Session IV: G20 vs. United Nations, and the role of parliamentarians

• Leadership in global economic governance is increasingly being exercised by the G20 countries, with the UN left to play a secondary role. The G20 does not see itself in a subordinate position to the UN and does not “report” to the UN for further consideration of its decisions before they go into effect. The meeting agreed that the G20 and the UN are both necessary and must learn to cohabit. There is a clear need however for the relationship between the two bodies to be rebalanced. Concrete solutions whereby the G20 would work in coordination with the UN and with due regard to the UN’s more representative nature must be devised.

• Indeed, each body has its advantages and disadvantages. The G20’s decisions are speedy because they involve a few major actors working in an informal setting and with no particular rules. On the other hand, the G20 tends to look after its own interests before those of the larger global community, and the countries that are impacted by those decisions have little say in them. By contrast, UN decisions are slow and often ineffective because consensus is harder to achieve and formal processes take longer. It would take a drastically reformed UN to do the job of the G20. The problem is that the current UN reform process is itself mired in fruitless politicking.

• But the overarching issue with the G20 is that it lacks an oversight body. This is particularly true at the national level with a number of parliaments of G20 member countries unable to hold their governments to account on decisions made at G20 meetings. Although parliaments are generally becoming more active in international affairs, thanks in part to the IPU, this process has still a long way to go. Parliaments and MPs have managed to be more visible and to make a contribution to the work of the UN. However, this is not the case for the G20, particularly over the last three years when its role evolved well beyond the original intent as a coordinating body of finance ministers. According to some, this increased role is now threatening to encroach into policy areas (e.g., development, UN reforms) that belong to the UN. The suggestion was made that members of parliament from G20 countries should hold come together on the occasion of G20 summits. Another proposal made is that MPs should help bridge the gap between the G20 and the people, who for the most part regard the G20 as remote and unrelated to their concerns.

Day 2 Slideshow

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Session III: Environmental governance

• The current institutional fragmentation that characterizes global environmental governance must be resolved. The proposal that UNEP should be better endowed with core funding and elevated to the status of a UN agency with a greater coordinating role among other global environmental institutions has merit. Similarly, the main conventions (climate, biodiversity, desertification) might as well be brought under a single umbrella to maximize synergies at both operational and policy levels. Regional environmental agreements may only be viable for the short term, but they cannot substitute for global agreements that call upon all countries rich and poor alike to do their part, in a spirit of common but differentiated responsibility.

 

• The root of the environmental problem is that consumption and production patterns are still well above the earth’s carrying capacities. The decoupling of economic growth from environmental impacts is not taking place in spite of official commitments. This will require obtaining greater efficiencies throughout the economy, but also a stronger move toward the green economy. Consumption of material goods should shift toward public goods like education, culture, and health care that produce less stress on the environment and a high return in terms of human development. All advanced economies should track carefully their consumption and production patterns as well as a plan for the transition to a green economy.

 

• The government must play a leading role in environmental sustainability, but must also work closely in partnership with the private sector. Public investments must be targeted to induce more private investments in the green economy. Governments must be willing to raise funds for the environment (e.g. eco taxes) to help support investments in green technologies. Similarly, many people spoke in favor of a global carbon tax to help support green technology transfers, or help pay for climate change mitigation and other environmental projects in developing countries. When it comes to the environment especially, a public good, politicians must guard against private interests and lobbies that act in their own self-interest: decisions must be made in the public interest only.

 

• In spite of all these challenges, it is important to note progress on the legislative front in many countries in just over twenty years. There were several examples given from countries like Brazil, Sweden and others of legislation to cut CO2 emissions, reduce waste, conserve biodiversity etc. It is important at this stage for MPs to also enact legislation that helps change public attitudes toward the environment so that people will become more conscious of how their behavior might impact on the environment. Citizens are growing apathetic about the environment because progress is too slow and there is little leadership to push for change.

Farook H. Naek, Chairman, Senate of Pakistan

In the wake of several environmental emergencies urgent reforms are needed to protect poor and vulnerable countries like Pakistan. Only recently Pakistan has paid a huge cost to the vagaries of climate change in the shape of disastrous floods.  Pakistan proposes the establishment of a Joint Compliance Body for the three Rio Conventions i.e. the United Nations Convention on Climate Change, the Convention on Biological Diversity and the Convention on Combating Desertification.  In our view, it is pivotal to make old and new technology which remains climate friendly such as nuclear, geothermal and bio-fuel. There is a need for significant investment in carbon storage and capture technology. Excessive reliance on markets would be a recipe for disaster. We must give serious thought to direct budgetary contributions from the developed countries: 0.5% to 1% of developed countries’ GDP as an assessed contribution would provide US $ 200 to 400 billion.

Session II: reforming the international financial system

Currency exchange rates must be stabilized through better international cooperation. A basket of currencies as a reserve system is inevitable and ultimately preferable to predominance by a single currency (USA dollar), but a clear alternative has yet to emerge. If a basket is to be used, it would be important that the currencies of emerging economies like China be part of it. That would also help address some of the problem with the trade imbalance between China and the US, which remains a destabilizing factor to the global economy as a whole. Global reserves are too high at the moment, well beyond prudential requirements, which translates in less capital available for productive investments and therefore less growth.

The ability of countries to devalue their own currency is a basic tool of macroeconomic policy that should not be quickly abandoned. The debt crises of Ireland and Greece, for example, were made much worse by the fact that both countries belong to a common currency over which central banks have no control anymore. The alternative to currency devaluation is budget cuts and austerity measures which will only make it harder for these countries to come out of the recession. While the causes of the recession are common to many countries, the response must also distinguish carefully between countries. In Spain, for example, the underlying problem is not a weak financial sector or excessive debt, but rather a more general competitiveness problem of the productive sector.

A long-standing proposal for a tax on short-term, speculative financial flows was for the most part favorably received. The tax would have nearly zero transaction costs, would only apply to a country’s own currency exchanges around the world (not just in its own territory), and provide a stable source of financing for development. It is technically feasible for countries to apply the tax on their own currency transactions without the need for a global agreement. The tax would hit mostly hedge funds and commercial banks whose overall tax burden is generally below that of other industries. Some also viewed favorably the recent IMF proposal to institute some sort of financial transaction tax in order to create a reserve fund to support troubled banks or financial institutions, thus preventing future bailouts with taxpayers’ money. It is indeed lamentable that in many countries banks that reported huge profits up until the crisis erupted received state aid and ended up weathering the storm almost undamaged. Private investors and savers did not enjoy the same advantage. It is also regrettable that, at least in some cases, international support to countries in the wake of the crisis was channeled to central banks that in turn use the funds to inject liquidity into other (private) banks. The real economy of those countries did not benefit from international support directly. 

Capital controls must be imposed whenever necessary to prevent currency overvaluations, asset bubbles and other negative consequences in receiving countries. The question is whether controls should be imposed as a last resort after trying other measures, as the IMF proposes.

Djibril Mama Debourou, MP, Benin

En effet, les pollueurs versent des larmes de crocodile sur la disparition des forêts tropicales dans les pays comme le Congo, le Gabon ou le Cameroun, pour ne citer que quelques cas. Au total, je pense que les parlements Africains, en raison des positions économiques de leurs pays ne peuvent pas grande chose contre la destruction de leurs écosystèmes nationaux.  Car il y a d’une part des sociétés de consommation où le superflu est devenu une nécessité, et de l’autre des sociétés où on lutte pour la survie.