Perspectives from José Manuel Barroso • David Cameron Angela Merkel • Barack Obama François Hollande • Abdalla Salem El-Badri Donald Kaberuka • Anthony Lake • Guy Ryder Angel Gurría • Mukhisa Kituyi • Ronald Noble Achim Steiner • Hamadoun Touré Kanayo Nwanze • Ertharin Cousin Valerie Amos • John Kirton

THE BRUSSELS SUMMIT JUNE 2014

G7 Research Group

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00 Masthead.indd 3 21/05/2014 10:48 Advertisement Fighting Smart in the Battle Against MDR-TB Multidrug-resistant tuberculosis is increasing; its symptoms devastating. But through education, empowerment and efforts to improve access to quality medicines, the Lilly MDR-TB Partnership is improving health outcomes of those affected by TB around the world

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Russia China South Africa The Lilly MDR-TB Partnership has collaborated Doctors in China inspect a chest x-ray from a Every day, this young girl accompanies her with Partners in Health for many years to person suspected to have TB. The doctors had mother to a clinic in Cape Town’s impoverished provide training and support services in attended a training course on MDR-TB, hosted Gugulethu suburb so her mother can receive Tomsk, a remote region of Siberia. These by the Chinese Medical Association and World TB medication. The child wears a mask while best practice learnings are now being applied Medical Association, and supported by the sitting in the clinic’s waiting room to avoid in other regions to train doctors and nurses Lilly MDR-TB Partnership. The work also inhaling TB bacteria from patients waiting to in MDR-TB infection control. By empowering includes support of six pilot centres to develop be attended to. As in Russia, part of the Lilly nurses, it is possible to free up the doctors’ and show effectiveness of training and MDR-TB Partnership's South African work time to deal with the most serious cases. engagement of local healthcare professionals. focuses on educating and empowering nurses.

www.lillymdr-tb.com / [email protected]

The Lilly MDR-TB Partnership is funded by the Eli Lilly and Company Foundation UKCPR00128a Date of Preparation 07 May 2013

Lilly_placed.indd05-2013-Lilly_G8UK-Summit_V2.indd 1 1 20/05/201413/05/2013 17:1015:24 SYLVAIN SONNET/GETTY IMAGES SONNET/GETTY SYLVAIN Contents

Introductions and leaders’ perspectives Editor’s introduction

8 History belongs to those who embrace the future 32 Seeking to strengthen democratic José Manuel Barroso, president, European Commission security and solidarity worldwide John Kirton, G8 Research Group 12 Bringing the benefits of globalisation home David Cameron, prime minister, United Kingdom Business viewpoints 16 A stable, competitive European Union Angela Merkel, chancellor, Germany 34 Private-sector-led growth and the global economy DSM Nutritional Products, GE Healthcare, 20 The hard work of building democracy International Gas Union Barack Obama, president, United States of America

24 In support of Ukraine’s territorial integrity: Energy and climate change as G7 priorities restoring economic and political stability Stephen Harper, prime minister, Canada 39 The pursuit of energy security and market stability in the oil industry 26 Shaping global destiny Abdalla Salem El-Badri, secretary general, François Hollande, president, France Organization of the Petroleum Exporting Countries

28 A proactive contribution to peace 44 Water security for growth Shinzo Abe, prime minister, Japan Benedito Braga, president, World Water Council

30 The Mediterranean is the heart of our 46 Escaping the poverty trap political and cultural actions Achim Steiner, United Nations under-secretary general and Matteo Renzi, prime minister, Italy executive director, United Nations Environment Programme

G7 BRUSSELS JUNE 2014 | 5

00_CONTENTS.indd 5 21/05/2014 13:07 Join the Global Conversation G7 Research Group In the rapidly globalizing world of the 21st century, the Group of Seven major market democracies serves as an effective centre of comprehensive global governance. G7 members – the United States, Japan, Germany, the United Kingdom, France, Italy, Canada and the European Union – contain many of the world’s critical capabilities and are committed to democratic values. At its annual summit and through a web of G7-centred institutions at the ministerial, official and multi-stakeholder levels, the G7 does much to meet global challenges, especially in the fields of security, development and economics. The G7 Research Group and the G8 Research Group are global networks of scholars, students and professionals in the academic, research, media, business, non-governmental, governmental and intergovernmental communities who follow the work of the G7, the G8 and related institutions. The groups share a mission to serve as the world’s leading independent sources of information, analysis and research on the G7/8. Founded in 1987, they are managed from Trinity College and the Munk School of Global Affairs at the University of Toronto. Professional Advisory Council members, Special Advisors and participating researchers span the world. Through the G7 and G8 Research Groups, Trinity’s John W. Graham Library has become the global repository of G7/8 documents, transcripts, audiotapes, media coverage, interviews, studies, essays, memorabilia and artifacts. The G8 Information Centre at www.g8.utoronto.ca The online G8 Information Centre (www.g8.utoronto.ca) contains the world’s most comprehensive and authoritative collection of information and analysis on the G7 and G8. The G7 and G8 Research Groups assemble, verify and post documents from the meetings leading up to and at each summit, the available official documentation of all past summits and ministerial meetings (in several G8 languages), scholarly writings and policy analyses, research studies, scholarship information, links to related sites and the “briefing books” for each summit published by Newsdesk Media. The website contains the annual reports on G7/8 members’ compliance with their summit commitments, produced by the G8 Research Group and its partner at the International Organisations Research Institute at the National Research University Higher School of Economics in Moscow. Books on the G7, G8 and Related Issues from Ashgate Publishing G20 Governance for a Globalized World G8 against Transnational Organized Crime John Kirton Amandine Scherrer The European Union in the G8 Making Global Economic Governance Effective Marina Larionova, ed. John Kirton, Marina Larionova & Paolo Savona, eds. Securing the Global Economy The G8 System and the G20 Andreas Freytag, John Kirton, Razeen Sally & Peter I. Hajnal Paolo Savona, eds. The New Economic Diplomacy Global Financial Crisis Nicholas Bayne and Stephen Woolcock Paolo Savona, John Kirtona & Chiara Oldani, eds. New Perspectives on Global Governance Global Energy Governance in a Multipolar World Michele Fratianni, John Kirton, Alan Rugman & Dries Lesage, Thijs Van de Graaf & Kirsten Westphal Paolo Savona, eds.

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G7 house ad_placed.indd 1 16/05/2014 14:23 CONTENTS

48 Climate-change governance: Africa as a global opportunity achievements, hopes and dangers Ella Kokotsis, G8 Research Group 88 Turning economic growth into economic transformation Donald Kaberuka, president, African Development Bank Global health governance 92 The role of ICTs in developing Africa 50 Maternal and child health at the Hamadoun Touré, secretary-general, International centre of the development agenda Telecommunication Union Anthony Lake, executive director, UNICEF 94 Powering Africa forward 52 Unite in the fight against Andrew M Herscowitz, coordinator, HIV/AIDS, tuberculosis and malaria Power Africa and Trade Africa Joy D Fitzgibbon, Global Health Diplomacy Program, University of Toronto Agriculture, food security and nutrition 56 Proactive prevention: the Caribbean contribution to global health 96 Growing a better future for all C James Hospedales, executive director, Kanayo Nwanze, president, International Fund for Caribbean Public Health Agency Agricultural Development

100 Working to achieve the vision of Economy, growth and jobs a world free from hunger Ertharin Cousin, executive director, World Food Programme 60 Joint commitment can kickstart growth Robert Fauver, former US G7/G8 sherpa Foreign policy and security 62 Generating decent jobs for youth Guy Ryder, director general, International Labour Organization 102 The humanitarian crisis in Syria poses a threat to world peace 66 Education for sustainable, shared prosperity Valerie Amos, under-secretary general and emergency relief Harry Anthony Patrinos and Gaurav Tiwari, World Bank coordinator, United Nations Office for the Coordination of Humanitarian Affairs

