Time of Crisis and Opportunity

As the world's wealthy and powerful arrive in Davos, the world looks a gloomy and uncertain place. Every day the prospects for the global economy look bleaker. We don't know how deep or long-lasting the downturn will be. But we do know there is plenty of pain to come.

In every crisis, however, there is opportunity. If we have the courage to learn the lessons of the last 18 months and put them into practice beyond the economic sphere, we can put in place new foundations to reshape our world for the better.

For the roots of this crisis go beyond an abject failure of financial governance and neglect of warnings of the risks being run. Connections between economies have been revealed which were clearly not fully understood, let alone regulated. There may have been endless talk of globalization. But it is very clear there has been a lack of recognition of what this means for us all.

We have now learned decisively that no country, no matter how powerful or prosperous, can control the forces of globalization on its own. The lack of inclusive processes and institutions needed to manage the risks and ensure all gain from the benefits has also been exposed.

The present crisis has already led to unprecedented international co-operation. There has been coordinated action to protect the financial system from collapse, to try to stimulate the global economy and find new rules and structures to prevent this disaster being repeated. But while the G20 is a better and more legitimate forum than the G8, it does not go far enough to give the poor and excluded a voice. After all, they are the ones most affected by the decisions made.

The real lesson of the past year is the urgent need to build on and extend this multilateral approach. It means accepting that the rich and powerful alone can no longer rule the world.

It means, too, recognizing that the only lasting and effective solutions to the challenges we face will be those which have the security, opportunity and welfare of all at their heart. Fairness and equity can no longer be an afterthought. No one's stability, security and prosperity can be guaranteed unless we strive to tackle the gross inequality of wealth, opportunity and influence in our world.

What is needed is a fundamental change of mindset. Solutions to the financial crisis must look beyond the impact on the market, financial institutions and developed countries. They must also focus on jobs, family incomes and the effect of the slowdown on the poorest countries. Market forces are the engine for economic growth. But they need to be well regulated to ensure fairness and equal opportunity for all.

The present crisis has underlined the importance of governments in effective regulation of the market. But they must also look beyond their borders and at the long-term picture. Richer countries can not use the excuse of tighter finances to renege on their aid promises to the poorest on the planet. As global trade contracts and protectionist instincts are emboldened, the danger is that those least responsible for the present crisis will be hardest hit.

Africa's progress, in particular, is under threat. We need not just to continue but to increase support as promised to help the continent overcome its problems. Development aid must be targeted at encouraging long-term economic growth, good governance and human development as well as immediate crises. We need a uniquely green revolution in Africa, transforming every aspect of farming to ensure food security.

It is Africa -- and the developing world as a whole -- which will be hit hardest, too, by climate change. It will affect every country and society, with the damage dwarfing the serious problems caused by the financial crisis. But the most severe impact will directly fall on those who have done the least to change our atmosphere.

We can waste no time. Only by working together can we hand over a healthy and sustainable planet to future generations. There must be a radical, effective and universal agreement at Copenhagen this year based on climate justice and the principle that the polluter pays.

The developed economies must accept their responsibilities to our planet and future generations. They must take the lead in cutting their emissions. They must also fund the transfer of knowledge needed to help the rest of the world to grow their economies sustainably and to adapt to the inevitable change in our climate already underway. No other approach will work.

The consequences for our children if we fail to rise to this challenge are immense. Breaking our addiction to fossil fuels and investing in green technologies will also help us deliver energy security, jobs, prosperity and sustainable economic growth.

This will, however, require robust and inclusive global economic, financial and political institutions. We need fundamental reform to involve a far wider range of countries and voices meaningfully in decision-making. Without this, the solutions reached will neither match the scale of the problems nor have the legitimacy to be effective. As the woeful international response to the conflicts in the Middle East and elsewhere highlights, our structures are at present incapable of meeting the challenges of today, let alone tomorrow.

The new American administration gives us hope that, in all of these areas, progress can be made. But other governments and actors must play their part in building on this momentum. At Davos, our business and political leaders must show they understand that our world has shifted for good and that we have to change with it or perish.

Kofi Annan was the seventh Secretary-General of the United Nations, serving from 1997 to 2006, and is now chairman of the Kofi Annan Foundation.

