New Diplomacy In Multilateral Development Cooperation* Winston Dookeran
July 5 th, 2011 The inspiration for this article is based on the Closing Remarks at the North - South Institute Forum, i Ottawa, June 21, 2011 by Winston Dookeran. 2
The Background A Crisis of Transition ii The present multilateral architecture and approach to development through international channels is not working. For most of the last fifty years, the industrialized global North has led the push for development and multilateral cooperation. These wealthy developed countries embraced this role and supported the establishment of international institutions as another vehicle for the extension and promotion of their own national interests. Meanwhile, much of the global South which gained independence from their colonial masters and were extremely fragile, either readily caught a developmental dependency syndrome or trapped themselves in insular nationalism. In the 21 st century, this paternalistic development approach led by the dominant developed countries of the so-called First World has failed to be the real drivers of growth in the Developing World. Indeed, currently, developed nations are becoming themselves more insular and self-serving in their outlook with both U.S.A. and Europe focusing on their own crises. In the meanwhile, with the rise of the BRIC countries with their ever expanding large economies, the expectation has been for them to be the new leaders in global development. Unfortunately for the rest of the developing world, they have not taken up a leading position in the multilateral architecture; instead they appear to seek their own narrow short-term interests in securing resources and markets for their own growth in support of their own nationalistic aims. Clearly there is a crisis in transition. Who and what institutions will fill the development leadership vacuum? A space has been created for the small and medium sized countries to step forward. 3
A New Debate A Search for a New Diplomacy iii There is a search for a new diplomacy for the future in multilateral development cooperation in a changing global order. The premise of this new diplomacy must be established and new anchors of the debate identified. These anchors ought to be development, globalization, and multilateralism. Mr. Percival Patterson, former Prime Minister of Jamaica, in his foreword to a previous book of mine: Power, Politics and Performance iv, said the following: Everywhere there is a growing acceptance that the old and traditional style of governance is obsolete. But even though the old is no longer extant, that new order for which we yearn has yet to be established as a result of constant and cataclysmic changes virtually with each passing day. Consequently, there is still an ongoing search to create a brand new paradigm for the exercise of political power and the management of national economies. To pass the final litmus test, any replacement must be accountable, responsible, inclusive, open and transparent or it will not survive. The key words here are: the exercise of political power. In this task there is need for a new diplomacy that will not only respond to the rising risks facing multilateral development cooperation, but also take into account the shifts in the global political order and the political demands of today. 1. Drilling Down for Development The first anchor has to do with development. Development paradigm shifts have been debated so often, indeed, that the arguments that there are strategic imperatives that must be followed have become somewhat tiring. Priorities have been reset and priorities have been reset again. Yet what has not been truly considered is the proposal that countries must begin Drilling Down for Development. For the ability to face the real challenges will be derived from the ability to drill down for development. In other 4
words, it is the recognition that development cannot be imported and a realization that natural entrepreneurship, talent, and capabilities must be unearthed. Development must be driven from the inside, the strength of the country itself. The new direction toward building capacity and for delivering public goods must be at the top of the leadership agenda. The old institutions may have lost their relevance, calling now for new models of cooperation among the private, public, and civil society. The role of the state must respond to the delivery that society expects and to the pressing issues of equity within our societies. 2. Spread and Speed of Globalization The second notion has to do with the dichotomy between globalism and globalization. Joseph Nye v describes Globalism as the reality of being interconnected, while globalization captures the speed at which these connections increase or decrease. Building the network of connections is what globalism is all about. This in turn results largely from the new information revolution now being experienced. This notion was referred to by a speaker at the North-South Institute Forum on June 20, 2011, who called for an open data architecture that distinguishes between outputs and outcome. Development cooperation must respond not only to the speed of globalization but also on the spread of globalism. 3. Shrinking Scope of Multilateralism The third notion is the shrinking scope of multilateralism. This is due to changing priorities in domestic politics of nations now preoccupied with short-term concerns. These arise from austerity measures made necessary by fuel and food crises and financial risks now faced by many countries. This has resulted in a decrease of priority and a loss of support for development and multilateralism. This trend, if not averted, could adversely affect global development, especially among fragile and vulnerable economies. Another reason for this political shift is the growing preference for bilateral arrangements between countries in the North and in the South. The reality is that the 5
space for multilateralism has given way to multi-track diplomacy, as nations search for new political architectures to promote their national interests. This has become even more pronounced since the aftermath of the 2008 financial crisis as nations grapple with their domestic agenda, resulting in falling commitments to development cooperation. The development agenda must be enhanced so that trade, as expressed in the Doha Round, becomes a development issue. Together with inclusive growth, as reflected in the World Commission Report on Environment and Development, vi these must become major policy objectives. As new spaces for multilateral development cooperation are negotiated, the reinsertion of the notions of development, globalization, and multilateralism are in need of scholarly work of the kind that has engaged institutions such as The North-South Institute. Another speaker at the same North-South Institute Forum referred to multi-track diplomacy as smart multilateralism involving all actors at the same time. The Future for Development Cooperation A New Diplomacy Uncertain expectations have resulted in donor fatigue or overzealous lending. A rough ride may be expected in the unruly waters of the new diplomacy for development cooperation. It has been argued that the political anchor for this diplomacy cannot be expected to come from the advanced economies alone, or indeed the emerging BRIC countries. Will the G20 be the anchor for this new diplomacy? Already the process of a new diplomacy has started with the appointment of the new Managing director of the IMF. Jeffrey Sachs vii had this to say on this issue: the defining truth of our time is that the US-led international order - the one that gave birth to the IMF - is over. The problems in Greece, Ireland, and Portugal are serious, but Europe can largely manage by itself. The IMF s new leader must address 6