Cybersecurity 104 Achieve secure borders through dedication, not tragedy 68 Big and open data Ronald Noble, secretary general, INTERPOL Neelie Kroes, vice president, European Commission, responsible for the Digital Agenda for Europe 106 Protecting global security norms for nuclear non-proliferation 70 Strengthening standards for cybersecurity David Shorr, foreign policy and international affairs analyst and surveillance John Lyons, chief executive, 108 Tackling regional security conflicts: International Cyber Security Protection Alliance sanctions or military force? Julia Kulik, G8 Research Group

Trade, taxation and transparency 110 The political threats facing East Asia David A Welch, chair of global security, Balsillie School 72 Promoting growth and development through trade of International Affairs, and senior fellow, Centre for Yonov Frederick Agah, deputy director general, International Governance Innovation World Trade Organization

76 Sound investment policies for sustainable Strengthening the summit process economic development Mukhisa Kituyi, secretary general, UNCTAD 112 Keeping the faith: still focused on goals Karen Hamilton, general secretary, 78 Advancing global action to Canadian Council of Churches support fiscal sustainability Angel Gurría, secretary general, Organisation for 114 Assessing compliance with the Economic Co-operation and Development Lough Erne commitments Caroline Bracht, G8 Research Group, and Mark Rakhmangulov, 82 The G7/G20 tax agenda: International Organisations Research Institute, National time to secure progress across the world Research University Higher School of Economics, Moscow Dries Lesage, Ghent Institute for International Studies, Ghent University

86 Put an end to money laundering, 116 Leaders’ profiles bribery and corruption Cobus de Swardt, managing director, Transparency International 118 Sponsors’ index

G7 BRUSSELS JUNE 2014 | 7

00_CONTENTS.indd 7 21/05/2014 12:58 INTRODUCTIONS AND LEADERS’ PERSPECTIVES

History belongs to those who embrace the future

presented to you here in early March. Today, we have gone through José Manuel Barroso, president of the this package and our joint European Agenda for Reform in detail and identified ways to support the political, economic and financial European Commission, outlines stability of Ukraine. Specifically, the new State Building Contract programme I just signed with the prime minister, worth €355 million, the support that Europe is giving in plus €10 million to support civil society, will help the Government of Ukraine to address short-term economic stabilisation needs and aid of a stable, sovereign, democratic implement governance reforms in order to promote inclusive socio- economic development. This State Building Contract includes concrete and peaceful Ukraine steps towards building transparency and fighting against corruption, and will help to increase the government’s ability to respond to citizens’ demands and needs. kraine can count on the European Union, now and in Another major deliverable of today’s meeting was the conclusion the future. Our meeting [with members of the Ukrainian of the Memorandum of Assistance to Ukraine that is necessary to give Government at the European Commission on 13 May effect to the €1 billion Macro Financial Assistance loan programme. 2014] was a very successful one. It was an unprecedented The EU will soon disburse the first package of €600 million of a total one – it is the first time the European Commission is amount of €1.6 billion of Macro Financial Assistance. Umeeting with another government outside of the European Union that has an association agreement with us. And I think we can say there was a great convergence and the spirit was really friendly and constructive. The situation we are seeing in Ukraine is, of course, of the greatest The rights of national minorities and all concern. First of all, for the Ukrainian people, but I believe it is also the persons need to be respected and upheld, but greatest challenge to Europe’s security since the fall of the Iron Curtain and the fall of the Berlin Wall. in the framework of a united Ukrainian state It is therefore critically important that we stop the spiral of political and security escalation that we have seen over recent weeks. We need to build on the diplomatic efforts agreed in the These two specific actions come on top of a wide range of the Geneva statement and continued by the OSCE [Organization for European Commission’s assistance to Ukraine in other areas, such Security and Co-operation in Europe]. as the elimination of customs duties on goods originating from Ukraine The so-called referendum held in Ukraine’s eastern regions is – worth nearly €500 million per year in tariff reductions; and the illegitimate and illegal. We will not recognise its outcome. The rights signature of the Memorandum of Understanding enabling gas flows of national minorities and all persons need to be respected and upheld, from Slovakia to Ukraine, which was an important first step to diversify but in the framework of a united and unitarian Ukrainian state. Ukraine’s sources of gas supply. I was present in the signature of this I have made clear to Prime Minister Yatseniuk that we support all memorandum in Bratislava recently. And the European Commission, efforts made by the Ukrainian Government to promote a broad-based as you know, is holding trilateral energy talks with Ukraine and Russia and inclusive national dialogue with all regions, in particular on the aimed at safeguarding the security of supply and transit of gas to and issue of constitutional reform. through Ukraine. The Ukrainian system of government, the election of the next Another point is the work conducted by the Commission, endorsed president of Ukraine and agreements with third countries are decisions yesterday by the Foreign Affairs Council, to give effect to our policy of for the Ukrainian people to freely decide, without external interference. non-recognition of Crimea’s annexation by Russia. The doctrine of limited sovereignty should belong to history books. And we are working together on many other areas, for example And history belongs to those who embrace the future, not to those who visa liberalisation, aviation and research. try to hijack it. Today … our focus has been on the support we can give to From the very beginning, our policy regarding the crisis in Ukraine Ukraine. Let me add a word on the actions of Russia. Our message had a very important central objective: to support a viable, sovereign to Russia is to engage, to implement its part of the Geneva statement, state of the republic of Ukraine; to support a democratic, stable, united to repeal the mandate of the Federation Council to use force and prosperous country. This is our first goal looking to the response on Ukrainian soil and to act as a responsible stakeholder of our to the crisis. community of nations. Together with the prime minister, before the executive-to-executive meeting, we have also analysed the situation Measures to support Ukraine there. My opinion is that it is still not too late if Russia wants to work Our joint meeting today was therefore part of our continued support constructively. I believe it is in the interest of everybody in Europe, to this stable, sovereign, democratic and peaceful Ukraine. including Russia, to cease this kind of action and that we can turn We are acting like never before to deliver short-, medium- and back this page and that we can in fact come to a real de-escalation long-term support measures worth €11 billion – measures that I of this conflict.

8 | G7 BRUSSELS JUNE 2014

G7 INTRO 01 Barroso.indd 8 21/05/2014 11:28 INTRODUCTIONS AND LEADERS’ PERSPECTIVES

European Commission president José Manuel Barroso has declared his support for the Ukrainian Government’s efforts to promote an inclusive national dialogue DEAN MOUHTAROPOULOS/GETTY IMAGES DEAN MOUHTAROPOULOS/GETTY

After the signing in March of the political chapters of our of the Ukrainian authorities. As I have said in the past, this Association Agreement, today’s meeting shows the EU and Ukraine agreement was never an agreement against someone, but for are jointly committed to working together towards Ukraine’s something: for democracy, prosperity and well-being of all the political association and economic integration with the EU. Ukrainian people. And we continue to stand by these goals. Closer association between the EU and Ukraine was something we proposed to, not imposed on, Ukraine and its people. And we remain committed to concluding the signature procedure of the remaining chapters of the Association Agreement as soon Excerpts from the press statement by European Commission president as possible after the presidential elections on 25 May. We received José Manuel Barroso after the visit of Prime Minister Arseniy Yatseniuk clear assurances from the Ukrainian side that it is exactly the goal and members of the Government of Ukraine, Brussels, 13 May 2014

