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Obama's foreign policy
Article added on June 2nd, 2009
You cannot judge politicians by
their words. As long as bold statements have
not translated into actions which have delivered results, it is impossible
to judge them. Barack Obama is still at the very beginning of his mandate.
The new president made some good
choices regarding his foreign policy team, including the tested Richard C.
Holbrooke as his special representative to Afghanistan and Pakistan and the
equally accomplished George J. Mitchell, Jr., as special envoy to the Middle
East, a man of Irish descent, but adopted by a Lebanese family.
The choice of Hillary Clinton as Secretary of State could turn out
to be a masterful decision - so for she seems to be a team player - or
backfire. Obama's biggest stroke however was to keep Bush's Secretary of
Defense, Robert Gates.
If the economic and financial crisis in the US cannot be solved by the end
of 2010, if the United States remain in a difficult position for a decade,
Obama will partly lose his soft and hard power. America will no longer be
able to support its military presence around the world. Domestic and foreign
policy are intertwined.
Domestic and foreign policy
So far, we have mixed feelings about Obama's recovery plans. Bush the
Torturer abandoned fiscal discipline. Obama goes a step further, preaching
fiscal responsibility while presiding over a trillion dollar deficit and a
dubious stimulus package.
Obama avoided to outright nationalize all three Detroit auto companies. But
his GM and Chrysler
“solutions” are partly state solutions, instead of having the private market and
private investors sort it out. Worse, the same remains true for some of the
biggest banks, mortgage and insurance companies. If they are too big to
fail, split them up in smaller entities.
Obama's $13 billion project to build fast trains in the US is a joke. It
would have to be a trillion or multi-trillion dollar plan. With $13 billion
you cannot even connect Boston to Washington, D.C.
Running huge deficits undermines the government's
flexibility because serving the public debt will consume an ever larger
percentage of the federal budget. As for the often mentioned
“anti-cyclical” spending approach, it's crux is that in good times, most
countries do not manage to pay down the additional debt accumulated in bad
times.
Pakistan
A populist at home, a populist abroad?
In the field of foreign policy, President Obama has opened new windows.
Talking to dictators and populist foreign leaders may not lead very far, but
there is not too much to lose, only precious time. If just one leader
changes his positions, it may be a step in the right direction. Obama's
choice to keep Secretary of Defense Robert Gates testifies to the fact that
Obama does not intend to rely on soft power and photo opportunities with
dictators alone. “Talk softly and carry a big stick” can be effective.
Enlarging the Iraq-Afghanistan conflict to Pakistan is surely a bold and
necessary choice. But it could end up in a disaster, both militarily and
financially. A change was needed. The previous Bush administration poured
some $10 billion into Pakistan with zero results. The Taliban could
prosper and seek refuge in Pakistan. The money largely ended up in dark and
corrupt hands. After getting Obama's new message for the region, the equally
new Pakistani leaders finally
realized that they had to do something against the Taliban who were about
to take control of significant parts of their country. The way the Pakistani
military intervenes violates
international humanitarian law. Will it be decisive and not just have caused
suffering to the civil population? Only time will tell.
The United States have a credibility problem in the Arab world in general
and in Pakistan in particular. The US have no UN mandate in
Pakistan, no troops stationed there and no or only weak local support. So
far, a direct Obama intervention is not wanted there.
In the Bush the Torturer era, president-dictator Pervez Musharraf seemed
less corrupt than the previous civilian leaders. Still, he was a dictator in control
who did not pave the way back to democracy. He suspended Chief Justice
Chaudhry - according to Musharraf supporters not a holy man either - and only backtracked after
prolonged domestic and foreign protests to his action. Musharraf did not deliver in the war against terror.
After the Pakistani elections, the US are again associated with another corrupt and incompetent regime,
although this time democratically elected. The
corrupt President Asif Ali Zardari - aka
“Mister 10%” - is the widower of
Benazir Bhutto. The US dilemma is that there is still no
major Pakistani politician with credibility in sight.
The overall policy towards Pakistan remains a mystery anyway. How could
Pakistan develop nuclear weapons, try to proliferate them and still get away
with it? With friends like
Pakistan, you don't need to worry about your enemies. Incidentally, this
holds true in other countries too. Some allies and
“friendly” nations of the United States or headed by corrupt and/or incompetent
leaders. This holds true for Egypt and Saudi Arabia, just to mention two key
countries in the Muslim world.
