Speech at the Commonwealth Finance Ministers Meeting

Minister Stavrakis, Ministers, delegates, ladies and gentlemen.

It is a real pleasure for me to speak to you tonight at the opening of this Commonwealth Finance Ministers Meeting. I must first thank the Government of Cyprus for the warmth of their welcome, and for their commitment to making this meeting a success.

This is not the first time that the Commonwealth has journeyed to Limassol, since Commonwealth Heads of Government met here in 1993. And I am sure it will not be the last. Cyprus is a valued member – and one of only three European states – in this, our 53-nation Commonwealth. It is one of the 32 small or island states whose voices are so clearly heard in our association.

It was here in Cyprus that Aphrodite, the Greek goddess of love, is said to have risen from the foam on Paphos. But the economic events of the twelve months since we last met seem to speak more of the earthquakes of Poseidon, or the thunderous storms of Zeus.

Last October, when we met in St Lucia, the financial storm in the global economy was just gathering pace. Since then, it has become a veritable tempest, which has affected every single Commonwealth country. 2009 will see the first contraction of the global economy in the association’s 60 year history.

No country in the Commonwealth will reach its growth potential this year. To offer just one example of many, Botswana – which has been and remains something of a model of macroeconomic stability and careful liberalisation – has seen a swing from a 7% surplus in 2008 to a 6% deficit in 2009. I say this, simply to stress that the crisis has spared no one.

I direct you to some of the papers we have produced for this meeting, and in doing so I thank my colleagues who wrote them. The analysis could not be clearer: output, employment, fiscal and external balances, markets, investments, remittances have all significantly deteriorated in Commonwealth countries.

It is wrong, to speak of the crisis in the past tense. The world is still deep in recession, and the residual effects will be all the worse, and all the longer-lasting, for the smaller, weaker, poorer countries, which do not have the cushion or the economic resilience to weather its storms.

As a result, this is a particularly important meeting for Finance Ministers – in both your national capacities, and as members of the Commonwealth. Rarely, if ever, have the challenges facing Finance Ministers been more complex or grave.

As a result of the crisis, 90 million additional people are now living below the poverty line, of whom we estimate that 40 million are likely to be our fellow Commonwealth citizens.

As a result of the crisis, around 40,000 more children will die in Africa. Again, many will be our fellow Commonwealth citizens.

These numbers defy understanding not because they are large – although they are – but because they are shameful.

Yet this is the reality of the diverse Commonwealth. Together, members embrace the whole range of human experience, and of countries of all descriptions. For some, a global recession means anxiety about mortgage payments, and perhaps even losing a job. For others, it is a matter of life and death.

The key is to make this Commonwealth diversity and inclusiveness a strength. To share experience, to learn from each other’s wisdom, to understand each others’ concerns, to act. I do believe that no other organisation offers quite this chance.

But beyond this: what can a Commonwealth meeting bring to Finance Ministers confronting these daily realities?

One part of the answer lies in the services that the Commonwealth Secretariat provides to members. We are not – nor do we pretend to be – an organisation providing comprehensive crisis response. But within our mandate and resources, our work is shaped by the crisis.

Whether it is providing expertise on sequencing of public expenditure restraint, designing debt management strategies or strengthening financial regulation following the crisis, the Secretariat works to meet your needs, and it will continue to respond to your requests.

But the Commonwealth Secretariat is not, of course, the Commonwealth. You are. So what the Commonwealth can offer is determined by what you bring to each other.

Today, I want to touch upon three particular features of the shared Commonwealth approach to the issues confronting us at this meeting.

The first feature is a commitment to collective engagement and to multilateralism – and therefore to coherence.

Of the many valuable lessons that have been taught us by the crisis, one of the most prominent is that an integrated global economy requires active collaboration and cooperation amongst nations. And what has been true of the financial and economic challenges of the past year is equally true of the dormant crises of food and fuel security, and the looming crisis of climate change.