G7 BRUSSELS JUNE 2014 | 9

G7 INTRO 01 Barroso.indd 9 21/05/2014 11:27 SPONSORED FEATURE

Building trust in global supply chains

and a strong framework at national level. control for governments across the length Leading governments are well-placed of complex supply chains that criminals to set a positive example by being are so adept at exploiting. ambitious in this area – ensuring their individual and collective approaches take Digital technology needs to be advantage of the best new solutions complemented by material-based security available and by setting an example of Secure track and trace is based on marking proactive cooperation. There is a win-win legitimate products securely so as to to be achieved through putting in place guarantee authenticity and give each item a robust national systems that can be linked unique identity, so that it can be monitored across borders to build an interoperable through its life cycle from manufacturer international network. to consumer. Digital technology is By Philippe Amon SICPA is at the forefront of those in essential for monitoring and for the full Chairman & CEO, SICPA the private sector investing in developing exploitation of data, but to protect against up-to-date tools for governments so they the vulnerabilities of cyberspace, secure can meet these challenges now and in marking needs to use material-based the future. Our SICPATRACE® platform is features such as high-security inks. afe international trade is designed to accommodate a broad range To meet government needs, a secure essential for the economic of products, to protect licit industries and tracking and tracing system should be growth governments are help promote the conditions suitable for modular and adaptable to a wide range currently seeking, but it is economic development and investment. of products – be they excisable goods, threatened by the ever-evolving Our approach builds on our long consumables likely to be fraudulently Sasymmetrical threat of fraud and illicit experience providing security inks and traded, medicines or sensitive equipment. activity. These crimes, be they through sale security features to protect bank notes At each stage there are benefits. At the of counterfeits, contraband, tax evasion, and through working in partnership with beginning of the supply chain benefits avoidance of quality controls or theft of governments. SICPA has developed a include production control, which tackles intellectual property, damage government modern toolbox that can be implemented in the mis- or under-declaration that results revenues, undermine policies and put public a modular way and adapted to take account in tax losses. There are further tax and health and citizens’ well-being at risk. of national needs and priorities. At the health gains from preventing diversion International cooperation is crucial to core of the approach is secure track and frauds, adulteration and illegitimate tackling the issue, as are clear policies trace, which provides transparency and repackaging. At inspection stages

SIPCA_placed.indd 2 21/05/2014 10:24 SPONSORED FEATURE

About SICPA

Founded in 1927 and headquartered in Lausanne from counterfeiting and fraud. They range from inks Switzerland, SICPA is a trusted provider of secured developed for specific printing processes to solutions identification, traceability and authentication solutions and adapted for varnishing and theft-deterrence systems. services to central banks, governments and high-security SICPA Government Security Solutions integrates printers around the world. High-technology security inks material-based security features and digital technology are at the core of the company’s expertise and for more to offer solutions and services to governments, ensuring than 60 years SICPA has been at the forefront of research product authentication, traceability and protection as well and innovation in this area. as tax reconciliation and production controls. SICPA inks and security features protect the majority Operating on five continents, SICPA is a global company of the world’s bank notes, security and value documents supporting governments in more than 200 countries.

there are tools to counter corruption. system is unintrusive and has minimal The technology now exists to do so Business intelligence, risk profiling and impact on production processes – it copes successfully. It is a tool par excellence reporting modules exploiting ‘big data’ with difficult industrial environments. of good governance. We stand ready to ensure best use of enforcement The integrity of data capture is crucial – it support governments to make it happen! resources. Real-time information of has to be highly accurate and the means evidential quality improves the ‘hit rates’ acceptable to all supply chain actors. It has of enforcers for seizures and prosecutions. to be collected and stored in a way that respects commercial sensitivities but which Implementation requires a holistic nevertheless allows governments to reap approach and expertise the benefits of ‘big data’ manipulation. It SICPA knows from its extensive practical requires a fully reliable and secured system experience in countries across the globe of aggregation so that, for example, a that implementing a successful control bulk package does not require unpacking. system requires a holistic approach Checks by the authorities need to be and proven expertise. It needs to quick and easy, compatible with trade address the needs of all stakeholders facilitation schemes based on AEO and so that implementation is not slowed contain anti-corruption safeguards. by unnecessary resistance. Permissive The cost of illicit trade is high. The legislation needs to be in place. A good benefits of combating it are significant. www.sicpa.com

SIPCA_placed.indd 3 21/05/2014 10:24 INTRODUCTIONS AND LEADERS’ PERSPECTIVES

Bringing the benefits of globalisation home

billions in our infrastructure – in roads, rail and what is set to The core values of Britain’s liberal become the best superfast broadband network in Europe. Ernst and Young now say Britain is the best place in Europe for democracy are vital foundations new entrepreneurs. This has not come automatically; it is because we have chosen to build our long-term economic plan on Britain’s for commercial success, UK prime great strengths. We have chosen to play to our strengths as an open, trading economy, championing the vital EU trade deals with America, minister David Cameron told the Canada and Asia that can add millions of jobs to our economies and billions of pounds to the value of our businesses. World Economic Forum Rather than trying to pull up the drawbridge and shut ourselves off from globalisation, we have chosen to embrace foreign investment … And we are proud that in the first half of last year, the United he key challenge for politicians and business leaders in Kingdom became the world’s largest recipient of inward foreign direct Europe is how we make a success of globalisation … investment … I think there is a chance for Britain to become ‘the If we engage in the right way, if we get the fundamentals re-shore nation’ … As we do so, we should never forget one of our most of our economies right, sort out our debts, maximise important strengths. We should never undersell the core values of our our competitiveness and build on our strengths, then Tglobalisation offers our businesses the chance to win new contracts to export into markets that were previously closed and create jobs fulfilling the demands of new consumers thousands of miles away. Rather than trying to pull up the drawbridge Indeed, if we make the right decisions, we may also see more of and shut ourselves off from globalisation, we what has been a small but discernible trend where some jobs that have chosen to embrace foreign investment were once offshored are coming back from East to West … All of this is about the same purpose. Securing sustainable, well- paid jobs. Giving people pride in using their skills. Offering workers a chance to make world-beating products. Bringing more of the benefits liberal democracy: the rule of law, the freedom of speech and freedom of globalisation home and ensuring those benefits are felt by hard- of the media, property rights and accountable institutions – all vital working people in terms of security, stability and peace of mind. foundations for long-term stability and commercial success. But for re-shoring to happen we need to build on those foundations. Getting the fundamentals right That means settling once and for all two key arguments that risk Let me start with what we are doing in Britain. We have set out a undermining our competitiveness. First, on the overall business long-term economic plan to secure our country’s economic future. environment. And second, on the need for cheap and predictable It has five parts. First, getting the fundamentals right – cutting the sources of energy … deficit so we deal with our debts, safeguarding our economy for the All of us here in Davos know what it is that businesses need if they long term and keeping mortgage rates low. Second, reducing taxes are to choose to locate in Europe. Macroeconomic stability. European to help hard-working people become more financially secure. Third, economies with their debts and deficits under control. Strong finance capping welfare and reducing immigration so our economy delivers – like that provided by the City of London. Consistent support for free for people who want to work hard and play by the rules. Fourth, trade – especially the vital trade deal with the United States. And above delivering the best schools and skills for young people so the next all, we need an unashamedly pro-business regulatory environment – generation can be best placed to win the jobs of the future. And fifth, with labour market flexibility, low jobs taxes and a willingness to pave driving job creation by backing small business and enterprise with the way for new business and new business models … better infrastructure and lower jobs taxes. Each part of this plan is already producing results. An enterprise-friendly Europe The deficit we inherited was the biggest in our post-war history – We are making progress in the battle for an enterprise-friendly Europe. but already it is down by a third. Our economy is growing. Just this The eurozone crisis has focused governments on the need for structural week, the International Monetary Fund upgraded its growth forecasts reform. The accession to the EU of countries that experienced state for Britain by more than any other G7 country and we have also seen socialism and the progress of sensible pro-enterprise governments. the largest quarterly increase in employment since records began. All these things have helped. But the fight is not yet won … There are now more than 1.6 million new private sector jobs since There are still people who think that the key to success is ever early 2010 – and around 400,000 more small businesses. We have cut greater social protections and more regulations. Let’s be clear. We taxes for over 25 million people, reformed welfare so that it pays to don’t protect workers by piling on the regulations and directives to work and created more apprenticeships than at any time in our history. such an extent that they become unemployable. We have to maintain And we have taken unprecedented steps to back enterprise, the flexibility for companies to grow and expand. Incredibly complex scrapping £1.2 billion of red tape – including pushing for the removal and overwritten directives that take this flexibility away, that make of the most problematic European Union regulations and investing life difficult for temporary workers, or that stop firms moving people