He is co-chair of the World Economic Forum's 2009 annual meeting. He is also chairman of the Africa Progress Panel, and the Alliance for a Green Revolution in Africa, and president of the Global Humanitarian Forum.

Comments

[culturaldiplomat]

Dear Mr. Annan,

You have raised some interesting points. Here are some observations I thought necessary to elaborate upon.

1. "Richer countries can not use the excuse of tighter finances to renege on their aid promises to the poorest on the planet"

Actually they can and should, at least in the short term. A bolder, stronger Western market economy will undoubtedly be able to share more of its' abundance if it is healthy. It is also the responsibility of "poorer" nations to pick up the "baton" and build something with the chances they have already been given. We must ask how long is this runway and when will these economies "take off"?

2. "We need fundamental reform to involve a far wider range of countries and voices meaningfully in decision-making. Without this, the solutions reached will neither match the scale of the problems nor have the legitimacy to be effective.­"

Not true. Simply quantifying mediocrity or throwing a few despotic regimes "into the mix" for the sake of diversity is the wrong way to go. Solutions reached "and refined" by true thinking nations will result in a better path for the one's "just trying to figure it all out".

[Pamela Hunter]

If I may toss one positive bit of news into the kettle, tomorrow Seattle-based eco-developer Phil Sherburne will open what he believes is the greenest hotel in America. Located in a community of 2,500, Yountville, CA., Bardessono is pioneering so many green initiatives, it should be an interactive classroom for people wishing to solver 21st century energy problems for themselves.

[pfrogger]

Mr. Annan, I agree with the intention of almost everything you have written.
But with all due respect you are making blanket generalizations such as it's good to help children. Who would argue against that?
This sense of idealism must be balanced by realism.
America and the world is guilty of the same fundamental human flaw: apathy. This is not the first economic disaster to befall America or the world, and it won't be the last. Repeatedly greedy people have scammed the American public. It WILL happen again. America's rhetoric of capitalism is God is trumped by its repeated actions of public-sponsored bailouts (FDR did it, we have done it many times in the past, and we are doing it now). This IS socialism. When it benefits the rich, they'll take what they can. And the world is guilty of this is as well. The rich do get richer. The bailout money has helped these greedy institutions to fire the lower tier workers, retain the management responsible for their situation, and acquire other institutions to become bigger and monopolize their sphere of influence. This is NOT capitalism.
We're paying for their greed, and their corruption. But since the rich essentially own the politicians, America, the democracy, is corporate-owned. They pollute the planet, and poison us, and we pay for the cleanup.
I could go on, but my point is that although I applaud your idealism, it is far from the realism that actually exists.

[BEYAZRENKLERORG]

r. Erdogan’s decision to leave the debate Thursday had all the overtones of a diplomatic incident, ruffling relations between Israel and a Muslim ally that seeks an important role as a mediator in Middle East peace efforts.

In Davos, Mr. Erdogan apparently became incensed during a panel discussion after a moderator curtailed his response to remarks by Mr. Peres on the recent Israeli military campaign in Gaza. “When it comes to killing, you know well how to kill,” he told Mr. Peres before scooping up his papers and leaving the stage. Commentators in Turkey said Mr. Erdogan appeared provoked by the fact that Mr. Peres was pointing his finger at Mr. Erdogan and raising his voice in an unusually aggressive manner as the two men argued.

[iblogleft]

You mean that we could quite possibly.. be in this.. TOGETHER?

Wow.

Excellent read, thank you!

[delphi]

"principle that polluters pay"

Agreed. Why does the cost of waste removal, pollution cleanup fall on the public? Why is pollution not a cost of production?
Resources ripped from the earth for private profit? Pollution cleanup is then "socialized" as a public cost? Which is why it rarely gets done. No profit in that....(E­xxon?)
Pollution control must be a cost of production.

[dadw5boys]

Oil refinerys are turning away oil shipments to keep the price of oil and gas products high.

It looks like they are challenging the Governments to Nationalize the Oil and gas industry.

They keep the price of oil high and force businesses out of business and people out of jobs.

[adamsmith3]

Hi Mr. Annan, what was that Oil For Food scandal thing all about? I never heard it discussed on our major news networks so hopefully you could "blog" about it sometime. Thanks.

