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Peter Bosshard

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

Posted: 10/28/11 12:09 PM ET

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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