted consequences or through the UN development system which has been providing valuable assistance to many countries’ socio-economic responses. As the Biden Administration puts its highest domestic priority on battling the pandemic in part through accelerated roll-out of vaccines, it will also be critical that it joins the COVAX Facility – the global coalition to make accessible a COVID-19 vaccine for those in greatest need. It remains unclear to date whether there will again be US financial support for the UN Relief and Works Agency for Palestine Refugees (UNRWA), how the new Administration will deal with its extensive accumulated arrears or whether the US will re-join the UN Educational, Scientific and Cultural Organization (UNESCO). Re-engaging with the UN, however, will require more heavy lifting than many had first predicted. Given the fragile social and democratic fabric in the US, it is not unlikely that the domestic support necessary for a more robust internationalism will prove difficult to achieve, even with a slim majority in Congress.

[the contribution by Weinlich and Hendra is an abridged version of a Current Column, click here for the full version]

Silke Weinlich, Senior Researcher at the German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE)

John Hendra, former UN Assistant Secretary-General and Associate Researcher with the German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE)

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