Afghanistan
In order to fix Afghanistan, the Obama administration pushed its Pakistani ally to act accordingly, displacing over
one million people in the context of the military Operation Black
Thunderstorm. In addition, Obama sent already some additional 17,000 troops
to Afghanistan. Does this amount to the overwhelming force needed to
definitively defeat the Taliban? Where are America's allies in this war?
Neither the Germans nor the French are ready to send in additional troops.
More money to build up the infrastructure, roads, hospitals and schools is
needed. Better training for soldiers, policemen, doctors and teachers is
a necessity. What happened to the huge sums already invested? Afghanistan is a
corrupt country too. A long standing NATO presence with at least a ten year
effort in raising education is one of the keys to success.
The fact alone that Afghanistan is responsible for some 90% of the global
opium production should incite all US allies to cooperate. To root out the
drug production in Afghanistan will not end the problem. Production may
simply shift elsewhere. The demand for opium remains high. More efforts to
tackle the problem in the consumer countries are needed.
The situation in Afghanistan is more difficult than the one in Iraq where,
incidentally, not all problems (e.g. armed militias not integrated in the
regular army) have been resolved yet either. Iraq is a relatively advanced
and educated society. In Afghanistan, you have to deal with a stubborn
population that is less educated, more traditional and in which from one
valley to the next you may have a new mentality, a new clan, a new tribe or
a new warlord dominating. It will not be easy to pacify a region that has
successfully resisted foreign aggressors including the British and the
Soviets. Add to this the opium producers and traders, the Taliban, the
terrorists and the many gangsters flourishing in a failed-state and you end
up with a nightmare scenario.
Last but not least, Obama has not addressed yet the problem of the Bagram
Air Base military detention facility which has the reputation of being a
possible Abu Ghraib or Guantanamo. Incidentally, Obama has announced to
close Guantanamo, but it will take a year or so to actually move the
prisoners elsewhere. Apparently, the US president has not done his homework
since election day because he still cannot offer a solution.
The G20 summit in London in April 2009
Obama's Afghanistan policy leads us directly to the G20 summit in London
which took place on
April 1-2, 2009. Initially, the US administration tried to seek support for
an increased war effort and additional spending by its allies. As mentioned
above, the French and the Germans as well as the other allies reacted pretty
tone-death. However, it is evident that a surge
strategy such as in Iraq is needed in Afghanistan (and Pakistan) too. More troops, better communication
with the local population, more and better controlled infrastructure
projects as well as increased investments in the Afghan economy are
necessary to turn the situation around. Only a big common effort that offers
sustainable alternatives to the Taliban and the opium prodcution can turn
Afghanistan around. Otherwise, the country will remain half in and
half out of control.
As pointed out
in the Iraqi context in May 2004, the American soldiers were and partly
still seem to be
unprepared for the Muslim and Arab world. All soldiers should be
taught the 200 most common words of the predominant language in their area
of engagement in order to allow them basic communication with the local
population. American and other NATO
soldiers should patrol and fight alongside local troops. You can only win a
guerilla war with the help of the local population. If you alienate them,
associating yourself with corrupt local leaders or conducting an
inacceptable type of warfare (e.g. having drones accidentally bombing wedding parties), all your efforts are doomed.
The Europeans have to learn the lesson from the run-up to the
Iraq war by George W. Bush, the later infamous Torturer. The
“civilized” world has to stand together militarily and financially in its
efforts to deal with situations such as in Iraq and Afghanistan. The EU has
not advanced towards a common foreign and military policy. Therefore,
Obama's defeat at the G20 due to the ill-prepared summit is also the EU's
defeat. Despite being an economic powerhouse, it remains a political and
military non-entity, thus weakening the
“civilized world”.
The G20 summit in London offered British Prime Minister Gordon Brown
to demonstrate his statesmanship. Brown, trying to profit from Obama's
favorable image around the globe, tried to push trough not only Obama's new
Afghanistan strategy, but also a world economic stimulus plan. Luckily, the
latter attempt failed too, thanks to the resistance of French President
Nicolas Sarkozy and German Chancellor Angela Merkel. Both Obama and Brown
tried to bring Keynes back with the plan of gigantic stimulus packages in
all major economies. Fiscal discipline around the globe risked to be
ignored, preparing the way for the next global economic crisis.
