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Public Event: Changing Course for Sustainable Development

12. September 2018 - 18:50
Bold Alternatives to Business as Usual Spotlight on Sustainable Development 2018 Geneva Launch of the Civil Society Reflection Group Report MONDAY 17 SEPTEMBER 2018, 1.00 – 3.00 PM; ROOM XII, PALAIS DES NATIONS

“The world is off-track in terms of achieving sustainable development and fundamental policy changes are necessary to unleash the transformative potential of the SDGs.” This is the main message of the Spotlight Report 2018.

Civil society organizations have a key role to play as independent watchdogs holding governments and international organizations accountable for their actions that help—or hinder—the implementation of the 2030 Agenda. The Spotlight on Sustainable Development 2018 report, produced by a global coalition of civil society organizations and trade unions, provides a wideranging independent assessment of the implementation of the 2030 Agenda and its Sustainable Development Goals.

The 2018 edition shines a light on existing bold alternatives to business as usual that can help to change the course towards more coherent policies for sustainable development aligned with human rights principles and standards.

But it goes far beyond that, seeing policy reform as necessary but not sufficient. More fundamental shifts in how and where power is vested are necessary to unleash the transformative potential of the SDGs. In particular, the report calls for more coherent fiscal and regulatory policies, and a “whole-of-government” approach towards sustainability.

At this event, co-organized by UNRISD and FES, some of the key findings and recommendations of this year’s global Spotlight Report will be presented and discussed from various perspectives.

PANELISTS:
  • Gita Sen (DAWN)
  • Kate Donald (Center for Economic and Social Rights)
  • Sandra Vermuyten (Public Services International)
  • Ziad Abdel Samad (Arab NGO Network for Development)
DISCUSSANTS:
  • Paul Ladd (UNRISD)
  • Victoria Tauli-Corpuz (United Nations Special Rapporteur on the rights of indigenous peoples)
MODERATOR:

Hamish Jenkins (UNRISD)

OPENING REMARKS:

Hubert René Schillinger (FES)

Sandwiches and light refreshments will be served prior to the event

Registration: http://www.unrisd.org/spotlight-geneva-launch-2018

Download the invitation here.

Kategorien: english, Ticker

How to finance SDGs to be discussed at UN next September 24

29. Juli 2018 - 18:14

New York, Jul 30 (GPW) – Next September 24, the UN Secretary-General, António Guterres, will outline a new private investment strategy during a high level meeting that he is convening. Under the title of “Financing the 2030 Agenda for Sustainable Development” the meeting aims at building momentum and support to mobilize public, private, domestic and international resources, to improve financial norms and standards, and to disseminate to developing countries digital technologies to help them access finances.

Details of the format and objective of the meeting were announced on Friday, July 27 by Deputy Secretary-General Amina J. Mohammed and Assistant Secretary-General Elliot Harris.

Following the inaugural speech by the S-G, three “Davos-style” panels will be held, one by Heads of State, one by CEOs of private finance sector and the last one by technological “innovators”. No names of panelists were provided at this stage.

The meeting will highlight five action areas to enable participants to come back one year later in 2019 and report during the High-level dialogue on Financing for Development on how they were implemented.

The Group of 77 and China asked if the focus was primarily on private finance or if it was positioned around the Addis Ababa Action Agenda (AAAA) on financing for development.

The UN secretariat replied that the Secretary-General will be using his convening power to help Member States action the AAAA. It identifies as a major problem the non-alignment of the financial system with the economic and financial policies needed to achieve the Sustainable Development Goals and hopes the September meeting will raise “uncomfortable questions” and target the normative aspects, putting the spotlight on the financial architecture in front of an audience that includes many who can leverage pressure to make the necessary changes.
Since finance for sustainable development is not being mobilized at the scale that would be needed, the meeting is expected to identify what is blocking and keep momentum.

Ambassador Courtney Rattray of Jamaica commented that some of the norms and regulations that govern the banking sector -such as the Basel III rules- actually run counter to the objective of aligning investments with the SDG. He offered as an example that in the US, the fiduciary guidelines that govern the behaviour of financial investors prioritize economic interests over environmental, social and governance issues. This is one of the inconsistencies that should be addressed.

Other countries, including the US, asked for more details on the event in order to send the appropriate representative. The US has reiterated in a number of ECOSCOC meetings in July their position that “much of the trade related language in the Addis outcome document has been overtaken by events since July 2015. Therefore it is immaterial and our reaffirmation of the outcome document has no standing for ongoing work and negotiations that involve trade.” Further, the current US position is one of not recognizing “the legitimacy of the AAAA“.

Kategorien: english, Ticker

SDG shadow implementation – hidden in plain sight

12. Juli 2018 - 13:34

By Barbara Adams and the GPW team

Download this briefing (pdf version).

The annual UN High-Level Political Forum (HLPF) has a unique role to review progress, define policies and flag priorities at national, regional and global levels for implementing the 2030 Agenda for Sustainable Development and achieving the SDGs. This agenda has also become the premier driver and justification for institutional, financial and data reforms and capacity development.

A number  of decisions have been adopted during the twelve months since the last HLPF that are central to the implementation of the 2030 Agenda and the SDGs, particularly the measurement of progress towards the SDGs and strategies to finance them. They are complemented by or responsive to proposals of the UN Secretary-General on the funding and institutional architecture of the UN system.

However, these developments are not prominent in the HLPF review process itself and are cause for concern as the current trajectories are inadequate to achieve the 2030 Agenda and do not correct the undermining of multilateralism.

The 2030 Agenda is universal: its vision is inclusive of all countries, all policies, and all sectors of society. But evidence to date shows a pick-and-choose approach among some Member States, UN agencies, civil society and the business sector according to their priorities and interests. Efforts at implementation have not only privileged these diverse priorities and competencies but also have neglected accountability, deliberately or otherwise.

While this approach may be understandable as it defines constituencies, resources and capacities, the aggregate does not do justice to the purpose of the 2030 Agenda, and risks re-writing it to a pale reflection of its ambition.

The 2030 Agenda reiterates the need to progress beyond siloes and contains commitments aimed at addressing disparities in opportunities, wealth and power.

Some laud the interest and involvement of the major economies / G20 and the corporate sector in the search for the ‘trillions not billions’ needed to implement the SDGs, but closer attention suggests the trillions may serve the needs of institutional investors and mitigate against the transformation needed to bring justice for people and planet.

Currently the dynamics around measurement and finance are re-shaping the Agenda. Its bold vision is being undermined not only by what is and is not being measured and financed but also by a failure to focus on strengthening democratically accountable institutions as well as cross-goal, cross-pillar and cross-policy streams.

