Table of Contents

Welcome by Mayor Rahm Emanuel 8

Message by Marcus Wallenberg 10

Message by Jean Guy Carrier 12

Editorial 16

Editor’s Note 17

Welcome by Mayor of Cannes 18

Publisher’s Note 20

Message by Gerard Worms 21

Yoshihiko Noda’s Vision for Japan 30By Hanna Trudo, Diplomatic Courier Correspondent

Global Finance

“A Fiscal Crisis? Oui et Non.” 36By Rami Turayhi, Diplomatic Courier Correspondent

Ties that Bind 40By Kenneth Weisbrode

Transatlantic Regulation: 42

What Unites Us Makes Us Stronger 42By Jonathan Evans, Member of the UK Parliament

G20 Agricultural Meeting:

A Transformative Moment? 44By Marco Picardi, Centre for African

Development and Security

Commodities and Risk 97By Chrisella Sagers, Diplomatic Courier Correspondent

Food Security

The Challenge for Food Security in

Developing Countries 48

By Kyle Rehn, Hinckley Scholar, Hinckley Institute of Politics

Malthus is Still With Us, But So is the Solution:

Using Science to Solve the Food Crisis 50

By Robert F. Bennett, Former U.S. Senator and Resident

Scholar at the University of Utah’s Hinckley Institute of Politics

Global Development

What’s in a Name? Deining Sustainability and Some Consequences of Deinitions 52By Ralph Brown and David Braudt, Brigham Young University

Peak Oil and the Threat to Global

Economic Expansion 54By Dr. Minqi Li, Associate Professor, Department of

Economics at the University of Utah, and Hinckley Scholar,

Hinckley Institute of Politics

Global Trade

A Trade Agenda for the Arab Spring:

Global Integration and the Dangers

of Neoliberalism 56By Athanasios P. Mihalakas , Diplomatic Courier contributor

Global Economy

The World’s Most Important Resource:

The Employee Contributions

to Global Economic Recovery 60By Angelea Panos, Ph.D, Patrick Panos, Ph.D, Christina

Steele Hanselman, MS, MBA, and Sterling Panos, MS,

Hinckley Scholars, Hinckley Institute of Politics

An agenda for More Accountable

and Ethical Free Markets 62By Alexandre Muns

Putting Jobs First for Recovery 66By James Howard, Director of Economic and Social Policy,

International Trade Union Confederation

SAVING LIVES IN THE WORLD’S

POOREST NATIONS 68By Ambassador Nancy Brinker

G20 YES summit 72By Grégoire Sentilhes, President of the G20 YES 2011,

President of NextStage

Human Security

The Global Challenge of Human Security 76By Dr. Cornelio Sommaruga Diplomatic Courier Contributor

The IMF Repositions Itself with the Rise

of Emerging Markets 86By Oscar Montealegre Diplomatic Courier Correspondent

G20

Summit 2011

6

Côte d’Azur, je t’aime!Why the Riviera is still a dream getaway for holidaymakers

Why do millions of people fall in love with the Côte d’Azur every

year? The list is long, so where to

start? Firstly, the nice weather and wonderful landscape, bien sûr. Then,

the divine combination of mountains

and sea, allowing people in winter to

go sunbathing on the beach in the

morning and skiing on the glistening

snow in the afternoon. Each year, 10

million people come and go through

Nice’s airport, France’s second busiest. On arrival they have one of

the easiest, and cheapest, airport-

to-city transfers, with the bus ride to

Nice centre taking half an hour and

costing four euros. Another positive

point, not to be underestimated, is

the political stability of the region -

there’s the odd industrial strike as

is the French way, but still it’s a bit calmer than it is in Tunisia or Egypt

at the moment. The people who

responded to our survey praised the

variety of the culture, gastronomy

and sport on offer: “The quality of

the leisure pursuits here is amazing,”

said one respondent. “It’s much more

than just a straight-forward beach

holiday.” There is much to be enjoyed

in soaking up the French way of life and the international atmosphere,

dining in the local restaurants and

trying the regional products - wine,

olive oil, honey, trufles etc. There is an in¬dividuality that is in stark

contrast to bland, mass package

tourism that you ind in some other popular holiday spots. Then you may

bump into a celebrity: Bono in a bar, Angelina plus children, or Kate lazing

on Philip Green’s yacht. Being able to reach Aix-en-Provence, Marseille,

Monaco and Italy is a huge bonus

for many. With one euro bus fares operating on most services in the

Alpes-Mar¬itimes, the region is

also inexpensive to explore. All year

round, it’s a wonderful place to be,

as one man pointed out: “In January

the mimosa is already in lower and by February you can smell spring. In July the days are endless, the

evenings bright and warm and in

August you can watch the shooting

stars in the night sky. In October you

can still eat outside and in December

the sea is your own.” There are

people who holiday in the south of

France again and again, every year. Why? “Because of the wonderful landscape and people, I am addicted

to this region,” one regular told us,

“Côte d’Azur je t’aime.”

EDITOR-IN-CHIEF

Ana Carcani Rold

EXECUTIVE EDITORS

Kirk L. Jowers

Courtney H. McBeth

MANAGING EDITOR

Rochelle M. Parker

Chrisella Sagers

CONTRIBUTORS

Rudiger von Arnim

David BraudtRobert F. Bennett

Ralph BrownJonathan Evans

Christina Steele Hanselman

James Howard

Minqi Li

Athanasios P. Mihalakas

Oscar Montealegre

Alexandre Muns

Angela Panos

Patrick Panos

Sterling Panos

Marco Picardi

Kyle Rehn

Chrisella Sagers

Gregoire Sentilhes

Cornelio Sommaruga

Hanna Trudo

Rami Turayhi

Kenneth Weisbrode

GRAPHICS DIRECTOR

Henri de Baritault

COVER DESIGN

Christian Gilliham

LEGAL

The G20 Summit Magazine is a yearly publication independent of political afiliations or agendas published by The CAT Company. The articles in the G20 Summit Magazine represent the views of their authors and do

not necessarily relect those of the editors and the publishers. While the editors assume responsibility for the selection of the articles, the authors are responsible for the facts and interpretations of their articles. Authors

retain all legal and copy rights to their articles. None of the articles can be reproduced without the permission

of the editors and the authors.

EDITORIAL

The G20 Summit – Cannes, France

After a successful meeting of the G8 in Deauville in May earlier this year, France will host another important meeting, this time for the G20, bringing together major advanced and emerging economies at a crucial time for the

Eurozone and the global inancial markets.

To tackle the inancial and economic crisis that spread across the globe in 2008, the G20 members were called upon to further strengthen international cooperation. The representation of the G20 is formidable: the 20 nations

represent more than three quarters of the world’s economic output, and unlike other similar forums—including the

G8—the G20 is comprised of both developed and emerging nations. This is a large representation. The issues these countries are trying to tackle at the Cannes summit are even larger.

The G20 leaders have presented some economic initiatives and collaborations, among others the “Framework for Strong, Sustainable, and Balanced Growth” that was launched at the Pittsburgh Summit in 2009. But so far they have made limited progress and their efforts have proved far from enough. For sure, the issues are indeed daunting.

As the world’s population reached 7 billion this October, the issues of the day have expanded dramatically

and demand an unprecedented collaboration between the private and public sectors. That is why the CEOs and

business leaders attending high level meetings during the G20 summit represent an important body of stakeholders

that can and will help the G20 leaders with the issues that the French Presidency has prioritized for this November:

• Reforming the International Monetary System (IMS). France wants to reform the international monetary system to establish collective responses to deiciencies and to provide support for the sweeping changes that the global economy is experiencing, particularly given the rise of the major emerging countries.

• Strengthening inancial regulation. As chair, in order to strengthen inancial-sector oversight on a lasting basis, France wants to strengthen inancial regulation in areas where it is still insuficient, for example with respect to regulation of the “shadow banking system” (i.e. the non-bank inancial institutions whose practices are not regulated) and concerning inancial market integrity and transparency.

• Combating commodity price volatility. At the September 2009 Pittsburgh Summit, the G20 examined the issue of excessive luctuations in commodity prices for the irst time, but few concrete measures have been taken to date. France would like to ind collective solutions in order to reduce excessive commodity price volatility, par-ticularly of agricultural commodity prices, which threatens food security around the world.

• Supporting employment and strengthening the social dimension of globalization. The French presidency has four priority objectives in this area: promoting employment, particularly for young people and disadvantaged

individuals; stronger social protection; respect for social and labor rights; and improved coordination of strategies

among international organizations.

• Fighting corruption. The G20’s efforts to ight corruption are part of a long-term overall strategy to clean up the business environment, to ight tax avoidance, and to strengthen the rule of law. The French presidency wants to ensure that the Anti-Corruption Action Plan adopted in Seoul will produce concrete results and real progress in

2011.

• Working on behalf of development. The French presidency wants to make speciic efforts to support infra-

structure development. It will bring discussions on development inancing to G20 level, via innovative inancing and in particular a tax on inancial transactions.

The G20 leaders have other, more immediate issues as well. The Eurozone crisis; trade relations;

and, billions in dollars committed have played out as recurring themes in Pittsburg, Toronto, and

Seoul. It remains to be seen if the Cannes summit will rise above the predecessors or whether it will

be consumed by the tasks of the day, which are mounting by the minute.

Ana C. Rold

Editor-in-Chief

New-generation i30 made world debut at 2011 Frankfurt International Motor Show

- New-generation i30 builds on success of Hyundai’s best-selling model

- Designed, engineered and manufactured in Europe, for Europe

- Upgraded diesel engine: CO2 emissions under 100 g/km

At the 2011 Frankfurt Interna-

tional Motor Show (IAA), Hyundai

has unveiled its new-generation i30,

a vehicle the company expects will

build on the success of the original

model thanks to enhanced design,

quality, performance and eficiency.

Designed and engineered

at the Hyundai Motor Europe

Technical Centre in Rüsselsheim,

Germany, the new-generation i30

represents a further evolution of

the unique Hyundai form language,

‘luidic sculpture’ – the company’s distinctive design DNA – and offers

a choice of four engines with a

total of six power options and CO2

emissions below 100 g/km thanks to an upgraded, super-eficient 1,6-litre diesel unit.

The new-generation i30 will go

on sale in Europe early in 2012 as a

ive-door hatchback. The newcomer will be produced in Europe at the

company’s state-of-the-art manu-

facturing facility in Nošovice, Czech

Republic.

Every new-generation i30 will be

backed by the industry-best, fully-

transparent Five Year Triple Care warranty from Hyundai. This award-

winning package provides ive years of unlimited-mileage warranty, ive years of roadside assistance, and

ive years of vehicle health checks.

A worthy successor to Hyun-

dai’s best-seller

The original i30 has deied the industry norm by recording

increased annual sales with each

passing year. Since launch in 2007,

the i30 has recorded over 360.000

European sales, including more

than 115.000 units during 2010 –

the highest-ever sales igure for an individual Hyundai model on sale in

Europe in one year, putting the i30 at

six in the C-segment rankings.

Hyundai expects the new-gen-

eration i30 to maintain this growth

trend, contributing to future sales

success, growing brand awareness

and improving perceptions

of Hyundai among European

consumers.

The fortunes of the new-gen-

eration i30 will also be helped by

a recovering market. Industry

analysts forecast the mainstream

C-segment will grow by 7% over

the next three years, reaching sales

of 2,4 million vehicles per year by

2014. Hyundai is planning to sell

on average over 120.000 units of

the new i30 per year during the car’s

lifecycle, capturing a larger market

share of around 5% and challenging

established competitors.

Allan Rushforth, Senior Vice

President and COO of Hyundai

Motor Europe, commented: “We expect the new-generation i30 to

play a signiicant role in developing our sales and brand image in Europe,

taking on the leading vehicles in the

C-segment and joining the all-new

i40 as a brand ambassador and

quality benchmark for Hyundai.”

Style inspired by nature

The ‘luidic sculpture’ ethos utilises lowing lines inspired by nature and modern architecture to

give a constant three-dimension-

al presence to Hyundai vehicles.

Since its introduction on the Hyundai

ix-onic concept at the 2009 Geneva

Motor Show, luidic sculpture has been the form language for all new

Hyundai models launched in Europe.

Thomas Bürkle, Chief Designer at Hyundai Motor Europe Technical

Centre, commented: “When designing the new-generation i30,

we used strong, luid lines to sculpt a car which looks athletic and exudes

a sense of constant motion, even

when stationary. We gave the car a bold stance, transmitting a conident attitude through sporty characteris-

tics and dynamic proportions. In

this way, the car is very close to the

all-new i40, and the Hyundai design

DNA is easy to recognise on these

models.”

The new-generation i30 also

bears Hyundai’s signature frontal

feature – the hexagonal-shaped

grille.

“The hexagonal appearance

is unique to Hyundai, and deines the i30 as a family member. The

jewel-like front headlamps which

lank the grille add a strong personality to the vehicle, as well as

a sense of reinement and luxury,” Thomas Bürkle added.

G20

Summit 2011

22

Powering the new generation

The new-generation i30 will

be available with a choice of three

gasoline and three diesel variants,

with power outputs ranging from

90 to 135 ps. Both fuel types play a signiicant role in the European C-segment, with diesel represent-

ing 52% and gasoline 43% of total

sales. Overall, Hyundai is expecting

a 50:50 split between diesel- and

gasoline-powered i30 sales.

Hyundai believes that its highly-

eficient 1,6-liter variable geometry turbo (VGT) ‘U-II’ diesel unit will be

the most popular engine in the range.

Generating 128 ps at 4.000 rpm, the upgraded engine will accelerate the

new-generation i30 from standstill to

100 kph in 10.9 seconds, with a top

speed of 197 kph.

The petrol engines, too, offer a

balance between performance and

economy. For example, the new-generation i30 can be speciied with Hyundai’s 1,6-liter ‘Gamma’ GDI

(gasoline direct injection), a 1.591 cc

unit that generates 135 ps and 164

Nm of torque.

Low emissions and real-world

eficiencyThe addition of technologies

developed under the company’s

Blue Drive™ sub-brand optimizes eficiency and lowers emissions for the new-generation i30. These

include: Integrated Stop & Go (ISG),

low-rolling resistance tyres and an

alternator management system.

With CO2 emissions below 100 g/km and an engine delivery of 128 ps, the 1,6-litre diesel new-generation

i30 will feature a best-in-class power

to eficiency ratio.

Buyers will be offered a choice between manual and automatic

six-speed transmissions, with both

units providing a reined driving experience and enhanced fuel

eficiency.

Interior quality and equipment

from the class above

Cabin reinement and speciica-

tion on the new-generation i30 have

been inspired by the high standards

of the all-new i40. Behind the wheel, for example, drivers beneit from Hyundai’s new Flex Steer™ option. With three operating modes – Comfort, Normal and Sport – the

system can be used to vary the level

of steering assistance and feedback

in order to suit driving conditions and

make the journey more pleasurable.

A large TFT Supervision cluster is available in the same quality found

on i40 – providing a wide range of

essential information to the driver in

high-resolution clarity. Located in

the centre console, the navigation

system is displayed via a 7-inch

touch-screen.

The generous equipment levels

on the new-generation i30 will

enhance the Hyundai experience for

passengers too. Dual-zone climate

control will ensure a comfortable

environment for all occupants during

long journeys, and the addition

of a panoramic sunroof provides

increased natural light within the

cabin. The panoramic sunroof has

been designed to open fully or tilt

open, offering passengers lexibility and functionality.

Customers will beneit from the new-generation i30’s roomier interior

compared to the previous model.

The overall length (4300 mm)

and width (1780 mm) have been increased, while the height has been

reduced (1470 mm), generating

sportier exterior proportions without

compromising functionality. Cargo

capacity in the new-generation i30 is

378 liters with the rear seats upright – an increase of 10% compared to

the original model.

Five-star safety features

The new-generation i30 features

the latest active and passive safety

technologies to ensure maximum

protection for its occupants.

Active safety features include ESP

(Electronic Stability Program), ABS (anti-lock braking system), VSM

(Vehicle Stability Management) and

Emergency Stop Signal. In terms of

passive safety, the new-generation

i30 will be itted with six airbags as standard – front, side and curtain

- while a driver’s knee airbag is

optional.