Who ever has read
Tom
Bower's Gordon Brown biography (review in German), was not
surprised by the master of ceremony - for uninitiated people acting
convincingly - as if he had just single-handedly saved our planet. Since
forming
his first cabinet, he has been unlucky at best. He has run from one
low-point to the next. The morally lowest came when he had to sack his
adviser Damian McBride for spreading ugly rumors about opposition
politicians on the internet. According to Bower, Brown sabotaged Blair's
efforts to reform the UK, notably the National Health Service, NHS. Brown will
be history in 2010 and very likely replaced by David Cameron, another
untested unknown
quantity with no executive experience.
That leads us of course back to Barack Obama, a man with no economic,
financial, foreign, military and executive experience and competence.
State interventions, subsidies and bailouts distort competition and trade
both nationally and internationally. The G20 leaders agreed in London to act
in favor of free trade and to avoid the protectionist road. In reality, 17
out of the 20 states had already taken such measures. You may remember the
US actions against Mexican trucks. Furthermore, the US, the EU as well as
smaller players such as Switzerland could stop subsidizing and otherwise
“helping” the agricultural sector in order to convincingly spread the
message of free trade.
Tax havens at the G20 in London
Tax havens were another big topic at the G20 in London.
Schwarzgeldbunkerer and Finanzverbrater are two German keywords
which come to mind in that somber context. Hoarding
“black money”, money hidden from
tax authorities as well as destroying wealth by
“investing” in secure securities aka junk mortgages do not give us a favorable
impression of the banking and financial industry. However, banks are the backbone of any modern economy.
The bad apples should be punished by the market and be allowed to go
bankrupt. In addition, banks responding to well-funded tax inquiries
by the IRS and other tax authorities as well as respecting due diligence in
the financial sector are two ways to get out of this crisis and avoid a
similar one. However, let's not fool ourselves, there will be another
financial crisis, if not in one, then in two generations from now. Business,
market and trade cycles as well as human nature are unlikely to change.
The German opposition leader Guido Westerwelle pointed out that the “tax
oasis” - the German word for tax haven - is less the problem than the desert
around it. In Germany, the tax scale reaches a maximum of 47%, to which you
have to add a value-added tax of up to some 19%. A sustainable future looks
different.
Obama can surely learn from Europe. But many European tax levels and most
social-democratic measures do not belong to the recipes that will lead the
US out of the current crisis. To invest in public schools - the children are
our future - and to enlarge the health care coverage to most if not all
Americans are surely decent steps. But how you do it makes all the
difference.
At the G20 in London, more regulation was requested. It may well just
translate into more red tape. Better and better enforced but not more
regulation is the key. To attack tax havens is fine as long as you openly
establish the criteria on which you classify the different banking places.
What is a tax haven? The English made sure the Channel Islands and some
Caribbean banking places did not end up on the grey list. The Chinese
avoided to have Hong Kong and Macao on the list. Obama finally could turn to
Joe Biden and ask him about the situation in Delaware. Furthermore, Wyoming
and Nevada could be on the grey list too. Miami in Florida has a sad
reputation regarding drug money laundering. Competition between tax systems
and liberal economic systems is needed.
Nuclear weapons
Maybe because he had no success message regarding Afghanistan and his global
stimulus plan, Obama boldly announced after the G20 that the US would fight
to ban all nuclear weapons. Instead of coming up with an unrealistic idea,
he could have announced that the US were ready to cut its nuclear weapons
arsenal in two and that it hoped that Russia would follow suit. According to
the Stockholm International Peace Research Institute (SIPRI), Russia has
currently 2,787 strategic nuclear warheads, the United States have 2,202. If we
count the total deployed warheads (strategic and non-strategic), Russia has 4834,
the US have 2702. All other nuclear
nations are around or below an estimated total of 300 deployed warheads
[more detailed numbers added to this page on June 10, 2009].
Pakistan and India are regional enemies. They will not give up their nuclear
weapons. For Russia, the nuclear arsenal gives them the illusion to still be
a superpower. The British and the French cling to their nuclear warheads,
otherwise we already had the EU's nuclear weapon. As for North Korea, the
nuclear weapon is the best protection against any foreign attack. It allows
the North Korean regime to blackmail the world for food and other things
needed.