This briefing introduces some of the recent developments in the areas of UN reform, funding and financing, partnership promotion and the measurement of “progress” on SDG indicators.

Measuring progress to implement the SDGs

Three years into the implementation of the SDGs, the indicator set that is currently being used as the basis for measuring progress fails to capture the holistic and transformative agenda envisioned by the SDGs. Instead of trying to find a synthetic dashboard that could summarize the trends in all key areas covered by the SDGs (social service delivery, inequalities, protection of the planet, prosperity) and show their trade-offs (e.g., prosperity versus planetary protection) and complementarities (e.g., access to water reduces the unpaid workload of women) the statisticians adopted a ‘count every tree’ strategy, proposing indicators for each of the 169 targets, without first assessing if a goal could be summarized by the sum of the indicators (which does not happen at all with, for example, SDGs 10 and 16) or data availability. The indicators have now been grouped into three Tiers, of which only Tier I has agreed methodology and sufficient data coverage; Tier II lacks sufficient coverage and Tier III still lacks methodological consensus.

The upgrading of indicators into higher tiers has been a cumbersome process, yet in 2017 the General Assembly was asked to approve its continuation, so that it eventually might lift all indicators to Tier I, the only ones that can legitimately be reported. This could take decades and it de facto leaves the HLPF assessment of the 2030 Agenda without the needed data to show progress or regression (see GPW briefings #22, #23 and #24 for thorough discussion of these developments and their implications).

 

Financing the SDGs

The current dialogue around SDG financing is snared among fault lines that favour big corporations. It assumes the conventional wisdom that public financing is played out without any attention to how resources are diverted from the public purse by tax avoidance, evasion and illicit financial flows. It avoids analysis of the quality of public spending, the distributive and multiplier benefits and increasingly advocates the shift of public resources to leverage private flows.  Moreover, it accepts unquestioningly the assertion by the G20 and the MDBs that US$ trillions are needed without clarifying the costing basis.  Who will benefit from the mobilization of these trillions? Certainly, the pension funds and institutional investors that are awash with liquidity and searching for a pipeline of guaranteed returns.

As the Mr. Torben Möger Pedersen, Chief Executive Officer, Pension Denmark, explained at the UN in 2016:

“….Very optimistic in this area, there are unusually low interest rates, that will stay low for a long period of time looking for new investment and new asset classes, that have higher return than you can get on government bonds, but with new utility with listed equity market. Actually, when you look into the SDGs you can regard them as a big catalogue of interesting investment opportunities. We are proud to offer a green pension plan partnered with green power from their own savings account.”

The urgency to attract the so-called ‘trillions’ – promoted under the call of Maximizing Financing for Development – has prompted a shift in the narrative from a focus on factors needed to create an enabling environment for states to implement the SDGs to a focus on promoting a business-favourable enabling environment, which often results in fewer regulations and oversight in relation to business activity. Modalities and innovations address how to incentivize private investment, including through the use of public finances. The UN is urged to convert development activities into a pipeline of bankable projects, embrace PPPs while avoiding the analysis of off-book liabilities that have turned this modality, on occasion, into a pipeline of debt creation and public service erosion.

In its 2018 report, “Financing for Development: Progress and Prospects 2018”, the UN Inter-Agency Task Force on FfD provides key recommendations regarding the framework that is needed for private sector investment to be effective in advancing sustainable development.  Chief among them is an acknowledgement of the critical need to shift from short-term to long-term investment horizons in decision-making. The report highlights that failure to do so could result in major risks, such as those from climate change, being left out of investment decisions.

The report also notes that “pension funds, insurance companies and other institutional investors hold around US$80 trillion in assets” but the majority of these resources are invested in liquid assets, such as listed equities and bonds in developed countries. Investment in infrastructure represents less than three percent of pension fund assets, with investment in sustainable infrastructure in developing countries even lower.  The report emphasizes the need for analysis that takes into account the different stages of development of each country, recognizing that not all countries are equally attractive to investors and offers words of caution on the push to “securitize” infrastructure as an “asset class”, being driven by the G20:

“The expectation is that standardizing infrastructure as an asset class and creating a benchmark of performance will create liquidity and attract greater investment, particularly by investors who are constrained from buying illiquid assets.  Developing this asset class has to be done with care, as it is creating liquid instruments on illiquid assets. This could attract investors with short-term investment horizons, with the potential of creating short-term bubbles that could impede rather than help long-term sustainable development. Indeed, many of the financial market crises over the past 25 years involved some form of mis-pricing of liquidity.”

As in the Addis Ababa Action Agenda, the IATF report on FfD reiterates that “Countries need to strengthen enabling environments, thus reducing investment risks, and develop project pipelines and investable projects.”  This finding echoes the commitment of Member States in the outcome of the 2018 FfD Forum “to operationalize national financial frameworks into investable projects and pipelines.”

This has been accompanied by increased attention to the role of ‘blended’ and ‘catalytic’ finance, or using public resources and ODA to leverage private investment. The 2030 Agenda emphasizes that “international public finance plays an important role in complementing the efforts of countries to mobilize public resources domestically, especially in the poorest and most vulnerable countries with limited domestic resources. An important use of international public finance, including ODA, is to catalyse additional resource mobilization from other sources, public and private.”

What is lacking, however, is an analysis of the opportunity cost of diverting resources from the public purse – resources that are essential for achieving the SDGs.

Efforts towards global tax co-operation have stalled with the Platform for Collaboration on Tax (PCT), which has gained momentum and is being positioned on centre stage. This initiative reduces the UN to one of four players (alongside the World Bank, IMF and OECD) and is not accountable for SDG implementation. As noted by the Global Alliance for Tax Justice in a recent policy brief, “PCT statements have taken positions on issues where no UN agreement has been reached, including where a majority of the UN membership has expressed a different position”. This diversion of policy-making and implementation into other fora only partially if at all accountable to UN norms and values is a well-used tactic, sometimes justified by claims of capacity and competence. However, the IMF, the World Bank and the OECD participate actively in inter-agency groups such as the FfD IATF and the IAEG-SDGs.

Partnership promotion

In the same way that the sought-for ‘trillions’ has been accepted into the discourse, so too has importance of multi-stakeholder partnerships for SDG implementation.  Member States and the UN accept that a new approach is needed.  What is missing from the current dialogue, however, is an assessment, before all else, of whether or when the partnership modality is relevant to SDG implementation.

Furthermore, if the partnership modality is deemed relevant, a new UN approach is needed in order to go beyond the narrow, or siloed, pre-2030 agendas of individual agencies to incorporate system-wide agreement on a set of rules and guidelines. These would be carefully designed to ensure the quality of any multi-stakeholder collaboration, such as those for inclusion or expulsion, conflict of interest and risk assessment, among others.