[ConstitutionCrusader]

"It means accepting that the rich and powerful alone can no longer rule the world."

You would *think* we would have learned that... a very long time ago. Democracy is supposed to take the power from the wallet, and give it to the ballot.

[RonMar]

Annan in Davos and preaching to the world after his record of corruption and mismanagement as head of the feckless UN. Give me a break, puh-leeze!

[HansB]

Disagree. Conservatives launched an all-out attack on Kofi Annan when it turned out that he would not play the role of US lackey. He's been accused of things which were false, and of things which were true but which unfortunately are part and parcel of international cooperation, and which were worse under his predecessors. Most of all, the accusations of corruption came at the precise moment that the Bush administration's far, far greater corruption was coming to light - as a way to change the subject.

Mr Annan was the best Secretary General the UN has had in its history, and certainly the most respected one, at least outside US wingnut circles. And even if you don't agree with the man, I wonder if you can find fault with his argument. This article is precise, true, and very relevant. Even if the credit for first recognizing that the financial crisis presents an opportunity for change goes to another black man.

[Ibackobama]

Agreed and very level headed..

[neoprimordial]

And so it goes. What globalization means for all of us is, ultimately and hopefully favorably, a single worldwide currency and equal international regulation standards for financial markets everywhere in the world, for starters. Of course, some countries (like the U.S.) will be kicking and screaming before it happens, but it is inevitable.

As for control by the rich and powerful, they can only rule if those under that rule consent to it. These money-grubbing opportunists take advantage of the ultimate sleeping giant due to its ignorance, indifference, and cultural incohesiveness. As long as the giant remains asleep--stupid and uninformed, apathetic, and factional--the rich and powerful will continue to capitalize on it, widening the wealth disparity. The financial sector being in dire straits worldwide does not change this fact, and if the U.S. cannot sustain their machinations, they'll pull up stakes and go set up shop elsewhere; maybe China, maybe India, maybe some other seemingly unlikely place, at least for a while if not indefinitely. Just as long as the giant sleeps, they will tarry in their way. It's unlikely the situation will be allowed to go supercritical, but there also won't be any serious concerted effort to transform conditions for the underclasses. The giant needs to be awakened.

Otherwise, I agree with you. Our world is in flux, and we either adapt sensibly to that change or succumb to it.

[island-in-alabama]

Remember the rich own the press and use it to keep us distracted and deluded. In America up until recently, the bulk of the population has gotten it's information from a thoroughly­-corrupted MSM that incessantly parrots the corporate orthodoxy and uses whisper campaigns to impugn and undermine any opposition.

The corporate domination over the spread of information needs to be addressed.

[sam49]

Great post Island-in-­Alabama!!!

[magibrotherhood]

propaganda----the msm are media-wh*r­es------an­d America is slowly seeing them for what they really are----corporate BUTT-KISSERS

[orangepetal]

This will, however, require robust and inclusive global economic, financial and political institutions. We need fundamental reform to involve a far wider range of countries and voices meaningfully in decision-making. Without this, the solutions reached will neither match the scale of the problems nor have the legitimacy to be effective.
==========­==========­==========­==========­==========­==========­==
Thanks but no thanks.

The UN should also train a group of leaders to develop programs to teach people to try to sustain themselves. What is wrong with Africa, the people are strong and able, why do they need always to be dependant. If it is because of conflict, maybe the UN needs to go to extra classes in conflict resolution. Until then I hope This global initiative will remain for many years just an aspiration. I do not mean to be cruel. I find the leadership and efforts of the UN seriously lacking. I know you try, but something is seriously wrong and I think it is deep in the philosophy of the organization. IMO Serious reforms are needed.

[iblogleft]

Well, aside from being uninformed, you have to understand that the Capitalist side of the U.N. has systematically removed independence from the agenda.

For one, we won't allow money to be spent in African countries that subsidize food production. (We demand they do what we say, not what we do)

Secondly, there is no incentive, other than cash returns, to influence decisions. They really don't care what happens to a country, as long as it is stable enough to do business in, and amass huge amounts of profit. Just weak enough to need help, just strong enough to keep it's people from overthrowing the government.

[nokoolaid4me]

Great article with many insightful observations.