What can Obama do in the case of North Korea? Probably nothing. The last one
who could have intervened was Bill Clinton. He decided against it and now we
have to live with a nuclear North
Korea.
The case of North Korea should be a warning for Obama regarding Iran. His
administration should secretly aid Israel to bomb Iran's military nuclear
facilities if Teheran does not stop its efforts to get a nuclear weapon. If
Israel - with the help of the US - can identify the targets and decide that
bombing them is feasible, then let them do it as they did in 1981 [added on
July 15, 2008: the successful 1981 Israeli air strike against the Iraqi
Osirak aka Tammuz-1 nuclear reactor]. The longer Obama waits regarding Iran, the more time they have to
build the bomb. Once they have nuclear weapons, you don't have to negotiate
anymore. In May 2009, Ahmadinejad announced that Iran had successfully
tested a missile capable of reaching Israel.
More foreign policy challenges
The defense and foreign policy challenges facing the Obama administration is
almost endless. Add to the list just one more problem, the Middle East conflict with a new
right-wing cabinet in Israel. A
comprehensive peace initiative seems unlikely right now.
As General De Gaulle once stated, states have no friends, they have only
interests. The quicker the Obama administration realizes that the Civilized
World has to stand together, that the US, the EU, Japan, South Korea,
Taiwan, Australia and other democratic nations have to face together
dictators, terrorists and global problems, the better. Despite everything
written above, Obama's priority is to fix the US economy, otherwise he will
lose his soft and hard power, both at home and abroad.
Obama still enjoys high popularity ratings around the globe. He should use
this opportunity for a fresh start. The honeymoon may sooner be over than he
thinks, although - until now - he looks like a Teflon guy, a politician like
Bill Clinton who could get away with almost anything without hurting his
popularity.
The
G20 official communiqué announced on April 2, 2009 in London. The full text.
1. We, the Leaders of the Group of
Twenty, met in London on 2 April 2009.
2. We face the greatest challenge
to the world economy in modern times; a crisis which has deepened since we
last met, which affects the lives of women, men, and children in every
country, and which all countries must join together to resolve. A global
crisis requires a global solution.
3. We start from the belief that
prosperity is indivisible; that growth, to be sustained, has to be shared;
and that our global plan for recovery must have at its heart the needs and
jobs of hard-working families, not just in developed countries but in
emerging markets and the poorest countries of the world too; and must
reflect the interests, not just of today’s population, but of future
generations too. We believe that the only sure foundation for sustainable
globalisation and rising prosperity for all is an open world economy based
on market principles, effective regulation, and strong global institutions.
4. We have today therefore pledged
to do whatever is necessary to:
restore confidence, growth, and
jobs;
repair the financial system to
restore lending;
strengthen financial regulation to
rebuild trust;
fund and reform our international
financial institutions to overcome this crisis and prevent future ones;
promote global trade and investment
and reject protectionism, to underpin prosperity; and
build an inclusive, green, and
sustainable recovery.
By acting together to fulfil these
pledges we will bring the world economy out of recession and prevent a
crisis like this from recurring in the future.
5. The agreements we have reached
today, to treble resources available to the IMF to $750 billion, to support
a new SDR allocation of $250 billion, to support at least $100 billion of
additional lending by the MDBs, to ensure $250 billion of support for trade
finance, and to use the additional resources from agreed IMF gold sales for
concessional finance for the poorest countries, constitute an additional
$1.1 trillion programme of support to restore credit, growth and jobs in the
world economy. Together with the measures we have each taken nationally,
this constitutes a global plan for recovery on an unprecedented scale.
Restoring growth and jobs
6. We are undertaking an
unprecedented and concerted fiscal expansion, which will save or create
millions of jobs which would otherwise have been destroyed, and that will,
by the end of next year, amount to $5 trillion, raise output by 4 per cent,
and accelerate the transition to a green economy. We are committed to
deliver the scale of sustained fiscal effort necessary to restore growth.
7. Our central banks have also
taken exceptional action. Interest rates have been cut aggressively in most
countries, and our central banks have pledged to maintain expansionary
policies for as long as needed and to use the full range of monetary policy
instruments, including unconventional instruments, consistent with price
stability.