12 | G7 BRUSSELS JUNE 2014

G7 INTRO Cameron.indd 12 20/05/2014 20:06 INTRODUCTIONS AND LEADERS’ PERSPECTIVES

UK Prime Minister David Cameron says that an “unashamedly pro-business regulatory environment” with labour market flexibility is needed in order for businesses to locate in Europe AMMAR AWAD/REUTERS

between plants, just mean that companies who want to re-shore environmental dangers. But if this is done properly, shale gas can will re-shore somewhere else … actually have lower emissions than imported gas … The same is true of energy. To relocate in Europe, businesses will We should be clear that if the European Union or its member states be encouraged by cheap and predictable sources of energy. Yes, we impose burdensome, unjustified or premature regulatory burdens on need renewables – these are a vital part of our future. That is why shale gas exploration in Europe, investors will quickly head elsewhere. Britain had made itself one of the best places for green investment Oil and gas will still be plentifully produced, but Europe will be dry … anywhere in the world, with the world’s first dedicated green European countries face a choice. If we act now, we can ensure our investment bank and the largest offshore wind market in the world. businesses, our peoples and our societies can benefit from the next We need nuclear as part of that energy mix too. And I am delighted phases of globalisation. that in Britain last year we agreed the first new nuclear build for a The security, stability and peace of mind that those we serve generation, with £16 billion of investment and 25,000 new jobs. yearn for can only be delivered by facing the difficult choices. That will ensure safety of energy supplies. We must not fail them. But we also need to explore the opportunity represented by shale gas … We need the right regulations, such as ensuring that well casings are set at the right depths with tight seals. And governments Excerpts from UK prime minister David Cameron’s speech to the need to reassure people that nothing would go ahead if there were World Economic Forum (Davos) on 24 January 2014

G7 BRUSSELS JUNE 2014 | 13

G7 INTRO Cameron.indd 13 20/05/2014 20:06 SPONSORED FEATURE

A commitment to developing healthcare in the emerging markets

GE Healthcare’s focus on localization and capacity building is contributing to more sustainable healthcare in developing nations, one partnership at a time

this represents a huge opportunity to invest innovation and consider more holistic, and solve. It is therefore time to double- system-wide approaches to fixing gaps in down our efforts on the emerging markets. the system, we observe some countries At GE, our approach to solving this even begin to leapfrog their counterparts is called healthymagination – it is about in the West – a significant sign that driving up quality, lowering cost and progress is being made. increasing access in healthcare. Moreover, governments in the emerging markets are today seeking a system-wide Differences in systems and populations approach to tackle several healthcare Despite advances, government healthcare issues. They want the guarantee of spending per capita remains low versus improved connectivity across the hospital the West and infrastructure is often network, smarter hospital design, broader Skander Malcolm poor. Across many parts of sub-Saharan financing options, better patient throughput President and CEO of GE Healthcare’s Africa, for example, access to appropriate and productivity and improved patient Eastern & Africa Growth Markets Region, healthcare facilities and qualified healthcare care. They want tailor-made solutions that covering Russia, Central Asia, Turkey, the expertise remains a challenge. address these critical needs. Middle East, Saudi Arabia and Africa Recognising that health and At GE, we see that it takes all different socioeconomic prosperity are inextricably perspectives and approaches to solve a linked, governments in these emerging problem and we are helping by providing n the developing world and indeed markets understand that they must aim medical technologies, consumer education, across Africa, Russia, Turkey and the for a fast-changing healthcare agenda training, financing and software – in short, Middle East, the demand for better where increasing access to primary all the collective experience we have – and healthcare and education is greater healthcare services, educating the deploying it in a way that works in the than ever before. predominantly young population on key emerging market context. IIndeed, if emerging market healthcare health issues and ensuring adequate challenges can be solved, this will training and critical skills for the healthcare Innovation in healthcare development contribute to a more stable economic workforce rank among the top priorities. We see that healthcare innovation has a recovery and faster growth, presenting Already we see significant investments different meaning depending on where a much more attractive profile for being made across the region in the you are in the world. What is consistent is investors including the G7 and global establishment of a more modern healthcare that it has to be economically and clinically companies, such as GE. infrastructure. In addition to revised legal relevant. Most importantly, given the In a very global economy, it makes frameworks and healthcare policies, the varying healthcare challenges, is that it sense for G7 countries to support financially focus too on capacity building in these is most effective when aimed at fixing a – and through technology, education developing nations is unprecedented. specific healthcare gap. and infrastructure – the development Of course, not all healthcare systems are At GE, we see that innovation comes of emerging market healthcare. For G7 created equal. As many emerging nations in different shapes and sizes: from big members and global institutions like GE, mobilise to transform health, leverage iron systems to small handheld scanning devices. For example, we found that GE’s portable mobile ultrasound, which fits in the palm of your hand like a smartphone, About is a great product that has potential to improve maternal and infant care in rural settings. Through our focus too on reverse GE Healthcare (NYSE: GE), one of the world’s leading healthcare companies, innovation, GE is bringing a new way of provides a range of technologies, services and solutions that cover the spectrum thinking in product development, based first of care, from medical imaging, software and IT, patient monitoring and diagnostics on specific emerging-market needs and to drug discovery, biopharmaceutical manufacturing technologies and then scaling these for resource-rich settings. performance-improvement solutions. GE Healthcare helps medical professionals In parallel, several new technologies with around the world deliver better healthcare to their patients. the potential to help emerging healthcare systems leapfrog the West are also very

GE_placed.indd 2 21/05/2014 09:38 SPONSORED FEATURE

encouraging. For example, tele-radiology big data to connect machines, people and capacity in the healthcare system, in line and tele-pathology are two pieces of information to improve outcomes. with the vision of the Ministry of Health. software development that will allow care Our approach is simple: we strive to In Saudi Arabia, with the Saudi Ministry to be optimized. Better data-management listen to and understand our customers and of Health, GE launched the Healthcare tools will also enable governments and work with our partners to develop solutions Skills Training Institute to provide technical, care providers to understand in more depth aimed at addressing specific needs. clinical and healthcare management courses disease patterns, treatment outcomes and Here are just a few examples of our across the region. Globally, GE Healthcare care provision, so that their spending can be most recent work across the region: trains more than 10,000 customers across used more productively. Further, emerging In Algeria, GE was selected as a strategic 120 classroom courses annually, and in manufacturing techniques will give us partner to support the government’s plan the Kingdom has trained more than 5,000 reliable, low-cost devices and allow us to put to improve healthcare services, with a healthcare professionals since 2009. In scans in place in remote and rural settings. performance-improvement programme. other work in the Kingdom to enhance Naturally, technological innovation is just In 2013, with an emphasis on knowledge hospital efficiencies, GE also helped to one aspect of the paradigm. We also see transfer and human-capital development, eliminate 9,000 hours of administrator innovation in processes, productivity and GE Healthcare launched the Advanced paperwork and 36,000 patient waiting leadership practices that ensure a holistic Applications Centre to provide vocational hours across 12 emergency departments. approach to innovation that is both tangible and continuous education. In Tanzania, GE’s handheld portable and intangible, but one that healthcare In Egypt, GE is supporting the Ministry ultrasound, in combination with education providers and ultimately patients will feel. of Health with the deployment of the and training of midwives, is demonstrating country’s first centralised image-exchange a higher rate of antenatal visits at clinics A 100-year commitment to developing repository, providing clinicians with real- with ultrasound. Therefore, this has the healthcare in the emerging markets time access to patient images. potential to have a meaningful impact GE has a long history in the emerging In Iraq, with more than 100 local on UN Millennium Development Goals 4 markets. Since arriving in Africa over employees, GE launched the Healthcare (reducing child mortality) and 5 (improving 100 years ago, we have been at work to Service Centre, customising its global maternal health) in a rural setting. deliver healthcare solutions that address service systems and processes specifically real areas of need led by a commitment to to scale the service needs of the Through our partnerships in the region, building sustainable long-term partnerships. Ministry of Health. GE Healthcare is striving to bring the best of Today, we are scaling up and localising our In Kenya, GE, USAID and the Kenya its expertise, technologies and solutions to operations, our people and our offerings Commercial Bank are collaborating to support real healthcare transformation and across the region. support SMEs, with $10 million in local deliver better clinical and patient outcomes We believe that helping our partners financing for the development of private for the region’s governments, healthcare fix their problems is where we can add health facilities including doctor partnerships, providers and their two billion citizens. the greatest value, and nowhere is there diagnostic centres and hospitals. greater demand for this than in the In Nigeria, working with the Nigerian emerging markets where GE is actively Federal Ministry of Health and USAID, GE bringing its expertise, technologies and launched the $20 million healthymagination Global Headquarters: innovations to the region. Mother & Child Initiative at the World GE Healthcare Through our experience in the region, Economic Forum in May 2014, aimed Chalfont St Giles we see a profound need for training and at reducing preventable child-maternal Buckinghamshire, United Kingdom education. Moreover, through our work we deaths in Nigeria. www.gehealthcare.com are helping hospitals reduce inefficiencies In Russia, GE partners with local EAGM HQ: +90 212 3980 902 and eliminating waste; scaling service technology manufacturer Meditsinskie capabilities to optimise product performance Technologii Ltd on the assembly of its hi- and patient safety; increasing general tech Computed Tomography and Ultrasound knowledge to help populations make technology for the Russian market. better-informed decisions about their health; In Turkey, GE is contributing to the delivery supporting human-capital development; of sustainable public-private partnerships, professionalising the region’s healthcare providing project financing and know-how workforce; and leveraging big iron and in design and technology integration to build