The safety features available on

the new-generation i30 reinforce

Hyundai’s excellent record on safety,

and the company anticipates the

new car will follow the outgoing

model in attaining the maximum

ive-star score in Euro NCAP’s impact assessment programme.

Driving leet growthSince going on sale in 2007, the

original i30 has played an important

role in expanding Hyundai’s sales and

reputation in Europe’s leet sector. Hyundai expects the new-gener-

ation i30 to be even more popular

with leet managers and company car drivers than its predecessor.

Targeting sales of over 120.000

units in Europe during a full year for

the new-generation i30, Hyundai

forecasts approximately 50% of

sales to come from the leet sector.

Five Year Triple Care will be a valuable point of differentiation for

the new-generation i30 in a highly

competitive class. The ive-year warranty has no mileage limit,

roadside assistance is included for

ive years, and vehicle health checks are performed annually, providing

peace of mind for leet buyers and operators.

Compared to the original i30,

total cost of ownership for the new-

generation model will be reduced,

helped by improved fuel eficiency, lower CO2 emissions and a lower

insurance classiication.

G20

Summit 2011

23

(Seoul, Korea) Hyundai Motor

Company will donate a total of 10

mobile clinics to African nations

this year as part of the company’

s “Moving the World Together” Corporate Social Responsibil-

ity (CSR) initiative, which aims to

contribute to society and be a better

corporate citizen. The mobile clinics

will be used to provide basic medical

services to residents of impover-

ished and remote communities in

Africa.

The mobile clinics, composed of

a mobile internal medicine clinic and

a mobile digital X-ray clinic, are spe-

ciically tuned to run on tough road conditions in many African nations.

Starting with Ethiopia, a total of 10

mobile clinics will be donated this

year to ive African nations (Ethiopia, Democratic Republic of the Congo,

Nigeria, Ghana and Rwanda). Each

country will receive two mobile

clinics -- the internal medicine clinic

and digital X-ray clinic.

The clinics will be operated

in close partnership with the

Korea Foundation for International Healthcare, local governments,

local clinics and NGOs. The

Korea Foundation for International Healthcare will provide consultation

and training on the operation of the

mobile clinics to local personnel.

To begin the initiative, Hyundai

handed over two customized mobile

medical clinics to the Ethiopian

government at the Ethiopian

Federal Ministry of Health, in Addis Ababa, the nation’s capital. The

handover ceremony was attended

by Korea’s Minister of Foreign Affairs & Trade, Mr. Kim Sung-Hwan;

Korean Ambassador to the Federal Democratic Republic of Ethiopia,

Mr. Chung Soonsuk; Minister of

Ethiopian Federal Ministry of Health, Dr. Tedros Adhanom; President of

Hyundai Motor Company, Mr. Chung

Jin-Haeng; and Chairman of Hyundai

Marathon Motor Engineering, Mr.

Haile Gebreselassie, as well as

media members and other guests.

To overcome challenging roads

in remote regions of many African

nations, the mobile clinics have been

developed on Hyundai’s four-wheel-

drive truck (HD120 chassis, GVW 12,520kg) to boost mobility with

an engine displacement of 6,600

cubic centimeters. The truck has

air suspension to protect delicate

medical equipment and operates

fully independently with its own

power.

The mobile clinics are self-

suficient hospitals. The mobile

Hyundai Motor Donates 10 Mobile Clinics to African Nations

- Starting with Ethiopia, Hyundai will offer 10 mobile clinics to ive African nations to provide free medical care to the underprivileged- Mobile internal medicine clinic and mobile digital X-ray clinic to provide in-depth medical examination and treatment

- Donation is part of Hyundai’s worldwide CSR initiatives

G20

Summit 2011

26

digital X-ray clinic is equipped with

a digital X-ray machine and remote

diagnostic systems. The mobile

internal medicine clinic features

the latest medical devices, such as

digital ultrasonic and portable ECG

(electrocardiogram), can conduct

basic medical tests, such as malaria

screening; and provide medical

supplies.

In addition to the donation of

vehicles, a total of 60 university

students from the Happy Move

Global Youth Volunteers program

are engaging in volunteer activities

July 5 - 16 in Addis Ababa, Ethiopia.

The services range from providing

free health care, in collabora-

tion with Open Doctors Society

of Korea, to installing communal

toilets to promoting a more hygienic

environment in partnership with

Habitat for Humanity International.

Starting with Ethiopia, Hyundai

Motor Company will send a total

of 500 Happy Move volunteers

from July to August to less-de-

veloped areas in Thailand, Brazil, India and China. The volunteers will

be engaged in various volunteer

programs such as environment

restoration and provision of medical

service.

REFERENCE

The Happy Move Global Youth

Volunteers program is one of Hyundai

Motor Company’s corporate social

responsibility programs. It seeks

volunteers from Korean universities

to travel around the world to work

in areas related to the environment,

local welfare, medicine and culture.

Since its foundation in July

2008, Happy Move Global Youth Volunteers has sent 500 university

student volunteers every summer

and winter to several countries,

including India, Brazil, China, Slovakia, Turkey, Egypt and the

Philippines.

From July to August of this year, volunteer students will spend about

two weeks in their assigned country

and work jointly with various NGOs,

including Open Doctors Society,

Habitat for Humanity International,

Food for the Hungry International, International Workcamp Organiza-

tion, and Ecopeace Asia to alleviate

poverty, improve the health of

residents, protect the environment,

and strengthen local economies.

Among the projects, volunteers

will build a children library and

renovate a kindergarten in Thailand,

work to prevent desertiication of Inner Mongolia through the Hyundai

Green Zone Project, build houses

and provide free medical services

in India, and carry out cultural

exchange programs in Brazil.

G20

Summit 2011

27

Hyundai Motor Named One of World’s Top Global Green Brands of 2011

- No. 4 among automakers, beating BMW, Ford and Mercedes

Interbrand, the global brand

consultancy, ranked Hyundai

as one of the world’s greenest

brands, citing the automaker’s Blue Drive eco-friendly strategy and its

industry leadership in zero-emis-

sions hydrogen fuel-cell vehicle

development.

Interbrand ranked Hyundai 11th

among the agency’s 50 Best Global Green Brands, a new global report by the agency. Hyundai placed

fourth among the seven automotive

brands that made the survey.

“The company is so conident in its fuel eficiency that starting this year it is reporting monthly leet fuel eficiency igures in the U.S.,” Interbrand wrote in the survey.

“Hyundai has recently seen strong

improvements in energy, GHG

emissions, water, waste, and toxic

emissions.”

The survey, which questioned

more than 10,000 respondents in 10

countries, examined each company’s

environmental record and how the

company is perceived by consumers.

Companies were judged based on

their performance, their environmen-

tal impact, their sustainable growth

strategy and their corporate social

responsibility programs.

Hyundai’s Blue Drive sub-brand, launched in 2008, encompasses all of the company’s eco-friendly

technologies and products that

contribute to higher fuel eficiency and lower emissions, including

gasoline, diesel, electric, hybrid and

hydrogen fuel-cell engines.

Hyundai rolled out the Avante

LPi hybrid in 2009 and the Sonata

hybrid in 2011.

Hyundai plans to bring plug-in

hybrid vehicles to market soon, while

the company is currently operating

test leets of its hydrogen fuel-cell electric vehicles and pure-electric

vehicles, called BlueOn.

G20

Summit 2011

28

Hyundai Motor Signed MOU with Intel, C&S Technology To Develop

In-Vehicle Infotainment Solutions

Hyundai Motor Company signed

a Memorandum of Understanding

(MOU) with Intel Korea and C&S

Technology, Ltd. to jointly develop

solutions that provide both drivers

and passengers with enhanced

in-vehicle experiences such as lo-

cation-based and social network

services.

The signing ceremony was held

at the JW Marriott Hotel in Seoul, attended by Mr. Woong-Chul Yang, Vice Chairman at Hyundai Motor,

Mr. Ton Steenman, Vice President

and General Manager at Intel’s

Embedded and Communications

Group (ECG), and Mr. Dong-Jin Kim,

Chairman and CEO of Seoul-based

C&S Technology.

“The demand for smart cars is

on the rise in Korea—a powerful IT

country,” said Hyundai Vice Chairman

Mr. Yang. “Hyundai will develop

in-vehicle infotainment systems

that incorporate changes in digital

lifestyles and maximize customer

convenience in cooperation with

Intel and C&S Technology.”

As part of the agreement, the

three companies will determine

product, technical and experiential

requirements for next generation

IVI platforms to be built in Hyundai

Motor vehicles. They will jointly

develop solutions based on the

Intel® Atom™ processor and the C&S Automotive IO Hub that

enable new, innovative services and

content to be offered to both drivers

and passengers in next-generation

IVI systems.

“Intel is working with automakers

and their suppliers around the world

to develop intelligent and connected

in-vehicle infotainment systems that

provide safer, more interactive and

personal experiences to drivers

and passengers,” said Hee-Sung

Lee, Country Manager of Intel

Korea. “Through our ongoing work

with Hyundai Motor Company

and the new collaboration with

C&S Technology, we can develop

solutions that deliver this type of

experience.”

About Intel

Santa Clara-based Intel

(NASDAQ: INTC) is a world leader

in computing innovation. The

company designs and builds the

essential technologies that serve

as the foundation for the world’s

computing devices. Additional

information about Intel is available

at www.intel.com/pressroom and blogs.intel.com.

About C&S Technology, Ltd.

C&S Technology specializes in

automotive non-memory semicon-

ductors. Please go to www.cnstec.

com for more information.

- Hyundai and Intel to develop In-vehicle Infotainment (IVI) systems based on the Intel® Atom™ processor

G20

Summit 2011

29

Yoshihiko Noda’s Vision for Japan

By Hanna Trudo, Diplomatic Courier Correspondent

Newly sworn in Prime Minister Yoshihiko Noda, the former inance minister of Japan, might take solace in the old Japanese proverb, Money grows on the tree of persistence.

But persistence, as the proverb fails to point out, does not trump inadequacy in the face of natural, political and economic disasters.

A new maxim, Fresh leadership grows from the broken branches of catastrophe, might be more applicable to Japan today.

The past ive leaders to cyclone through the country since 2006 have added to the already quaked national morale by making promises they could not keep, and scalding leader after leader with burdens of past mistakes.

Yoshihiko Noda, the 54-year-old Prime Minister number six, stepped in with a cup-half-full -- though chipped, and illed with luke warm expectations -- approach to mitigate the aftermath of the 9.0 magnitude earthquake, tsunami and nuclear meltdown in March.

But Japan, an essential arm of the APEC community, might need something stronger – an unbreakable prime minister who exudes mirror-speech conidence, not self-deprecatory quips of mediocrity.

The iscally conservative leader must work against the grain of his in-and-out predecessors, and leverage his economic capabilities and past successes, to secure the longevity needed to promote political, economic and environmental reconstructive efforts.

The odds are stacked against him, but someone who under promises – a change from the tactics of past politicians – might be what Japan needs to overcome the inherited economic and nuclear challenges to come.

The leadership opportunities are there, despite a

national debt that swells two times larger than the size of the economy, or the dispersed Northeastern region that suffered the worst damages since World War II. But it’s up to the Democratic Party of Japan (DPJ) prime minister to choose adversity-triumph over low barometer expectations.

Prime Minister Noda’s predecessor, Naoto Kan, the DPJ leader who was in ofice for just 15 months, eventually ran out of get-out-of-March 11-disaster-free cards. Some media reported he made unprecedented, intensive relief efforts – he was broadcast on television wearing the same work clothes as Japanese engineers – but others reported widespread dissatisfaction, and said his low approval ratings were directly linked to his even lower responsiveness to disaster’s calamitous call.

In May, just a few months before former Prime Minster Kan stepped down, Japan donated $640,000 to help stimulate the Asian-Paciic economy – a con-tribution to the APEC Support Fund (ASF), started in 2004, that demonstrated lasting commitment to the region, despite devastating national circumstances.

During a meeting at the UN General Assembly on Sept. 21 in New York, Prime Minister Noda picked up the conversation as the new leader six months after the disasters – with the economy and relief efforts in the forefront. At the General Assembly, the prime minister said the Fukushima Daiichi nuclear plant’s reactors would be shutdown within a year, according to a White House press release. The prime minister also said he will hold a conference in 2012 with the International Atomic Energy Agency (IAEA) to analyze and discuss key takeaways from the meltdown.

If the Fukushima disaster is any indication of policies and preventative measures to come, Prime Minister Noda’s tenure will inevitably include nuclear safety reform as a top agenda item.

He committed to working alongside the U.S. and other allies, and with the IAEA, to assume a leadership role in meltdown responsiveness and prevention, and on nonproliferation and national security efforts.

The former inance minister has a lot to do with little support or self-conidence. His commitment to Japan, and to the international community, will be tested by his willingness to stimulate the APEC Support Fund, among other regional initiatives, as he navigates into his irst months as the post-disaster prime minister.

G20

Summit 2011

30

“A Fiscal Crisis? Oui et Non.”

By Rami Turayhi, Diplomatic Courier Correspondent

A strange thing is happening in Washington. Many politicians, pundits, and commentators are starting to

confuse two interrelated but substantively different ideas:

iscal crises and inancial crises. While not everyone is guilty of this inadvertent or perhaps intentional mix-up,

we are beginning to witness a recurrent pattern of

attempts to paint the 2008 inancial crisis as one that was primarily iscal in nature. Confused yet? I don’t blame you.

Fiscal crises most commonly refer to ongoing insti-tutional problems with managing debt loads, with the

institution in this instance being the federal government.

Financial crises, on the other hand, typically connote systemic problems within the inancial sector of an economy – stemming from some combination of bad

corporate choices and government policies – that

ultimately lead to an economic retraction of some sort.

Getting these two things straight in the minds of the

American public will go a long way towards informing

robust public debate about necessary next steps: the

banking crisis that led to a near-economic collapse

in 2008 was primarily inancial in nature, whereas the consequences of that crisis have resulted in short-

to medium-term iscal problems at the local, state, and national level. There is meanwhile an additional

long-term iscal crisis that has been quietly chugging along for many years – indeed decades – now, and

this particular problem is largely linked to long-term

imbalances between tax revenues and spending on

entitlement programs and defense.

In case you were wondering, there is a very good

reason for some politicians to paint the 2008 crisis as a iscal rather than inancial one. By confusing these two terms and ideas together, self-described “iscal hawks” in Washington can bolster their claims of out-of-control government spending by the Obama administration,

conveniently shifting any blame away from themselves.

The argument goes something like this: the reason

we are in this mess today is because of excessive

government spending by the current administration, and

the only way to turn the economy around is to therefore

cut this same irresponsible spending.

This argument makes for a convenient cable

television sound bite, but it unfortunately smacks more

of theater than reality. The 2008 recession was in large part caused by an enormous inancial collapse, and this inancial recession was itself primarily the end result of years of haphazard inancial deregulation and loose monetary policy coupled with myriad unsound

inancial business practices. Ironically, many of the same politicians who are today calling for federal iscal discipline tend be the same ones who in years past

promoted this very inancial deregulation and increased federal spending on both mortgages and entitlements.

The inancial deregulation in particular consisted of passing legislation that allowed or promoted loose credit

standards at banks, increasingly irresponsible leverage

ratios, and little or no regulation of complex derivatives

and other esoteric inancial products. In other words, it was the banking sector, and not the federal government,

that was the primary driver of the recession, though the

government played its part in enabling the banks’ worst

practices over the past couple of decades. Indeed,

had government been more involved in responsibly and

smartly regulating these banks rather than supplying

them with monetary cocaine, we would likely not have

witnessed such a severe recession in 2008.