longer term and more complex global challenges The IMF s main task for the coming years should be to create a monetary and financial system that causes fewer international shocks not to clean up after each debacle While there is an understandable focus on those countries in which the largest proportions of the world s population live; economic, social, and political success of the world economy cannot be achieved by ignoring the performance and viability of small sovereign states that have small populations. The new leadership of the IMF should give a credible attention and voice to the economic, monetary, and political challenges of small states and their economies. viii While the improvements made to the lending facilities of the Fund in the last two years (with the introduction of the Flexible Credit Line, the Precautionary Credit Line, the Post Catastrophic Debt Relief Trust and the reform of the concessional lending facilities to Low Income Countries) are welcome; a gap persists nonetheless, as concessional financing for Small States are still inadequate. Recent developments in the Caribbean and other regions have revealed the additional fragilities and vulnerabilities of small states to natural disasters, the collapse of financial institutions and the concentration of economic activity. 1. Developmental Issues: The Case for Small Economies Some critical issues impacting small economies must be part of shaping the manifesto for the leadership of the IMF. In particular there is concern that changes to the international architecture, in which the IMF and G20 sit, lends themselves to a potential contravention of natural justice where clubs of large countries sit and develop rules for smaller states to follow without adequate consultation, consideration, and engagement with small states. Development of international financial regulation, supervision, risk management, and the assessment of financial sectors does not support a level playing field between small and large states. Preferential treatment given to areas important in some large states, from 7
mortgages, regional banks to hybrid capital, treatment that proved so dangerous in the financial crisis, also penalizes institutions in small states beyond economic justification. Furthermore, there is concern that, while small states particularly need help in the financing infrastructure, the criteria of lending by the multinational institutions is better suited to larger states with capital markets, credit ratings and diversified private-sector players. The criteria used for long-term and short-term support pays too much attention to level of GDP per capita, and not sufficiently to the much high levels of fragility and vulnerability to natural and economic shocks. Finally, in order to address these issues, a new leadership position in the IMF focusing on the challenges of small economies may be required. 2. Challenges for the North-South Institute The North-South Institute provides a platform to rethink the challenges ahead of us. As the conference agenda said the international landscape is changing, new actors are emerging presenting new challenges and opportunities for multilateral development and cooperation, as the international aid architecture is being criticized as overlapping and incoherent; development agencies are facing greater pressure to demonstrate results. Perhaps now is the right time to make a declaration for a new commitment of resources and creativity by countries in both the North and South. This is a declaration for development and development cooperation in the realities of today s times. Hence the suggestion that we develop a new diplomacy and where it is not working, we must fix it. This is a call for an action agenda for the future for development cooperation in a changing global order. 8
i The North-South Institute: http://www.nsi-ins.ca/english/default.asp ii Keynote Address at the North - South Institute Forum, Ottawa, June 20, 2011 by His Excellency the President Joaquim Chissano, providing the context for the forum. iii Closing Remarks at the North - South Institute Forum, Ottawa, June 21, 2011 by Winston Dookeran. iv Winston Dookeran with Manfred D. Jantzen, Power, Politics, and Performance A Partnership Approach for the Development of Small States, Ian Randle Publisher, pending publication. v Joseph Samuel Nye Jr. is the co-founder, along with Robert Keohane, of the international relations theory neoliberalism: http://en.wikipedia.org/wiki/joseph_nye vi World Commission Report on Environment and Development http://www.un-documents.net/wcedocf.htm vii Jeffrey David Sachs, American Economist and Director of the Earth Institute at Columbia University: http://en.wikipedia.org/wiki/jeffrey_sachs viii Letter sent by Winston Dookeran as Minister of Finance and Chairman of the World Bank Small States Forum to the IMF asking for a voice of Small Economies in the IMF. 9
Dear Minister Dookeran, I just wanted to thank you from the bottom of my heart for accepting my invitation to attend and participate at the MDC conference. Your presentation was by all accounts the most profound and insightful. I have received a large number of compliments on it. I look forward to working with you on your chapter for the edited volume. It was a real pleasure seeing you in Ottawa and hope there will be another occasion in the near future. Hany Besada, Program Head: Governance of Natural Resources & Senior Researcher: Development Cooperation North-South Institute, Ottawa, Ontario Dear Minister Dookeran, It was wonderful seeing you at the North-South Forum in Ottawa, Canada and to be able to be present for your Closing Remarks at the forum. Your comments and the excellent analysis were well received. I had the opportunity to speak to many of the attendees; all who felt that such remarks should be documented and be made available to a wider readership. It is my strongly felt opinion that your membership and attendance on International Organizations and Forums would serve to influence the discourse and discussions on behalf of the under-represented nations (Fragile States). I also look forward to the publication of your works and your writings on Small States. If I can be of any assistance I would be honoured to assist. Dr. Alvin Curling CD, Former Canadian Ambassador/Former Speaker of the Ontario Legislature 10