GE_placed.indd 3 21/05/2014 09:38 INTRODUCTIONS AND LEADERS’ PERSPECTIVES

A stable, competitive European Union

The foundations for growth and prosperity in Europe need to be constantly shored up and worked at, as Angela Merkel remarked during a recent visit to London

uropean integration shows that we have learned the lessons from bloody conflicts and a painful history. Together we have changed Europe for the better. Thanks to the peaceful revolution in Central and Eastern Europe, whose 25th anniversary we are celebrating this year, it was possible Eto overcome further frontiers in Europe. Current events in Ukraine demonstrate how grateful we should be for this good fortune. We stand shoulder to shoulder with the people there, and in many other countries, as they struggle to protect justice and freedom. For me personally, as for millions of people behind the Iron Curtain, the fall of the Berlin Wall in 1989 was a moment of incredible happiness. I learned first-hand: change – change for the better – is possible. We should be guided by that maxim in this year of commemoration. Every political generation has its responsibility; as do we, the politicians of today. Standstill can quickly lead to setbacks. Or, in the words of Winston Churchill: “To improve is to change, to be perfect is to change often.” I believe we politicians should take this to heart … On 25 March 2007, we member states of the European Union pledged in a Berlin declaration to mark the 50th anniversary of the signing of the Rome Treaties: “Our history reminds us that we must protect this for The Europe without borders is one of the great achievements of the good of future generations. For that reason we must always renew the European integration. All the member states and all their citizens political shape of Europe in keeping with the times.” We have to renew it benefit from it. Be that as it may, if we are to preserve this freedom time and again in keeping with the times so that Europe can continue to of movement and ensure that it is still accepted by the citizens, then fulfil its promise to ensure peace, freedom and prosperity. we must also have the courage to acknowledge adverse developments I know that many believe that the European Union’s peace mission and try to correct them. has been accomplished. They believe that in the early post-war years, it was an obvious motive for European integration. Now, many think, this Fair and open trade promise is outdated as today a war among European Union member In our European democracies, freedom is secured by the rule of law. In states is – thank goodness! – impossible. business, too, a reliable legal framework is a prerequisite for enterprise It is true that a war among the European Union’s member states and trade. That is the basis of our single market. Germany and the United is inconceivable today. But let us not forget that the last war on the Kingdom want to use the strength inherent in this single market to European continent took place less than a generation ago. The Western maintain our prosperity through fair and open trade with other regions Balkans show how clear and present the danger of military conflict of the world. Not least in order to ensure that we can in future continue remains. Our soldiers and police officers are still serving there today. to keep this third promise of Europe, we must always renew the political Without a European perspective for these countries, a future in peace shape of Europe in keeping with the times. We must constantly remind would still be a long way off. ourselves that the world is not waiting for Europe. Economic strength And we have to continue to stand up resolutely against extremism and competitiveness must be continually enhanced and renewed. and inhumanity, which are still present in today’s Europe. We have to For a long time we Europeans took it for granted that economic continue to condemn and fight hate, violence and terrorism of any kind development would, on the whole, be positive. With the single market – day after day. and the single currency we created an unparalleled success story that We member states of the European Union have a duty to pass on opens up new opportunities for us. However, the international financial the lessons we have learned from our history and to help foster peace crisis and the ensuing sovereign debt crisis in the euro area also made it and the rule of law in our neighbourhood and in the world. This clear that the foundations for growth and prosperity in Europe need to includes enabling others in the world to do more themselves to ensure be constantly shored up and worked at … stability and security in their region and to settle their conflicts as I am convinced that, when it comes to tackling both the peacefully as possible … international financial crisis and the European sovereign debt crisis,

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G7 INTRO 04 Merkel.indd 16 20/05/2014 19:52 INTRODUCTIONS AND LEADERS’ PERSPECTIVES

A stable, competitive European Union LUKE MACGREGOR/REUTERS LUKE

Chancellor Angela Merkel addresses members of both UK Houses of Parliament in the Royal Gallery of the Palace of Westminster, London

it cannot simply be enough just to try to survive them somehow. United States of America can make a significant contribution to We must set our sights higher. Our aim must be to come out of the growth and employment in Europe … crises stronger than we were at the start, because it is a matter of We must make even more intensive use of the European Union’s upholding our values and interests worldwide … clout to push our common interests, for example with regard to international climate protection. No one EU member state alone would Defending common values have sufficient weight to stand fast in the international negotiations. The Cold War blocs no longer exist. Globalisation and digitisation A stable, competitive European Union can combine economic success determine how we live, how we do business and how we work in a way and social responsibility in a sustainable way. To this end, the euro we could never have imagined … states must back up monetary Today the world is home to union with a strong economic more than seven billion people. union with a clearly defined and We 500 million Europeans make The world is not waiting for Europe. Economic sustainable architecture … up a mere seven per cent of the strength and competitiveness must be We Germans will never world’s population. We have to forget that we owe our country’s face up to the major tasks of our continually enhanced and renewed prosperous development to our age together. I am convinced European partners’ willingness that any of us acting alone would to forgive and reconcile. achieve less than if we all act together: less in terms of defending our We Germans are aware of our responsibility for a bright future common values and less in terms of the prosperity of our citizens in for the European Union. We will therefore do our utmost to ensure the global competition … that the European Union can continue to keep its promise of peace, Despite Europe’s 25 per cent share of global economic output, the freedom and prosperity in future. Whatever we do or fail to do now World Trade Organization estimates that, over the next five years, to renew the European Union’s political shape in keeping with the 90 per cent of growth will be generated outside Europe. So to keep times will decide Europe’s future. the European promise of prosperity in the future, it will be vital to benefit from growth opportunities in other parts of the world. To that end, we must dismantle further barriers to trade. In particular, the Excerpts from Chancellor Angela Merkel’s speech to the UK parliament planned free trade agreement between the European Union and the in London, 27 February 2014

G7 BRUSSELS JUNE 2014 | 17

G7 INTRO 04 Merkel.indd 17 21/05/2014 12:53 SPONSORED FEATURE

Doing business in the heart of Europe and soaking up San Marino’s sights, history and culture