G20

Summit 2011

36

That said, in response to this inancial recession, both the Bush and Obama administrations embarked upon a series of unprecedented temporary iscal stimulus measures in order to help boost consumer demand and

keep our inancial institutions aloat (think: TARP, tax cuts, Recovery Act spending, and the proposed Obama jobs

bill). Most economists, though not all, tended to believe

that this overwhelming government response was

necessary to stave off an even more severe economic

contraction, as many of them have argued that a lack of

government stimulus in the face of similar recession led

to the prolonging of both the Great Depression and the

Japanese “lost decade.” Whether or not this economic theory withstands the test of time and continued trial and

error in economic policymaking, the consequences of

the massive government intervention in 2009 up through

today include a series of short-term iscal deicits that are alarming in their size and seeming longevity. Most

projections continue to show sustained large budget

deicits throughout this decade, in large part the result of stimulus spending and generous tax cuts (assuming a

continuation of the Bush tax cuts) that are meant to help ease the United States out of the recent recession and

into a more “normal” economic cycle.

It has therefore been easy for some politicians to

latch on to this ballooning federal government spending

and construe it as the primary reason for today’s – and

tomorrow’s – iscal messes, but the reality is much more complicated than that. In addition to the expected

deicits that are a consequence of all of this post-reces-

sion government spending and the continued reduction

of revenues from taxes, there are also enormous

anticipated long-term deicits that stem from unfunded future liabilities in both healthcare and social security

– the so-called “entitlements” – spending. Of course,

this long-term entitlements problem is by no means a

new thing; many honest politicians and policymakers

alike have been shouting from the rooftops – oftentimes

into a howling and indifferent public wind – about our

long-term structural problems for decades. With in-

creasingly more (unhealthy) Baby Boomers retiring en masse today expecting costlier technological ixes to keep the them alive in old age, entitlement funding

shortfalls are only likely to get worse in coming years

and decades: hence, the complementary long-term

iscal dilemma that we face.

Truly responsible politicians would not shortchange

the American public by confounding these distinct

economic problems. They would spell out appropriate

solutions for each iscal dilemma, and debate whether

one methodology or another – i.e. tax cuts or increases,

reduced government spending, or more likely some

combination of these two – might best solve each of

the iscal problems. The inancial crisis laid bare some of the shortfalls of rampant, lobbyist-driven deregula-

tion: without adequate and well-designed regulatory

safeguards, the market might become too eficient for its own good. Indeed, one could argue that, in

the absence of government intervention, a complete

inancial collapse in 2008 – something much worse than what actually happened – would have been the

natural free-market corrective to excessive risk-taking

and greed on Wall Street. While theoretically correct, can we as a nation accept a system-wide economic

collapse every decade or so in order to allow the market

to work out behavioral economic shortfalls and kinks for

itself? If this seems like a rhetorical question laced with

sarcasm….well, that’s because it is, unless Americans

are prepared to accept high double-digit unemployment

numbers every decade or so.

If nothing else, I’d like to leave you with my simple,

3-sentence pocket formula for iscal versus inancial crises in the 21st century: (1) a inancial collapse occurred in 2008, fueled in large part by inancial de-

regulation, cheap borrowed money from abroad, and

shoddy lending practices that took place over many

years. (2) As a result of this inancial collapse, the government spent a lot of money via both short-term

stimulus and tax cuts and contributed to a short- to

medium-term iscal problem: persistent decade-long annual deicits. (3) Meanwhile, for years and years on a parallel track alongside all of this, we as a country have

indulged ourselves with lavish entitlement spending on

things that we have not really paid for and, assuming

no realistic legislative ixes anytime soon, this funding shortfall will likely come back to bite us in the coming

years and decades in the form a long-term iscal crisis.

Got it? Good. Now, the next time a politician,

pundit, or economic know-it-all tries to sound important

by blaming everything on the wrong things, at least you’ll

know who not to vote for, watch, or read. It’s about time

for some honest accounting of the nation’s economic

woes, lest we swallow the wrong tonic for our very real

iscal and inancial ills.

“Rami Turayhi is a recent graduate of Columbia

Law School. This article was adapted from an earlier

Diplomatic Courier op-ed published by the author in

July 2011.”

Global Finance

G20

Summit 2011

38

Ties that Bind

By Kenneth Weisbrode, Diplomatic Courier Contributor

For over a century liberal orthodoxy has held that free trade promotes both peace and prosperity. No

matter that there will always be “winners” and “losers” in

any economic relationship, the freer the trade, the more

prevalent “win-win” relationships is said to be. The last

ifty years seem to have borne this out. A free trade regime never stopped a war in the way that the writers

of an earlier generation like Norman Angell imagined.

Nevertheless, more people in the world emerged from

poverty since the end of World War II than before, and this had much to do not only with freer trade but also

with high levels of investment in certain parts of the

world, particularly Asia.

Back in Europe meanwhile the economic dimensions of peace took on a somewhat different hue. It was

called regional integration and involved the merger or

combination of various sectors across national borders.

It began with the fusion of the French and German industries into the European Coal and Steel Community,

which led to the Common Market and eventually to the

European Union.

These stories are well known but still not well

understood outside their respective regions. Could a

European-style common market work elsewhere? There

have been some attempts to plant the seeds of one

in the Americas with NAFTA and the FTAA and similar arrangements, but a Western Hemisphere common market seems remote; the same is true for the most part

in Africa and Asia. Nor would they make much economic

or political sense, at least not in the same way that

binding the Western European nations together did after two terrible wars and in the face of the Soviet threat.

Yet even there the viability of the European project is

being questioned more and more, and, in spite of global-

ization, protectionist pressures are mounting across the

world. Free trade ideology remains strong, but the future

of the institutions and public support that undergird it

remain uncertain.

To some extent the eclipse of free trade is

symptomatic of a broader retrenchment. Nowhere is it

more apparent than in the Middle East and North Africa

since last year. On the one hand there are these dramatic

upheavals led by masses of citizens demanding justice,

responsive government, and freer access to economic

and social opportunities that exist elsewhere in the

world. Many outsiders have interpreted their motivation

as a manifestation of globalization, just as the inter-

preters of the upheavals of 1989 depicted it as the result of a desperate desire to join, or at least to live on

equitable terms with, the West. But this does not appear to be happening in the Middle East and North Africa,

at least any time soon. These places—even the most

closed, authoritarian ones—are not immune to global

forces, yet they nearly all are badly integrated with more

prosperous, peaceful neighbors, namely Europe. This is

as much Europe’s fault as their own.

The Mediterranean, which for centuries connected

Europe and its neighborhood, has become a wall. Europe

itself is shrinking – in ideology, tolerance and ambition

– as its relationship to globalization has become more

defensive. Its institutions are also strained to the point

that their very survival is now being called into question,

however remote that still seems. How then can Europe

serve as a beacon for the reformers of the Middle East

and North Africa as it did for others at the end of the

twentieth century? The reformers say they have no need

for a European (or any other) beacon, and who can

blame them? The national lags one saw at so many of these demonstrations spoke for themselves.

However no reform movement can succeed in

a vacuum. The spirit of regional integration must be

preserved, augmented and extended in both a national

and global context alongside similar steps to promote

a stable security environment. This is what the late

Manfred Woerner meant, for example, when he said that NATO had to go out of area or out of business: he

didn’t necessarily mean that it had to swallow a bevy

of new members or send expeditionary forces halfway

across the world (although it ended up doing both); but

rather that it had to think and act creatively, overcome

old prejudices, adapt to new conditions, and meet new

demands. The same holds true for other institutions.

Their own future – and that of the people they serve – is

also at stake.

G20

Summit 2011

40

Transatlantic Regulation: What Unites Us Makes Us StrongerBy Jonathan Evans, Member of the UK Parliament

The inancial crisis of 2008 put into strict relief the fragility of global inancial systems. Stories unfolded about impossibly complex products and, after the horse

had bolted, people began to relect on the wisdom of making credit so freely available and, in some cases,

with little analysis of how the customers would cope if

their circumstances changed.

An unsurprising result of this has been a long hard

look at the supervisory and regulatory systems, especially

in those countries worst affected by the crisis, and an

impetus to reform to avoid a repeat of the mistakes of

the late 2000s.

In Dodd-Frank the U.S. is aiming to bring in “one of the largest rule-making exercises in the history of the

country,” said Jeremy Anderson, Global Chairman of

KPMG Financial Services Practice in “Evolving Banking Regulation: A Marathon or a Sprint?”

In Europe we are moving from “light touch” to more

intensive supervision. From January 2011, the Level 3 Committees have been merged to form the European

Supervisory Agencies which have greater regulatory and

legal powers than their predecessor bodies. Moreover

on July 20, 2011, the European Union released the inal text of its Capital Requirements Directive (CRD4) and

this seeks maximum harmonisation between member

states. This may create issues with the new regulatory

structure being put forward in the UK.

The UK is in the process of reorganising its inancial regulation mechanisms under the Prudential Regulation

Authority (PRA), the Financial Conduct Authority (FCA) and the Financial Policy Committee (FPC). Differently from the European model, these changes will separate

prudential from market and conduct of business

supervision.

Of course, Basel 3 is key to co-ordinating all action that is undertaken globally. At its heart, Basel 3 requires institutions to hold more and better capital and so G20

Summit 2011

42

protect the system from failure. This is a natural result of

a crisis caused by institutions being “too big to fail” and

their lack of liquidity.

Especially, in the U.S., UK and Switzerland there

is considerable concern about the failure of Systemi-

cally Important Financial Institutions (SIFIs)—hardly surprising, given the size and concentration of SIFIs in those countries relative to their GDP. These countries,

among others, are pushing for improvements to national

resolution regimes.

Achieving a co-ordinated transatlantic regulatory

environment will be important in guaranteeing the sus-

tainability of the banking sector. The large cross-bor-

der banks in the EU and the U.S. will bear the brunt of

proposals for SIFIs. It is vital, therefore, that the costs of regulation are not ratcheted up through duplication.

In this climate, we need to dismantle existing

regulatory barriers, stop new ones emerging and, above

all, prevent a light into protectionism. By making the transatlantic regulatory environment more streamlined

and integrated, the costs for consumers and producers

on both sides of the Atlantic will be reduced and in turn

the competitive potential of EU and U.S. companies will

be improved.

The U.S. is committed to full, on-time implementa-

tion of Basel 3. This is relected in Dodd-Frank, which requires SIFIs to be subject to higher capital leverage and liquidity requirements and to meet enhanced re-

quirements on disclosures, rigorous risk management,

concentration of exposures and resolution plans.

The UK is equally signed-up to Basel 3 and a central part of the debate is whether big banks should be

broken up. Business Secretary Cable is on record as being in favour of this course of action. The argument

goes both ways: on one hand, big banks concentrate

risk; on the other, they provide strength and stability to

inancial systems.

On a human level, the main focus has been

consumers and the impact the crisis has had on them.

The concerns around consumers are two-fold: that

many people do not properly understand the products

they are buying; and that they are drawn into taking on

levels of debt they cannot afford. Important features of

the reforms since the crisis has been improving inancial education and reducing incentives to mis-sell.

With its strong inancial protection watchdog (the Consumer Protection Bureau), its “skin in the game” rule

and the Ofice of Financial Literacy, Dodd-Frank seeks to introduce these protections in the U.S. In Europe,

the sale of banking, insurance and investment products

will come under greater scrutiny as a result of new EU

business conduct regulations. In the UK, the Retail Dis-

tribution Review is set to be introduced at the start of

2013. This will outlaw commission and demands that

advice be paid for from customer fees.

Although these plans will make the environment

safer for consumers, they are not without their risks.

Advisors may leave the market. Out of an unwillingness

to pay fees, consumers may get less, not more advice.

The range of products on offer may become more

limited and “vanilla.” Limited choice may, of course, be

preferred by some consumers but it carries with it the

risk of restricting the diversity and innovation that has in

the past underpinned economic expansion.

The work being done to reduce the risks to the

consumer and to the system is an important step

forward in ensuring future inancial stability. However, it is important that the balance between protecting

investors and allowing the inancial services industry to be commercially viable is inely struck. While reducing systemic risk we also have to recognise the changes

may bring a systemic reduction in proits and this may in turn result in a fundamental reshaping of the sector.

The reforms still need to allow inancial institutions to meet the diverse trading, investment and capital-raising

needs of an essentially international and wholesale client

base. Regulatory barriers have long been recognised as

the most signiicant impediment to trade and investment between the EU and the USA. In reforming the inancial sector it is, therefore, imperative that we take this

opportunity establish good regulatory practice and not

merely look for local solutions to global problems.

Jonathan Evans is the Member of the UK

Parliament representing Cardiff North since May 2010.

He is Chairman of the All Party Parliamentary Group on

Insurance and Financial Services and the All Party Par-

liamentary Group on Building Societies and Mutuals.

As a Member of the European Parliament (1999-2009)

he was the Conservative Spokesman on Economic and

Monetary Affairs and, between 2007 and 2009, he was

a Member of the Advisory Board to the Transatlantic

Economic Council. Between 1992 and 1997, Jonathan

was the Member of Parliament for Brecon and Radnor

during which time he served as the Corporate Affairs

Minister at the Department of Trade and Industry.

Global Finance

G20

Summit 2011

43

G20 Agricultural Meeting: A Transformative Moment?By Marco Picardi, Centre for African Development and Security

This week’s irst ever meeting of G20 agricultural ministers in Paris marks the birth of a new era of global

collaboration on food policy. As food prices reached

record highs earlier this year, and rapid urbanisation

continues to change the complexion of global resource

needs, this is an opportune moment for political action

to determine a plan to tackle food insecurity.

The severity of rising prices in the developing world

became clear in 2007-08 when food related riots broke out in three-dozen countries, leading to the violent

ousting of heads of state in Madagascar and Haiti.

This has been underlined by the ongoing Middle East

turmoil, where food prices played a key role in sparking

revolutionary sentiment. It is well documented that a

hike in the cost of bread – coupled with widening so-

cio-economic inequality - was a key driver in Tunisia’s

Jasmine revolution that then spurred regional uprisings

based on similar grievances. These episodes conirm the emergence of food as a security issue.

To mitigate future price volatility, agricultural envoys

are discussing the collection of data on the stockpiles

of major staples including corn, rice and wheat.

The information provided by this Agriculture Market

Information System, would reduce the uncertainty faced

by farmers and markets. This recommendation builds

on an interagency report commissioned by the G20‘to

protect the most vulnerable’, a somewhat incongruous

demand for an organisation that does not include the

voices of the poorest countries in its negotiations. And,

it is precisely this incongruity of a gathering where big

powers discuss their own actions, which adversely

impact poor economies the most that will truly test the

developmental will power of the G20 membership.

Foodstuffs have been squeezed due to pressures on both supply and demand. Yields already stretched

due to climatic change are being further reduced by

the consequences of land overexploitation and unsus-

tainable irrigation practices that are depleting water

tables, and thus causing soil erosion and desertiica-

tion. In recent times, high oil prices have also affected

production costs.

These supply side deiciencies have been matched by higher demand for crops from industry in industrial

countries (for biofuels, subsidised by many G20

G20

Summit 2011

44

members, and grain intensive livestock feed) and

shifting global demographics (a rising population and

the growing caloriic expectations of growing afluence in emerging economies).

The imbalances between supply and demand have

been compounded by the inancial practices of both governments through quantitative easing and traders

through artiicial the manipulation of markets i.e. betting on foodstuffs in the same way as other soft commodities.

Emblematic of this was the 2010 purchase of 241,000

tons of West African cocoa by a London-based investment fund, which immediately drove global prices

up to a thirty-year high.

This has spawned what Lester Brown, the president of the Earth Policy Institute, has termed a ‘new geopolitics

of food’ whereby the trend of land acquisition to secure

‘parochial interests at the expense of the common good’

is increasing the spectre for conlict.

In bypassing market insecurities and leasing tracts

of productive land, rich net-importers of food are

aiming to feed their own populations into the future.

The increasing incidence of foreign investments of this

kind in countries such as Ethiopia, Mali, Kenya, DRC,

Sudan, and Zimbabwe that suffer their own nourishment

problems have sparked claims of a neo-colonial land

grab. Although many of these deals can equally be

understood as the outcome of dubious governance, it is

questionable whether G20 nations such as South Korea

and Saudi Arabia, protagonists in the pursuit of foreign

agricultural land, can be truly committed to curbing

these practices.

With the inclusion of India and China, countries with development issues of their own, the G20 is an

improvement on the G8, but this week’s conference hardly represents democratic engagement in the

governance of global food. China and India are amongst

the G20 members most vehemently against the proposed

information database, as aside from the practical con-

siderations they are concerned about losing competitive

advantage control over prices.

