MARY ROBINSON, a former president of Ireland, calls 2015 “the Bretton Woods moment for our generation”. In 1944 the small town in New Hampshire of that name hosted a conference which was to shape the post-war economic order. The open trading rules it established laid the foundation for decades of post-war growth and the “Bretton Woods twins” that it founded, the IMF and World Bank, still influence global financial governance.
Four UN conferences comprise the new Bretton Woods. Though they are unlikely to produce institutions that will matter in 50 years, if they go well they could boost growth and development in poor countries. If they do not, the only outcome will be windy and pointless political rhetoric.
The first of the conferences has just finished in Sendai, the nearest city to the epicentre of an earthquake and tsunami that devastated Japan in 2011. The importance of its subject—how to reduce the risk of disasters—was dramatically highlighted the day before it started when Cyclone Pam smashed into the tiny island chain of Vanuatu in the South Pacific, ravaging its economy and killing at least 17 people. The country’s president, Baldwin Lonsdale, who was in Sendai at the time, said the storm had wiped out many years’ development gains.
Another of the conferences is a special meeting of the UN in New York in September that will be dedicated to development. Its aim is to approve a set of “Sustainable Development Goals” (SDGs) to replace the “Millennium Development Goals” (MDGs) which were agreed in 2000. The MDGs measure progress towards such aims as providing clean water, combating HIV/AIDS and cutting child and maternal mortality, and are due to expire in 2015. Negotiators are busy arguing about what the SDGs that replace them should be.
Before that, in July, another meeting will be held in Addis Ababa, Ethiopia’s capital, to talk about how to raise more money for projects that would speed development. The idea is to find ways to ensure that a larger share of global savings is used for the plethora of big proposals that need funding. HSBC, a bank, recently estimated that Asia alone will need to spend $11 trillion on infrastructure over the next 15 years. But commercial lenders and investors are not willing to take on many sorts of infrastructure risk. The aim of the conference is to encourage risk to be shared more widely, as well as to persuade rich countries to stump up more money for aid.
The final conference is in Paris in December, when governments hope to sign a global treaty on tackling climate change. It is supposed to be based upon what countries are already planning to do to rein in greenhouse gases and adapt to climate change. By the end of March each country is to spell out its policies (or, in the jargon, “contributions” to the treaty) in such a way that negotiators can construct a deal.
The aims of the four meetings overlap. Climate change can increase the number and severity of disasters, and increase poverty since hundreds of millions living just above the poverty line risk being pushed back into destitution by a flood or epidemic. It is also linked to development because some of the most vulnerable countries are very poor, for example Sahelian states threatened by desertification and small island states affected by rising sea levels and ocean acidification. Conversely, though coal-fired economic development can reduce poverty, it also increases carbon emissions, thus contributing to climate change.
Helen Clark, a former prime minister of New Zealand and now head of the UN Development Programme, says success in 2015 means getting agreement on all of these negotiating strands: a climate treaty with teeth; most of the proposed SDGs, lots of financial promises. That will not be easy. The conference in Sendai shows some of the difficulties. It approved various targets—to reduce the number of people killed in disasters by 2030 “substantially”, for instance (it was 700,000 in 2005-15). But the target was vague, and there was little on how it is to be achieved.
The bigger problem is that the other three strands are enormously ambitious. The climate treaty, assuming it is signed, would be the first global climate treaty since the Kyoto protocol in 1997. Though the decision to base it on what countries are doing anyway should make a deal easier to reach, rich and poor countries are still bickering over how much the rich ought to pay the poor to help them deal with the costs of climate change.
The meeting in Addis Ababa also risks a split over how generous rich countries are prepared to be. There are plenty of opportunities for disagreement: it is supposed to deal not only with the vast costs of financing infrastructure and climate policies but also to crack down on illicit trade flows and give a boost to world trade talks. Each of these is knotty enough to scupper the event on its own.
But the most ambitious of the conferences concerns the SDGs. The MDGs were mainly about the poor; their successors are supposed to go far beyond that, with goals proposed for urbanisation, infrastructure, standards of governance, income inequality and climate change. The MDGs, says Homi Kharas of the Brookings Institution, who helped draft an early version of the SDGs, were about reducing poverty; the new goals are about creating peaceful and inclusive societies.
The number of SDGs reflects this breadth of ambition: there are 17 overarching goals and 169 targets, compared with just eight MDGs. It also shows what happens when a bureaucratic process runs out of control. The organisers sought to consult as widely as possible, with the result that each country and aid lobbyist got a target for its particular bugbear and is now unwilling to give it up unless others give up theirs. Something for everyone has produced too much for anyone. Making matters worse, some developing countries think each extra goal will come with a pot of money, so the more goals, the more aid. All attempts to chop down the list have failed: last year negotiators cut the number of proposals from 212 to 169, but largely by running separate targets together into one.
The original Bretton Woods conference established lasting institutions partly because its members faced a common enemy (Japan and Germany); shared a clear set of beliefs (that open markets were essential if economic nationalism was to be defeated); and were willing to take unpopular steps (such as lowering their own barriers to trade). But now rich and poor countries are divided, there is no consensus on how to tackle climate change and most countries are demanding that others, not they, should make sacrifices to strengthen the global economic system. The Bretton Woods moment is not doomed to failure. But seizing it will not be easy.
Artículo editorial publicado en The Economist, 28.III.2015, pp. 58-59.