“The Organization must do better to manage risks and ensure oversight in a manner that protects its values and yet allows space for innovation and expanded partnership arrangements. Due diligence standards and procedures are highly heterogeneous across the United Nations system and need to be streamlined. The lack of a system-wide approach to due diligence results in the inefficient use of financial and human resources, as multiple United Nations agencies often screen the same partners, and poses significant reputational risk to the Organization. It sometimes leads to contradictory decision-making across entities, undermining the integrity and increasing the vulnerability of the Organization. There is also a need for increased transparency with respect to the range and types of partnerships in which entities of the United Nations development system are engaged. Measures will be put in place to ensure the full transparency and accountability of United Nations partnership engagements.”

–  Repositioning the United Nations development system to deliver on the 2030 Agenda: our promise for dignity, prosperity and peace on a healthy planet – Report of the Secretary General (A/72/684–E/2018/7, December 2017)

The Secretary-General’s proposals on UN reform stop short of addressing existing institutional gaps that detract from the potential of UN-led partnerships to contribute to the successful advancement of the SDGs, and instead risk having the opposite effect. The establishment of an independent UN Office of Risk Management would go a long way to separating oversight from promotion functions. To avoid conflicts of interest, oversight and verification of due diligence and integrity measures cannot be performed by the same agencies and/or unit(s) tasked with promoting and engaging in partnerships (for a more detailed discussion of the pre-conditions for effective partnership engagement, see GPW Briefing 24, “The Semantics of Partnership”).

A New Funding Compact

The reform of the UN development system to make it “fit for (SDG) purpose” has been a major focus of the Member States and the Secretary-General’s team. In 2017, the Secretary-General outlined proposed reforms aimed at enhancing alignment with the 2030 Agenda. These included a call for a new funding compact as a keystone to “bring better quality, quantity and predictability of resources, increased accountability and transparency and enhanced capacities of the system to deliver on the 2030 Agenda.”

The UN system currently relies on just three governments (the US, UK, Germany) for 45 percent of all its funding. The past two decades have seen a marked shift from a more or less even split (50/50) of core and non-core resources to the current “pay-to-play” ratio of 20 / 80 core and non-core with 91 percent of non-core funds being strictly earmarked. To enable the UN to secure impartial and quality capacity to support SDG implementation necessitates a move away from this pattern of a strictly earmarked and donor-driven approach to funding. (For an analysis of UN Development System funding see “Fit for Whose Purpose? Private Funding and Corporate Influence in the United Nations,” Global Policy Watch, September 2015).

The Secretary-General’s reform proposals recognize that successful repositioning of the UN system to deliver on the 2030 Agenda will require a transformation in current funding patterns


– From the Report of the Secretary-General, “Repositioning the United Nations development system to deliver on the 2030 Agenda: our promise for dignity, prosperity and peace on a healthy planet” [A/72/684-E/2018/7] – December 2017.

A thorough process of consultations and deliberations resulted in the adoption of resolution A/RES/72/279 on 31 May 2018. Although Member States “welcomed the Secretary-General’s call for a funding compact” and “took note” of his proposals to bring core resources to a minimum 30 percent level in the next five years, to double both interagency pooled funds to $3.4 billion, consensus could not be reached on his proposals for assessed contributions, due to the opposition of a few states.  As explained by the USA: “Todays resolution limits increases in assessed contributions for UN Member States. That is critical, as we avoided a more than US$200 million increase in the UN’s regular budget compared to what was first on the table.”

After the adoption of the resolution the Secretary-General expressed his disappointment, saying:

“As you know, my preference would have been to fund the Resident Coordinator system through the regular budget of the United Nations, to ensure predictability, sustainability and ownership from all Member States. The hybrid funding solution put forward by the co-facilitators is the best possible alternative. By combining different sources, it diversifies the funding base and enhances the prospect of adequate and predictable funding.” (http://statements.unmeetings.org/media2/18560047/sg.pdf)

How to balance diversification to reduce the influence of a few big-state donors without adding only a few big corporate or philanthropic donors?

Conclusion

The HLPF has become a magnet and a marketplace for all manner of initiatives.

It will meet in 2019 at summit level and will be confronted with the growing evidence of being off-course for 2030. This is an essential occasion to address the obstacles to achieving the SDGs. If the Heads of State and Government do not chart a correction course, it is time to consider what really lies behind their championship of the SDGs.

Kategorien: english, Ticker

We need to revolutionize care systems if we are to achieve the 2030 Agenda

12. Juli 2018 - 0:17

The third edition of the civil society report Spotlight on Sustainable Development states that unpaid care work represents the largest subsidy to the global economy and the main obstacle for women´s economic participation. Care public policies are needed to transform the social organization of care and narrow gender gaps

New York, 12 July 2018: In some countries where the economic contribution of women’s unpaid care and domestic work has been measured, its value exceeds 30 percent of GDP, making it the largest subsidy to the global economy and currently a source of reproduction of inequality, which needs to be addressed in order to achieve the 2030 Agenda, says the third edition of the report Spotlight on Sustainable Development.

Corina Rodríguez Enríquez, Executive Committee member of Development Alternatives with Women for a New Era (DAWN) and author of the chapter that analyzes the relationship between care systems and the Sustainable Development Goals (SDGs), shows that care is a crosscutting issue along all of the SDGs, directly related to growth, decent work, poverty, hunger, health, education, water and sanitation, infrastructure, and inequality.

She recalls that care and domestic work has been identified as a foundation of sustainable development, since it is essential for day-to-day living, for people´s reproduction and for the whole survival of the society.

However, the current distribution of care work represents a massive burden on women’s lives, in what the report describes as an “unfair social organization of care”. It stresses that in all countries where time use surveys have been implemented, the gap between women and men is evident in terms of the time devoted to care and domestic activities, in some cases exceeding 100 percent. The burden of domestic responsibilities increases in the absence of public provision of care services and of basic social infrastructures, such as water, electricity, and sanitation.

The report refers to global care chains, through which care work is transferred from middle-class women in more developed countries to migrant workers, and from the latter to the unpaid work of women in the least developed countries. “Global care chains are strong evidence of the transnational mechanisms that deepen inequality both within and between countries”, it affirms.

Rodríguez Enríquez warns that the current unfair social organization of care is not only the main barrier to women’s economic participation, but it also constitutes a social problem: “women’s overly demanding workload and time burden lead to fragile, precarious and unsustainable care arrangements that represent a threat to the future development of boys and girls, and increases the vulnerability of dependent elderly people and people with disabilities.”