The Commonwealth’s commitment to constructive multilateralism is rooted in the realities which face its members. Commonwealth countries are more dependent on trade than many others. This is particularly true of our smaller members, who are more integrated with the global economy and consequently disproportionately affected by the slowing of world trade. In this crisis, lower trade volumes have effectively wiped out growth in small countries. But the Commonwealth on its own cannot ensure a stable global economy. This requires global cooperation.

The fact that the Commonwealth’s interest lies in effective international cooperation was the motivation for Commonwealth Heads of Government – at their last meeting in Uganda – to seek the comprehensive reform of international institutions. Last year, this same group endorsed a set of principles for reform of the International Financial Institutions.

Over the past year these principles have been broadly reflected in some of the real changes implemented in the IMF and World Bank, not least in the greater flexibility that both institutions have shown in creating new ways of supporting their member countries. You will be discussing progress on these issues in the course of the meeting.

The past year has also shown that there is a need to add a further principle to guide reform. That principle is inclusiveness.

In one way, this has been a breakthrough year for the simple concept of including all and excluding none. The emergence of the G20 at leaders’ level has brought overdue recognition that the world has changed, and that it requires wider and more complex management. But the fact that the exclusive club is bigger now remains of limited value to those who are not members.

Five Commonwealth countries are members of the G20, so forty-eight are not. Yet those forty-eight are just as concerned about the stability and structures of the global economy – and just as affected by the consequences of its operation – as the twenty themselves.

We have repeatedly called for the G20 to see its role in wider terms. I wrote an opinion piece in April that drew wide international coverage: it called on the G20 to see itself as a ‘T 20’ – where the T stands for Trustees of the world economy, not masters of it. As trustees, they should be seeking the views and concerns of others, and taking their interests and welfare into account. They have the responsibilities of guardianship, of and for us all.

How delighted we were, then, to see those two messages in the headlines coming out of the G20 summit in Pittsburgh last week. In two words, that summit embraced the imperatives of Trusteeship and Inclusiveness. Those are not exclusively Commonwealth ideas – but they are tenets to which we have held, faithfully. We can take communal pride in that outcome; and commit ourselves anew to seeing its words translated into actions.

The Commonwealth – consensual and collaborative – where views can be freely expressed, should continue to be one the uniquely representative channel of communication in this new world.

The second Commonwealth quality is distinctiveness in pioneering new ideas.

This distinctiveness is born of a combination of the Commonwealth’s diversity, its truly consensual nature, and its ability ‘to look beyond’. This all combines to allow a unique perspective. The current crisis has left the world in greater- than-ever need of good and new ideas. The only certainty is that things cannot simply return to how they were before the crisis.

We should recall the Commonwealth’s track record in foresight – in the economic as much as the social sphere. In the past, groups of Commonwealth Finance Ministers have dared to look to the future and shape global debates.

The championing of debt relief remains the clearest example of this. It was here at Commonwealth Finance Ministers Meetings that two huge global ideas were incubated – of bilateral debt relief when your predecessors met in Barbados in 1987, and of multilateral debt relief when they met in Mauritius in 1997. The persistence of those who came before you, debating the issues amongst themselves and then bound together by the strength of their consensual positions, has won hearts and minds. A generation later, we can point to something like $110 billion-worth of debt relief emanating from an idea first pioneered by this organisation, the Commonwealth.

The world is still in need of good ideas. Our challenge is to find those new ideas wherever they may be – in building economic resilience, promoting global financial regulation, or governance of the International Financial Institutions – and develop them together.

One area where the Commonwealth as a whole has brought a distinctive view is in the need to address climate change.

First raised at CHOGM in 1987 by the Maldives – well before Rio – the issue of climate change is well and truly upon us. Commonwealth Finance Ministers discussed the financial aspects of climate change as recently as two years ago. For our low-lying or smaller, island states, it is could be nothing short of an existential catastrophe. It will shape the economic realities of all Commonwealth countries, for decades to come. A global transformation is needed both to adapt to the impact of climate change, and to move to a sustainable low-emissions future. The UN discussions at Copenhagen are designed to create a new global compact for a sustainable future.

