Mark Malloch-Brown :
The annual Spring Meetings of the World Bank and International Monetary Fund wrapped up in Washington, DC last week amid growing fears of global recession, as Russia’s invasion of Ukraine pours more pain on economies already damaged by the continuing Covid-19 pandemic.
The United Nations has warned that over 100 countries now face risks relating to food, energy, and finance. Sixty percent of low-income countries are in or near debt distress, while humanitarian crises from Madagascar to Myanmar are severely underfunded. Global food prices have soared by 75% since 2020, jumping nearly 13% in March alone. UN Secretary-General António Guterres has called the war in Ukraine a “silent assault on the developing world.”
To date, the West has rightly focused on supporting Ukraine. That support remains essential, as 1 in 4 Ukrainians have been forced to flee their homes and millions are in need of humanitarian assistance.
Efforts to isolate Russian President Vladimir Putin’s regime must also continue. We cannot buy oil and gas from a regime that commits atrocities in Ukraine and denies its right to exist. We cannot accept without consequence a state that sees undermining global rules as a policy objective, especially when that state is charged with maintaining international peace by virtue of its permanent seat on the UN Security Council.
But the West must urgently shift gears. If the world’s most prosperous countries do not address the global impacts of this crisis and use this moment to transform our multilateral institutions, we will only play into Putin’s hands.
We failed to fix the global economic system after the 2008 financial crisis. We are failing to vaccinate the world and manage the economic fallout from the pandemic. We are failing to deliver a bold and just response to the climate emergency. We cannot fail again.
Successive votes on Ukraine in the UN General Assembly have shown there is a broad appetite for action, but also concern by low- and middle-income countries that their problems are being ignored – and that the international system is being used, once again, to further the agenda of the wealthiest and most powerful nations. The latter need to put forward concrete plans to address other humanitarian crises, and demonstrate they are willing to give as well as take by backing efforts to make the UN and other institutions more equitable.
Whether or not the summit of the Group of 20 leading industrial nations goes ahead in November, the economic recovery agenda must also proceed. Members of the Group of 7 wealthy nations should step up and increase their commitments to recycle the Special Drawing Rights issued by IMF last year in ways that create fiscal space in heavily indebted countries.
They should support the issuance of a new tranche of SDRs. Both G-7 and G-20 must also strengthen the Common Framework for Debt Treatments to bring transparency and meaningful debt relief from all creditors to low- and middle-income countries such as Zambia, as well as lower-middle-income countries such as Ghana that are falling deeper into distress.
As the world faces multiple crises at once, from the war in Ukraine, to price shocks, and the Covid-19 pandemic, Axel van Trotsenburg, the World Bank’s managing director of operations, calls on shareholders to stay focused and stick together.
High-income countries, including those in the G-20, should expeditiously contribute to the new IMF Resilience and Sustainability Trust to help countries meet long-term structural economic challenges. The World Bank should leverage its own balance sheet more effectively to borrow more, and in turn lend more to developing economies.
We should hold discussions on reforming the international financial architecture. This should include new mechanisms such as a permanent Sovereign Debt Restructuring Mechanism, which would allow emerging economies to free up resources for development needs such as health and education, as well as a broader shift away from creditor-dominated governance to a more inclusive system that prioritizes economic justice. And we should look beyond governments. The private sector must act responsibly and play its part in finding solutions. Civil society and affected communities must be empowered and supported. A renewed global system cannot exclude them.
We must look to leaders, as reforming institutions takes time: working together through entities such as the UN Economic Commission for Africa’s meeting of regional finance ministers, as well as individually, as with Barbados Prime Minister Mia Mottley’s initiative on climate finance.
We must use this moment of fracture to reset multilateralism so it is not transactional but based on the values of democracy, cooperation, equity, justice, and human rights. This may sound abstract. But the last few years have made painfully clear that when we fail to deliver solutions, we strengthen the hand of those who claim that democracy and multilateralism do not work. People fighting for these values in Ukraine and across the world deserve better.
(Mark Malloch-Brown is the president of the Open Society Foundations and a former United Nations deputy secretary-general. Courtesy: Devex.com).