The region with the highest prevalence of hunger,

sub-Saharan Africa, only has one representative at the

meeting (South Africa). It is here, where income to food

purchase ratios are highest that price volatility hurts

most as higher costs reduce the quantity and quality

of food consumed thereby raising the threat of chronic

malnutrition. In order to implement a truly transformative

security architecture for food, countries of the G20 will

have to overcome self-interest and consider the millions

of poor people in countries not at the negotiation table.

Marco Picardi is a founding director of the

Centre for African Development and Security (www.

cads-cdsa.org) in London. Currently he is leading

on a research project on urbanisation in Bukavu,

Democratic Republic of Congo with the British Institute

in East Africa. He holds an MA in International Studies

and Diplomacy from the School of Oriental and African

Studies, University of London.

Food Security

G20

Summit 2011

46

The Challenge for Food Security in Developing CountriesBy Kyle Rehn, Hinckley Scholar, Hinckley Institute of Politics

Photo Credit COLEACP PIP - Aurélien Chauvaud Photo Credit COLEACP PIP - Aurélien Chauvaud

Food is a basic but essential need for every human. Aside from water, nothing demands more attention to our

cultural, social and psychological well-being than food.

Food is the good that keeps us alive. It is by the United Nations deinition, a human right to live life.

Despite this deinition, it is unfortunate that 1 billion people are living with chronic hunger. Even worse, every

day 20,000 people die from hunger-related causes. For future economic policy, this is troubling. Our attention is

needed.

Addressing food insecurity in developing countries

has never been an easy task. Confronting it over the

next 40 years won’t be any easier either. With the world population expected to increase to 9 billion by 2050,

this challenge becomes even that much more dificult; it is estimated that to meet the rising demand, agriculture

production will need to increase by 100 percent for

developing countries.

The comprehensive policies involving food security

include agriculture, health trade, research, education

and energy. Considering its impact in these signiicant categories, alleviating food insecurity will continue

to be a core challenge to communities, cities, states

and nations. Further, since developing countries are vulnerable to the biggest problems associated with

this issue, it is crucial that they must build self-reliant

and sustainable agriculture conditions so that they can

improve their well-being for the future.

To create sustainability and self-reliance, a viable

economic policy option would be to encourage

small-scale farming for developing countries.

Small-scale farming is effective for many reasons. For one, small-scale farming can combat price volatility.

Price volatility occurs when a consumer and producer

are both suspect to prices that rise and fall by large

amounts over a small period of time.

Recently, Russia’s wheat embargo exposed the

dificulty that arises when a country limits its exports and causes price volatility. For those countries that had been increasing their consumer demand for wheat, co-

incidently their dependency for wheat became evident

as their consumers suffered due to the increased price

for wheat. Without diversifying their agriculture, it forced these countries to become dependent on other countries

for there nutrients. Consequently, with a dependency

on imports, they then fell victim to price volatility that

occurred in the wheat market.

Developing countries that rely on only a few agriculture

goods for their imports can be subject to price volatility

as well. The reason that developing countries are at

risk to price volatility is because a primary amount of

their employment and GDP is dependent on agriculture.

If prices were to increase or decrease for a particular

agriculture commodity, then it would drastically affect

the countries that depend on agriculture imports for their

large scales of production.

Another area of price luctuations causing a concern for the developing countries is the universal increased

cost of oil. With oil prices increasing right now, it is also increasing the costs for transportation. Consequent-

ly, importing and exporting cargo ships are also more

expensive. Plus, with this natural resource depleting, oil

prices are going to continue to increase, which means

that over the long run it is going to be that much more

dificult for developing countries to rely on imports and exports for agriculture production.G20

Summit 2011

48

Food Security

Since oil prices are going to continue to rise,

policies that encourage small-scale farming would allow

agriculture producers in the developing countries to not

have to rely on imports and face the inancial burden of oil price increases. By encouraging small-scale farming, it would also allow developing countries to grow and

diversify in the food areas that are most suspect to

outside price volatility. Essentially small-scale farming is

most effective in this category because it creates oppor-

tunities for farmers to at least produce within their means

so that they can create more stability for themselves

and their communities. Obviously if they can produce

beyond their means then they should, but to ensure

that communities, cities, states and nations avoid food

insecurity then it is important that they reduce their

chances of falling victim to outside price luctuations in the import and export market.

Further, to encourage small scale farming, it is also important that policies are implemented so that farmers

can get the proper fertilizer, seeds, irrigation and farming

equipment that they need. Without these basic essentials to building a good crop, those that are resource poor

are faced with barriers that could alleviate them from

poverty. Of the 1,400 million small-scale farmers that are

in the developing countries, most of them farm in areas

in which the soil is fragile and vulnerable to erosion.

Further, even if small-scale farmers are lucky enough to have fertile soil, often their crop remains threatened

because of lack of access to the necessary pesticides

and fertilizer that would improve their crop yield.

With the necessary farming essentials, small-scale farmers can then increase their eficiency and production of the crops. When small-scale farmers are able to get more out of their land and labor, their families can

eat better, earn more money, and lead healthier lives.

By having a healthier life, they then can become more active and more productive themselves.

With regards to small-scale farming, policies that encourage responsible use of the land are also things

from which we all can beneit. That is why despite the opportunities to improve agriculture productivity and

development, it is also important for environmental

policies to coincide with the policies to alleviate food

insecurities. Increasing land degradation and pollution

at the expense of improving the eficiency and produc-

tivity of agriculture output is not the direction that is in

the best interests of our entire well-being for the future.

Thus, small scale farming policies must be implemented

with the intention of sustaining the people and the

environment for the long term.

Eliminating food insecurity will not happen overnight.

It is and will remain a dificult challenge. Despite this, small-scale farming is an effective solution that will

combat price volatility and remove the dependency of

outside market luctuations. In bigger picture terms, this then creates sustainability and self-reliance in developing

countries. Plus, most importantly for those dealing with

chronic hunger, small-scale farming gives more oppor-

tunities to for people to “live life.”

Kyle Rehn recently graduated from the University of

Utah with a Bachelor’s of Science degree in Economics.

In the spring he will be teaching economics at a high

school in Accra, Ghana. While in Accra, he will also be

preventing malaria with the department for Medical Care

Development.

Photo Credit COLEACP PIP - Christopher Saunders Photo Credit COLEACP PIP - Aurélien Chauvaud

Photo Credit COLEACP PIP - Christopher Saunders

G20

Summit 2011

49

Malthus is Still With Us, But So is the Solution:Using Science to Solve the Food CrisisBy Robert F. Bennett, Former U.S. Senator and Resident Scholar at the University of Utah’s Hinckley Institute of Politics

Thomas Malthus was an Englishman who became

famous because of his prediction that the world

population was growing so fast that it would soon

outstrip the capacity of the earth to provide enough food

to sustain it. Many of England’s highest oficials believed him and laws were enacted to discourage couples from

having children, particularly among the poor.

In 1798, he wrote in the “Essay on the Principle of Population”: “The power of population is so superior to

the power of the earth to produce subsistence for man

that premature death must in some shape or other visit

the human race. The vices of mankind are active and

able ministers of depopulation. They are the precursors

in the great army of destruction, and often inish the dreadful work themselves. But should they fail in this war of extermination, sickly seasons, epidemics, pestilence

and plague advance in terriic array, and sweep off their thousands and tens of thousands. Should success be

still incomplete, gigantic inevitable famine stalks in the

rear and with one mighty blow levels the population with

the food of the world.”

Two centuries later, none of that has come true. The

world population is more than six times than it was when

Malthus lived, and statistically, the world has more food

per person now than it did then.

Malthus went wrong because he did not igure human ingenuity into his equation. Unlike animals, who

will blindly ruin their own food supply by overgrazing it

unless they are forced to move on by predators, humans

can, and have, devised ways to make arable land ever

more productive. We crossbred new crops that give higher yields, formulated fertilizers that restore barren

soil and devised new ways to get water to places that

never receive rain. Crops yields have multiplied much

faster than population did.

Nonetheless, today’s trends give rise to new

Malthusian prophecies: “We are running out of land on which to produce crops through drought and citiication. We are running out of water through waste and industrial and municipal use. We are still having too many babies. Starvation and food riots are just around the corner.”G20

Summit 2011

50

There is some truth to what they are saying. I agree

that world agricultural production must rise signiicantly, and soon, if everyone is going to be fed in the coming

decades. However, human beings have not lost their

ability to reason. Those of us who are non-Malthusians

say, “Give us the facts and we can ind a solution.”

Food production requires land. Its availability

and productivity are threatened in three ways:

Changing land use patterns

Land that was fertile agricultural soil now serves

as base material for houses, factories, roads and other

industrial uses, shrinking the amount of arable land

available for growing food.

Climate change

More droughts and changing patterns of rainfall are

making previously fertile areas unproductive even if they

are nowhere near a city.

Pests and diseases

After plants have grown to full maturity, they are

often killed by pests or diseases. In terms of yield, it

is as if the land and water invested in their production

didn’t exist.

How do we change these trends?

No industrial country is going to reverse urbaniza-

tion; the poorer countries see themselves getting richer

by embracing it. As for climate change, even if it is 100

percent the result of human activity, it will not be turned

around in less than decades, if not centuries. Pest

and disease control is by far the area with the greatest

promise of improvement, and the science to exploit this

opportunity is well along.

Just as the Human Genome Project has opened the

door to miraculous health cures in the not too distant

future, research on plant genomics (used to create

genetically modiied organisms, or GMOs) has done the same with respect to plant and disease control.

There are now insect-resistant crops, herbicide-tolerant

crops, viral-resistant crops and drought-tolerant crops,

all of which are perfectly safe to eat. They improve

soil quality, reduce erosion and enhance biodiversity

of beneicial insects. Land and water used to produce them is not wasted, as it is when pests and disease

strike today. There are also health beneits to farmers

and their families as a result of lowered exposure to

harsh chemicals now in use.

Most signiicantly, for modern Malthusians, yield increases through use of GMOs and other modern

farming techniques are as high as 30 percent—more in

some places.

In sum—the food challenge for our growing

world population is enormous, but the science to

solve it exists. Those politicians who call GMOs

“Frankenfood” and ban their use turn their backs to that science to the peril of millions of their constitu-

ents in the decades ahead.

Former Senator Robert F. Bennett (UT) is the

Hinckley Institute of Politics’ Resident Scholar. Mr.

Bennett was elected to the U.S. Senate in 1992, where

he served for 18 years, carrying his businessman-like

approach with him to the Hill. He served as a senior

member of the Senate Banking Committee and a

member of the distinguished Joint Economic Committee,

where he was at the center of national economic policy

discussions. He also served as the ranking Republican

on the Senate Rules Committee. Mr. Bennett is a

graduate of the University of Utah.

Food Security

G20

Summit 2011

51

What’s in a Name?

Deining Sustainability and Some Consequences of DeinitionsBy Ralph Brown and David Braudt, Brigham Young University

Sustainability as a concept is commonly used to

describe the anticipated, if not hopeful, social, political,

and economic outcomes of development paradigms.

Unfortunately, like so many other ubiquitous and un-

critically examined terms used in the multi-disciplinary

arena of international development, “sustainability” often

takes on a host of meanings depending on the person,

program, agency, or organization and their respective

agendas; evidence for this is found in the writings of

William Easterly, James C. Scott, and Jeffrey D. Sachs among others. At a minimum, and on a general level,

“sustainability” could mean economic sustainability,

political sustainability, organizational sustainability, or

environmental sustainability—commonly referred to as

“sustainable development.” Below are brief deinitions of each of the above mentioned types of sustainabil-

ity followed by a discussion of some potential effects

each type may have on the approaches adopted by

development project administrators.

Economic sustainability, possibly the most readily

conceived form of sustainability to western minds, is

the maintenance, reproduction and/or perpetuation of a given project through the use of market-based

mechanisms and strategies. Political sustainability with

regard to development projects has at least two forms:

1) the maintenance of political power and/or position by politicians through the use of particular projects

or agendas; 2) any personal attachment to, or afinity toward a project(s) by politicians who remain in positions

of suficient power to perpetuate their project(s) of choice. The latter often occurs when a project becomes

associated speciically with a single politician or political party. Organizational sustainability is the attempted

avoidance of organizational mortality of a project—it is

not allowed to “fail.” This can occur through: manipula-

tion of organizational structure, perceived power in in-

terorganizational relationships, authoritative leadership

within a project space and neutral levels of centralization

and internal communication. Environmental sustainabil-

ity, or sustainable development as coined by the United

Nations Commission on Environment and Development

in 1987, is the conservation of natural, produced and human productivity from generation to generation.

Due to individual paradigms and a lack of offered

or requested information in project proposals the exact

type of sustainability sought, idealized or understood

can vary between project administrators, funding

agencies and project recipients. Each type of sustain-

ability described above has varying idiosyncrasies and

while we list a few of the consequences relevant to each

type considered, the following discussion is not meant

as exhaustive or fully deinitive. Furthermore, each type of sustainability may have both positive and negative

attributes for different audiences.

ECONOMIC SUSTAINABILITY

The concept of economic sustainability is

bounded by quantitative reasoning and observation

without overt consideration of subjectivity. The consid-

eration of variables which cannot be reduced to hierar-

chical or value indicators is generally omitted, or given

lesser importance, in project analyses or proposals

which seek sustainability solely on economic grounds.

Additionally any evaluation of noninancial variables by project administrators, funding agencies and recipients

is even more subjective than traditional market operators

G20

Summit 2011

52

and may not receive the same levels of priority between

project administrators, funding agencies and project

recipients.

POLITICAL SUSTAINABILITY

The above deined bifurcated concept of political sustainability is subject to considerable subjective in-

terpretation in so far as development projects, which

are sustainable through political means, are generally

sustainable due to the motivations and actions of

particular political leaders. These motivations, while in

the ideal democratic society should align with members

of their constituency are not always substantiated by

recipient groups in development circumstances.

ORGANIZATIONAL SUSTAINABILITY

A lack of organizational mortality in the absence of

a Platonic “just” ruler suffers from similar consequenc-

es as politically sustainable. Instead of a politician, the

governing body or individual in control of a project is

capable of dictating the direction of project aims and the

methods employed in achieving those aims. Furthermore organizational longevity is often considered as a primary

objective of organizations without any viable threat of or-

ganizational mortality. When the threat of organizational mortality is removed by iat, organizations tend to lose their innovative edge.

ENVIRONMENTAL SUSTAINABILITY (SUSTAIN-

ABLE DEVELOPMENT)

The use of sustainable development as a form of

sustainability does not suggest as much about the

possible longevity of a given project as much as it

does about the effects of that project. Thus, while the

previously considered forms of sustainability will often

skew the projected aims/goals of development projects sustainable development is an aim/goal apart from any other desired achievement. This suggests that

development projects which proclaim an adherence

to the standards of “sustainable development” will be

most affected by the degree of their adherence to these

standards than by any other objectives. For example, a project which seeks to decrease rates of child morbidity

while desiring to practice sustainable development

will face different constraints when deciding how,

and if, to build new hospitals in areas habituated by

endangered lora and fauna. Furthermore, beyond the individual effects of sustainable development on the

aims and goals of development projects, and due to its

unique deinition, development projects which pursue

sustainable development as a form of sustainability will

be inluenced, in one form or another, by at least one of the other methods of achieving longevity – sustainability

– mentioned above.

Policy makers, practitioners, recipients, and

academics all need to be aware of the multiplicative

meanings associated with “sustainability” as a concept

within development contexts. We have outlined a few deinitional approaches to sustainability and a small number of the consequences which accompany each

case. A better understanding of sustainability in all dei-

nitional aspects of the concept will allow for better public

policy, private initiatives and communication between

those who seek to help the underdeveloped world and

those receiving the offered assistance.

Ralph B. Brown is a Professor of Sociology and Director of the International Development Minor at

Brigham Young University. He is also the Executive Director and Treasurer of the Rural Sociologi-

cal Society. His Ph.D. (1992) is in Rural Sociology

from The University of Missouri-Columbia. His

research has centered on community satisfaction

and attachment in rural communities and on social

change and rural development both in the United

States and Southeast Asia.

