How the Global 1% Shape the World's Development Agenda

Democracy is a messy affair. It forces government officials and politicians to face parliamentary scrutiny, pesky journalists and grassroots pressure. While they uphold democracy and good governance in their rhetoric, governments and the World Bank have begun to shift important decisions about global development to the Group of 20, a body that is largely shielded from public debate and democratic control. It's time to shed some light on an institution that has become a key power broker for the interests of the global 1%, including through the promotion of large dams.

The Group of 20 was created in 2008 and consists of 19 major countries and the EU. The G20 members meet at least once a year to discuss the international financial system and a growing list of other topics, from infrastructure to trade and food security. The group's powers have grown so quickly that Nancy Alexander, an observer at the Heinrich Boell Foundation, has described it as the "maestro of development finance."

The infrastructure sector is a key example for the G20's powerful role behind the scenes. The group has commissioned a high-level panel of experts to prepare recommendations on future infrastructure investment in Southern countries. This panel brings together 17 leading representatives of large corporations, banks and government agencies. Civil society groups and trade unions are absent from its roster. The panel has just submitted its recommendations to the G20's heads of state, who will convene for their annual meeting in Cannes/France next week. The new report illustrates what is wrong with delegating extensive powers to an exclusive body like the G20:

Undemocratic: One third of the world's population -- and particularly the poorest countries -- are completely excluded from the G20. The people who in theory are represented have no way of influencing its proceedings. The new report, which will shape future rules for infrastructure investment, has not been shared with the public. Parliaments, civil society groups, trade unions and the media have no way of debating or influencing its recommendations. The G20, in other words, operates like the Mubarak regime before the Arab Spring.

One-sided: The agenda of the G20 is strongly influenced by corporate interests. Its expert panel on infrastructure mostly consists of private sector representatives, and is chaired by the CEO of Prudential. It is no surprise that the panel has spoken out strongly in favor of public-private partnerships -- a euphemism for projects operated by private investors with subsidies and guarantees from the public sector. The new report is expected to recommend new regulations that benefit this type of projects and new public subsidies for them.

Public interest ignored: In its early announcements, the high-level panel narrowly focused on the promotion of economic growth, at the exclusion of poverty reduction, environmental protection, and human rights. In its new report, the panel will recommend six criteria according to which the World Bank and other funders should prioritize their future projects. As the Boell Foundation reports, these criteria include issues such as regional integration and attractiveness for the private sector. They are silent on poverty reduction, protection of the environment and even climate change.

Big is beautiful: The high-level panel was asked to identify a number of projects which exemplify the new approach to infrastructure development. Early on, this list included a transmission line between Ethiopia and Kenya and the Inga hydropower scheme on the Congo River. The transmission line will depend on the completion of the controversial Gibe III Dam on the Omo River, which violates numerous international agreements and will impoverish up to 500,000 indigenous people. The Inga dams will cost billions of dollars and will generate electricity for aluminum smelters and far-away urban centers, but will ignore the needs of Africa's rural poor. The first two stages of the hydropower scheme have turned out to be white elephants and monuments of corruption. Scientists have warned that the proposed new dams may have "truly alarming" impacts on the capacity of the Atlantic Ocean to absorb greenhouse gases from the atmosphere.

Hand in glove: The panel reviewed the lending practices of the World Bank and is expected to recommend measures through which the financier can streamline its funding for infrastructure projects. Given the gist of its other recommendations, this may well mean the dilution of social and environmental safeguard policies. The World Bank is supposed to follow the instructions of all member countries, and not take orders from outside bodies like the G20. But it would be wrong to think that the institution somehow resents this interference. Indeed, the World Bank and private corporations have provided the staff doing the day-to-day work for the infrastructure panel. It appears that the Bank is working hand in glove with the G20. Like its member governments it is outsourcing unpopular tasks -- such as the promotion of corporate subsidies and destructive dams -- to an institution that can operate outside the limelight of public debate and democratic control.

Infrastructure is an essential ingredient of social and economic development. Key decisions about the sector cannot be left to undemocratic, non-transparent institutions. Civil society groups have started to pry open the echo chambers of the G20 and its cooperation with other powerful actors. Please let us know if you would like to receive occasional updates about the G20 and its role in global development.

 

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Comments

[nanalexander1]

04:28 PM on 10/28/2011

In response to the comments of "blue beyond" on the topic of which countries are capable of participating in the G20 -- we would suggest that the imperial masters did not believe that the colonies had the capacity to represent their own interests. Moreover, we could cite many countries that are excluded from G20 which have the capability (by any definition) to participate -- the Scandanavian countries, Switzerland, the Philippines, Costa Rica, and Chile for starters. And many of the G20 are not democratic: take China and Saudi Arabia (where women cannot vote), for instance. This year, Equatorial Guinea, which is ruled by a notorious dictator, participates in the G20. Actually, the IMF and World Bank have more representative governance than does the G20. As a rule, when countries are affected by a G20 policy, they should be represented. For instance, low-income countries are affected by the G20's Development Action Plan, but there is only one low-income country (Ethiopia) overseeing the Plan! Where is the justice in that? Finally, where are poverty levels being halved? Primarily in countries such as China and India which have not followed prescriptions of the IMF and World Bank to the letter.

[blue beyond]

01:46 PM on 10/28/2011

Like it or not, states excluded from the G20 haven't the expertise or resources to participate. The G20 are democratically elected governments that associate by choice. What's the problem? They predominate in global financial institutions like the IMF, World Band but also take input from the rest in WTO decisions. Taken together, these institutions have engineered halving of world poverty over the past 30 years. That's not bad. Dissidents would like poverty to end tomorrow. It just doesn't work that way.