Daniela Berti Regent: “Though your country is small, On 3 October 2013, the double Head of Cabinet Ministry of Finance and Budget nevertheless it is one of the most honored taxation agreement (DTA) with Italy throughout history…” entered into force. The historical peculiarity of San Marino is revealed in its ancient institutions, which The economic system ore than 1,700 years of are unique in the world. The two Captains San Marino is based on a diversified independence and freedom, Regent, for example, appointed for the first economy, with a developed industrial amid history and legend: time in 1243, are an institution still in force sector, banking and financial services, trade, the special traits of the today. The Great and General Council tourism and handicrafts. The government world’s oldest republic, a is the legislative body composed of is promoting internationalisation of the Msmall piece of land that clings to Mount 60 parliamentarians, elected every economic system by adopting specific Titano, in the heart of Europe and Italy. five years by universal suffrage, and the regulations favourable to attract foreign Over the centuries, popes, potentates and Congress of State (government) is today investments. Since San Marino is a small even the emperor Napoleon have shown composed of nine members whose country, it presents the advantage of being respect for the liberty of this country, mandate shall not exceed a maximum flexible and fast in the decision-making which is today a fully fledged member of ten consecutive years. process. It offers conditions for developing of the United Nations and the Council of San Marino is also known for its successful projects, including reduced Europe, as well as other major international tradition of great hospitality. Right of bureaucracy and direct negotiation with organisations, in which it strives to defend exile has never been refused, whatever institutions for providing solutions tailored human rights and peace. the condition and ideas of the refugee. to investors’ needs. The level of education It was thanks to the wisdom that One emblematic episode is the hospitality is very high and English is widely spoken. inspired the ancient San Marino given during the Second World War These elements allow companies to find Commune that its people were able to 100,000 Italian refugees from the most of the skills they require. However, to tackle dangerous situations and surrounding districts. access to the external labour market strengthen their independence. In is always possible in case of missing 1797, Napoleon offered to extend the San Marino on the UNESCO professional profiles. country’s land area as far as the sea, but World Heritage List this offer was wisely refused. In 1861, The San Marino Historic Centre and Mount Taxes, facilities and the financial system Abraham Lincoln showed his friendship Titano site became part of the UNESCO San Marino offers competitive low tax rates for San Marino by writing to the Captains World Heritage List in 2008. It is a place of and a new law on direct taxation came quality and well-being thanks to historical, into force in January 2014. It has a modern cultural, traditional and environmental structure with a low taxation both for factors and a high level of security. natural and legal persons (the corporate tax rate is 17 per cent). Furthermore, a reform San Marino’s full integration of indirect taxation is being studied in order in the international community to draft a law in line with EU directives. The Republic of San Marino is a San Marino is a good place for member of the United Nations and developing innovative projects that many UN programmes, funds and can benefit from the new Science and specialised agencies, as well as the Technology Park and from legislation able to Organization for Security and Co-operation support strategic initiatives. Moreover, the in Europe (OSCE) and the Council of Europe establishment of fruitful collaborations with (CoE). It has also joined the IMF, the World the local university is possible thanks to its Bank, the CEB and INTERPOL. It takes openness to the real economy. part with its own parliamentary delegation San Marino has an internationally in the Inter-Parliamentary Union, the oriented financial system, which provides Parliamentary Assembly of the Council of a wide range of financial services to satisfy Europe and that of the OSCE. San Marino the needs of all types of client. has diplomatic and consular relations The financial system is composed of with more than 100 European and extra- around 30 financial institutions, including European countries. seven banks specialised in full-scope With the European Union, San Marino banking services to private and corporate has a special Customs Union Agreement customers, as well as in private banking and a Monetary Agreement, and by the end and family office solutions. Nowadays, of this year the republic will start official financial intermediaries in San Marino negotiations for an Association Agreement. can offer the best services meeting the

SanMarino_placed.indd 2 15/05/2014 12:12 SPONSORED FEATURE

best international standards in one of the has signed a significant number of Tax and roads, all made of the beautiful most secure and advanced economies Information Exchange Agreements (TIEAs) and precious stone of San Marino. The in the world. There are two institutions and DTAs, according to the new standards landscape on the Adriatic coast and responsible for promoting, sustaining and of the Organisation for Economic inland views offer the most beautiful controlling the financial system: the Central Co-operation and Development (OECD), and emotional experiences. Tourists can Bank is mainly involved in fostering and with several countries and jurisdictions. find accommodation facilities, shopping safeguarding financial stability, while the As a consequence, on 23 September 2009 opportunities, and a rich culinary offer Financial Intelligence Agency is responsible San Marino was placed on the OECD based on excellent local agricultural for analysing suspicious transactions. white list. San Marino has in place more products. In addition to that, many events The current Anti Money Laundering than 41 Agreements, meeting the latest are held all year round, particularly during and Countering Financing of Terrorism OECD standards, 24 of which are with the summer season and at Christmas (AML/CFT) regime is fully in compliance OECD or EU countries. Furthermore, time. Two prestigious international events with Financial Action Task Force (FATF) San Marino is an active member of are also organised in San Marino: Renata recommendations and the relevant the Global Forum on Transparency and Tebaldi International Voice Competition directives and regulations of the EU. Exchange of Information for Tax Purposes. and International Piano Competition. Moreover, the current Monetary Agreement In 2013, San Marino signed the OECD- with the EU, signed on 27 March 2012 and CoE Multilateral Convention on Mutual in force since September 2012, ensures Administrative Assistance in Tax Matters. the implementation of all relevant EU The Central Liaison Office is in charge of directives and regulations in banking and exchanging tax information. the financial sector listed in the Annex to the Agreement, in accordance with the Welcoming tourists from around the world deadlines therein specified. San Marino San Marino will take part in the Milan Expo boasts a modern and competitive legislation 2015 Bio-Mediterraneum cluster, with its on insurance, investment funds and trusts. own exhibition space: ‘San Marino, small enough to be big’. Ministry of Finance and Budget Tax information exchange Every year, almost two million tourists T: +378 0549 882241 Since 2008, San Marino has been deeply from all over the world come to San Marino, E: info.fi[email protected] committed to a process of greater visiting in particular the Historical Centre www.visitsanmarino.com transparency and, since April 2009, it with its museums, churches, buildings www.esteri.sm

SanMarino_placed.indd 3 15/05/2014 12:12 INTRODUCTIONS AND LEADERS’ PERSPECTIVES

The hard work of building democracy

In US president Barack Obama’s State on Earth. But we have to act with more urgency, because a changing climate is already harming western communities struggling with of the Union Address, he reasserted drought, and coastal cities dealing with floods. That is why I directed my administration to work with states, utilities and others to set new the efficacy of American diplomacy standards on the amount of carbon pollution our power plants are allowed to dump into the air. The shift to a cleaner energy economy will not happen overnight, and it will require tough choices along the way. But the debate is settled. Climate change is a fact. And when our pportunity is who we are. And the defining project children’s children look us in the eye and ask if we did all we could of our generation is to restore that promise. to leave them a safer, more stable world, with new sources of energy, We know where to start: the best measure of I want us to be able to say yes, we did … opportunity is access to a good job. With the economy Tonight, because of the extraordinary troops and civilians who picking up speed, companies say they intend to hire risk and lay down their lives to keep us free, the United States is more Omore people this year. And over half of big manufacturers say they secure. When I took office, nearly 180,000 Americans were serving in are thinking of insourcing jobs from abroad … Iraq and Afghanistan. Today, all our troops are out of Iraq. More than Let’s do more to help the entrepreneurs and small business owners 60,000 of our troops have already come home from Afghanistan. With who create most new jobs in America. Over the past five years, my Afghan forces now in the lead for their own security, our troops have administration has made more loans to small business owners than moved to a support role. Together with our allies, we will complete any other. And when 98 per cent of our exporters are small businesses, our mission there by the end of this year, and America’s longest war new trade partnerships with Europe and the Asia-Pacific will help them will finally be over. create more jobs. We need to work together on tools like bipartisan trade After 2014, we will support a unified Afghanistan as it takes promotion authority to protect our workers, protect our environment and responsibility for its own future. If the Afghan Government signs a open new markets to new goods stamped ‘Made in the USA’. China and security agreement that we have negotiated, a small force of Americans Europe are not standing on the sidelines. Neither should we … could remain in Afghanistan with NATO allies to carry out two narrow One of the biggest factors in bringing more jobs back is our missions: training and assisting Afghan forces, and counterterrorism commitment to American energy. The all-of-the-above energy strategy operations to pursue any remnants of al-Qaeda. While our relationship I announced a few years ago is working, and today, America is closer with Afghanistan will change, one thing will not: our resolve that to energy independence than we have been in decades. terrorists do not launch attacks against our country. One of the reasons why is natural gas – if extracted safely, it is The fact is, that danger remains. While we have put al-Qaeda’s the bridge fuel that can power our economy with less of the carbon core leadership on a path to defeat, the threat has evolved, as pollution that causes climate change. Businesses plan to invest almost al-Qaeda affiliates and other extremists take root in different parts of $100 billion in new factories that use natural gas. I will cut red tape the world. In Yemen, Somalia, Iraq and Mali, we have to keep working to help states get those factories built, and this Congress can help by with partners to disrupt and disable these networks. In Syria, we will putting people to work building fuelling stations that shift more cars support the opposition that rejects the agenda of terrorist networks. and trucks from foreign oil to American natural gas. My administration Here at home, we will keep strengthening our defences, and combat will keep working with the industry to sustain production and job new threats like cyberattacks. And as we reform our defence budget, growth while strengthening protection of our air, our water and our we have to keep faith with our men and women in uniform, and invest communities. And while we are at it, I will use my authority to protect in the capabilities they need to succeed in future missions … more of our pristine federal lands for future generations. It is not just oil and natural gas production that is booming; we are A world of complex threats becoming a global leader in solar, too. Every four minutes, another In a world of complex threats, our security and leadership depends American home or business goes solar, every panel pounded into on all elements of our power – including strong and principled place by a worker whose job cannot be outsourced. Let’s continue diplomacy. American diplomacy has rallied more than 50 countries that progress with a smarter tax policy that stops giving $4 billion a to prevent nuclear materials from falling into the wrong hands, year to fossil fuel industries that do not need it, so that we can invest and allowed us to reduce our own reliance on Cold War stockpiles. more in fuels of the future that do. American diplomacy, backed by the threat of force, is why Syria’s chemical weapons are being eliminated, and we will continue to work A cleaner, safer planet with the international community to usher in the future the Syrian And even as we have increased energy production, we have partnered people deserve – a future free of dictatorship, terror and fear. As we with businesses, builders and local communities to reduce the energy speak, American diplomacy is supporting Israelis and Palestinians as we consume. When we rescued our automakers, for example, we they engage in difficult but necessary talks to end the conflict there; worked with them to set higher fuel efficiency standards for our cars. to achieve dignity and an independent state for Palestinians, and In the coming months, I will build on that success by setting new lasting peace and security for the State of Israel, a Jewish state that standards for our trucks, so we can keep driving down oil imports knows America will always be at its side. and what we pay at the pump. And it is American diplomacy, backed by pressure, that has Taken together, our energy policy is creating jobs and leading to halted the progress of Iran’s nuclear program – and rolled parts of a cleaner, safer planet. Over the past eight years, the United States that programme back – for the very first time in a decade … Iran has has reduced our total carbon pollution more than any other nation begun to eliminate its stockpile of higher levels of enriched uranium.