She calls on States to implement integrated care policies that give people a flexible choice between care services and unpaid care work, and that take into account the diversity of personal and family situations: “In brief, creating, improving and expanding care systems (revolutionizing them) is key to achieving many if not all of the SDGs”.

The Spotlight report is launched yearly in coincidence with the High Level Political Forum (HLPF) of the United Nations. It is published by a broad range of civil society organizations and trade unions and provides the most comprehensive independent assessment of the SDGs.

Click here to download the PDF of the Spotlight report 2018

Click here to download the PDF of the chapter “Care System and SDGs: reclaiming policies for life sustainability”

Kategorien: english, Ticker

Sustainable development needs fundamental policy changes

9. Juli 2018 - 8:17
Global civil society report assesses obstacles and contradictions in the implementation of the 2030 Agenda

New York, 9 July 2018: “The world is off-track in terms of achieving sustainable development and fundamental policy changes are necessary to unleash the transformative potential of the SDGs.” This is the main message of the Spotlight Report 2018, the most comprehensive independent assessment of the implementation of the 2030 Agenda. The report is launched on the opening day of the High Level Political Forum at the United Nations in New York by a global coalition of civil society organizations and trade unions.

When UN Member States adopted the 2030 Agenda, they signaled with the title ‘Transforming our World’ that it should trigger fundamental changes in politics and society, argues the report.

Yet, “three years after its adoption, most governments have failed to turn the vision of the 2030 Agenda into real policies. Even worse, policies in a growing number of countries are moving in the opposite direction, seriously undermining the spirit and the goals of the 2030 Agenda.”

The Spotlight 2018 report focuses on policies that are needed and, as the authors underline, “possible”:

“There is a need for more coherent fiscal and regulatory policies and a whole-of-government approach towards sustainability.”

“Governments should promote policies that are genuinely coherent in the interest of sustainable development, human rights and gender justice.”

“The implementation of the 2030 Agenda and the SDGs must not be hidden in the niche of environment and development policies but must be declared a top priority by all heads of government.”

“The national strategies for sustainable development should not be regarded as one among many but constitute the overarching framework for all policies.”

The 160-page report is supported by a broad range of civil society organizations and trade unions, and informed by the experiences and reports of national and regional groups and coalitions from all parts of the world. The contributions cover many aspects of the 2030 Agenda and the SDGs (and beyond), and reflect the rich geographic and cultural diversity of their authors.

The Spotlight Report is published by the Arab NGO Network for Development (ANND), the Center for Economic and Social Rights (CESR), Development Alternatives with Women for a New Era (DAWN), Global Policy Forum (GPF), Public Services International (PSI), Social Watch, Society for International Development (SID), and Third World Network (TWN), supported by the Friedrich Ebert Stiftung.

Spotlight on Sustainable Development 2018 Exploring new policy pathways How to overcome obstacles and contradictions in the implementation of the 2030 Agenda REPORT OF THE CIVIL SOCIETY REFLECTION GROUP ON THE 2030 AGENDA FOR SUSTAINABLE DEVELOPMENT

Beirut/Bonn/Ferney-Voltaire/Montevideo/New York/Penang/Rome/Suva, July 2018

www.2030spotlight.org

#SpotlightSDGs

Contact in New York:

Barbara Adams, Global Policy Forum (GPF): barbaraadams@globalpolicy.org

Jens Martens, Global Policy Forum (GPF): jensmartens@globalpolicy.org

María Graciela Cuervo, Development Alternatives with Women for a New Era (DAWN): mgcuervo.dawn@gmail.com

Kate Donald, Center for Economic and Social Rights (CESR): kdonald@cesr.org

Roberto Bissio, Social Watch: rbissio@item.org.uy

Sandra Vermuyten, Public Services International (PSI): sandra.vermuyten@world-psi.org

Stefano Prato, Society for International Development (SID): stefanop@sidint.org

Ziad Abdel Samad, Arab NGO Network for Development (ANND): ziadas@gmail.com

Contributing partners of the Spotlight Report 2018:

Kategorien: english, Ticker

SDG indicators – how statistics play favorites

7. Juli 2018 - 21:00

By Roberto Bissio*

As key instruments to assess implementation of the 2030 Agenda, the UN secretariat has published The Sustainable Development Goals Report 2018 and a report on Progress Towards Sustainable Development Goals that should inform the ministers attending the High Level Political Forum of ECOSOC to be held mid-July in New York. Both publications aim to “provide a global overview of the current situation” of the SDGs, “based on the latest available data for indicators in the global indicator framework” and they include the same set of numbers and indicators, only differing in their presentation, the latter being more wordy and text-only and the former a collection of bullet points with ample use of graphs.

While reiterating that “the availability of quality, accessible, open, timely and disaggregated data is vital for evidence-based decision-making and the full implementation of the 2030 Agenda” the emphasis on some indicators while ignoring others, an arbitrary management of disaggregation and an inconsistent use or disregard of trends results in a message that fails to convey the “sense of urgency” that UN Secretary-General António Guterres speaks about in his foreword. Even worse, the principle of “common but differentiated responsibilities” of all countries is absent, and the report systematically ignores or downplays evidence of developed countries’ contribution to the present un-sustainability of the planet or unfair appropriation of its resources.

A “note to the reader” explains that the reporting “is based on the latest available data as of May 2018 on selected indicators of the global SDG framework” (developed by the Inter-Agency and Expert Group on SDG Indicators) and that “the indicators presented are those for which sufficient data are available to provide an overview at the regional and global levels”. The elaboration of this framework has been a cumbersome process (see “The Ups and Downs of Tiers: Measuring SDG Progress” and “SDG indicators: The forest is missing”) with over 200 indicators being classified in three tiers. Tier I includes those with “internationally established methodology” and data regularly produced for at least half of the countries. Tier II indicators meet the same methodological requirements but lack enough data coverage and Tier III groups those whose methodology and standards are still being discussed.

Corporate contribution: reporting but not investing

While the small print of the note to the reader seems to suggest that only Tier I indicators are included, in fact many Tier II indicators have been selected (without any explanation of the criteria) and even some Tier III indicators are used. For example, SDG target 12.6 seeks to “encourage companies, especially large and transnational companies, to adopt sustainable practices”. While both indicators to measure this target remain at Tier III owing to lack of established methodology, the SDG Report quotes the private auditing firm KPMG to inform readers that “93 percent of the world’s 250 largest companies are now reporting on sustainability”.

This positive achievement is the only mention of corporations in the whole report, which is remarkable, considering the high expectations placed on the private sector for SDG implementation and the hopes that they can help mobilize “trillions” in foreign investment for the SDGs.

