by Alex Evans | Apr 2, 2009 | Climate and resource scarcity, Economics and development, London Summit
Although the food price crisis has slipped from the agenda as the credit crunch has gathered pace, for poor people around the world it hasn’t gone away – and may now be set to worsen again.
While the FAO’s food price index has fallen by around 30% since its peak last summer, that only takes it back to May 2007 levels: still well above recent norms. Meanwhile, the global total of undernourished people is now over a billion, up from 850m just a couple of years ago. Now, FAO officials say privately that they expect the next findings from the index to show a new increase.
If that’s right, then we’re really moving in to worst case scenario for developing countries, who are already reeling from the credit crunch. So what’s happening here at the London Summit on this front?
I asked that to Douglas Alexander, the UK’s international development secretary, in a press conference he did an hour or so ago. He pointed to the £200m the UK has committed to a new ‘rapid response social fund’ to provide safety nets for the most vulnerable people, and applauded the work of the World Bank and WFP in particular. On increasing supply, meanwhile, he suggested that infrastructure investment is crucial (which it is).
I also caught up with Peter Mandelson, the UK’s business secretary, and asked him how the trade system could be proofed against the kind of crazy security of supply perturbations that caused such problems last summer, when over 30 countries had export restrictions in place. He stressed that what’s needed is to keep markets open, and that any impediments to this would harm supply by undermining incentives.
In analytical terms, I can’t fault anything either of them said. But note the lack of specifics about what this summit should be doing: there’s no getting round the underlying fact that preventing a resumption of the food price spike isn’t on the agenda here. It should be. As a senior IMF official put it to David and I when we were over in DC recently: “the last thing we can afford now is another crisis creeping up on us”.
by David Steven | Apr 2, 2009 | What we're watching
[youtube]http://www.youtube.com/watch?v=T245HbanjpQ&feature=player_embedded[/youtube]
by Alex Evans | Apr 2, 2009 | London Summit
Alex Barker at the FT’s Westminster blog:
This is my first dispatch from the G20 media hangar, which has so far proved to be full of journalists and free of information. But Britain’s intrepid press pack have succeeded in digging up one important story: the “minty green” colour of the “lounge area”.
We’re told that the world’s leaders will be plotting the course for economic recovery from a modern, functional, informal “break out zone”. There are comfortable chairs and tables, but “no bean bags”, according to one well informed source.
Leaders left breakfast a short while ago (the menu remains top secret) and are now “milling around”, chewing the fat and bargaining over the world’s future. Here’s to hoping the coffee is better than it is in the press area.
Actually, an informal ‘break out zone’ is probably a good idea. Watching the TV feed of the formal summit room a couple of minutes ago, I couldn’t help wondering how any kind of shared awareness could emerge from such stilted surroundings…
by Alex Evans | Apr 2, 2009 | Economics and development, London Summit
So here I am in the cavernous media centre at the London Summit. Some of the main excitement of the day so far: (a) the police found an unexploded World War Two bomb sunk in the dock next to the Excel centre, and will be detonating it shortly; and (b) there are free bacon sandwiches.
Plus, it turns out that one of the other G20 voice bloggers is Daniel Kaufmann – now at the Brookings Institution, before that at the World Bank. He’s one of the top governance experts in the world (the FT’s words), and was one of the World Bank staffers who really put pressure on Paul Wolfowitz during the 2007 graft kerfuffle – if you recall the letter that he and other Bank staff sent to Wolfowitz, it read
The credibility of our front-line staff is eroding in the face of legitimate questions from our clients about the Bank’s ability to practise what it preaches on governance. In these circumstances, we cannot credibly implement the governance and anti-corruption strategy.”
Hats off for that. Next up: bloggers’ press conference wit Douglas Alexander coming up shortly.
by Alex Evans | Apr 1, 2009 | Economics and development, London Summit
Earlier this week, I did a post on Chinese central bank governor Zhou Xiaochuan’s essay calling for the replacement of the dollar as the world’s reserve currency. Today’s FT contains another instalment of big picture thinking from China on the global economy – this time from Yu Qiao, an economics professor at Tsingua University’s School of Public Policy and Management.
Like Zhou, Yu is explicit on Chinese worries about the potential erosion of the value of their rather large stash of US dollars – $1,200 billion of T-bills alone. “Most of Mr Obama’s stimulus spending is devoted to social programmes rather than growth promotion,” he notes, “which may exacerbate America’s over-consumption problem and delay sustainable recovery”.
What’s more, he continues, that could in turn end up doing exactly what Tim Geither was worried about in the wake of Zhou’s essay: an erosion of the dollar’s role as reserve currency. Here, interestingly, there’s what looks like a signal of preparedness to moderate the position set out in Zhou’s essay. Yu says explicitly that,
No other international monetary system offers a viable alternative. However, we can make the main reserve currency power more accountable by creating an instrument to help manage the global crisis.
Admittedly, Yu is an academic and not a member of the government. But it’s very hard to imagine that a senior Chinese professor would directly contradict his government’s position, on such an acutely political issue, in a time of such severe risks, in the FT, the day before the G20 summit, without clearance. At the same time, using this approach avoids losing face for Zhou – and may signal a willingness to talk, rather than a definite climbdown.
So what does Yu propose as an alternative way of safeguarding China’s assets, if not reform of the dollar’s reserve currency role?
(more…)