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G7 INTRO 05 Obama.indd 20 20/05/2014 19:55 INTRODUCTIONS AND LEADERS’ PERSPECTIVES

President Barack Obama believes that the transition to a cleaner energy economy will not be a quick process, and says that it will demand tough choices KEVIN LAMARQUE/REUTERS

It is not installing advanced centrifuges. Unprecedented inspections poverty. In the Americas, we are building new ties of commerce, but we help the world verify, every day, that Iran is not building a bomb. are also expanding cultural and educational exchanges among young And with our allies and partners, we are engaged in negotiations to people. And we will continue to focus on the Asia-Pacific, where we see if we can peacefully achieve a goal we all share: preventing Iran support our allies, shape a future of greater security and prosperity, from obtaining a nuclear weapon … and extend a hand to those devastated by disaster – as we did in Our alliance with Europe remains the strongest the world has the Philippines, when our marines and civilians rushed to aid those ever known. From Tunisia to Burma, we are supporting those who battered by a typhoon, and were greeted with words like “We will never are willing to do the hard work of building democracy. In Ukraine, forget your kindness” and “God bless America!” we stand for the principle that all people have the right to express themselves freely and peacefully, and have a say in their country’s future. Across Africa, we are bringing together businesses and Excerpts from the 2014 State of the Union Address delivered by US president governments to double access to electricity and help end extreme Barack Obama on 28 January

G7 BRUSSELS JUNE 2014 | 21

G7 INTRO 05 Obama.indd 21 20/05/2014 19:55 SPONSORED FEATURE

Kuwait Fund For Arab Economic Development Partners in development, helping people help themselves

hortly after its independence societies. The Fund continued its main technical capabilities of the beneficiary in December 1961, the State of activity of providing concessional loans for countries. In addition, the Fund contributes Kuwait established Kuwait Fund financing development projects accorded to the financial resources of development for Arab Economic Development high priority by the recipient countries. institutions to support their activities in to assist other Arab countries in Projects supported by the Fund are based developing countries and cooperates with Stheir development. In July 1974, The Fund on well-prepared feasibility studies, and several national, regional and international expanded its scope of operations to include the results of appraisals carried out by the development institutions in coordinating all developing countries. Fund’s professional staff. efforts and participating in the financing Over the past 52 years, the Fund had of projects. Furthermore, the Fund pursued its activities with the primary Supporting activities administers grants extended by the objective of assisting developing The Fund also provides technical State of Kuwait to developing countries nations in their efforts to achieve their assistance required to finance the and institutions. development goals and improve the preparation of feasibility studies for Operations of the Fund cover standard of living of their people and projects and to improve administrative and development projects in various

Figure 1: Regional distribution of total loan commitments

Up to 31 December 2013

19% East, South Asia and the Pacific Latin America and the Caribbean 2%

9% West Africa Arab Countries 56%

8% Central, South and East Africa Central Asia & Europe 6%

Figure 2: Sectoral distribution of total loan commitments

Up to 31 December 2013

3% Development Banks Others1%

4% Social Transportation 36%

2% Telecommunication Agriculture 11% 9% Water & Sanitation

27% Energy Industry 7%

Kuwait Fund_placed.indd 2 06/05/2014 17:51 SPONSORED FEATURE

economic sectors including agriculture, close cooperation with its partners in communication, energy, industry, development with respect to their priorities transport, water and sanitation, as well and with full support to their ownership About the Kuwait Fund as education and health. In addition, of the development operations. It also for Arab Economic the Fund supports small and medium provides its partners in development with private-sector projects financed by advice, as needed, on all matters relating Development the national development banks and to preparing and implementing projects. social development funds of the Since its independence in recipient countries, with the aim to Distributing loans 1961, the State of Kuwait has create new jobs opportunities and Up to 31 December 2013, the Fund has participated in economic improve living standards. provided concessional loans with a total development efforts, motivated On December 31 2013, 104 countries value of approximately US$17.2 billion by its firm belief in the principles received concessional loans and technical distributed over regions and sectors as of cooperation and humanity. assistance from the Fund. It maintains shown in Figures 1 and 2. Therefore, Kuwait proceeded to establish the Kuwait Fund for Arab Economic Development, the first Basic Information on Kuwait Fund Up to 28 February 2014 institution in the Middle East to take an active role in international PROFILE (US$) Million development efforts. Capital 6,600 The Kuwait Fund extends loans to finance development projects Loans Commitment 17,456 in developing countries, provides Total Disbursements of Loans 13,890 assistance with feasibility studies, offers training for nationals Total Repayment of Loans 8,206 of the recipient countries, Amount of Kuwait Fund Grants 335 and subscribes to the capital of international and regional Amount of Technical Assistance 42 development institutions. Today, Kuwait Fund forms a solid Amount of Kuwait Government Grants 3,310 bridge of friendship and solidarity Number of Loans 858 between the State of Kuwait and developing nations. Number of Beneficiary Countries (Loans) 103

Number of Kuwait Fund Grants 197

Number of Technical Assistance 48

Number of Kuwait Government Grants 75 Kuwait Fund for Arab Economic Development Number of Beneficiary Countries and Institutions (K F Grants) 95 Mirqab Number of Beneficiary Countries and Institutions (Tech Assistance) 36 Mubarak Al-Kabeer St Kuwait City Number of Beneficiary Countries and Institutions (Kuwait Govt Grants) 43 PO Box 2921 Safat 13030 Kuwait State of Kuwait www.kuwait-fund.org

Kuwait Fund_placed.indd 3 06/05/2014 17:51 INTRODUCTIONS AND LEADERS’ PERSPECTIVES