In fact, UNCTAD’s World Investment Report 2018 states: “Global flows of foreign direct investment fell by 23 percent in 2017. Cross-border investment in developed and transition economies dropped sharply, while growth was near zero in developing economies. With only a very modest recovery predicted for 2018, this negative trend is a long-term concern for policymakers worldwide, especially for developing countries.”

Secretary-General Guterres has commended this UNCTAD report as “a timely contribution to an important debate” but these numbers on foreign investment, produced by a UN agency and available for a majority of countries are not included in the SDG report, even when explicitly demanded by implementation targets (see target 10.b and others).

While an effort is made to find something positive to say about big corporations,  noted as a challenge is “the lack of expertise and resources for reporting by small and medium-sized enterprises, which play a key role in some economies, especially in developing countries.” SDG target 9.3 promises to “increase the access of small-scale industrial and other enterprises, in particular in developing countries, to financial services (…) and their integration into value chains and markets”. But the indicators for that target are not included, even when they were upgraded from Tier III to Tier II after a long debate, not about the data but about the definition of “small-scale industries”.

If a business source like KPMG can be validated to report on a target for which the indicators are officially classified as Tier III, on the relatively minor issue of corporate self-reporting, why leave out a vital indicator for any sustainability analysis like fossil fuel subsidies? Target 12.c seeks to “rationalize” those subsidies “that encourage wasteful consumption by removing market distortions”. Extensive  databases on fossil fuels subsidies are being kept by the OECD, by the International Energy Agency and by the fiscal affairs department of the IMF. Nevertheless these numbers are not included in the report.

Another major unexplained exclusion can be found on the first of the SDGs, the one on poverty. The report celebrates that “the rate of extreme poverty has fallen rapidly: in 2013 it was a third of the 1990 value”. But it only considers the World Bank poverty rate of $1.90 a day for that conclusion, ignoring the fact that the World Bank itself has set higher poverty lines for middle income countries and that target 1.2 of the SDGs explicitly seeks to reduce poverty in all countries “in all its dimensions according to national definitions”. The numbers and definitions for poverty in rich countries are easy to obtain, Philip Alston, the UN Special Rapporteur on extreme poverty and human rights, made international headlines with his recent finding that “40 million Americans live in poverty; 18.5 million live in extreme poverty; and 5.3 million Americans live in Third World conditions of absolute poverty”, with children comprising one-third of the people living in poverty in the United States. Yet none of this finds an echo in the official SDG report.

Food and broadband: To have or not to have

“Absolute poverty” (now relabelled “extreme poverty”) was defined by then World Bank president Robert McNamara in 1973 as “a condition of life so degraded by disease, illiteracy, malnutrition, and squalor as to deny its victims basic human necessities”. Half a century later, how can we celebrate poverty reduction in SDG 1 (based on a narrow income-based definition of poverty) and then report on SDG 2 that “world hunger appears to be on the rise again”?  The report does not comment on the apparent contradiction of an estimate of malnourished people (815 million in 2016) that is higher than the supposedly decreasing number of those under the extreme poverty line (783 million in 2013), forgetting that the World Bank itself considers that “malnutrition not only perpetuates income poverty, it is itself an indicator of poverty”.

“Conflict, drought and disasters linked to climate change” are listed by the SDG Report as “among the key factors” of the rise in malnutrition. Yet,  no link is made to the finding of the same report that “one-fifth of the Earth’s land surface covered by vegetation showed persistent and declining trends in productivity from 1999 to 2013, threatening the livelihoods of over one billion people”, which is an indicator listed for SDG 15. Similarly, the high death rate by “unintentional poisonings” in low-income countries is reported under SDG 3 on health (target 3.9) but without linking it to excessive use of pesticides, which is its direct cause. The targets mandating countries to “ensure sustainable food production systems and implement resilient agricultural practices” (target 2.4) and to “double the agricultural productivity and incomes of small-scale food producers, in particular women, indigenous peoples, family farmers, pastoralists and fishers” (target 2.3) are not even mentioned.

To make matters more difficult, some indicators seem to contradict each other. Indicator 9.c.1, for example, states that “by 2016, the proportion of population covered by a 3G mobile broadband network (which allows for Internet access) stood at 61 percent in the LDCs and 84 percent globally. If this trend continues, LDCs are on track to reach over 90 percent mobile broadband coverage by 2020”.

Yet, further down, in the Means of Implementation chapter, indicator 17.6.2 tells us that “high-speed fixed broadband Internet connection remains largely inaccessible across the developing world” since “in 2016, only 6 percent of the population in these countries had access to high-speed fixed broadband Internet, compared to 24 percent in the developed regions.”

This contradiction is not explained in the report, even when the ITU has already observed that “this paradox of connectivity versus use suggests that connectivity remains only one of the barriers to Internet use; it is important to take into account the affordability of services, but also socio-economic factors”, which lead to the debate on poverty and inequalities…

Suicidal or children beater?

Developed countries are praised in the analysis of the Climate Goal (SDG 13) because they “continue to make progress towards reaching the goal of jointly mobilizing US$100 billion annually by 2020”. Indicator 13.a.1 of the statistical framework  tries to measure, precisely, how much money has actually been mobilized towards that commitment. But this indicator is classified as Tier III (no agreed methodology) and with good reason, because developed and developing countries cannot agree on many details of the accounting. The Financial Times, for example, recently quoted China’s top climate change negotiator, Xie Zhenhua stating that “developed countries have not met their commitments. In their reports a lot of their commitment is in the form of development aid. That doesn’t meet the commitment to contribute new funds.” Oxfam’s “Climate Finance Shadow Report concludes that “estimated net climate-specific assistance is far lower than reported climate finance: “Aggregated reported donor numbers for public climate finance in 2015–16 amount to an estimated $48bn per year. However, these numbers cannot be taken at face value: Oxfam estimates net climate-specific assistance may be just $16–21bn.”

Since the SDG Report doesn’t even dare quote a global figure, knowing how controversial those indicators are, it could have spared the praise for developed countries on an issue where the jury is still out.

That benevolence towards the richest countries, contrasts with some cases of what seems to be a bias against developing countries emerging from the numbers: On indicator 16.2.1, for example, the report says the following:

“Despite their detrimental and long-lasting impact, violent forms of discipline against children are widespread. Nearly 8 in 10 children aged 1-14 years were subjected to some form of psychological aggression and/or physical punishment at home on a regular basis in 81 countries (primarily developing countries) with available data from 2005 to 2017.”

Any reasonable reader concludes from that statement that children in developing countries are being beaten on a massive scale, presumably in a much greater proportion than those in developed countries, forof which no information is given. In fact, the UNICEF database from which this information is extracted, ONLY has data for 81 developing countries, it has no information whatsoever on any developed country and therefore no implicit or explicit comparisons can be made. The indicator doesn’t have a minimum coverage to claim global representativeness and should not have been included at all, even less so in a formulation that seems to stigmatize developing countries.

