The G20 and OECD – ‘an evolving relationship’

THE Secretary-General of the OECD Angel Gurría came to Dublin to present the OECD’s Economic Survey of Ireland 2009 to the Minister for Finance. He was to also hold discussions with the Minister for the Environment, Heritage and Local Government on a pending report Environmental Performance Review of Ireland due for release in 2010. He dropped into the Institute for International and European Affairs at breakfast time this morning to speak of the evolving relationship between the OECD and the G-20 – the group of 20 finance ministers and central bank governors established in 1999 to act as a forum for twenty industrialized and developing economies across the world.  This morning’s  gathering attracted the Ambassadors to Ireland from Germany, Switzerland, South Korea and Croatia.

I’ll begin by using the following table to illustrate the membership of each grouping and where they overlap:

G-8	G-20	OECD
Canada France Germany Italy Japan United Kingdom United States Russia + European Union	Argentina Australia Brazil China France Germany India Indonesia Italy Japan Mexico Russia Saudi Arabia South Africa South Korea Turkey United Kingdom United States + European Union European Central Bank + International Monetary Fund + World Bank	Australia Austria Belgium Canada Czech Republic Denmark Finland France Germany Greece Hungary Iceland Ireland Italy Japan Luxembourg Mexico Netherlands New Zealand Norway Poland Portugal Slovakia South Korea Spain Sweden Switzerland Turkey United Kingdom United States

 

The G-20

The G-20 has progressed a range of issues since being set up in 1999, including agreement about policies for growth, reducing abuse of the financial system, dealing with financial crises and combating terrorist financing. The G-20 also aims to foster the adoption of internationally recognized standards through the example set by its members in areas such as the transparency of fiscal policy and combating money laundering and the financing of terrorism. In 2004, G-20 countries committed to new higher standards of transparency and exchange of information on tax matters. This aims to combat abuses of the financial system and illicit activities including tax evasion.  The G-20 also tries to play a significant role in matters concerned with the reform of the international financial architecture.

The G-20 has aimed to develop a common view among members on issues related to further development of the global economic and financial system and held an extraordinary meeting in the margins of the 2008 IMF and World Bank annual meetings in recognition of the current economic situation. At this meeting, in accordance with the G-20s core mission to promote open and constructive exchanges between advanced and emerging-market countries on key issues related to global economic stability and growth, the Ministers and Governors discussed the present financial market crisis and its implications for the world economy. They stressed their resolve to work together to overcome the financial turmoil and to deepen cooperation to improve the regulation, supervision and the overall functioning of the worlds financial markets.

 

Role of OECD

Nowadays OECD acts as a facilitator, or hub, for members to compare and analyse policy perspectives, identify practices that can be deemed ‘best’ and coordinate domestic and international policies aimed at social and economic progress.

Gurría contends that new structures, relationships and approaches to coordination are necessary to deal with the prevailing crisis and that the OECD would advocate on behalf of those nations that are not members of the G-8 or -G20.  The world is a series of network and there is a need for international organisations such as his own, IMF, WTO, ILO to cross-pollinate their approach to world issues.

The G-20, he believes, will become the global platform at which to resolve all types of issues, except those with a military facet.  Example of the current agenda include exit strategies for the public intervention into the financial crisis, climate change, jobs, tax havens, elimination of bribery and corporate governance.  Progress, has been commendable in some areas but the capacity to deliver outcomes in many others “is excellent” according to Gurría.  The OECD input is in the form of evidence-based analysis and a facility for countries to stay connected to each other through OECD being an additional channel to support balanced and sustainable growth.

One of the offerings of the OECD is the peer review of member countries across a range of topics – health, environment, governance and others.  Interestingly, the only one of the 30 members that is not peer reviewed is the United States.

The blame for the financial crisis is split between the public and private sectors.  The former taking the hit for failure of regulation and the latter culpable for lack of supervision and ineffective risk management.

The Organisation for Economic Cooperation and Development [OECD] traces its roots to 1948 when the Organisation for European Economic Cooperation [OEEC] to help administer the Marshall Plan, the initiative of the United States Government to help European countries recover after World War II and to repel the threat of communism. It has 30 member countries that accept representative democracy and free markets that since 1961 include non-European states. Chile, Estonia, Israel, Russia and Slovenia have started accession talks to become members. It was founded in France and is headquartered in Paris. It has a budget of €320 million and a staff of 2,500 persons. Its budget is about one third that of FÁS and a similar staff headcount.

Angel Gurria (59), became Secretary-General of the OECD in 2006.  He is a former Mexican Minister for Foreign Affairs and Finance. He has represented Mexico on the board of The World Bank and the International Monetary Fund.

Ireland’s Permanent Delegate (Ambassador) to the OECD in Paris is Paul Murray.

Supporters of Irish Aid Make a Weak Case for No More Budget Cuts

No fewer than 66 Irish overseas voluntary aid organizations have written to the Taoiseach and taken half-page national newspaper advertisements urging that the overseas aid budget which is managed by the Department of Foreign Affairs, through Irish Aid, is not pruned again in the budget on 7th April.