8. Our actions to restore growth
cannot be effective until we restore domestic lending and international
capital flows. We have provided significant and comprehensive support to our
banking systems to provide liquidity, recapitalise financial institutions,
and address decisively the problem of impaired assets. We are committed to
take all necessary actions to restore the normal flow of credit through the
financial system and ensure the soundness of systemically important
institutions, implementing our policies in line with the agreed G20
framework for restoring lending and repairing the financial sector.
9. Taken together, these actions
will constitute the largest fiscal and monetary stimulus and the most
comprehensive support programme for the financial sector in modern times.
Acting together strengthens the impact and the exceptional policy actions
announced so far must be implemented without delay. Today, we have further
agreed over $1 trillion of additional resources for the world economy
through our international financial institutions and trade finance.
10. Last month the IMF estimated
that world growth in real terms would resume and rise to over 2 percent by
the end of 2010. We are confident that the actions we have agreed today, and
our unshakeable commitment to work together to restore growth and jobs,
while preserving long-term fiscal sustainability, will accelerate the return
to trend growth. We commit today to taking whatever action is necessary to
secure that outcome, and we call on the IMF to assess regularly the actions
taken and the global actions required.
11. We are resolved to ensure
long-term fiscal sustainability and price stability and will put in place
credible exit strategies from the measures that need to be taken now to
support the financial sector and restore global demand. We are convinced
that by implementing our agreed policies we will limit the longer-term costs
to our economies, thereby reducing the scale of the fiscal consolidation
necessary over the longer term.
12. We will conduct all our
economic policies cooperatively and responsibly with regard to the impact on
other countries and will refrain from competitive devaluation of our
currencies and promote a stable and well-functioning international monetary
system. We will support, now and in the future, to candid, even-handed, and
independent IMF surveillance of our economies and financial sectors, of the
impact of our policies on others, and of risks facing the global economy.
Strengthening financial
supervision and regulation
13. Major failures in the financial
sector and in financial regulation and supervision were fundamental causes
of the crisis. Confidence will not be restored until we rebuild trust in our
financial system. We will take action to build a stronger, more globally
consistent, supervisory and regulatory framework for the future financial
sector, which will support sustainable global growth and serve the needs of
business and citizens.
14. We each agree to ensure our
domestic regulatory systems are strong. But we also agree to establish the
much greater consistency and systematic cooperation between countries, and
the framework of internationally agreed high standards, that a global
financial system requires. Strengthened regulation and supervision must
promote propriety, integrity and transparency; guard against risk across the
financial system; dampen rather than amplify the financial and economic
cycle; reduce reliance on inappropriately risky sources of financing; and
discourage excessive risk-taking. Regulators and supervisors must protect
consumers and investors, support market discipline, avoid adverse impacts on
other countries, reduce the scope for regulatory arbitrage, support
competition and dynamism, and keep pace with innovation in the marketplace.
15. To this end we are implementing
the Action Plan agreed at our last meeting, as set out in the attached
progress report. We have today also issued a Declaration, Strengthening the
Financial System. In particular we agree:
to establish a new Financial
Stability Board (FSB) with a strengthened mandate, as a successor to the
Financial Stability Forum (FSF), including all G20 countries, FSF members,
Spain, and the European Commission;
that the FSB should collaborate
with the IMF to provide early warning of macroeconomic and financial risks
and the actions needed to address them;
to reshape our regulatory systems
so that our authorities are able to identify and take account of
macro-prudential risks;
to extend regulation and oversight
to all systemically important financial institutions, instruments and
markets. This will include, for the first time, systemically important hedge
funds;
to endorse and implement the FSF’s
tough new principles on pay and compensation and to support sustainable
compensation schemes and the corporate social responsibility of all firms;
to take action, once recovery is
assured, to improve the quality, quantity, and international consistency of
capital in the banking system. In future, regulation must prevent excessive
leverage and require buffers of resources to be built up in good times;
to take action against
non-cooperative jurisdictions, including tax havens. We stand ready to
deploy sanctions to protect our public finances and financial systems. The
era of banking secrecy is over. We note that the OECD has today published a
list of countries assessed by the Global Forum against the international
standard for exchange of tax information;
to call on the accounting standard
setters to work urgently with supervisors and regulators to improve
standards on valuation and provisioning and achieve a single set of
high-quality global accounting standards; and
to extend regulatory oversight and
registration to Credit Rating Agencies to ensure they meet the international
code of good practice, particularly to prevent unacceptable conflicts of
interest.
