THE BLOG
11/20/2008 05:12 am ET Updated May 25, 2011

G-7, G-14 and G-20: Yet Another Tardy Call

First the years-late call on the global food crisis. Now, Robert Zoellick, current World Bank president, has done it again on the international financial crisis. Zoellick, a Republican National Lawyers Association expert on hanging, dimpled, and pregnant chads at the Florida Recount of punch card paper ballots in Bush v. Gore that gave the presidency in year 2000 to George W. Bush is now claiming that the G-7 is inadequate and that it must be made the G-14. That, when the G-20 created through the leadership and foresight of Canada and Germany has been in existence since 1999, and was established precisely because of the recognition that some G-7 members like UK and Italy would be overtaken by non-G7 nations, and that China with the world's largest foreign-currency reserves of almost $2 trillion would soon demand a place at the table followed shortly by India. Indeed, this year, President Bush was compelled to attend the G-20 meeting that has never before been attended by a US President, because it has always been a gathering of finance ministers or Treasury Secretaries and central bank governors, not heads of government. The G-20 was created in response to the financial crisis of the late 1990s to support growth and development across the globe, and is expected to strengthen the international financial architecture and enable dialog on national policies, international co-operation, and international financial institutions.

The members of the G-20 are Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, the United States of America and Argentina. The European Union is also a member, represented by the rotating Council presidency and the European Central Bank. Other multilaterals participate as well on an ex-officio basis. From this G-20 list, Robert Zoellick eliminated a few countries, and presto, created G-14. Can this G-14 grouping do what both the G-7 and the G-20 too have been unable to? Is this a gimmicky, "mavericky" sort of approach?

Also, Zoellick claimed that the G-20 is "unwieldy." But the G-20 is smaller than the World Bank's Board comprised of 24 Board Members and 24 Alternates who reside in Washington DC throughout the year and those 48 individuals and their staff cost $100 million a year, or 10% of the annual US contribution of $1 billion. Since Zoellick currently chairs the World Bank Board, his failure to mention that is just typical.

The Story of the Three Bears, and the G-14

Just like the story of the Three Bears' bowls of porridge: one is too small (G-7) one is too large (G-20) and one just right: G-14, according to Zoellick! Now who has been hired as a short-term consultant to potentially certify that a networked G-14 is just right? Enter Ernesto Zedillo, multilateralist-extraordinaire and a former President of Mexico. But Zedillo has never spent continuous time inside multilaterals as a long-term consultant or as a staffer, only brief periods as a short-term consultant, and therefore does not know that innovation is lacking not because of the relative size of a board or other superficial reason, but because the deck is stacked against staffers who call for accountability as the GAO determined.

Rep. Barney Frank and Bill O'Reilly Shouting Match

House Financial Services Committee Chair Barney Frank and conservative Fox News TV host Bill O'Reilly had a tremendous shouting match in which they hurled invectives at each other over responsibility for the failure of oversight. This may well portend what will be coming in a potential Obama Administration. If conservatives are stung with a landslide victory by Democrats, probably the only way they can regain some semblance of trust from the public is to emphasize the near-absence of oversight in business-as-usual. When a party controls both the executive and legislative branches of government, it can very easily be pinned on accountability. That is what happened to the Republicans, and the landslide victory (see here
and here that opinion polls are predicting at this November 2008 election would be the equivalent of what is seen in other democracies of the periodic "throw the bums out" sentiment in the entire population, that creates the electoral tidal wave. But if Democrats believe that they can gloat and rest on laurels, they need only look at what happened in the Clinton Administration. Just a few years after President Clinton was inaugurated amid the dancing to the melodious blaring of Fleetwod Mac's "Don't Stop Thinking About Tomorrow," Newt Gingrich appeared and through one Congressional election after the other took away much of the flexibility of the Clinton Administration. Unless, as Senator Biden emphasized, there is "fundamental change," there will be yet another repetition of the consequences of the public's disdain for politicians. Holding no hearings in the Senate Foreign Relations Committee and the Appropriations Committees on accountability and transparency and proposing to double the annual contributions for foreign assistance is a recipe for potential disaster. If a shoe were to drop somewhere in the multilateral system of development banks: the US has poured $60 Billion into the World Bank alone, and there are many more like the Asian Development Bank and the African Development Bank into which many more billions of US contributions have been sent, the Rep. Barney Frank-Bill O'Reilly shouting match would look like a schoolyard brawl, when compared to how it would be portrayed in policy circles and the world's media. That is also because Robert Zoellick was in charge of the lobbying for Fannie Mae as its Executive Vice President.