In contrast, the report on the suicide mortality rate, which is used to illustrate target 3.4 on mental health, only states that “nearly 800,000 suicide deaths occurred in 2016, unchanged from the previous year”. The only regional discrimination provided  is to inform readers that Europe has the largest rate of male to female suicides, but nowhere is it mentioned what the WHO database clearly shows: In 2016 the suicide rate for both sexes in developed regions was 16.5 per 100, 000 population, which is 75 percent higher than the 9.4 rate in developing countries. Why was the better mental health performance of developing countries not deemed worth a mention? No reason is given.

Wages or ATMs?

SDG 10, promising to reduce inequalities within and among countries, is frequently quoted as one of the transformative innovations of the 2030 Agenda. Yet, in spite of the abundant literature and rich academic discussion on inequalities the report does not even mention inequalities among countries, it fails to use well-established methodological tools such as the Gini index or the Palma ratio (between the incomes of top 10 and the bottom 40% of the population) and instead quite optimistically reports that “between 2010 and 2016, in 60 of 94 countries with data, the incomes of the bottom 40 percent of the population grew faster than that of the entire population”. Lacking any other information to balance or complement this indicator, the reader is led to believe that, therefore, inequalities are indeed somehow being reduced.

This is not what every other international study says. The OECD, for example, reports that “Income inequality in OECD countries is at its highest level for the past half century. The average income of the richest 10% of the population is about nine times that of the poorest 10% across the OECD, up from seven times 25 years ago.” It adds that “in emerging economies, such as China and India, a sustained period of strong economic growth has helped lift millions of people out of absolute poverty. But the benefits of growth have not been evenly distributed and high levels of income inequality have risen further. Among the dynamic emerging economies, only Brazil managed to strongly reduce inequality, but the gap between rich and poor is still about five times that in the OECD countries.”

Target 10.4 of the inequalities SDG, promotes fiscal, wage and social protection policies to “progressively achieve greater equality.” The suggested indicator is the labour share of GDP, an issue on which both the ILO and the IMF have abundant information. Yet the indicator has this year been re classified as Tier II, down from Tier I (apparently for newly found lack of data availability) and not mentioned in the report (while other Tier II indicators are).

In a recent study titled “Why is Labor Receiving a Smaller Share of Global Income?” the IMF explains that “the labor share of income—the share of national income paid in wages, including benefits, to workers—has been on a downward trend in many countries. In advanced economies, labor income shares began trending down in the 1980s, reaching their lowest level of the past half century just prior to the global financial crisis of 2008–09, and have not recovered materially since. Data are more limited for emerging market and developing economies, but in more than half of them—and especially the larger economies in this group—labor shares have also declined since the early 1990s.”

While this information is not included in the SDG Report, its inequalities chapter does inform us that “from 2010 to 2016, the number of Automated Teller Machines per 100,000 adults increased from 39 to 59 worldwide” with Asia leading that growth. This is excellent news, of course, and choosing to publish how ATMs multiply and not how labour income diminishes should not imply any distorted priorities on the part of the authors. After all, as the small print of the report explains “all Goals, targets and indicators are equally important.”

* The author is coordinator of Social Watch.

Kategorien: english, Ticker

SDG implementation at national level: What’s the point of national reports?

6. Juli 2018 - 22:58

VNRs and shadow (or spotlight) reporting:
How it is key for meaningful participation and accountability

The national voluntary reporting to the High Level Political Forum of ECOSOC is a practice that has gained traction, as dozens of governments are volunteering each year to participate and contribute their VNRs. A number of CSOs have prepared their own shadow or spotlight reports to follow-up on their governments efforts to implement the 2030-Agenda. Is there a meaningful dialogue between the official and the alternative reports? What is the value of the whole exercise?

These issues will be debated on July 13, 2018 | 1:15 PM to 2:45 PM at WeWork Grand Central,
4th Floor, Room 4A, 450 Lexington Ave, New York 10017

The event aims to:

  • share experiences of CSO shadow reports on national implementation; and
  • engage government and CSO-representatives in a discussion on national implementation, CSO participation and accountability

Speakers: Roberto Bissio (Social Watch), Clarisse Sonon (Social Watch – Benin), Ziad Abdel Samad (Arab NGO Network for Development, Lebanon), Iara Pietricovsky (INESC, Brazil), Mark Herkenrath (Alliance Sud, Switzerland), Rene Raja (Social Watch – Philippines)

Comments by: Sakiko Fukuda-Parr (New School, former editor of the Human Development Report)
Ambassador Michael Gerber, Swiss Special Envoy for Global Sustainable Development

Please RSVP by 12 July to gpf@globalpolicy.org
Due to space limitations we kindly ask that you RSVP in advance.

This invitation is available for download here.

Kategorien: english, Ticker

New Report: Highjacking the SDGs?

5. Juli 2018 - 16:05
The Private Sector and the Sustainable Development Goals

At the United Nations (UN) summit in September 2015, the 2030 Agenda for Sustainable Development with its 17 Sustainable Development Goals (SDGs) was adopted by all UN member states. The Agenda gives a comprehensive framework for a global socio-ecological transformation.

The novelty of the SDGs vis-à-vis the Millennium Development Goals (MDGs) is its paradigm shift: all countries, not just the countries of the Global South, have to implement the SDGs, working closely together to achieve the common goal of a sustainable future. By 2030, the SDGs are to be implemented by all states and at all levels.

Along with governments, various actors have been involved in the development of the SDGs, and are now part of implementation strategies. This is the case for organizations (CSOs) and academia as well as the business sector. As a matter of fact, the 2030 Agenda gives the private sector a significant role.

In many countries, the engagement of the private sector in the SDG implementation is part of official policies. Governments and UN are striving for increased commitment of the private sector to finance the SDG implementation. Along with this, many governments expect the SDG engagement of companies to lead to greater social and environmental awareness in business strategies.

The call for business engagement in the 2030 Agenda has been answered by various corporations and corporate lobby groups. Already during the SDG negotiations, the private sector was intensively engaged through many different channels. Now, with the adoption of the goals, several corporations have pledged their support for the SDGs or evaluated the relevance of the SDGs for their own business activities.

The idea of business involvement with the SDG is trending but so far there is little systematic analysis: In which way are businesses engaging with the SDGs? What is the actual impact on sustainability of businesses’ SDG activities? And which strategies are needed in order to better align business activities with the transformative Agenda of the SDGs?