16. We instruct our Finance
Ministers to complete the implementation of these decisions in line with the
timetable set out in the Action Plan. We have asked the FSB and the IMF to
monitor progress, working with the Financial Action Taskforce and other
relevant bodies, and to provide a report to the next meeting of our Finance
Ministers in Scotland in November.
Strengthening our global
financial institutions
17. Emerging markets and developing
countries, which have been the engine of recent world growth, are also now
facing challenges which are adding to the current downturn in the global
economy. It is imperative for global confidence and economic recovery that
capital continues to flow to them. This will require a substantial
strengthening of the international financial institutions, particularly the
IMF. We have therefore agreed today to make available an additional $850
billion of resources through the global financial institutions to support
growth in emerging market and developing countries by helping to finance
counter-cyclical spending, bank recapitalisation, infrastructure, trade
finance, balance of payments support, debt rollover, and social support. To
this end:
we have agreed to increase the
resources available to the IMF through immediate financing from members of
$250 billion, subsequently incorporated into an expanded and more flexible
New Arrangements to Borrow, increased by up to $500 billion, and to consider
market borrowing if necessary; and
we support a substantial increase
in lending of at least $100 billion by the Multilateral Development Banks
(MDBs), including to low income countries, and ensure that all MDBs,
including have the appropriate capital.
18. It is essential that these
resources can be used effectively and flexibly to support growth. We welcome
in this respect the progress made by the IMF with its new Flexible Credit
Line (FCL) and its reformed lending and conditionality framework which will
enable the IMF to ensure that its facilities address effectively the
underlying causes of countries’ balance of payments financing needs,
particularly the withdrawal of external capital flows to the banking and
corporate sectors. We support Mexico’s decision to seek an FCL arrangement.
19. We have agreed to support a
general SDR allocation which will inject $250 billion into the world economy
and increase global liquidity, and urgent ratification of the Fourth
Amendment.
20. In order for our financial
institutions to help manage the crisis and prevent future crises we must
strengthen their longer term relevance, effectiveness and legitimacy. So
alongside the significant increase in resources agreed today we are
determined to reform and modernise the international financial institutions
to ensure they can assist members and shareholders effectively in the new
challenges they face. We will reform their mandates, scope and governance to
reflect changes in the world economy and the new challenges of
globalisation, and that emerging and developing economies, including the
poorest, must have greater voice and representation. This must be
accompanied by action to increase the credibility and accountability of the
institutions through better strategic oversight and decision making. To this
end:
we commit to implementing the
package of IMF quota and voice reforms agreed in April 2008 and call on the
IMF to complete the next review of quotas by January 2011;
we agree that, alongside this,
consideration should be given to greater involvement of the Fund’s Governors
in providing strategic direction to the IMF and increasing its
accountability;
we commit to implementing the World
Bank reforms agreed in October 2008. We look forward to further
recommendations, at the next meetings, on voice and representation reforms
on an accelerated timescale, to be agreed by the 2010 Spring Meetings;
we agree that the heads and senior
leadership of the international financial institutions should be appointed
through an open, transparent, and merit-based selection process; and
building on the current reviews of
the IMF and World Bank we asked the Chairman, working with the G20 Finance
Ministers, to consult widely in an inclusive process and report back to the
next meeting with proposals for further reforms to improve the
responsiveness and adaptability of the IFIs.
21. In addition to reforming our
international financial institutions for the new challenges of globalisation
we agreed on the desirability of a new global consensus on the key values
and principles that will promote sustainable economic activity. We support
discussion on such a charter for sustainable economic activity with a view
to further discussion at our next meeting. We take note of the work started
in other fora in this regard and look forward to further discussion of this
charter for sustainable economic activity.