We have seen moves and counter-moves in the last few weeks, and those discussions remain in the balance. But the key issues there are not only environmental: they are economic and moral. Our Heads will meet in Trinidad on the very eve of that Copenhagen summit: we can anticipate that that they will state unequivocally that the climate change obligations of the developed world to the developing world are clear – and they need to be backed with finance and technology.

The Commonwealt is an association in which respect for each other runs deep. I hope that Commonwealth countries will be able to help reach across the global divide to support a viable conclusion. And I hope that Finance Ministers will be at the forefront of their countries’ efforts to tackle climate change. Without this, the prospect of achieving a sustainable economic and environmental future will slip away.

The third Commonwealth feature I would like to highlight is partnership.

The Commonwealth, as a voluntary association, can only last if its members see value in the relationships they create together, and within the organisation. The Secretariat trades in these partnerships: you see them in the way we support the training of African businessmen in India; in the value of Canadian expertise brought to the banking systems of the Caribbean; in the value of the Asian capital we help to bring to the Pacific. The lesson is that experience shared is wisdom spread.

This year, we have an even greater focus on partnerships, since the theme of the Trinidad and Tobago CHOGM is ‘Partnering for an Equitable and Sustainable Future’. Economic issues will be high on the agenda of that meeting.

In the next two days we will have the opportunity to identify ways in which partnerships amongst members of the Commonwealth can assist in helping to meet our daily economic challenges. Our Commonwealth business and civil society communities are here in the margins of this meeting: they are an integral part of the solutions we seek. I am pleased to be speaking at a business breakfast tomorrow, and a civil society one the day after.

The Secretariat can help with facilitating those partnerships. The Secretariat can also assist with promoting partnerships with other institutions, since we have built up strong strategic relationships with a range of organisations: with the World Bank on Small States issues, for instance; with the ACP Secretariat on trade issues; and we are in the process of developing links with UNCTAD. We would value your insight and experience on how to develop these further.

As you know, this year is the sixtieth anniversary of the foundation of the modern Commonwealth. It is an opportunity to celebrate past successes, but more importantly to look forward: that is why our theme for the year is ‘serving a new generation’.

As an organisation which is getting ever younger, we are firmly committed to putting the promotion of youth work at the heart of what the Commonwealth does, including as participants in the economy. We have a strong track record, in the form of a dynamic Commonwealth Youth Programme which is now nearly 40 years old.

It is why I hope there will be a ringing Declaration from Heads of Government on the value of young people in Port of Spain, and political and financial commitments to match. We already run a Commonwealth Youth Credit Initiative which has provided thousands of young people with seed funding, and training and mentoring to match. We would like to see the CYCI go up several gears – with government, inter-government, IFI and ‘big business’ support. We already have a $600,000 promise from a bank, as we start to build the resources and scope of the project. This has to go hand in hand with ambitious initiatives in skills development. The aim is to unleash entrepreneurial talent, and to turn out job creators, not job seekers. You need to be part of that, since our efforts to galvanise youth enterprise will not succeed without you.

Ministers, this is just some flavour of the context in which we meet, these few days in Limassol. The world has a future to shape, and the Commonwealth has to take a hand.

There is more, of course, and some of it is technical in nature. In the papers set before you, you also have our responses to an acute problem in access to finance for so many Commonwealth countries, and our ideas on three things:

• a new Commonwealth push to give impetus to the Doha Round; 
• a proposal to revisit the theme of multilateral debt relief for those countries above an agreed debt-GDP ratio; 
• a proposal for a new and limited multilateral relief fund, with which to meet differentials in debt interest.

We can explore these further in the next few days.

So we meet today in the context of real challenge, but also of real opportunity – above all for the new Commonwealth, the next Commonwealth – the half of our two billion people who are under 25, and the quarter who are under five. As I wrote in the handbook for this Meeting, the Commonwealth Finance Ministers Meeting is ultimately about people, not economics.

The job of Finance Minister has never been harder, and never been more crucial. I do not envy you your work. But I hope that for the next two days we will find strong and new approaches in forging a way forward, and that we will emerge strengthened for the task.