Spotlight G20: Efforts on Food Price Volatility Hobbled: The G20 and the CFS

Jennifer Clapp, part of our 2011 Spotlight G20 Series

At the meetings of the UN Committee on World Food Security (CFS) in Rome two weeks ago, disappointment was in the air. Expectations that the body would be able to agree to anything near what is needed to effectively address food price volatility had been seriously deflated, especially among civil society groups that were participating. What was the source of the trouble for the CFS? In a nutshell, it was the G20.

Earlier this year when France took on the chair of G20 and President Sarkozy announced his intention to use the forum to address food price volatility, there was initial excitement. Sarkozy promised to rein in excessive speculation on commodity futures markets that was seen to be contributing to price volatility and resulting food insecurity in the world’s poorest countries. There was also hope that the G20 would do away with market-distorting biofuel policies that also have contributed the volatility in food prices. There was even hope that the G20 might support the idea of reserves to manage food stocks and smooth prices.

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Spotlight G20: Brazil in the G20 Meetings

Adhemar Mineiro, guest blogger, part of our 2011 Spotlight G20 Series

The meeting in the beginning of November will be somewhat of a new experience for Brazilian partners in the group. In all previous meetings Brazil was represented by President Lula da Silva and Foreign Minister Celso Amorim, who both had not only experience and inclination for the discussion of international issues, but also high profiles and proven leadership capacity in this kind of meeting. In the next meeting Brazil will be represented by President Dilma Rousseff and Foreign Minister Antonio Patriota, two newcomers with low profiles in general.

On other side, the international economic crisis remains the main problem on the agenda: the G20 as a group has a quite insurmountable problem. Besides its old problem of scarce or nonexistent legitimacy stemming from the idea that a small group of countries cannot represent the whole world, the G20 now faces a new issue. After its three year existence, and despite the use of available resources and political will, the group was unable to overcome the financial and economic crisis and find a new development path. In other words, it is not only the G20’s legitimacy that is now in question, but its ability as well.

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Spotlight G20: International monetary system reform: G20 chooses the wrong priorities

Aldo Caliari, guest blogger, part of our 2011 Spotlight G20 Series

When the first G20 Summit was launched in 2008 in order to provide an emergency response to the global financial crisis, the premise was that dramatic reforms were needed in a short period of time. Those reforms could never happen in the slow-moving machineries of the institutions with full representation of all countries, such as the UN, hence, the need for the G20.

Three years down the road, and based on the preliminary agreements that one can foresee happening in the coming Summit in Cannes, the G20 has negligible progress to show, calling such premises into question. The world veers dangerously close to a new global recession that, if it happens, will catch developing countries in a worse position than three years ago. The President of the World Bank informed last month that developing countries’ fiscal positions are, in the average, two percentage points of GDP down from where they were pre-crisis. In the face of what is arguably a more pressing emergency than three years ago, the Group cannot even agree to throw its full weight behind the coordinated stimulus measures of the kind and scale to which they’d previously agreed. The idea that grand agreements can be reached by the most powerful countries, if only small countries stop acting as spoilers or brakes in the multilateral machinery with their delaying tactics or parochial views, has evidently no merit to it.

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Spotlight G20: Why We Need a Financial Transaction Tax: A Proposal for the G20

Kavaljit Singh, guest blogger, part of our 2011 Spotlight G20 Series

At the forthcoming G20 Summit (Cannes, 3-4 November 2011), the summit leaders are expected to address several policy issues concerning world economy and financial markets, many of which remained unresolved since the Toronto Summit in June 2010. Against the backdrop of a weak global economy and the ongoing eurozone sovereign debt crisis, G20 leaders will have to take some hard decisions. Failure to do so would undermine the effectiveness and credibility of G20 as the “premium forum” for international economic cooperation.

One of the key policy issues to be tackled at the Cannes Summit is the introduction of a global financial transaction tax (FTT). The Interim Report of the G20 on Fair and Substantial Contribution by the Financial Sector (2010) had proposed a flat rate levy on all financial institutions and “financial activities tax” on profits and remuneration in order to pay for future financial clean-ups and reduce systemic risk. But the proposal got diluted at the G20 meeting held at Busan in June 2010, which called for implementation of the levy taking into account an individual country’s circumstances and options.

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Spotlight G20: The G20’s Helpful Silence on Capital Controls

Jose Antonio Ocampo, Stephany Griffith-Jones and Kevin P. Gallagher, part of our 2011 Spotlight G20 Series

When French President Nicolas Sarkozy took the reins as host of this year’s G-20 summit, to be held in Cannes on November 3-4, he called on the International Monetary Fund to develop an enforceable “code of conduct” for the use of capital controls (or capital-account regulations, as we prefer to call them) in the world economy. The IMF followed through by publishing a preliminary set of guidelines this past April.

