The G20, or the ‘G200’?

With 5 of its members in the G20 – but 48 outside it – the Commonwealth has always said the same things to the Group, from within and without. It is this: while 90% of global GDP will be represented at the G20 table in Pittsburgh in September, what will be missing is 90% of the world’s countries.

Globalisation decrees that all of our fortunes are inter-locking, and that all our challenges can only be met together. So the G20 countries which meet in the United States should always be conscious of their place in the global ‘G200’. More accurately, they should be conscious of the ‘G172’ who are the unseen guests at their table, and who comprise so big a part of the global community.

For it is they, who stand at the gates, whose need is greatest. For the richer countries of the G20, the current global downturn can make them a little poorer. But for the developing world embodied in the G172, the current global downturn can be devastating – just ask the estimated 44 million people worldwide who have been tipped into poverty in the last 12 months, or the 100 million people now newly categorised as under-nourished. In the last 12 months, the number of infant deaths worldwide has risen by at least a quarter of a million. These people are the reality of the downturn; the development scientists and statisticians are merely the witnesses to the receding target of meeting the Millennium Development Goals.

The G20 should always remember that until these ill winds blew, the G172 had done many of the ‘right things’, and adopted many of the right policies. But they had little of the inbuilt resilience of established institutions and robust economies, to allow them to withstand the buffeting brought by the crisis. The gains of decades, it seems, were blown away in days. Turbulence in the skies of the developed world has unleashed hurricanes in the developing world.

And yet there are, even now, signs of growth in the world economy, with the IMF recently declaring itself more optimistic about 2010. The G20’s fiscal stimulus – and the trillion dollars it agreed in London in April – has achieved some of this momentum.

We prophesy at our peril, as to when and how – but not if – we emerge from the current economic darkness. But certain lessons are clear, and one is that we need a global economic system which gives priority to stability, and one which is built around the interests of all, not the few.

We in the Commonwealth repeat the message of the need to ‘reinforce development’ in straitened times.

Development – which we view as Democracy’s twin – is the key not just to an emergence from the current darkness, but to many poorer countries’ very existence. The Millennium Development Goals of 2000 were the first universally adopted framework for ensuring that all countries, the world over, are able to achieve their own potential. The MDGs were agreed by rich and poor countries alike, by donor and recipient. And all 8 of the Goals are in danger of not being met. Without spectacular growth in China and India, the slippage in Sub-Saharan Africa and other parts of Asia and Latin America would look even more serious than it already is. As development scientists now start to look beyond the MDG deadline of 2015 – debating possible new targets, for instance in areas like population growth and social protection levels – they are also painfully aware that the world will not reach its targets by the date it had set itself.

The international financing institutions – especially ‘The Bank’ and ‘The Fund’ – have led a coherent, international response to the current crisis, in the form of billions of dollars released as liquidity for finance. But the World Bank itself estimates that the financing gap for developing countries may still rise to a figure of some $700 billion – and the international community is honest enough to say that it does not know where that funding will come from. In all this uncertainty, the fear is that the developing world may be retarded long after this crisis, with poorer countries especially hard hit by the end or the slowing of equity finance, bank lending, and Foreign Direct Investment. The nagging concern is that ‘recovery’ could as easily mean ‘relapse’.

14 of the Commonwealth’s 53 members are classed as Least Developing Countries, and 26 of its members are expected to record negative GDP growth in 2009. A powerful example is Botswana – seen as a model of macroeconomic stability and careful liberalisation – which has seen a swing from a 7% surplus in 2008 to a 6% deficit in 2009. We also see the effects of developmental downturn in the areas of social development which need developmental funding the most: Nigeria’s education spending, for instance, is down by 19% in 2009, and its health spending by 26%.

What can the G20 do to reverse the slide? First, it can honour its own aid commitments – made as long ago as 1970 when richer countries first promised in the UN to reach a target of 0.7% of GDP being spent on overseas development, and – more recently – by the G8 at Gleneagles in 2005, and in by the G20 in London this April. Aid flows are at risk as the rich countries now digest the staggering costs of bailing out their financial sectors, and aid promises are already badly broken. A still greater loss is the stalling of private sector investment money coming into the developing world.

At the G20 summit in London in April, the host, UK Prime Minister Gordon Brown, announced the end of the Washington Consensus of open markets, privatisation and liberalisation. The centrepiece of the recovery exercise announced then took the form of resources made available primarily through the Washington-based IMF. It is incumbent on the IMF to respond fairly and substantially to the needs of countries seeking assistance. Hence a current Commonwealth initiative to reform and revitalise the global institutions, making them properly representative and inclusive.

The G20 should also give serious consideration to a new formula of economic development, which has already been proven in places like Brazil, Japan and South Korea. The new approach can be true to the principles of the Washington Consensus, while resurrecting moderate forms of government guarantees for long-term loans, part-nationalised development banks, managed exchange rates, and some flexibility on inflation. The G20 needs to think creatively if it is to help the developing world out of the difficulties into which it - the G20 - has plunged it.

Be it for the 10-year-old G20 meeting in Pittsburgh in September, or the 60-year-old Commonwealth whose Heads of Government meet in Port-of-Spain in November, the backdrop will be difficult times. For the first time in a generation, we face a confluence of crises which can only be met by a conjoining of effort. Global challenge needs global rules, which need global consent. The G20 needs to find a way of reaching out and making this new partnership a truly global partnership. The Commonwealth stands ready to contribute fully and enthusiastically to such an approach.

ENDS