Public Figures on Multilateral Committees

Using the reputations of public figures
by hiring them as short-term consultants to prevent genuine change has been a well-worn approach by many organizations. But there is reason to be concerned about the apparent gullibility or lack of relevant experience in public members of the latest such committee set up to advise on anti-corruption. In a stunning confession, Australia's prime-minister-in-waiting, Peter Costello, a leading Committee member, stated that he was hoodwinked by Australia's own war-leader, John Howard for over a decade (see here
and here)
with a fake promise that Howard would step aside if Costello did not challenge him in 1994 and that he "should have listened to his wife Tanya Costello." Also on the Committee is Chester Crocker, the Reagan Administration Assistant Secretary of State reportedly responsible for the "constructive engagement" policy with the apartheid South African government in the 1980s and Simeon Marcelo, whose claim to fame of having prosecuted Philippines president Joseph Estrada is steadily being eroded in his current function as Executive Secretary of the Asian Development Bank's Administrative Tribunal that lacks independence because it is structurally part of the Bank, and even on the rare occasion when the appellant prevails such non-independent tribunal cannot ensure implementation of the ruling. Yet another is Mark Pieth whose Swiss court system lacks legal discovery (court-compelled fact-finding), and therefore no one has been prosecuted for perjury for hundreds of years in Switzerland!

The Core of the Problem: Lack of Independent Governance Structures

Multilateral Development Banks (MDBs) have no independent structures. Because of the way the institutions' privileges and immunities have been constructed, all structures created are in such a way for pay-checks always to come from the bureaucracy of the MDBs and therefore, he who pays the piper in all likelihood plays the tune. With such a serious structural problem, what reform is possible from within? That is at the root of the failure of accountability and transparency, not number shuffling from G-7 to G-20. Will those "wise" but perhaps inexperienced men stand up anytime soon to say that aloud? Further, the G-7 and all other Gs are merely talking shops, and implementation of their discussions have to occur through existing multilaterals since there is no appetite for creating new ones. Some think that the US General Accountability Office (GAO) can remedy everything, but GAO has no authority to follow-up and hence the importance of having a new Accountability and Transparency Czar like Senator Coburn.

Under the current system, it is an "offense" worthy of termination for a World Bank staffer to speak with someone like Senator Patrick Leahy, Appropriations SubCommittee chair, even though $1 billion is being sent every year from the US Congress to the Bank. So what happens? No hearings at all. None in the Appropriations Committees, the same for Joe Biden's (and soon to be John Kerry's) Senate Foreign Relations Committee (SFRC). Senator Chris Dodd is currently acting-chair while Senator Biden campaigns for the Vice Presidency. Given the high probability, as per polls, of an overwhelming Obama victory, Chris Dodd is unlikely to give up his Banking Committee chair leaving Senator Kerry as the most likely Foreign Relations Committee chair from 2009 onwards. Quite a turn of events from the time John Kerry appeared as a young anti-war Veteran to testify in 1971 against what then looked like the unending US involvement in the Vietnam war and, thematically strikingly similar to his likely role in the next Congress. Today, Vietnamese government officials & businesspeople routinely fly into the US seeking foreign direct investment and for building US-Vietnamese commercial partnerships on goods and services for the booming business sectors of Asia. The SFRC too has its own oversight role, and there too SFRC is unable to speak with World Bank or any other UN-system staffer because of the sweeping multilateral immunities that may have been relevant for another era, but not this one.

"Too Busy" to Hold a Hearing

Although it is the cornerstone of democracy to be able to question those in authority, legislative aides who have spent most of their lives in the confines of the Senate have a different take. Senator Leahy's top aide, for instance, told me that he is "too busy" to hold a hearing. The message it sends to those who receive a billion dollars a year is then unmistakable: no one is looking over your shoulder. In this case, Senator Leahy's chairing the Judiciary Committee is itself a full-time job and where does that leave time for chairing the key appropriations subcommittee on foreign operations on which rests America's soft power. Is seniority the sole criterion to decide on who should chair a committee or subcommittee? What about their other responsibilities? If he/she is too busy, shouldn't other Senators handle such committees and subcommittees?

Senator Dick Lugar as Secretary of State?

In the final presidential debate of 2008, Senator Obama appeared to signal that he may appoint Sen. Dick Lugar as Secretary of State in an Obama Administration. It is customary to have a member of the opposite party in the cabinet: Bill Cohen for President Clinton and Norm Mineta for President Bush. Sen. Lugar has worked closely with Sen. Obama and Sen. Biden on the Foreign Relations Committee, and has been an expert on foreign policy and agriculture, food and nutrition for much of his professional life. Further, on the contentious area of foreign affairs that once had bipartisan consensus, the thinking may well be that Senator Lugar's appointment could neutralize any remaining opposition to ending the war in Iraq. But is that really the case? Conservatives have for long been ambivalent about Senator Lugar for multiple reasons.

Multilateralism and Oversight

How is oversight possible if the rules are that even speaking with those with oversight responsibilities, with or without preconditions, is a punishable offense! That question is particularly pertinent as President Bush plans to host a world summit on the financial crisis. With the sexual harassment allegations against yet another multilateral development bank head, this time IMF Chief Dominique Strauss-Kahn, the stage is set for a thorough examination of the abuse of immunity and abuses of power and revamping of oversight mechanisms. Especially as the next Secretaries of State and Treasury will have to make the request to Congress for doubling of the annual US contributions to multilaterals that Senator Obama proposed, it could present a unique opportunity to thoroughly examine the privileges and immunities and make changes through Congress. Someone like Senator Coburn would be the ideal person to make that methodical examination. It is time to change the immunities to ensure accountability and transparency.