David B. Braudt is a Graduate Student of Sociology at Brigham Young University. His principal training in the social sciences is in Economics (2011) from Brigham Young University where he graduated with University

Honors. His current research is on mechanisms of social

change, with particular attention to rural communities in

underdeveloped countries.

Global Development

G20

Summit 2011

53

Peak Oil and the Threat to Global Economic Expansion

By Dr. Minqi Li, Associate Professor, Department of Economics at the University of Utah, and Hinckley Scholar, Hinckley Institute of Politics

In 2008, the world annual average oil price surged to $97 a barrel. In the following year, the global economy as a whole contracted by 0.6 percent, the irst absolute contraction since the Second World War. The oil price shock was a major factor that contributed to the deepest global economic crisis in the modern time.

Despite substantial improvement in energy eficiency, the global economy remains highly dependent on a steady supply of cheap oil for normal functioning. Oil is an essential input in transporta-tion, agriculture and chemical industries. According to the International Energy Agency, oil accounts for 96 percent of the world energy consumption in the trans-portation sector, 29 percent in the industrial sector and 15 percent in the residential and commercial sector. In addition, oil plays a small but sometimes important role in electricity generation.

Figure 1 shows the historical relationship between world oil spending and world economic growth. His-torically, whenever the world oil spending (the total

market value of the world oil consumption) as a percent of world GDP had risen by about 3 percentage points within a relatively short period of time, it was followed by deep global economic recessions. This happened in 1973-1974, 1978-1979 and 2003-2008.

The current world oil price is not far away from this dangerous territory. The world GDP now stands at about $70 trillion. World oil consumption is near 90 million barrels a day. Given these conditions, if the annual average oil price rises to $150 a barrel, world oil spending will rise to 7 percent of world GDP or 3 percentage points above the 2010 level. World oil price averaged $80 a barrel in 2010 and could average more than $100 a barrel in 2011. At this rate, world average annual oil price could exceed $150 a barrel in two or three years.

In recent years, there has been growing concern that world oil production could peak in the near future, imposing severe limits on global economic expansion. The U.S. oil production peaked in 1970. The total G20

Summit 2011

54

non-OPEC, non-former Soviet Union oil production

reached an all time high of 35.9 million barrels a day in

2002. By 2010, it has declined to 34.4 million barrels a day. New technologies may help to develop previously

underdeveloped resources, such as tar sands oil, shale

oil and deep water oil. However, these new oil resources

may be associated with higher greenhouse gas emissions

and other environmental costs. Moreover, it takes many

years to plan and develop new oil production capacity.

Thus, the supply capacity that is expected to come on

line in the next few years has been largely determined by

the existing projects.

According to the Wikipedia page on “oil megaproj-ects,” the total additions of new crude oil production

capacity from 2011 to 2015 amounts to 13 million barrels

a day. The world’s existing oil ields are observed to deplete at an annual rate of 4-5 percent. Given that the

world’s current crude oil production is about 75 million

barrels a day, the depletion results in a reduction of

world crude oil production capacity by 3 million barrels

a day a year or 15 million barrels a day over ive years. Assuming that the production of other liquid fuels (such

as natural gas liquids and biofuels) grows by 0.5 million

barrels a day a year, the world oil production capacity

(including crude oil and other liquid fuels) would grow by

only 0.5 million barrels a day from 2010 to 2015. Taking

into account the OPEC surplus capacity of 4 million

barrels a day, world oil production could increase by 4.5

million barrels a day from 2010 to 2015.

From 2000 to 2010, the global economy grew at an average annual rate of 3.5 percent and world oil

consumption grew at an average rate of 1.1 million

barrels a day a year. Thus, the world oil consumption

needs to grow at least by 1 million barrels a day a year

to sustain reasonable global economic growth. At this

rate, by 2015 the world will face an oil shortage of 0.5

million barrels a day.

As the energy demand in the emerging economies

rises rapidly, the world oil consumption growth could

accelerate to 1.5 million barrels a day per year. To meet

the rising energy demand from the emerging economies,

world oil consumption may need to rise by 7.5 million

barrels a day by 2015, implying a huge shortage of 3

million barrels a day. This could lead to a major surge in

the oil price similar to what happened in 2008, plunging the global economy back into recession.

Oil may be substituted by biofuels. But given the current technology, the production of biofuels competes

with food production for land and water resources and

may have contributed to rising food prices, threatening

the living standards of billions of poor people in the

world. Currently, more than one-third of the total

U.S. corn production is committed to the production

of biofuels. It represents 5 percent of the world grain

production but contributes to only 0.6 percent of world

oil consumption.

Some oil uses may be substituted by electricity.

Electric cars, electric buses and electriied railways could replace much of the oil used for personal transportation.

But major infrastructure transformation will be required. Electricity cannot or cannot easily substitute for oil for its

use in trucks, ships, airplanes and chemical industries.

Electricity is a secondary source of energy. Currently

about 70 percent of electricity is generated from

fossil fuels that generate greenhouse gases. Nuclear

electricity has serious safety and security concerns.

Renewable electricity is limited by various economic and

technical factors.

In summary, under business as usual, the world

is confronted with the threat of another major oil price

shock in the next few years, which could plunge the

global economy back into recession. To prevent the

danger from materializing, the world’s governments need

to take urgent actions to increase energy eficiency and develop new energy sources, while taking appropriate

steps to avoid unintended side effects.

Minqi Li received PhD in economics from University

of Massachusetts Amherst in 2002. Since 2006 he

has taught economics at University of Utah. He has

published many articles and given many invited talks

on topics such as peak oil, climate change and global

economic crisis.

Global Development

G20

Summit 2011

55

A Trade Agenda for the Arab Spring: Global Integration and the Dangers of NeoliberalismBy Athanasios P. Mihalakas, Diplomatic Courier Contributor

As developments unfolded in the Middle East and

North Africa (MENA) during the past 8 months, one thing has become abundantly clear: the political transforma-

tion will not survive without an economic transformation.

As many analyst have pointed out, an overwhelming

motivation of the people who took to the streets with the

‘Arab Spring’ was the dismal economic and employment

condition on the ground; high unemployment among the

young, crony capitalism, ineficient welfare state, and even food shortages.

What has been less adequately reported, is that Tunisia and Egypt (along with Morocco and Jordan) has

experience an intense economic transformation during

the past couple of decades, away from “Arab Socialism”

of the 60’s and 70’s, and towards western style

capitalism in the 80’s and 90’s. Through the guidance and assistance of the IMF and the World Bank, Tunisia and Egypt have pursued neoliberal economic policies

(entrepreneurial freedom, strong property rights, free

markets, and free trade), which have led to great income

inequalities and a concentration of wealth among the

political elite. Walter Armbrust’s article, ‘A revolution against neoliberalism?’, make’s it abundantly clear that

corruption in Tunisia, Egypt, and other MENA nations

now in turmoil, was the result of conlation of politics and business under the pretext of privatization – that the

revolving door between government and business, and

the participation in private business of political leaders,

bureaucratic oficials (technocrats) and even military personnel and their enrichment from such preferential

business deals was less a violation of the system and

more ‘business as usual.’

The combination of authoritarian regimes (to

suppress populist religious movements) and reliance on

oil and gas exports for economic growth has produced

weak and isolated economies conditioned on patronage

and welfare and cut off from the global market. Non-the-

less, the new regimes emerging from the Arab Spring

will have to tackle the many economic problems that are

plaguing the region. How do you promote economic

growth in politically transitioning nations, like the ones

of the Arab Spring? Which economic model (good old-fashion ‘national’ socialism, western neoliberalism,

or some hybrid – see authoritarian capitalism under

China?) should be implemented in pursuit of economic

growth, higher employment, and equal opportunities for

all (a major demand of the people in the streets).

Three levels of economic activity, where trade

plays a role –

Any strategy for instituting political reform in MENA

will have to include a strong consideration for economic

reform, and in particular integrating the region into the

global economy. With the exception of natural resources (and Al Jazeera), most countries in the region have been

net importers – relying heavily on foreign imports to

cover even basic food needs. The Arab world stands

alone and excluded from the beneits of global trade and economic integration. The nations emerging from the

Arab Spring need to reenergize entrepreneurial activities

at the local level, strengthen the regulation of national

market, and facilitating exports through regional trade

integration.

At the local level, commerce always existed,

especially in the Arab world with its strong cultural

afinity for exchange and bargaining. What small and medium size local merchants need to grow and lourish is the freedom from government regulation/intervention, AND the existence of an infrastructure system that only

the government can create and maintain.

In order to jump-start local markets and promote

economic activity at the lowest lever, the central

government will have to transfer the administration and

regulation of local markets to local authorities. This

will allow for the more eficient operation of these local markets, and free the central government to tackle

bigger issues. Therefore, the collection of taxes and

promulgation of licenses and local regulations will have

to be performed at the local level, with respect to these

local markets and small/medium size companies.

On the other hand, the central government should

concentrate its efforts in providing the necessary in-

frastructure (roads and transportation systems, power

grids, telephone, internet), and venues/methods for ad-

judication and dispute resolution (courts and other legal

services) – all very necessary for the proper functioning

of a local economy. It is imperative that small entre-

preneurs have the necessary access to adequate trans-

portation, consistent energy and upgraded for the 21st

century communication systems – something only the

central government can guarantee.

At the national level, according to neoliberal

economy theory, what applies for small companies and

G20

Summit 2011

56

local markets should also apply nationally. However,

it will be very challenging for a young democracy to

both regulate and control large companies. After all,

corruption at the top and exploitation of the public trust

by the regimes of Tunisia and Egypt was in part what

broke the proverbial camels back and send the people

to the streets. In order for neoliberalism to succeed, it

will have to apply to the large national companies and

the national market as well, subjecting them to the same

free market economics that the middle class had to

leave by during the past 20 years.

Therefore it is imperative that any liberalization

at the national level or any privatization of national

companies be done slowly, methodically and very-very

carefully. Shock therapy like the one used in post-soviet

Eastern Europe, and WB/IMF ‘one size its all’ economic policies which advocate for complete and uncondi-

tional liberalization of the market, will lead to the per-

petuation of cronyism and the further enrichment of

the current elite. For example, the government should scrutinize not only the selling/privatization of large and ineficient government companies, but also operation/management of large companies transitioning from

national monopolies to market economies.

At the international level, there are two trade-re-

lated strategies for growth; irst, regional integration that focuses on movement of workers, goods, and capital;

and second, preferential access to western markets

through inancial assistance from the WB and the IMF.

Free movement of workers is imperative for a region that has a lot of jobs to offer in the oil and gas industry,

but relies heavily on migrant workers from sub-Saharan

Africa and Asia. The region needs a common regulatory

system that allows for preferential working permits of

Arab citizens wishing to move from non-oil producing

countries (like Egypt, Syria, Tunisia, Morocco, Yemen,

Jordan) to oil-producing countries, but does not

extend citizenship rights. Such movement of workers

could alleviate unemployment in some countries, grow

production in others, and foster better understanding

and cooperation among the otherwise culturally and

religiously similar people of the MENA.

Although many analyst hope that the Arab Spring

will usher a new era of peace and democratic values for

the region, Leon Hadar doubts that and argues that the

Middle East should follow the ASEAN model of regional

integration. (see: The Middle East Needs an ASEAN) Mr.

Hadar argues that ASEAN is a mosaic of various political

systems and old and new civilizations in various stages

of economic development, which were brought together

not by a common ideology, religion, or culture, but rather

by their mutual economic and political interests. A

free-trade zone for the MENA region, based on the large

and educated middle class of the region, could provide

many opportunities to local companies for growth.

A role for the West –

On the other hand, the best thing the west can do

for the MENA people right now is help them integrate

into the global market… quickly but sustainably!

Western nations should link democratic development with access to western markets, and promise to deliver

the beneits of preferential trade access to the people G20

Summit 2011

58

of those nations that embrace democratic values and democratic forms of governance. The promotion and facilitation of a regional trade agreement should be at the forefront of any western economic initiative about the ‘Arab Spring.’ After the revolutions sort themselves out, the U.S. and the EU must incentivize the growth of existing regional trade agreements, or the creation of new ones.

In particular, President Obama announced in his recent Mideast speech, that “it’s important to focus

on trade, not just aid; on investment, not just

assistance.” President Obama outlined the U.S. goal of promoting a development model based on economic openness and competition, trade and integration to global markets, and inancial stability that enables more employment opportunities for young people. Of all the ideas proposed by President Obama the most ambitious (and least deined) was the one about launching a comprehensive Trade and Investment Partnership Initiative in the Middle East and North Africa.” President Obama promised to “work with the EU to facilitate

more trade within the region, build on existing

agreements to promote integration with U.S. and

European markets, and open the door for those

countries who adopt high standards of reform and

trade liberalization to construct a regional trade

arrangement.”

The question of how can the Bretton Woods insti-tutions (WTO, IMF, WB) help the ‘Arab Spring’ is hard to answer, considering that it was WB and IMF policies in the irst place that led to imbalanced liberalization of the Tunisian and Egyptian economies, and the inevitable crony capitalism that has followed the application of neo-liberalism in the Middle East and throughout the world. Debt forgiveness or renegotiation of past debts by the post ‘Arab Spring’ governments should be at the heart of any IMF/WB strategy to help the region. The people who suffered so much under the rule of corrupt and incompetent dictators should not have to be burdened (at least not right now) with the debts and obligations of the past.

On the other hand, during their most recent summit (this past May), G-8 countries pledged $20 billion of their own money to go along with $20 billion offered by the IMF and the WB, to support development efforts in Tunisia and Egypt. However, it is unclear whether that represents new money, or the re-branding of existing aid commitments. Aid for economic development is always good, but what the Arab Spring does not needs right is yet another ‘government hand-out.’ The people need to feel empowered, both politically and economically – they need to grow sustainable economies, not ones depended on foreign aid or oil exports.

At the G-8 Summit of Deauville, the EU, the U.S., Japan, Russia and Canada, all pledged to take unilateral action to bolster further trade and investment integration within the region, through trade facilitation, reduction of tariff and non-tariff barriers, the promotion of direct investments and regulatory convergence, and improved mutual market access opportunities to encourage integration into the global economy, for Arab countries undertaking reforms to open their economies and create competitive conditions. Now they have to deliver on their promises. It is unfortunate that the current G-20 agenda for the November summit does not include anything speciic on the Arab Spring.

Authoritarian Capitalism, China Style –

Finally, one model that could work for the transition-ing economies of MENA is China. Although politically authoritarian, during the past 30 years China has pursued an economic policy of liberalization at the local level with centralized control and supervision of strategic industries at the national level. Government control and direction of most of the biggest companies has led to cronyism, the enrichment of the political elite, and income inequalities. On the other hand, small and medium size companies have been allowed to operate and thrive at the local level, lifting millions of people from poverty and creating a sizable middle class. They were able to do that even under heavy capital control regulations by the central government, and the lack of access to inancing and the major banks. (See: Entrepreneurship in China.)

Granted, China is a large country with many oppor-tunities… but China was as economically depressed and underdeveloped as many on the MENA countries are today. What China had was a culture of opportunity (in Chinese, crisis and opportunity translate the same) and a belief that anyone could become successful! These are assets that the people behind the ‘Arab Spring’ also posses.

Let a million ‘Arab’ lowers bloom – through trade and commerce!

Nasos Mihalakas is currently an associate

professor with the University of New York at Tirana,

teaching International and Commercial Law. During the

past 9 years he has also worked for both a Congres-

sional Commission advising Congress on the impact

of trade with China on the U.S. economy, and for the

U.S. Department of Commerce investigating unfair

trade practices and foreign market access restrictions.

Contact: nasos.mihalakas@gmail.com

Global Trade

G20

Summit 2011

59

The World’s Most Important Resource:The Employee Contributions to Global Economic RecoveryBy Angelea Panos, Ph.D, Patrick Panos, Ph.D, Christina Steele Hanselman, MS, MBA,

and Sterling Panos, MS, Hinckley Scholars, Hinckley Institute of Politics

Many employees experience a lack of a sense of

safety, security and loyalty in today’s workplace. The

effects of the global economic recession have led corpo-

rations to respond with layoffs, salary freezes, and cuts

in pay, beneits and pensions. In turn, these efforts to protect their proitability have changed how employees feel about their relationship with their employer.

