The world faces an emergency. And on the 2nd April, leaders from the twenty largest economies in the world will meet in London at the G20 summit in an attempt to tackle the financial meltdown.
There are high expectations for the summit, but before they leave London, the G20 leaders must ensure that their well trailed agenda does not overshadow concerns for those who are barely represented at the G20, namely the poorest countries in the world.
They too are being hit by the current financial crisis; one which they had no part in creating. Indeed, if concerted action is not taken, we will see a rapid increase in poverty, hunger and disease and a collapse in progress towards the Millennium Development Goals that are designed to eradicate them.
The Liberal Democrats believe that the G20 summit offers a key opportunity to revitalise the international community’s commitment to development at this difficult economic time.
In an interconnected world tackling the impacts of the crisis on the developing world is not just a moral imperative, but in our own self-interest.
If we do nothing it will not be long before humanitarian crises, migration and political instability impact on our shores. If we act progressively, continued growth in developing economies will act as a boon to our export markets, impacting positively on jobs and markets at home.
Hundreds of billions of dollars have been set aside to tackle the crisis in the banking system and to provide economic stimulus, but President of the World Bank, Robert Zoellick, was right to say that at least 0.7 per cent of this should be spent to help developing economies. As host and Chair of the G20 summit, the UK has a leading role to play and must set an example for others to follow. That is why we have set out the idea of a new ‘G20 Compact’ between the developed and developing economies including a £1 billion UK stimulus package specifically for the developing world, including action on a ‘Green New Deal’.
Our approach is based on three strands: delivering on failed aid pledges, protecting vulnerable people and revitalising the private sector.
The failure on aid is unconscionable: amid much fanfare at the 2005 Gleneagles summit, the G8 pledged to double aid to the developing world by 2010. In 2009 the G8 is $34 billion dollars a year short of this target. The perennial cycle of generous international aid pledges followed by subsequent failure to deliver them must come to an end. It is time for the G8 to deliver on its ‘IOUs’. That is why we have proposed a ‘Gleneagles recovery plan’ and a new roadmap, ‘Route 0.7’, for the world’s rich nations to meet their promise to spend 0.7 per cent of GNI on aid.
The human impact of the downturn is easily lost: much of the discourse on the global financial crisis is conducted in statistical and economic terms. It is of course important to understand that developing world growth is set to drop two percentage points to 4.5 per cent in 2009, but the real story is that this will push an extra 46 million people into extreme poverty (less than $1.25 a day) and cause the deaths of up to 400,000 more children this year. These people will need help quickly, which is why we propose extra funding for the World Food Programme. We have also set out ideas for the creation of a ‘Global Fund for Social Protection’ to help with the establishment of basic welfare systems in developing countries.
But aid is only part of the story. The private sector is the engine of economic growth and therefore the driver of development. We need to silence the siren cries of the protectionists who would close the gates to trade with the developing world. In addition, any stimulus package must address the large scale withdrawal of western capital from developing economies in the wake of the recession. That is why we are arguing for additional funding for the UK’s CDC and the World Bank IFC, to allow them to invest in businesses and draw in further capital. By setting new targets on investment in green and agricultural investment, we believe we can advance the process of climate change adaptation in the developed world.
We also need to see new rules for western corporate activity in developing countries. Increasing financial transparency and tackling the problem of tax havens to boost revenue for both developed and developing countries must be a priority, but so too is ending the scandal of the charges applied for remitting money overseas, which in some cases reach 40 per cent.
There is a great deal for the G20 to achieve at the London summit and we have seen how lives are at stake on the outcome. The chancellor made a nod to the problems in the House of Commons ahead of the summit, but proposed little action. The challenges for the developed world are stark, but if the G20 applies even a fraction of the determination and resources it has applied to its respective domestic responses, the G20 could prevent the financial crisis producing a humanitarian catastrophe in the developing world.
Michael Moore MP is the Liberal Democrat spokesman on International Development. His paper Development in a downturn; dealing with the global emergency is out on Monday 23 March and will be available from the Liberal Democrat website