The Irish Times recently published a letter from me in which I advocated that a portion of the Irish Aid budget should be reallocated to Irish charities such as The Society of St Vincent de Paul and The Simon Community to alleviate poverty and distress at home. We are now living in a society which might yield tax revenues of €34 billion in 2009 but whose dysfunctional health services alone cost €14 billion and whose level of unemployment has increased by over 200,000 and is continuing to escalate. The overall economic prognosis is extremely uncertain and volatile.

The OECD has a published report in advance of the G-20 Summit in London which indicate that donor nations are falling behind on aid pledges despite but increased development aid by 10.2% last year to enhance core programmes. Excluding the effect of debt relief measures, the value of overseas aid to about €88 million but this was just 0.3% of the GDP of donor countries, equivalent to 1993 aid donation levels. The report indicates that only 5 countries, Luxembourg, Denmark, Sweden, Norway and Holland exceed the 0.7% target that Concern and its counterparts refer to as the ‘solemn undertaking by the Government’ to the UN The commitment by the US, UK, Japan and Germany are miniscule in comparison, although the UK has made up substantial ground. There is now concern that the bid aid increased agreed when the G-20 met in 2005 may not be greatly moderated.

I stated in my letter that charity begins at home but I also agree it should not necessarily end there! I believe that our nation should make every effort to support Irish Aid, but within our capacity to do so.

Ireland has paid €5.3 billion in overseas aid over the past decade and the annual sums committed to it have risen steadily each year. Ireland has therefore delivered, but what has actually been accomplished?

I don’t have a comprehensive sense of how much charities with an indigenous mission raise but I did observe that the annual revenues of the Society of St Vincent de Paul in Ireland have been in the region of €45 million. I suspect that the overall amount of funds raised for Irish purposes are significantly less than the amount of Irish Aid committed elsewhere. All charities are finding it much more difficult to raise funds in the prevailing economic climate. There is no need for me to embroider the rationale that more resources are needed at home. Sadly, the evidence is abundant. What I am suggesting is that fresh compromises are necessary that take current and prospective realities into account, at home and overseas.

If I was petitioning the Taoiseach in defence of the Irish Aid budget and by obvious implication, I saw the necessity of persuading a large cohort of the Irish population that my case has real merit, I would approach the persuasion task in a different way.

I would try to ensure that the public consciousness was animated by the actual accomplishments with the funds committed and, specifically, how ongoing funding would make a direct difference. I would describe what adaptations have been made to programmes to ensure the greatest impact is made with the resources expended; which projects have been abandoned or curtailed and why; which projects have been brought to a successful conclusion; what is the rationale for multi-decade commitments in some instances; how has project funding evolved? I would address, as a point of information, the issue of insidious corruption in recipient countries and the impact of this on supported projects. I would also avoid fantasy statement about the eradication of the sources of poverty. However noble and well meaning these maybe the possibility of eradicating poverty is about as achievable as the eradication of rumours or the science of economics becoming redundant!

I recently received an e mail from a cousin recently in which he stated “I quit PricewaterhouseCoopers last November in order to work as a volunteer with GOAL. I've been working as an accountant for GOAL in North Sudan since November; so far it has been a great experience; very eye-opening”. That comment tells a story, narrates an anecdote and creates a sense of intrigue!

Is it really enough for the advocates of no further cuts to the Irish Aid budget to merely state that €5.3 billion over 10 years “make a real and positive difference”. One would expect that to be the case – as an absolute minimum baseline. But what are the ‘star achievements’, the enduring footprints - that are uniquely Irish? Those sterile, passive exhortations created by a committee do not!

Comments that are excessively passive in tone and ‘feel-good’ expression doesn’t convey very much and are too simplistic. Will they really animate the imagination and passion of your jury – the Irish public whose will the politicians must tilt towards? Clichéd references to ‘fairness and equity’ are two-a-penny these days but vary tremendously in practice with one’s perspective, experience and personal circumstances. Unfortunately, the circumstances of hundreds of thousands of Irish citizens have changed immeasurably for the worse and the prospects of alleviation are non-existent.

They routinely trot out the expression ‘solemn undertaking’ as if it was an immutable clause in the Constitution or a blast from the pulpit. But the religious connotation may not have the desired impact on many of a secular disposition would not identify with. Why would they it not construct a more persuasive argument that would resonate with a greater number of people?

There is such a visceral sense of betrayal in Ireland as a consequence of the malign behaviour of financial institutions, politicians, power brokers, influence peddlers and even bishops that citizens no longer believe that any pillars of society ‘keep their word’ or respect trust. This destruction of this principle has greatly impaired Ireland’s national reputation to the extent that the fatted cow that kept the entire economic system prospering, including Irish Aid, is in tatters. But the jailing of corrupt and incompetent greedy bankers with messianic egos’ would impact more on the national reputation that an adjustment in the amount of the Irish Aid budget - which would make little, or negligible, impact on its rehabilitation or restoration of the nation’s reputation.

The challenge for charities is how to successfully intercept the imagination of the nation to make the strongest possible case for their viewpoint and keep those pay the bills convinced that the money is thoughtfully, creatively and productively spent!