Lowered productivity, increased turnover and decreased

morale are natural responses to these immediate “cost

saving” strategies. After layoffs, the surviving employees

are often burdened with overwhelming workloads

and forced overtime (for salaried employees) without

additional pay or compensation. A cycle of declining

productivity, turnover and poor morale is created (see

igure 1). While some employees hold to their jobs due to fear, a lack of hope and optimism in their future with

the company decreases their loyalty. Furthermore, fear has a damaging effect on all levels of the organization

from top leadership to the front line employees.

Anxiety, insecurity and fear are having a deleterious

impact on the employees’ abilities to perform

effectively. First, decision making at the front-line levels is stalled or stiled by fear. One survey by Braun Research, conducted in 2009, showed that 25 percent of employees of U.S. companies believe that

fear is delaying critical day-to-day business decisions.

Intelligent risk-taking and apt decision-making behaviors

by workers are stunted when employees fear job loss.

Second, employees stop giving critical information and

feedback to those in leadership positions that would

be needed to pose organizations for economic revital-

ization. “Managers need to help employees cope with

workplace anxiety,” said David Rockland, Ph.D., partner

and managing director of Ketchum Global Research

Network and Stromberg Consulting. “Fear of job loss can drive increased short-term productivity, but it is not

sustainable for an organization in the long run.”

Additionally, a decline in customer service occurs

when employees’ have lowered security and morale.

Fearful employees are less enthusiastic about servicing customers and are unwilling to recommend their

company’s products and services.

The above mentioned study by Braun Research also showed:

• Only one-third of anxious employees would recommend their companies to others as an enjoyable

place to work. This compares to those with little to

no fear, of which almost half would recommend their

companies to job seekers.

• Corporate reputations are being damaged, as employees who strongly fear that they might lose their

jobs are more likely to have (and share) negative views

about their company’s future.

• Fear impacts everyone regardless of geography, gender, age, or income level. When it comes to employee fears, U.K. and U.S. workers are very similar. Thus,

drops in employee morale have been shown to rapidly

spread through an organization beyond those who are

directly impacted by restructuring.

Unfortunately, fear seems to beget more fear.

Cutting or eliminating training budgets are often one

of the irst moves that employers make to scale down G20

Summit 2011

60

expenses during economic hard times. Yet, for the most

loyal and dedicated employees, training is one of the

most powerful interventions against burnout and low

morale. An opportunity for further training is translated

into “the company cares about my success” by an

engaged employee.

What Employers Can Do

Even during times of layoffs, it is critical for employers

to recognize employees as an important resource.

Employers should develop a comprehensive program

to address and reduce the fears of employees. Com-

munication from top leaders to front line employees is

important. However, honesty and credibility in the com-

munication is imperative, otherwise the employees will

reject the messages and their anxiety will only increase.

Address rumors and catastrophic thinking that will likely

be fueling fears. Additionally, take the opportunity to

demonstrate appreciation and reward employees for

their sustained efforts, loyalty, and seniority.

When bad news or cutbacks are announced, it is key that top management share a major portion of the

pain. They must take action to show “we are all in this

together.” Top management needs to consider giving

up bonuses or taking salary reductions themselves.

Consider which beneits will assist the staff in their resiliency and recovery. Beneits such as training, employee assistance programs (EAP) and lexible schedules can improve morale and reduce fear. Involve

employees who are informal “morale boosters” and have

the trust of their peers. These “informal” morale builders

can be a great source of support for their peers. They

should be recruited from within all levels of the organiza-

tion to assist in dispelling fear and to provide feedback

to leadership on the needs of the employees.

Look for ways to even out and improve job loads after

downsizing. Assist employees looking for new oppor-

tunities within the organization. Most employees gladly

learn a new responsibility if it could lead to promotion or

improved job security.

Finally, employees are a resource that should not be ignored by companies. A climate of fear is not conducive

to company revitalization efforts. Being aware of the emotional realm of employees and responding to their

needs can create an atmosphere of caring and safety.

In turn, employees at all levels will be engaged in doing

their part to assist the growth and recovery efforts.

Dr. Angelea Panos is psychologist and adjunct

professor at Argosy University. Patrick Panos is a psy-

chologist and associate professor at University of Utah.

Christina Steele Hanselman is a retired Air Force Captain

and currently works in management for NORAD. Sterling

Panos is a IT business owner in Silicon Valley.

Global Economy

G20

Summit 2011

61

An agenda for More Accountable and Ethical Free MarketsBy Alexandre Muns

The plunge in stockmarkets in August prompted

comparisons to the dark days in late September of 2008, when government intervention after Lehman Brothers’s bankruptcy and the imminent collapse of several inancial institutions staved off inancial meltdown. The painfully slow negotiation over the second bail-out of Greece, the

dangerous months-long deadlock and last-minute deal

to raise the U.S.’s debt ceiling and weak data pointing

to continued anemic growth in the U.S. triggered the

biggest one-day drop (August 4th) on Wall Street since 2008. Slow growth and weak job creation is the best that can be expected for the rest of 2011 in the U.S. and

many developed countries – with notable exceptions

such as Australia, Germany, Canada and Sweden.

Governments and central banks in the U.S. and

Europe have run out of monetary and iscal ammunition

to jump-start their economies. The European Central

Bank, riven by internal disagreements, can do little beyond renewing its program to buy bonds of peripheral

euro-zone economies and providing liquidity to the most

troubled banks. The new powers given to the European

Financial Stability Facility cannot be employed until several EU member states’ parliaments ratify them. After

the lacklustre results achieved by the stimulus program

and two rounds of quantitative easing, there is little the

Obama administration can do heading into the 2012

presidential campaign to spur growth and job creation

beyond extending the payroll-tax cut and enacting other

business-friendly tax deductions.

The uncertainty and volatility will continue in the

coming months. The best governments in developed

countries can do is to create an environment conducive

G20

Summit 2011

62

to private-sector job creation while continuing to

implement structural reforms and adjusting their

entitlement programs to their demographic reality.

At the same time, and after the unprecedented

downgrade by S & P of the U.S. government’s AAA

credit rating, the G-8 and G-20 need to act on their agenda to curb and even prohibit the inancial sector’s most speculative instruments and products. The SEC

rightly banned abusive naked short-selling in 2008. Moreover, it restricted short selling in the shares of 19

systemically-important inancial irms. President Obama and Congress worked together to pass inancial sector reform. Among other provisions, it sets up a commission

that can limit investors’ contracts in raw materials

futures. Germany took similar steps to forbid naked

short-selling of its most important inancial institutions and sovereign debt. France’s agenda for its presidency of the G-8 and G-20 calls for restrictions in the size of derivatives contracts, measures to diminish commodity

and food price volatility and additional steps to crack

down on fraudulent tax havens.

Credit-rating agencies, hedge funds, private-equity

irms and practices such as short selling and derivatives should continue to play a constructive role in disciplin-

ing governments and markets. But they can only do so if their analysis and behavior is based on sound and

credible data and they are also held accountable.

After the credit-rating agencies’s undisputed

neglicence and errors in awarding AAA ratings to mort-

gage-backed securities with subprime and toxic assets

during the housing bubble, they have been too eager

to downgrade peripheral euro-zone countries’ sover-

eign-debt ratings, often doing so only days after newly-

elected governments or bail-out programs were able to

prove themselves. Despite its unsustainable debt burden

and incomplete program to liberalize and reform its

economy, it is dificult to share the credit-rating agencies’ assessment that Greece’s ability to pay its creditors is the

worst in the world, behind that of developing countries

embroiled in civil wars. Credit-rating agencies need to

factor political and governance issues (in addition to

macroeconomic and inancial ones) into the equations they employ to determine a country’s rating. At the very

least, they must be consistent. If they traditionally have

focused only on inancial and economic factors, S & P’s questionable downgrade of the U.S’s AAA credit rating

is lawed, not only because of its $2 trillion error, but also because it explicitly referred to the weakening predict-

ability in U.S. policymaking to justify its move. The G-8 and G-20 need to foster more competition in the credit-

rating sector and make the existing big three agencies

more accountable.

The G-20 needs to approve the agreements reached

by the Group of Governors and Heads of Supervision.

They call for additional loss absorbency requirements to

be met with progressive common equity tier 1 capital re-

quirements ranging from 1% to 2.5%. They also impose

an additional 1% surcharge if a bank becomes signii-

cantly bigger. These requirements supplement the new

7% minimum core capital all banks will have to hold

under new Basel III rules which will be phased in over six years from 2013.

More transparent and less speculative free markets

can restore the public’s conidence in our public institu-

tions. Free markets that function in a more accountable and ethical way can enhance traditional advanced

countries’ ability to compete with democratic and

non-democratic emerging countries from a position

of economic and moral strength. If we uphold higher

standards of transparency and accountability in our

own markets, we will have more leverage to demand

that emerging countries follow environmental and

labor standards and crack down on corruption in their

investments worldwide.

The inancial crisis and great recession have already taken a devastating toll on the populations of both

emerging and developing countries and developed

ones. It is time they work together to ensure markets

work for people and not the other way around.

Alexandre Muns Rubiol

Professor of European Integration and International

Economic Institutions

Escola Superior de Comerç Internacional, Pompeu

Fabra University

Global Economy

G20

Summit 2011

64

G20

Summit 2011

65

Putting Jobs First for Recovery

By James Howard, Director of Economic and Social Policy, International Trade Union Confederation

More than three years since the Great Recession

began, the world economy is still not out of the woods.

Financial instability continues to roil markets. Sovereign debt markets in much of Europe as well as global equity

markets are volatile, and depend on continued support

from central banks. Elevated energy and food prices

push up inlation in some developing countries and strain the purchasing power of households in some developed

countries. Most worrying, however, is the weakening

recovery in both the U.S. and Europe.

Growth in the U.S. has resumed at times, but

was rarely strong and is now slowing. However, the

employment rate—the share of the working age

population that has a job—remains depressed. In

Europe, the largest economies (especially Germany)

rebounded relatively quickly, but sovereign debt crises of

several other European countries keep the continent in

its grips. The average EU unemployment rate—at about

9.5 percent, depending on which aggregation one looks

at—masks wide disparities. The southern countries,

Ireland, and Latvia and Lithuania all show double digit

unemployment rates.

A protracted period of weak employment and

income growth endangers careers and livelihoods for a

whole generation. Unemployment erodes conidence, leads to loss of acquired skills, and imperils cohesion of

communities and families.

How did we get to this point? The proximate cause

of the Great Recession was the bursting of a global

inancial bubble. The ultimate causes of that bubble can be seen in two salient trends—(1) deregulation of inance within and between countries, accompanied by an ex-

acerbation of income inequalities, and (2) shortcomings

of the architecture of the global inancial system. Much has been said about inancial deregulation.

In the U.S., investment and commercial banks were

allowed to merge, and the latter began to “play roulette

with the family’s savings.” In Europe, introduction of the

Euro was accompanied by signiicant deregulation, and European inancial centers competed with each other and New York to attract business. This regulatory race

to the bottom came at the expense of proper supervision

of markets by public authorities. Globally, controls on

capital lows were reduced. New, largely unregulated derivative markets exploded in size as securitization of

debt became widespread.

Additionally, the evolving global inancial archi-tecture led developing countries to self-insure against

capital light. Crises in the late 1990s had shown that private capital could evaporate quickly. If, on the other

hand, monetary authorities had accumulated oficial

reserves, a country could withstand a storm. A trade

surplus aids accumulation of reserves, which in turn is

easier to achieve with an undervalued exchange rate.

The resulting growth of manufacturing exports and

employment were certainly welcome to the developing

countries concerned, too. The de-facto world reserve

currency is the U.S. dollar. Hence, Asian manufacturing

power houses (and Middle Eastern energy exporters)

recycled their export earnings through Wall Street, to acquire reserve assets.

As a result, longer term interest rates remained

suppressed, and global inance was awash in funds. These factors fed a lending frenzy. In the U.S., labour

market policies kept average wages down, so that

households took on too much debt, as did corporations.

In the Southern and Eastern parts of Europe, it was

possible to borrow at core country interest rates; and

the private sector, as well as some governments took

on too much debt. The global bubble is therefore best

characterized as a private sector debt bubble. When it burst, the global economy went into a tailspin. As

panic spread, credit became expensive or unavailable

for many businesses and consumers. As equity and real

estate prices fell, everybody from banks to businesses

to households realized that what they own and earn is

insuficient to service their debt, further feeding panic. The rest is history.

What can be done to address the root causes of the crisis? First and foremost, the inancial sector must be re-regulated and brought effectively under supervision

of public authorities. Financial corporations that have become “too big to fail” need to be downsized.

Financial “prudential rules” that apply to banks, insurers, investment funds and pension funds need to promote

long-term investments in the real economy. Speculative

behaviour must be penalized, including through imple-

mentation of a Financial Transactions Tax that would also provide resources for sorely needed development,

climate and social expenditures. Consumers must be

protected against predatory credit lending practices.

Second, the architecture of the global inancial system must be reformed. Diversiication of reserves is a step in the right direction, and reduction of the need for

self-insurance is another. To achieve the former, leading

countries should foster the use of the IMF’s Special Drawing Rights (SDRs), an international money based

on major currencies. To achieve the latter, international

inancial institutions need to be reformed. Developing countries’ IMF quotas need to increase at a faster pace, and harmful conditions of emergency assistance

need to be eliminated so as to achieve recovery on a

G20

Summit 2011

66

pro-growth, pro-employment basis. Third, the EU needs

to address shortcomings of its own internal inancial structure, including through an effective, cross-border

architecture of inancial supervision.

Pursuit of these reforms, while necessary, will not

immediately strengthen the economy. What can be done to boost recovery now? Despite the misplaced

focus in both U.S. and Europe on austerity, renewed

public investment would be most effective. The collapse

in stock market prices in August 2011 delivered a

wake-up call that should make that politically feasible

once again. The G20 must put employment creation at

the heart of its agenda, adopting employment targets

in its Mutual Assessment Process that would be

monitored by the ILO and a new G20 Working Group on Employment and Social Protection. Policy makers

should make a commitment to a youth employment

pact to be developed through national social dialogues,

should target Green Jobs with associated investments

and should implement a Social Protection Floor backed by the IMF. Furthermore, high growth export-dependent countries need to support domestic demand, including

through improving social safety nets and promoting

collective bargaining and higher wages. Such steps

would foster recovery now, and help to put the world

economy on a sounder footing.

James Howard (james.howard@ituc-csi.org) is

Director of the Economic and Social Policy Department

at the International Trade Union Confederation (ITUC),

the world trade union organisation with a membership

of 175 million workers in 151 countries. He received his

Economics degree in the School of European Studies at

the University of Sussex in 1986. His work at the ITUC

covers a range of issues associated with globalisation,

such as global economic cooperation to respond to the

world economic crisis; international trade and the World

Trade Organisation (WTO) including its impact on the

observance of international labour standards; policies to

favour sustainable economic development and decent

work; analysis of the international inancial institutions (IFIs), particularly the social dimensions of structural

adjustment; and general world economic developments.

Rudiger von Arnim (rudiger.vonarnim@economics.

utah.edu) is Assistant Professor at the University of Utah

in Salt Lake City, UT, USA. He received the doctoral

degree in Economics from the New School for Social

Research in New York, NY, in 2008. His research

focuses on international macroeconomics, trade and

development, particularly the application of computer

simulated models for policy analysis. Von Arnim has

consulted the ILO’s International Institute of Labour

Studies (IILS), Oxfam, UK, and the Inter-governmental

group of Twenty Four (G24), among others.

G20

Summit 2011

67

RIU Hotels & Resorts in Los Cabos Where meetings combine with pleasure

Los Cabos, located in tip of the

Baja California peninsula in Mexico, is one of the most beautiful and

exclusive destinations in Mexico.