Resisting protectionism and
promoting global trade and investment
22. World trade growth has
underpinned rising prosperity for half a century. But it is now falling for
the first time in 25 years. Falling demand is exacerbated by growing
protectionist pressures and a withdrawal of trade credit. Reinvigorating
world trade and investment is essential for restoring global growth. We will
not repeat the historic mistakes of protectionism of previous eras. To this
end:
we reaffirm the commitment made in
Washington: to refrain from raising new barriers to investment or to trade
in goods and services, imposing new export restrictions, or implementing
World Trade Organisation (WTO) inconsistent measures to stimulate exports.
In addition we will rectify promptly any such measures. We extend this
pledge to the end of 2010;
we will minimise any negative
impact on trade and investment of our domestic policy actions including
fiscal policy and action in support of the financial sector. We will not
retreat into financial protectionism, particularly measures that constrain
worldwide capital flows, especially to developing countries;
we will notify promptly the WTO of
any such measures and we call on the WTO, together with other international
bodies, within their respective mandates, to monitor and report publicly on
our adherence to these undertakings on a quarterly basis;
we will take, at the same time,
whatever steps we can to promote and facilitate trade and investment; and
we will ensure availability of at
least $250 billion over the next two years to support trade finance through
our export credit and investment agencies and through the MDBs. We also ask
our regulators to make use of available flexibility in capital requirements
for trade finance.
23. We remain committed to reaching
an ambitious and balanced conclusion to the Doha Development Round, which is
urgently needed. This could boost the global economy by at least $150
billion per annum. To achieve this we are committed to building on the
progress already made, including with regard to modalities.
24. We will give renewed focus and
political attention to this critical issue in the coming period and will use
our continuing work and all international meetings that are relevant to
drive progress.
Ensuring a fair and sustainable
recovery for all
25. We are determined not only to
restore growth but to lay the foundation for a fair and sustainable world
economy. We recognise that the current crisis has a disproportionate impact
on the vulnerable in the poorest countries and recognise our collective
responsibility to mitigate the social impact of the crisis to minimise
long-lasting damage to global potential. To this end:
we reaffirm our historic commitment
to meeting the Millennium Development Goals and to achieving our respective
ODA pledges, including commitments on Aid for Trade, debt relief, and the
Gleneagles commitments, especially to sub-Saharan Africa;
the actions and decisions we have
taken today will provide $50 billion to support social protection, boost
trade and safeguard development in low income countries, as part of the
significant increase in crisis support for these and other developing
countries and emerging markets;
we are making available resources
for social protection for the poorest countries, including through investing
in long-term food security and through voluntary bilateral contributions to
the World Bank’s Vulnerability Framework, including the Infrastructure
Crisis Facility, and the Rapid Social Response Fund;
we have committed, consistent with
the new income model, that additional resources from agreed sales of IMF
gold will be used, together with surplus income, to provide $6 billion
additional concessional and flexible finance for the poorest countries over
the next 2 to 3 years. We call on the IMF to come forward with concrete
proposals at the Spring Meetings;
we have agreed to review the
flexibility of the Debt Sustainability Framework and call on the IMF and
World Bank to report to the IMFC and Development Committee at the Annual
Meetings; and
we call on the UN, working with
other global institutions, to establish an effective mechanism to monitor
the impact of the crisis on the poorest and most vulnerable.
26. We recognise the human
dimension to the crisis. We commit to support those affected by the crisis
by creating employment opportunities and through income support measures. We
will build a fair and family-friendly labour market for both women and men.
We therefore welcome the reports of the London Jobs Conference and the Rome
Social Summit and the key principles they proposed. We will support
employment by stimulating growth, investing in education and training, and
through active labour market policies, focusing on the most vulnerable. We
call upon the ILO, working with other relevant organisations, to assess the
actions taken and those required for the future.
27. We agreed to make the best
possible use of investment funded by fiscal stimulus programmes towards the
goal of building a resilient, sustainable, and green recovery. We will make
the transition towards clean, innovative, resource efficient, low carbon
technologies and infrastructure. We encourage the MDBs to contribute fully
to the achievement of this objective. We will identify and work together on
further measures to build sustainable economies.
28. We reaffirm our commitment to
address the threat of irreversible climate change, based on the principle of
common but differentiated responsibilities, and to reach agreement at the UN
Climate Change conference in Copenhagen in December 2009.
Delivering our commitments
29. We have committed ourselves to
work together with urgency and determination to translate these words into
action. We agreed to meet again before the end of this year to review
progress on our commitments.
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