This analysis aims at answering some of those questions and thus contributing to the critical discourse on business engagement with the SDGs. The first chapter gives an overview of business involvement with the SDGs and the relevant discussions following that trend. Then, the analysis looks at two different business sectors. The first case examines at the financial sector. The idea of “shifting the trillions” gained huge attention following the understanding that SDG implementation depends on redirecting financial flows from unsustainable areas to SDG financing. The case study examines the growing market of SDG related financial instruments like bonds and its impact on sustainable development.

Consumer goods are highly relevant for the 2030 Agenda because of their environmental and social impact along the supply chain. The second case examines tobacco companies and their involvement with the SDGs. Along with alcohol, tobacco is in fact the only consumer product explicitly mentioned in the SDGs. And of all consumer goods, tobacco touches on every SDG, be it health or agriculture or water, and has therefore a relevant role to play for the successful implementation of the SDGs.

Highjacking the SDGs?

The Private Sector and the Sustainable Development Goals

Report

Authors: Marie-Luise Abshagen, Anna Cavazzini, Laura Graen, Wolfgang Obenland
Published by: Brot für die Welt, German NGO Forum on Financing for Development, Unfairtobacco, Global Policy Forum, MISEREOR

Berlin/Bonn, July 2018

Download the report here (pdf, 2,1 MB)
Kategorien: english, Ticker

Conversation with authors of Spotlight on Sustainable Development 2018

3. Juli 2018 - 12:26
Exploring new policy pathways: How to overcome obstacles and contradictions in the implementation of the 2030 Agenda

Church Center, 10TH Floor, 777 UN Plaza, New York

12 July 2018, 6:15-7:45PM

Jointly organized by Arab NGO Network for Development, Center for Economic and Social Rights, Development Alternatives with Women for a New Era, Public Services International, Global Policy Forum, Society for International Development, Social Watch, Third World Network with support from Friedrich-Ebert-Stiftung.

The world is off-track in terms of achieving sustainable development. Fundamental policy changes are necessary to unleash the transformative potential of the SDGs. In particular, there is a need for more coherent fiscal and regulatory policies and a whole-of-government approach towards sustainability.

These are the main messages of the Spotlight Report 2018, the most comprehensive independent assessment of the implementation of the 2030 Agenda.

The Spotlight Report 2018 describes policies, resources and actions that are necessary to implement the 2030 Agenda. It highlights strategies and approaches which depart from business-as-usual and prioritize fulfilment of human rights and respect for planetary boundaries.

At the roundtable event authors of the Spotlight Report 2018 will present key findings and recommendations to participants for discussion.

PROGRAMME

6:15 Welcome by Luise Rürup (FES New York Office) and Barbara Adams (Global Policy Forum)

6:30 Brief statements by Roberto Bissio (Social Watch), Ziad Abdel Samad (Arab NGO Network for Development), Corina Rodríguez Enríquez (DAWN), Kate Donald (CESR), Stefano Prato (SID), Sandra Vermuyten (PSI)

7:00 Discussion; Moderator: Jens Martens (Global Policy Forum)

As space for this side event is limited, we kindly ask you to RSVP by 10 July 2018 to gpf@globalpolicy.org.

Kategorien: english, Ticker

Partnership or Business Case? Side-event during HLPF 2018

3. Juli 2018 - 12:26
Private Sector and the SDGs Permanent Mission of the Germany to the UN, 871 UN Plaza, New Yiork

13 July 2018, 7:15 pm

Jointly organized by Government of Germany, Government of Uruguay, German NGO Forum on Environment and Development, Brot für die Welt, Global Policy Forum, Public Services International, Social Watch, MISEREOR, World Council of Churches

The private sector plays a significant role in achieving the SDGs of the 2030 Agenda for Sustainable Development. Several corporations have already pledged their support for the SDGs or evaluated the relevance of SDGs in their business activities. The UN Global Compact has started a global campaign to celebrate business leaders who are taking action to advance the 2030 Agenda.

In many countries, engaging the private sector in SDG implementation is part of official policy. Governments and the UN are seeking increased commitment from the private sector in order to finance SDG implementation and bring growth to their economies. Many governments expect the involvement of companies in SDG implementation to lead to greater social and environmental awareness in business strategies.

Among civil society organizations (CSOs), the increased involvement of the private sector in sustainable development has received mixed responses. Some CSOs welcome more business involvement as a necessary recognition of responsibility and a shift in the understanding of the private sector’s role in society. As a result, various partnerships between CSOs, governments and the private sector have emerged. Other CSOs view the growing involvement of the private sector in sustainable development critically. The democratic legitimation of this trend as well as the budgetary rationale of Public Private Partnerships (PPPs) is being questioned as governments hand over more of their duties and power to private companies, particularly in the social sector. Some CSOs view this as a further push towards the privatization of public goods and services and worry about a new form of greenwashing with the SDGs.

This side event will focus on the following questions:

What are the activities and strategies of private sector actors in SDG implementation? Does private sector involvement lead to more sustainability and better implementation of the SDGs? Does it positively affect business models and behavior in the long run? What are criteria and political frameworks for private sector engagement in SDG implementation? What are recommendations for the private sector, governments and civil society organizations with regard to sustainable development?

PROGRAMME

Opening remarks and introduction to side event: Anna Cavazzini, Bread for the World

Findings from the case study “SDGs and Finance Sector”: Wolfgang Obenland, Global Policy Forum

Discussion with: Cormac Ebken, Deputy Head of Division 2030 Agenda for Sustainable Development, Federal Ministry for Economic Cooperation and Development (BMZ); Dr. Laura Schneider, Project Manager, econsense; Shanta Lall Mulmi, RECPHEC; Rosa Pavanelli, General Secretary, Public Services International;
Moderator: Marie-Luise Abshagen, German NGO Forum on Environment and Development

Followed by a small reception with finger foods and drinks.

Please register by July 11 by writing to  abshagen@forumue.de.

Please note that for security reasons you must register in advance and bring your personal ID to the venue. A UN grounds pass is not necessary.

Kategorien: english, Ticker

Warnings of a new global financial crisis

14. Juni 2018 - 15:39

By Martin Khor

versión en español

There are increasing warnings of an imminent new financial crisis, not only from the billionaire investor George Soros, but also from eminent economists associated with the Bank for International Settlements, the bank of central banks.

The warnings come at a moment when there are signs of international capital flowing out of some emerging economies, including Turkey, Argentina and Indonesia.

Some economists have been warning that the boom-bust cycle in capital flows to developing countries will cause disruption, when there is a turn from boom to bust.

All it needs is a trigger, which may then snowball as investors in herd-like manner head for the exit door.  Their behaviour is akin to a self-fulfilling prophecy:  if enough speculative investors think this is the time to move back to the global financial capitals, then the exodus will happen, as it did in previous “bust” phases of the cycle.