Thanks to its exceptional attractions

as the beautiful beach sceneries, a

varied life of leisure, water sports

and the sight of gray whales, one

of the most spectacular natural

sights in the destination, RIU Hotels

& Resorts opted for this exotic

destination 7 years ago, opening

its irst hotel in Los Cabos: the Riu Palace Cabo San Lucas.

With over 55 years of experience, RIU Hotels & Resorts has been dis-

tinguished for its prestigious All-

inclusive program and excellent

service in more than 100 hotels

in 19 countries around the world,

highlighting its excellent location

in paradisaical beach destinations.

In Los Cabos, the hotel chain has

two incredible 24 Hours All Inclusive

resorts which can be an ideal choice

for holding all kinds of events, the

Riu Palace Cabo San Lucas and Riu

Santa Fe, which are located just 3.5 kilometres from downtown Cabo

San Lucas.

The elegant Riu Palace Cabo

San Lucas belongs to the most so-

phisticated range of the hotel chain,

the RIU Palace and is the best option

for the most demanding clientele.

The luxurious hotel, which features

642 junior suites and suites, offers

an elegant palatial architecture with

sophisticated decor and beautiful

facilities, 24 hour room service,

several swimming pools for adults

and children, live entertainment

shows, water sports, spa, a wide

gastronomic offer and the Krystal

Restaurant, that combines the latest

concepts of avant-garde fusion

cuisine. For events, the Riu Palace Cabo San Lucas has a conference

room with a capacity for up 300

people and a professional RIU team

that will meet and exceed the needs

of groups and conventions.

Next to the luxurious Riu Palace

Cabo San Lucas is the Riu Santa Fe hotel. This 5-star resort is perfect

for families and groups as it offers a

great entertainment program during

the day and night, ine cuisine in its ive restaurants and six bars, three of which are located in the pools,

a itness center, Pacha nightclub, tennis courts, and the Renova Spa.

For events, the Riu Santa Fe offers a large conference room with capacity

for up to 800 people which has the lexibility to be divided into three rooms to accommodate the needs

of all types of events.

Advertisement

G20 YES summit

By Grégoire Sentilhes, President of the G20 YES 2011, President of NextStage

Our over-indebted world and its inancial institu-

tions are in crisis. Stock markets are volatile to say

the least, prone to unstable movements as rarely seen

before. Our economic and political systems appear

to be disembodied, disconnected from reality. Have

our politicians, focused on short-term emergency

resolutions, become out of touch?

All this is creating anxiety and pessimism on an un-

precedented scale, when we need hope. That is particu-

larly apt for young generations. Witness the Arab Spring, the Indignados in Spain, or demonstrations in Israel.

Protestors demand a future in which they can believe

and true, shared growth in a society in which they feel

included, both socially and economically. But economic recovery will only happen thanks to long-term vision.

The start of the 21st Century has been paradoxical.

Our times, streaked by crisis, are also characterized by

major developments: an increase of life expectancy, a

power switch from the Western world towards emerging countries, the pervasive role of the Internet, an inevitable

change of energy models and strategies. Yet it is rather

striking that the entrepreneur, one of the major players

and drivers of the ‘real economy’, is virtually absent from

all the proposals and plans to address the current crisis.

The capitalist system seems to have lost the lead

to generate growth and innovation, embarked on a

pendulum swing between inancing cash-strapped governments with an ever-expanding social burden and

multinational groups focused on their development,

shrinking from their social responsibilities.

As Harvard Professor, Daniel Isenberg states in

his famous article: “How to start an entrepreneur-

ial revolution” (Harvard Business Review, June 2010), the quality and performance of the entrepreneur-

ial ecosystem is the nations’ backbone and a critical

long-term resource to create jobs, income growth and

to promote values.

Taking France as an example, where the 2011 G20 YES summit is taking place, entrepreneurs’ economic

and social importance speaks for itself. In the last 15

years, SMEs have created 1.8m jobs there, 950,000 of which were created by 5 % of those enterprises that

are developing the fastest. Local by nature, SMEs

and entrepreneurs, many of which operate interna-

tionally, contribute to a well-balanced globalization. To

understand Germany, India and China’s growth dynamics

over the last 10 years, it is worth remembering that their

economies have been spurred on by a tremendous en-

trepreneurial spirit. Only a capitalism of entrepreneurs

based on “small-scale” action and initiative can tackle

global challenges that the world is facing.

But to enable entrepreneurs to create jobs, to innovate and invest, to grow their activity in the best

possible conditions, it is essential to build a holistic en-

trepreneurial ecosystem with the support of appropriate

policies, both on national and international levels.

Reducing countries’ deicits and setting up appropriate global governance will not sufice to pay off our debts if we do not give entrepreneurs the means to

imagine new growth strategies, to invent new markets

and to develop their activity.

The crisis is on three fronts –– inancial, economic and social. Global leaders cannot afford to consider this

issue from a theoretical standpoint anymore. This is a

matter of paramount urgency that requires both strong

political will and a plan giving entrepreneurs access to

innovation and investment, with measures that can be

implemented at the soonest.

It is precisely to address this issue that the 3rd

edition of the G20 Young Entrepreneur Summit (G20

YES) has been set up. Taking place in Nice in the South

of France (October 31st - November 2nd), the G20 YES 2011 will bring together 400 emblematic entrepreneurs

of the world’s leading 20 economies. They have been

tasked to deliver a series of proposals offering solutions

to the crisis, developed on an international scope with

the active support of Ernst & Young and of McKinsey

and Company.

These proposals are based on a collective analysis

of the best entrepreneurial practices in G20 nations,

whose eficiency has been proven. Their aim is to enable the growth of a sustainable entrepreneurial ecosystem,

both in developed and developing countries, as the

cornerstone of global economic dynamism, competi-

tiveness and prosperity.

The proposals will then be handed over oficially to G20 country leaders in Cannes at their own summit a

few days later.

The G20 YES intends to be realistic as well as

practical, eficient, innovative and independent. In that, it relects accurately the spirit of the entrepreneurs it involves. The ambition of the G20 YES is that we do not

refer to the irst three decades of the 21st Century as “the Dreadful Thirties”, but as “the Fertile Thirties”.

Grégoire Sentilhes

President of the G20 YES 2011, president of

NextStage

G20

Summit 2011

72

Drug-Resistant Tuberculosis

A Global Emergency

Requires an Innovative

Response TB: A Global Overview

Tuberculosis (TB), often thought of as a disease of the past, continues to plague the world’s most vulnerable people. The World Health Organiza-tion (WHO) estimates there were 9.4 million new cases of TB globally in 2009; in the same year, 1.7 million people died of TB – equal to about 4,700 deaths each day.

The WHO estimates that of all new TB cases in 2009, about 3.3 percent of these were the drug-re-sistant form of TB, called multidrug-resistant tuberculosis, or MDR-TB. These indings by the WHO mark the highest rates ever of MDR-TB. In some settings in the former Soviet Union, these rates peaked at about 28% of new TB cases.

These dire statistics are even more dismal considering that TB and MDR-TB are treatable and curable. The real problem lies in the fact that TB – in all its forms – is a complex disease, one which is not only a medical problem; it is also a social and economic problem.

A Multi-Pronged Approach to

MDR-TB

The Lilly MDR-TB Partnership is a public-private initiative that encompasses global health and relief organizations, academic insti-tutions and private companies, and is led by Eli Lilly and Company. Its mission is to address the expanding crisis of MDR-TB. Created in 2003 to address the growing challenge of MDR-TB, the Partnership has adopted a 360-degree approach, and mobilizes over 25 global healthcare partners on ive continents to share resources and knowledge to confront TB and MDR-TB.

To drive the Partnership, Lilly is contributing US$ 120 million in cash, medicines, advocacy tools and technology to focus global resources on prevention, diagnosis

and treatment of patients with MDR-TB; and an additional US$ 15 million to the Lilly TB Drug Discovery Initiative to accelerate the discovery of new drugs to treat TB.

Empowering Local Communities

In order to prevent the spread of the disease and effectively care for those infected, the Lilly MDR-TB Partnership has implemented com-munity-level programmes to raise awareness about MDR-TB, increase access to treatment, ensure correct completion of treatment and empower patients by eliminating the stigma of the disease in communities and workplaces.

The Partnership also trains healthcare workers to recognize, treat, monitor and prevent the further spread of MDR-TB. These training materials and courses have been designed to ensure that the knowledge learned is passed on to peers, furthering the quality of patient care.

A Global Approach for Global

Results

While community and country-based activities empower local populations to ight MDR-TB, global change requires a global view. With this in mind, the Partnership works with policymakers to raise awareness about the toll that TB takes on the global population and encourages new initiatives that curb the spread of MDR-TB. Additionally, the Partnership promotes adherence to the World Health Organization’s standards on TB treatment and supports national TB programs that have been developed using these standards.

Sustainable Access

to Medicines

One of Lilly’s many goals is to increase the supply of high-quality, affordable medicines to the people who need them most. To do this, Lilly has partnered with manufacturers in countries hardest hit by MDR-TB, providing both

knowledge and inancial assistance to create sustainable, local sources for MDR-TB drugs. These locally produced drugs enable access to medicines at affordable prices for MDR-TB patients, while supporting local economies and ensuring high-quality manufacturing.

New Drug Discovery Initiative

While access to medicine and care help patients signiicantly, MDR-TB treatment remains a long, isolated process. To encourage patients to complete treatment and avoid even more drug-resis-tant strains of TB, research and development are necessary to discover faster-acting medicines. To address this need, Lilly has created the Lilly TB Drug Discovery Initiative, which is a not-for-proit public-pri-vate partnership that will draw on the global resources of its partners, including medicinal libraries donated by Lilly, to pioneer research.

A Public-Private Partnership for

Those in Need

Lilly and its Partners work together closely, sharing knowledge, expertise and research in the quest to contain and conquer MDR-TB, a disease that disproportionately affects impoverished populations. The initiatives of the Lilly MDR-TB Partnership all have one thing in common: improved care for some of the world’s most vulnerable people, delivered in a manner that is sustainable and builds capacity within the communities where it is needed most.

www.lillymdr-tb.comEmail: mdrtb@lilly.com

Phone: +41 22 306 0333

Advertisement

The Global Challenge of Human Security

By Dr. Cornelio Sommaruga, Diplomatic Courier Contributor

After the irst decade of the Twenty-First Century, we have come to recognize that the world has become

a dangerous place, with terrorism and bloody local

conlicts. Humanitarian efforts and human rights laws are largely ignored and systematically violated.

Social inequality, inside states and among states, has

increased dramatically, and poverty in the poorest

areas is deepening. Consequent increasing competition

for scarce resources contributes to unstable political

structures and favours eruption of conlicts. Fluctua-

tions in world commodity prices can trigger dangerous

destitution and civil strife. Indeed many of the apparently

senseless violent conlicts and acts of terrorism in the world become markedly more transparent when such

roots are explored.

Aid budgets have regrettably shrunk. Even advances

in debt relief have sometimes been at the expense of aid

budgets, and, as a result, resources were not necessarily

freed and banks were given more advantages than the

world’s poor. One has to underline again and again how

much issues such as conlict, disease, abuse of power, violation of human dignity, illiteracy and malnutrition are

bound up with abject poverty, a stat in which hundreds

of millions of human beings live.

In such a state of the world, where there is no hu-

manitarian space, it is not astonishing that there are

many factors of human insecurity that create a climate

of fear and hate. First of all, there is human insecurity generated by neo-liberal globalization. Despite the

many positive aspects of globalization that has certainly

beneited people in developing countries, inancial mis-

management and market fundamentalism have created

a large exclusion of people from the global mega-com-

petition. Many human beings are often caught between

criminal organizations and states; this is particularly the

case for migrant workers and environmentally displaced

persons. The label “illegal” is easily applied to them,

because of the lacking international legal basis for

a coherent global approach to these serious human

problems.

G20

Summit 2011

76

There is a growing insecurity of indigenous

peoples, be it in Latin or North America, in Australia, in

Eastern Republics of the Russian Federation, in other independent republics of the former Soviet Union, and in

several other regions. These people are not only subject

to all sorts of discriminations, but they are also affected

by government agricultural policies pushing poor

peasants out of business to become itinerant agricul-

tural labourers. Their very existence as distinct societies

and cultures is often endangered.

There is also human insecurity generated by militari-

zation, the growing impact of the military – and increas-

ingly of the police – on the political economic power

relations and on everyday life of the most non lucrative

sectors of society. The globalization of military industrial

technology relates people’s security to an increasingly

powerful source of threat. Militarization triggers inter-

ventions in the name of “humanitarian aid”: this creates

more insecurity!

It is also obvious that climate change, with a number

of evident phenomena, is particularly feared and creating

severe insecurity.

A clear reference has to be made to gender

insecurity. Violence against women and children creates

a high human insecurity for families and individuals.

The expansion of the global sex industry, accompanied

by traficking of women and children into industrial-ized countries from developing and Eastern countries

constitutes violence against women and a double dis-

crimination, both gender-based and racial. Despite

a number of measures and declarations progress is

extremely limited. This remains a preoccupying cause

of insecurity in the world.

We have had nine years and more after 9/11 to recognise that the war in Afghanistan and the ensuing

violation of human rights around the world (not excluding

countries in other times committed to human rights, the

aftermath of the war on Iraq, the persistent Israeli-Arab

conlict with severe violations of international humanitar-ian law as well as the repeated corporate management

inancial scandals) are creating also in Western countries great insecurity. The clear statement of Common Article

3 of the Geneva Conventions, which sets precise limits

to all sort of violence in a mode which is clearly more

evident than the Bible, is ignored.

We could go on mentioning other causes of insecurity, but at this juncture one could simply state

this: when a hegemonic global system centralizes

power, wealth and knowledge in the hands of a minority,

when there are few avenues of action to ensure at least

a certain degree of accountability on the part of major

powers, there is a widespread feeling of marginalization

that can sometimes lead to disastrous consequences.

The invention of the Group of 20 has not improved the

sense of marginalization.

All these factors, including the cultural insecurity often

called “islamophobia”, bring individuals to desperation.

From there, the step to violence and terrorism is easy to be made.

A Change in Focus

During the Cold War period, the notion of security was indeed in generally understood terms of the security

of the State, the preservation of its territorial integrity,

and sovereignty against military attacks.

The UNDP Human Development Report of 1993 for

the irst time indicated in an oficial document that the individual must be placed at the centre of internation-

al affairs. The report expressly says that “the concept

of security must change – from an exclusive stress on

national security to a much greater stress on people’s

security; from security through armaments to security

through human development; from territorial security to

food, employment and environmental security”.

Even the G8 Foreign Ministers in a statement on Human Security issued in Cologne on June 10, 1999

said: “The G8 is determined to ight the underlying causes of the multiple threats to human security, and is

committed to creating an environment where the basic

rights, the safety and the very survival of individuals are

guaranteed…. We regarded the spread of small arms, the danger posed by landmines, international terrorism

and transnational crime, drugs and infectious diseases,

poverty, economic distress and oppression to be among

the most serious threats to mankind. …”

Recognizable here are elements of the root causes of

violence and terrorism: such as the systematic violation

of human rights and the denigration of human values,

poverty, hunger, thirst, inequalities, injustice; as well as

symptoms, such as arms proliferation and small arms

transfers, including landmines, corruption, organized

crime. All these elements must be addressed energeti-

cally and urgently for an effective answer to terrorism.

Ultimately human security emphasizes that the

security agenda and the development agenda are

merely different sides of the same coin.

Human Security

G20

Summit 2011

78

As stated in the 2001 report “The Responsibility to

Protect” by the International Commission on Interven-

tion and State Sovereignty, there is a responsibility to

prevent. The failure of prevention can have wide inter-

national consequences and costs. Conlict prevention – and this is also valid for terrorism – is not merely a national

or local affair. In our Report, the Commission stated

that “there remains a gap between rhetoric and inancial and political support for prevention… Encouraging more

serious and sustained efforts to address the root cause

of the problems that put populations at risk, as well

as more effective use of direct prevention measures,”

remains crucial.

Prevention of violence is promotion of human

security. There is a need to constantly emphasize

human values and the ethical dimension of economic,

social and political life. Political systems indeed give

moral instructions through legislation; a nation’s law

relects its underlying moral norms, as a nation’s civics relects its constitutional mores.

