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.
President Barack Obama is photographed during a presidential portrait sitting for an official photo in the Oval Office, Dec. 6, 2012. (Official White House Photo by Pete Souza). This is in the public domain.
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, 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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