Regulation of cross-border capital flows has been strangely absent from the G-20’s agenda, which is aimed at strengthening financial regulation. But they are a central element in the financial volatility that incited calls for stronger regulation in the first place. The IMF has shown that those countries that deployed capital-account regulations were among the least hard-hit during the worst of the global financial crisis. Since 2009, it has accepted and even recommended that such regulations are useful to manage the massive inflows of “hot money” into emerging markets.

That said, while the IMF’s proposed code is a step in the right direction, it is misguided. So, the G-20’s endorsement of the Fund’s guidelines would not be wise for a world economy trying to recover from one financial crisis while preventing the next one.

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Spotlight G20: Why the G20 must set rules for private sector involvement in development

Nuria Molina-Gallart, Guest Blogger, part of our 2011 Spotlight G20 Series

The G20 are turning more and more to the private sector as the solution to public sector malaises, but there need be binding rules in place to ensure that private finance can contribute to sustainable and equitable development.

G20 governments are increasingly pushing for greater private sector involvement in developing countries, ranging from infrastructure financing, investment in food and agriculture, or climate finance.

Private sector finance could be the answer; it just depends on what is the question. If the question is “Can private sector investment play a role in creating jobs and paying taxes and contribute to sustainable and equitable development?” The answer is probably yes. If the question is “Can the private sector fill in public sector financial and regulatory gaps?” Then the answer is probably not.

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Spotlight G20: The G20’s Motto: “No We Cannes’t”?

Nancy Alexander, guest blogger,  part of our 2011 Spotlight G20 Series

As is customary now, the days of the business summit – the B20 – overlap with the Leaders’ Summit.  In Cannes, the B20 is on November 2-3; the G20 is on November 3-4.   At these Summits, the Presidents of the business confederations of the G20 countries, as well as 120 CEOs and Chairmen from global companies are delivering messages on 12 themes to the G20.

Many of these Ultra-High Net Worth Individuals (HNWIs) live in a rarified world according to the World Wealth Report 2011. A world far from the “99%” of the population represented by the “Occupy” protests or the civil society mobilizations in Nice on 2-3 November.

The G20 Advisory Group of the International Chamber of Commerce (ICC) is already working closely with its counterparts on the June 18-19 G20 Summit in Los Cabos, Mexico.  That Summit will focus on seven themes: financial regulation and supervision; IFI, especially IMF, reform; the International Monetary System; financial inclusion; commodity price volatility and food security; green growth; and challenges for economic growth.

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Triple Crisis Blog’s G20 Coverage

As G20 heads of state prepare to gather in Cannes, France for their annual summit, Triple Crisis will continue its ongoing series, “Spotlight G20,” with new analysis both from our bloggers and from guest writers. The G20 meets at a time when the three crises identified in our name — finance, development, and environment — face critical policy decisions. Join the discussion on Triple Crisis at Spotlight G20.

Previous Spotlight G20 posts include:

Matías Vernengo, What should developing countries demand?
Timothy A.Wise, More Fodder for the Food Price Debates: Ethanol, speculation drove prices
Ilene Grabel, G20: Speeding from Hopeful to Hopeless
Kavaljit Singh (guest blogger), G20 Defers Decision on Financial Transaction Tax Despite Global Support
Edward Barbier, G20: Tax “Bads” and not “Goods”
Sophia Murphy (guest blogger), The G20’s Opportunity on food reserves
Timothy A. Wise, Identifying the Drivers of Price Volatility
Timothy A. Wise, New evidence of speculation in financialized commodities markets
Jennifer Clapp, The G20 Agricultural Action Plan: Changing the Course of Capitalism?
Jennifer Clapp, How to Add Value to the G20 Agricultural Ministers’ Meeting

Triple Crisis Blog's G20 Coverage

As G20 heads of state prepare to gather in Cannes, France for their annual summit, Triple Crisis will continue its ongoing series, “Spotlight G20,” with new analysis both from our bloggers and from guest writers. The G20 meets at a time when the three crises identified in our name — finance, development, and environment — face critical policy decisions. Join the discussion on Triple Crisis at Spotlight G20.

Previous Spotlight G20 posts include:

Matías Vernengo, What should developing countries demand?
Timothy A.Wise, More Fodder for the Food Price Debates: Ethanol, speculation drove prices
Ilene Grabel, G20: Speeding from Hopeful to Hopeless
Kavaljit Singh (guest blogger), G20 Defers Decision on Financial Transaction Tax Despite Global Support
Edward Barbier, G20: Tax “Bads” and not “Goods”
Sophia Murphy (guest blogger), The G20’s Opportunity on food reserves
Timothy A. Wise, Identifying the Drivers of Price Volatility
Timothy A. Wise, New evidence of speculation in financialized commodities markets
Jennifer Clapp, The G20 Agricultural Action Plan: Changing the Course of Capitalism?
Jennifer Clapp, How to Add Value to the G20 Agricultural Ministers’ Meeting