Quoting again the report on The Responsibility to

Protect, I should like to refer to the concluding section,

which says “If we believe that all human beings are

equally entitled to be protected from acts that shock the

conscience of us all, then we must match rhetoric with

reality, principle with practice. We cannot be content with reports and declarations. We must be prepared to act.”

An Unprecedented Chance to Remake the World

Let us repeat: the world is heading for growing

suffering and eventual catastrophe as the climate irre-

versibly changes, agriculture is disrupted, hunger and

division intensify, arms spending escalate and nuclear

weapons proliferate. The world’s political establish-

ment – in full contradiction with humanitarian politics -

seems unable to grasp both the urgency of the threat,

and the potential of the opportunity, brought about by

movements of conscience and concern.

Our generation has an unprecedented chance

to remake the world in a real form of humanitar-

ian engagement. Matters needed to be addressed

urgently are:

Poverty: Inequality and poverty are increasing both

within and between countries. Humanity possesses

both the capital and the knowledge that everyone has

enough.

Hunger and Thirst: The number of hungry and

thirsty people has risen to more than a billion. Enough

is produced every year to feed everyone on earth well,

if justly distributed. Increasing production through

sustainable agriculture – which restores soil and

conserves water – can ensure that this continues to be

the case.

Climate Change: The planet is warming fast, and

rising sea levels and shifting rainfall will drive millions of

people from their homes, slash harvests, and disrupt

societies. Developing existing clean technologies will

do much to produce the sustainable growth required to

ensure a future of low carbon prosperity.

Resource Depletion: Over-exploiting land, water,

isheries, forests and other natural resources will result in scarcity and and growing conlict – and this threatens to get worse as the population rises to nine billion over

the next few decades. Just an eighth of global defence

spending would provide massively enlarged programmes

to reduce suffering and the mentioned threats..

War and Conlict: World arms spending is rising rapidly, encouraged by deeply entrenched vested

interests. There must be a new determination in resolving

conlict.

Reconciliation, justice and forgiveness are interde-

pendent: We must genuinely commit to human rights and International humanitarian law for all and address

seriously injustice and oppression.

To meet all these challenges a revolutionary world

wide coalition of conscientious people is urgently

needed. Such a revolution has to start with individuals;

however it must be recognized that individual humanitar-

ian engagement is not enough. A movement of people

is required to bring about the global transformation that

is so desperately needed. We have to unite efforts to multiply effectiveness.

The construction of a renewed humanitarian space

depends on it.

Human Security

G20

Summit 2011

80

Hyatt Regency Paris-Madeleine“Your Parisian Residence in the City of Light”

Hyatt Regency Paris-

Madeleine, a ive-star boutique hotel, is

nestled in a convenient

and bustling area of the

8th district in the cen-

tre of Paris. Situated on the typically Parisian

Boulevard Malesherbes, this luxury hotel is close to the city’s most

important fashion streets, among

them Faubourg Saint-Honoré, Rue Royale and Boulevard Haussmann, home to the department stores

Printemps and Galeries Lafayette.

Hyatt Regency Paris-Made-

leine is also near the city’s iconic

attractions of Opéra Garnier, Place de la Madeleine, Place de la

Concorde, the river Seine and the

Champs-Elysées.

Glamorous, chic and sophis-

ticated, Hyatt Regency Paris-

Madeleine offers 86 rooms and suites. The hotel specialises in

a discreet personalised service,

with particular attention paid to

each guest’s individual preference.

La Chinoiserie

La Chinoiserie, spectacularly

redecorated by the talented French architect Pascal Desprez, sets the

sophisticated tone for the entire hotel.

Rich sofas and a contemporary

decor inluenced by tones of black and silver, and subdued illumination

creates areas for discreet, personal

gatherings enveloped in a soothing

atmosphere, making this a special

place to experience the personally

created menu prepared with

expertise by Chef Frédéric Charrier.

La Chinoiserie is the ideal

location for a moment’s respite

between shopping expeditions. A

large number of celebrities have

discovered the elegance of a club on

the Left Bank of Paris here among the most prestigious addresses for

luxury shopping. A place where,

in the evenings, candlelight and

an open ireplace create a magical atmosphere for joyful gatherings of

friends or, perhaps, the most secret

of rendezvous.

Café M & Champagne Bar

Continuing in the spirit of

glamour and professionalism,

Pascal Desprez introduced a new

decor and atmosphere to Café M with the elegant tones of a lounge

bar, featuring natural wood, dark

drapes, and accents of black and

gold. During the evenings, Café M transforms into a champagne bar,

offering an unrivalled selection of

cocktails and champagnes.

Our barman, Alexis Martinez,

has personally selected a menu that

features the best champagnes from

the biggest names in champagne

production, and welcomes guests to

discover the exclusivity of products

from Selosse and Gratien, the most

reputable Champagnes in Paris.

Banquet Rooms

Meeting rooms and banqueting

areas offer the perfect space for

events.

Advertorial

All rooms are designed by

Pascal Desprez following the

theme for the entire hotel. Any

event, party or conference enjoys a

streamlined decor and outstanding

service, perfect for privacy and

concentration.

All banqueting rooms are

also equipped with the latest in

technology and services. They also

offer extensive banqueting menus

designed by Chef Frédéric Charrier, and available for breakfast, lunch,

dinner and cocktail occasions.

In each of hotel’s rooms, four

lighting levels are monitored to

personalise the atmosphere of

guests’ events, from business

meetings or audiovisual events

to dinners and cocktails. A video

projector is installed in the largest

room, while all the other areas have

plasma–screen TVs with network

hook-up available. Unlimited

Internet access and mini bar facilities

are at guests’ disposal, while, for

their security and comfort, a safe

and cloakroom are available.

The smallest room, Manhattan,

relects the hotel’s professional-ism in terms of conidentiality and discretion. This room can cater to

up to six people and enjoys natural

light with a view of the boulevard.

M’Eating Performance concept

Today, as performance is linked

closely to the notion of speed,

Hyatt Regency Paris-Madeleine has

developed a “non-stop” meeting

concept.

M’Eating Performance has been

created to answer the growing

needs of companies that approach

hotels to organise their meetings,

seeking irst and foremost luxurious space, eficient service and beneits that meet their needs.

Business guests can experience this “non-stop” meeting special offer

for just €105 per person, including

bento boxes prepared by Chef

Frédéric Charrier, a candy bar and a mini bar.

The bento boxes, prepared

according to the season, feature

mixed salads, sandwiches (Club

sandwiches and wraps), a fruit

salad and macaroons from Ladurée. Practical, quick and modern,

this makes guests’ lunches both

delicious and energising!

In addition, the set-up displayed

before the beginning of the meeting

assures guests total autonomy, as

well as lexibility and complete con-

centration.

Spa Kéraskin Esthetics

Reinforcing its luxury positioning,

Hyatt Regency Paris-Madeleine

recently launched a unique Spa

offer in collaboration with Kéraskin Esthetics.

As part of its efforts to provide

guests with tailor-made services, the

hotel has partnered with Kéraskin Esthetics to develop a special beauty

offer featuring speciic esthetic rituals that involve high performance

and wellness.

This new brand of excellence

offers a menu of facials and full-body

treatments, combining the best

formulas of Advanced Research

at L’Oreal and novel techniques

for exceptional results and deep

well-being.

Created two years ago,

Kéraskin Esthetics has positioned itself as the leading brand in the

market for esthetic treatments and

conirms the success of today’s selective implantation.

As a result of the collaboration,

customers have at their disposal a

complete spa menu offering mixed

facial care (New Youth), body

treatments (Body Immersion) and express treatments. This turnkey

service relects the hotel’s desire to meet and exceed the expectations

of increasingly demanding guests.

Treatments are provided at

the Spa, which is open daily and

offers a fully redecorated treatment

room, a itness room equipped with modern machines, a sauna, a

steam room, two cloakrooms and a

relaxation room.

G20

Summit 2011

84

The IMF Repositions Itself with the Rise of Emerging MarketsBy Oscar Montealegre, Diplomatic Courier Correspondent

Prior the inancial crisis of 2008, the IMF was on the verge of becoming obsolete. Countries were success-

fully inding inancing through private capital markets with lower rates with no strings attached-contrary

to IMF loans that require strict adherence to IMF’s conditions. Moreover, the IMF in terms of branding and public relations was being tarnished, with no apparent

ix in sight.

Many countries in Asia blamed the IMF for their own economic crisis in 1997/98, and adopted precaution-

ary strategies like stockpiling currency reserves to avoid

ever having to request assistance from the IMF again. Countries in Asia did not want to be stigmatized for being

associated with the IMF. In Argentina, after economic default of 2003, the IMF became persona non grata,

being blamed for the economic collapse that brought

Argentina to its’ knees. In Ecuador, the IMF’s represen-

tative left after constant viliications and provocations by President Correra, not to mention Venezuela’s and

Bolivia’s fervent displeasure with the IMF.

But, as the old adage goes, where there is bad there is good. The Global Financial Crisis of 2008 did much damage across the world-especially to developed

markets-however, it also resurrected the IMF, giving the institution a new life and an opportunity to re-stamp

its’ legitimacy. Interestingly, the actors that pumped

new money into the IMF fund were not your usual suspects, i.e. the Unites States, Western Europe and Japan. Instead, Brazil, China and India were the main contributors, underscoring the new realization that the

international inancial and monetary system is being rebalanced, where the West is descending and the East and Co. is ascending.

In a very short timeframe, the G-7 became

secondary to the G-20- an expansion that accurately

represents the current state of our world economy. The

strongest currency being the dollar-by default as it may

be-has been lately challenged by both developed and

developing markets. More and more policymakers and

central bankers are touting the advancement of the

SDR (Special Drawing Right), a basket of currencies

(the dollar, the euro, the yen and pound and maybe one

day include the yuan) that may one day be the world’s

currency safe haven, with the purpose of relying less on

the U.S. greenback. Pre-2008, when the U.S. would encounter economic turbulence, the ramiications were felt throughout the world. That is no longer the case,

Asian and Latin American economies were resilient

to the latest inancial crisis, solidifying the theory that decoupling (where emerging markets are no longer

dependent on the U.S., Europe and Japan) is real. The

economic recovery in the West is weak, vulnerable, and can easily be eroded. In the East and Latin America, G20

Summit 2011

86

recovery already occurred, thrusting emerging markets

as the engines that are currently driving the world’s

economy; hence, conirming the rise of the emerging markets.

The emerging markets are gradually being given

more inluence; as a result, their added participation in international organizations such as the IMF has already yielded decisive outcomes. For instance the IMF’s special funds in the last three years have extended loans

to countries such as Hungary, Greece, Ireland, Iceland,

Ukraine, and Pakistan. Not only are the emerging markets

moving their weight when it comes to GDP growth, but

ideas and capital are stemming from Asia and Latin

America as well. For instance, cash transfer schemes were irst developed in Latin American and are now practiced in Asia and Africa. Unprecedented amount of

capital inlows are entering emerging markets, - albeit risking the possibility of inlation and overheating asset bubbles- where emerging markets are gradually using

this excess capital to inance projects abroad, purchase foreign private assets, and packaging loans needed by

other countries.

Just recently the IMF chose Christine Lagarde as its leader. The leaders of the emerging markets missed

an opportunity to rally behind one candidate for the top

spot at the IMF, enabling the IMF to better relect the shifting balance of powers in the global economy. But here lies the problem with the emerging powers, when

having to debate the U.S. and Europe on economic

issues, solidarity exists, as a front to prevent U.S. and

European interests. But when decisions on who will lead, or which country will take charge on a certain

matter, fragmentation instead prevails. Many divisions

and jealousies exist, for instance, China vs. India, Brazil vs. Mexico, Latin America vs. Asia, Russia vs. Asia,

an endless menu of partings. If these divisions are not

remedied, the emerging powers will struggle in the

realm of diplomacy, conlict resolution and international relations. Consequently, despite their economic strength

waning, the U.S. and Europe will dictate the narrative in

international affairs if the emerging powers don’t act in

line with their aspirations.

Consequently, the IMF is going through a restructur-ing as well. Where before it was the lifeline for developing economies, such as in Mexico in the 1980s, Southeast Asian countries in the 90s and Uruguay in the early

200os. Today, clearly the outlook has changed, the IMF’s main concern is EU member Greece, and it is monitoring

with an awfully close eye the likes of Ireland, Portugal,

Italy and Spain-the latter two being fully developed

economies. In addition, other institutions such as the

Inter-American Bank (Latin America/Caribbean) and the ASEAN (Southeast Asia) are accumulating more

clout, reinforcing the notion of the present shifting of

economic powers.

Thus, is the new scenario now an ideological battle

between East and West? Due to restructuring of the inancial globally system, should the West be threaten by the East? It seems that international relations and

geopolitical power can no longer be measured by

political and military power. The main global indicator is

now GDP. It is GDP that dictates who leads and who

doesn’t. As a result, the West will have to accept this new normal. Vilifying emerging powers such as China has

no favorable consequences; in fact, it moves countries

further away from inding solutions. Economies in the West must adjust and ine new sectors where they can uphold a comparative advantage in the international

marketplace.

The IMF now is in a precarious position, because it can change its’ framework of not just proving aid to

countries in dire need or coordinating policies among

countries. Instead the IMF has the opportunity to implement a global economic model that countries can

refer to when debating domestic economic reforms.

Economics, trade and commerce is local and global,

therefore domestic policymakers have to take into

account international affairs when implementing iscal and monetary policy. The IMF no longer needs to be just the lifeguard of the global economy, it can approach

its’ new rejuvenation by creating a web-like matrix (in

both lending and consulting) that represents the current

global economic reality-interconnectedness. The idea of

developed vs. developing markets will soon be outdated,

and the IMF must prepare for this new reality where the emerging powers will soon warrant the same merit and

signiicance as the West.

Global Finance

G20

Summit 2011

88

G20

Summit 2011

96

Commodities and Risk

By Chrisella Sagers, Diplomatic Courier Correspondent

Sometime around Halloween this year, the world

reached a population of 7 billion people. Somehow,

each of those 7 billion people will need to have access

to enough food and energy to survive. But as the population increases, so does the competition for these

vital commodities, leading to skyrocketing prices.

This is a concern that will affect not only the poorest,

but all the nations of the world.

In the richer half of the world, increased consumer

demand in the richest countries leads to increased

demand for energy to run machines in manufactur-

ing countries. This drives up energy prices across the

board, negatively affecting consumer-driven economies

when household budgets are pinched by the rising cost

of transportation, heating in the winter, and manufac-

tured goods.

In order to protect their economies, countries

begin to seek out the cheapest forms of energy. The

foremost example of this has been China’s search for

energy sources to fuel its red-hot economy in far-lung places such as Africa and Kazakhstan. Much of China’s

foreign policy has been built around this search for

energy and economic opportunity, and it has led to

some potentially dangerous conlicts. The South China Sea is supposedly home to very rich oil deposits, but

the waters are contested, claimed by multiple countries

as their Exclusive Economic Zone (EEZ) due to the

confusing legal boundaries laid out by United Nations

Conventions on the Law of the Sea. Rising tensions over

the claims to the sea, through which runs some of the

busiest shipping lanes in the world, have led to military

confrontations. If the issue of demand for commodities

and volatility in the markets is not addressed on a global

scale, this area could see an outbreak of war.

In the poorest half of the world, volatile food prices

contribute greatly to dangerous instability. The timing of

the Arab Spring after a sharp rise in wheat prices was

no mistake; the riots originally began as protests against

the government for the failure to insulate the population

against high food prices, and gained enough momentum

to overthrow the unresponsive leaders. The West has attempted to save face by calling these movements

“pro-democracy” efforts, without actually taking the

steps to ensure that more such movements would not

be sparked by continuing volatility in food prices.

The government of France has attempted to lay out a global framework to lessen commodity volatility during

its leadership of this year’s G20, but simply discussing

ideas is not enough. Oil prices continue to grow ever

higher, and food prices are once again nearing the

global high that they reached in 2008. This issue must be addressed in concrete terms on the global scale,

before increasing volatility leads to more instability and

violence. G20

Summit 2011

97