All nations should formulate comprehensive food security policies in response to our three-headed
hydra of a crisis: climate change, dwindling 'cheap' oil supplies, and the end of unsustainable consumer-based (high debt load) economies.

It is likely that the costs associated with our agribusiness monoculture will rise along with the price of
oil since our fertilizers and pesticides are oil based. Global warming will lead to more prolonged
periods of drought, so we will be producing less food, but that lower yield will cost much more to generate.

Developed nations need to address lowering energy consumption now as a key
part of climate change policy, as energy descent is now inevitable due to dwindling supplies
"cheap" oil. Too often solutions to our energy, climate and economic problems are predicated
on the assumption that the developed world can maintain it's current rate of energy consumption,
and that global economies can return to the rate of growth experienced in the last two decades.
This does not seem likely or even desirable given our limited natural resources and the damages
to the health of this earth and it's inhabitants implicit with the practices of the past 50 years.
Too often these problems are addressed as independent rather than interdependent issues.

I applaud Mr. Anan's efforts to share a broader more holistic world-view with us all.

[smharmon1]

International cooperation is fine. Ending wars to enforce unfair market deals is fine. Real "free" trade, the likes of which I have not yet seen, would be fine. I'd like to see that coffee-maker in Africa get his just share, too. But what is with the "global democracy" BS? (I mean, if not the G20, then what, the G180?) Is this the feudalistic version where we have untold numbers of recycled, well-fed elites running high offices and lording over their domain, or the version where people around the world vote for their representatives? Is it a popular vote, borders gone, states gone (anarchists would like this, but then they'd do away with the representatives)? Let's see, how many representatives does each nation get? Is it modeled on a Constitutional framework? I thought the toothless, highly ineffective U.N. was already the "voice of the people." But that joke has been exposed already. Is Davos or the WEF the model of what is being sought?

[neoprimordial]

I think what will happen is a confederation of nations with one currency and one set of regulatory standards. Each nation maintains its sovereignty, but each is also a stakeholder in the agreed upon financial rules and structures, probably along the lines of what happens with the European Union.

The U.N. was always merely a forum to air the various issues in play around the world, with the option for possibly dealing with those issues, but more just for the airing of them. It could only be this without independent executive power--to enforce its agreed-to majority policies, regardless of the influence of powerful minorities.

The biggest differences between the U.N. and the European Union are that the E.U. is much more culturally homogeneous and has a much bigger stake in keeping the union going, due to the financial interconnectedness of the nations. Still, it also suffers from the problem of no independent executive power. The power of codified international consensus is still beyond its grasp.

[rnelsonbrown]

For one, it would be G192/UN/195x). For another, i imagine the flatheads who could not envision countries other than the one they were on (re pre Columbus) felt the same way. Get real SH1. It' a new world order. World resuorces are now finite, and we will all have to share or beat each other to death. It's a choice thing. Of course, there is always outer space, and Branson is already riding that train. Space, the final frontier.

[smharmon1]

Natural resources have always been finite, practically speaking. It is population that is growing, and demand for resources that is growing. Everything in life is a choice. There have been many "new world orders" over my lifetime already--each approached in a different way. Somehow, though, the concept of "sharing" never reaches a select few --and that is the fallacy. Will you share your house? Your dinner table? Will the US share its nukes? Socialism doesn't work, never has, even in small venues. As to your choice, it will not be sharing, but beating each other to death, that wins. But I do not see the choices of our country as limited; I do not see our only choice to fight to the last drop of oil, or water, or promote a planet run by Imperialistic bankers. Many, many things can be done with technology today that are inherently not chosen due to government regulation and cloudy thinking.

[kenstremsky]

Many African countries may want to become a part of a United States of Africa that has a constitution similar to the United States of America. It might want to back its currency with gold, silver, and other commodities. It could allow each State Legislature to choose at least 1 United States Senator to a United States of Africa Senate. It could allow State Legislatures to repeal federal laws, federal regulations, trade agreements, and treaties. It could allows State Legislatures to recall (fire) their Senators, their Representatives to a United States of Africa House of Representatives, the President, and the Vice President.

Many African countries may want to have bartering agreements with many different state governments and local governments in the United States of America that would have gold, silver, and other commodities being exchanged for the help of local governments and state governments improving health care, crop yields, water, septic systems, and other things.

Sincerely,

Ken Stremsky