Soros recently told a seminar in Paris:  “The strength of the dollar is already precipitating a flight from emerging-market currencies.   We may be heading for another major financial crisis.  The economic stimulus of a Marshall Plan for Africa and other parts of the developing world should kick in just at the right time.”

If Soros is right about an imminent crisis, its trigger could come from another European crisis. Or it could be outflow of funds from several developing countries.  Some had received huge inflows when returns were low or even zero in the rich countries.  With US interest rates and bond prices going up, the reverse flow is now taking place and it is only the start with more expected to take place.

Soros’ prediction may not be widely shared.  “Honestly I think that’s ridiculous,” said the head of investment bank Morgan Stanley commenting on Soros.

The Soros warning reminded me of a South Centre debate held in Geneva in April, when we hosted two eminent main speakers to launch their book, Revolution Required: The Ticking Bombs of the G7 Model.

The authors were Peter Dittus, former Secretary General of the Bank for International Settlements (BIS), and Hervé Hannoun, the former Deputy General Manager of BIS.  The BIS is a club of 60 central banks, known as the bank for central banks.

You can’t get more a more respected conservative establishment than the BIS, also famous for the quality of its research.

Yet the two recently retired top BIS leaders wrote a book in simple direct language warning of “ticking time bombs” in the global financial system waiting to explode because of the reckless and wrong policies of the major developed countries. Nothing short of a revolution in policy is required, to minimise the damage of a crisis that is about to come, they say.

At the Geneva meeting, Dittus and Hannoun pointed to several problems or “time bombs” that had developed in the developed countries, with potential to harm the world.

The main problem is what they call the G7 debt-driven growth model.  The major countries, except Germany, have lax fiscal policies with high government liabilities as percent of GDP.  In  particular the United States has an irresponsible fiscal policy which it has exported to other G7 countries, except Germany.

The US administration has expanded new expenditure and tax cuts by over a trillion dollars, with no funding other than more debt. This “reckless behaviour”, leading to a US fiscal deficit projected to be around 1 trillion USD in 2019, was made possible by the permissive monetary policy conducted by the Fed since 2009, the silence or complacency of the big three US based ratings agencies, and the IMF’s blessing.

The G7 central banks have also become the facilitators of unfettered debt
accumulation, according to the authors. The near zero or negative nominal interest rates are a huge incentive to borrow and extreme monetary policies have destroyed any incentive to fiscal rectitude.

G7 total debt in the 3rd quarter 2017 was around USD 100 trillion. Together the US, the UK, Canada, Japan and the Eurozone account for 64% of the world total debt.

The authors assert that the G7 extreme monetary policies since 2012 have undermined the foundations of the market economy.   There are now centrally planned financial markets and the break up of key elements of the market economy model.

Long-term interest rates are manipulated, valuations of all asset classes are deeply distorted, sovereign risk in advanced economies is deliberately mispriced, and all these do not reflect fundamentals.

They warn that the unprecedented asset price bubble engineered by G7 central banks is a ticking time bomb that is ready to burst, after seven years of near zero interest rates and speculative excesses in bonds, stocks and real estate. The Federal Reserve has dealt with the bursting of every asset bubble of the last 20 years by creating another, larger bubble.

They also warn that the quantitative easing policy of recent years may shift to a worse policy of government debt monetisation.

Although central banks have made it very clear that large scale government bond purchases are a temporary measure taken for monetary policy reasons, they are slipping into a different concept – that of a permanent intervention of central banks in government bond markets.

This is seen as a way to solve the sovereign debt crisis in major advanced economies, by transferring a growing part of government debt to the central bank: 43 per cent of G7 government bonds in major reserve currencies are now held by central banks and other public entities.

G7 central banks are at risk of heading towards the slippery slope which ultimately leads to government debt monetisation.

G7 central banks at the cross roads: normalisation or debt monetisation?
They are facing a dilemma, the authors point out.  They have to choose between highly risky scenarios: policy normalisation or government debt monetisation?

For the time being, the Fed and the Bank of Canada are leaning towards normalisation, albeit at a slow pace, while the ECB and the Bank of Japan are dangerously heading towards a continuation in a way or another of the debt monetisation experiment.

Here is the dilemma: G7 central banks’ policy normalisation is the only option consistent with their mandate and with a return to the rules of a market economy. But when G7 central banks eventually exit from their unconventional policies, they will contribute to the bursting of the asset price bubbles engendered by their monetary experiment.

This could well be the worst financial crisis ever experienced, as the level of debt and the artificial level of asset prices have no precedent.

But an even worse systemic crisis would result from the continuation of current unconventional policies leading central banks to cross the rubicon of government debt monetisation. The perpetuation of these policies, with their zero or negative interest rate policy and large-scale purchases of government debt, would encourage fiscal deficits and the continued expansion of public
debt.

Public debt monetisation, through the transfer of always more government bonds on G7 central banks’ balance sheets, would destroy the market economy as it would pave the way for an unlimited expansion of the public sector, say the authors.

The above shows why the former BIS officials believe a new financial crisis is brewing.  Changing the recent policy will lead to an explosion, but continuing with the same policy while buying time will lead to an even bigger crisis.

Their analysis of the crisis in the G7 countries matches that of Yılmaz Akyüz, the South Centre’s Chief Economist and author of the book, Playing With Fire.

Akyüz goes further, in analysing the impact a global crisis will have on developing countries.  Since the 2008-09 global crisis, the developing countries have built up new and increased vulnerabilities to global financial shocks.

Their financial sector has established even more and deeper links to international financial markets, shown for example by a high percentage of the ownership of foreign funds and investors in the domestic stock markets and in government bonds of developing countries.

Therefore if there is a significant or big outflow of these foreign funds, the same economies may suffer from loss of foreign reserves, currency depreciation, higher external debt servicing, higher import prices, falling prices of houses and equities and in worse cases an external debt crisis.  A few developing countries are already facing a crisis and seeking IMF bail-outs.

Many developing countries still have strong econo­mic fundamentals.  But in many cases, their economies are weakening in one way or other, and the worsening global economic prospects (including the real possibility of a trade war) do not augur well.  The conditions for an external-debt problem have increased.

It would thus be wise for them to monitor and analyse what is happening globally, as these will significantly affect the economy. Scenarios should be established on what may happen externally, including the onset of a new global crisis, how this may affect the economy in various ways, and to prepare for various measures that can be taken.  Crisis prevention and crisis aversion should now be a priority.

Dealing with the domestic economic issues should go together with preparations to cope with changing external situations. Though we may not be able to control what happens abroad, we can take measures to respond appropriately.

Martin Khor is Executive Director of the South Centre.

Kategorien: english, Ticker