In support of Ukraine’s territorial integrity: restoring economic and political stability

of the jungle ought to be to redouble the free world’s unwavering The Government of Canada has always fervour and to reinforce the growing diplomatic and economic isolation of the regime in place in Moscow. stood with those who defend freedom, The Government of Canada has always stood with those who defend freedom, democracy, human rights and the rule of law. democracy, human rights and the rule We have also been proud that we were the first Western country to recognise Ukraine’s independence in 1991. of law, Prime Minister Stephen Harper We are here today to reiterate our commitment to your independence. I am here today to reiterate our support for Ukraine’s said on a recent visit to Kiev sovereignty and territorial integrity, and to support your efforts, Prime Minister Yatseniuk, to restore economic and political stability.

n recent months, the whole world has witnessed the courage of the Ukrainian people. You have driven back a regime that pointed its guns at your people and killed Ukrainians. Canadians are impressed by the Through such dark days, you have provided inspiration and a restraint shown by the Ukrainian new chapter in humanity’s ongoing struggle for the freedom, Idemocracy and justice of its citizens. Government and people in the face Now you face an even greater test. of obvious provocations President Vladimir Putin’s actions in Crimea are a clear violation of international law, a campaign of armed aggression widely condemned by the international community. Canada and its G7 partners have spoken with one voice: we do To that end, Canada has already announced loan guarantees as not accept what has happened in Crimea, a parody of a referendum part of a broader package under consideration by the International that violates the constitution, sovereignty and territorial integrity of Monetary Fund. These guarantees must be accompanied by the Ukraine, and the results of which only reveal the brutality of Putin’s restoration of Ukrainian institutions after the damage inflicted by military occupation. the corruption of the Yanukovych regime. In coordination with our allies, Canada has already taken action Canada stands ready to help Ukraine in this necessary work. in response to the events in Crimea, including suspension of our Prime Minister Yatseniuk and I talked today about a number of preparations for the G8 in Sochi, suspension of the Canada-Russia additional ways Canada can assist and work with the government Intergovernmental Economic Commission, cancellation of joint military here. In particular, Prime Minister Yatseniuk and I agreed to establish operations, and an array of travel bans and sanctions on members of the a basis to restart our suspended free trade negotiations at the earliest Russian Government and of the former Yanukovych regime. possible opportunity. For Ukraine, the consequences of the actions of the Putin regime Canadians, I should mention … are also impressed by the restraint are obvious and can only be remedied by their complete reversal. shown by your government and the Ukrainian people in the face of Furthermore, all of us who desire peace and stability in the world obvious provocations, and we commend your commitment to respect must recognise that the consequences of these actions will be felt far regional and linguistic differences within your own country, and to beyond the borders of Ukraine or even the European continent itself ... seek good relationships with your neighbours, both east and west. By his open repudiation of the Budapest Memorandum, President Let me conclude with this: it is for Ukrainians and Ukrainians Putin has undermined international confidence in the protection only to decide their future. In this principle, Canada will not waiver. afforded by such agreements. And to help the Ukrainian people peacefully secure a bright future Ukraine relinquished its nuclear weapons, the nuclear weapons of freedom, we shall spare no effort. This courageous people deserves it inherited from the former Soviet Union, on the basis of an explicit no less. Slava Ukraina. Russian guarantee of its territorial integrity. By breaching that guarantee, President Putin has provided a rationale for those elsewhere who needed little more encouragement than that already Taken from remarks delivered by Canadian prime minister Stephen Harper furnished by pride or grievance to arm themselves to the teeth. at a joint press conference with Prime Minister Arseniy Yatseniuk of Ukraine, However, the effect of President Putin’s attempt to impose the law Kiev, 22 March 2014

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G7 INTRO 06 Harper.indd 24 21/05/2014 11:33 INTRODUCTIONS AND LEADERS’ PERSPECTIVES

Canada’s prime minister Stephen Harper reiterated his country’s commitment to Ukraine’s independence and sovereignty GLEB GARANICH/REUTERS GLEB

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G7 INTRO 06 Harper.indd 25 21/05/2014 11:32 INTRODUCTIONS AND LEADERS’ PERSPECTIVES

Shaping global destiny

France’s president François Hollande spoke recently on how his country is working towards a fairer world, according to firm principles

ur world is uncertain, unstable and unpredictable at the present time. But when has it been anything else in recent years? It was certainly organised according to a system: by the Cold War for many years, and later by what has been called a ‘unipolar world’. The minister Oof foreign affairs … has spoken of a zero-polar world! But what does that mean? It means that we are faced with responsibilities – all countries, but more especially those whose status and history, as well as their economy or their population, confer upon them a role in shaping global destiny … France can do so only according to principles it has laid down … The first principle is peace; that is the posture constantly adopted by France. On every occasion it is the solution we seek through dialogue, through negotiation. And when it is no longer possible to achieve it, we then take action, always within the framework of an international mandate, that of the United Nations. That is what we have done in Mali … at the request of a country that is our friend, and, contrary to what has been said, France was at no time alone. First, because France was there with our Malian friends; second, because France was accompanied or, more precisely, France supported African forces that were also mobilised; and, last, because from the outset France received support from the countries of Europe and the United States. It was a year ago that the decision was taken. And the outcome is there to see and must demonstrate to the international community that we can take action and succeed. The jihadi extremists have been defeated in the space of a year. They have not all disappeared but they have been driven, pushed back. Mali’s territorial integrity has been restored and free, transparent elections organised. The state of Mali is being rebuilt with its new president, Ibrahim Boubacar Keïta. Just when we thought the task was finished, fears arose of a major catastrophe in the Central African Republic. Already, incidents of brutality and violence, of which women were often the first victims, were leading to the conclusion that there was a possible risk of genocide. Inevitably, I had the events in Rwanda in mind. The month or more that we have been in the Central African CHRISTIAN HARTMANN/REUTERS Republic – 1,600 French soldiers and 4,000 African soldiers – has brought about, not a halt to all conflict, all fighting, but something the population of all faiths, all communities with just one desire: approaching calm … reconciliation and democracy … The Syrian conflict has many consequences for the region: for Crisis resolution Jordan, where tens of thousands of refugees are making life even more Looking beyond Africa, France also intends to play its part in crisis complicated; for Lebanon, where at least a third of the population is resolution. First, in the Middle East. We are encouraging a resumption now of Syrian origin. We must help those countries … of the dialogue between the Israelis and Palestinians … I also know that the Gulf states are making the necessary effort to Our greatest concern in the region is of course Syria. I refuse to facilitate those settlements. But there are not only conflicts that continue. accept that the choice that might be placed before the world will be Others have prospects for settlement. I am thinking here of the events either the perpetuation of a dictatorial regime, that of Bashar al-Assad, in Tunisia, where three years ago the Arab Spring was born. Today, a or Islamist extremism. I think that there is in Syria a majority of new constitution is on the way to being adopted and further democratic

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G7 INTRO 07 Hollande.indd 26 20/05/2014 20:00 INTRODUCTIONS AND LEADERS’ PERSPECTIVES

Shaping global destiny

The second principle underlying our foreign policy is to contribute to the building of a new international order. Where trade is concerned, the crisis – which has affected the developed world but with consequences for the entire planet – has in the past prevented all progress on trade negotiations. It is my belief that the recovery in the global economy that is now evident will be all the stronger if trade is facilitated. The proof of this is that after five years of successive failures the World Trade Organization has reached an agreement in Bali … Similarly, an economic partnership agreement has been signed between Europe and Canada after years of negotiation. Others are on the way between Europe and Japan, and between Europe and the United States … The opening up of markets, the removal of non-tariff barriers, the development of trade … all of this can … stimulate the global economy. But there must also be rules, especially where currencies are concerned … In the same way, we must arrive at an international system that combats social dumping … On this we can welcome the progress accomplished at the G20 in St Petersburg: the automatic exchange of information, removal of banking secrecy, combating fiscal optimisation – it is all there! … France is working towards a new international order, which also means a fairer world. France is the fourth largest donor where development aid is concerned … [Our] road map has been revised for greater coherence with the combat against extreme poverty, as well as with the imperative of environmental protection. France has accepted a responsibility for 2014 that will come to fruition in 2015: the organisation of the climate conference. As I often say, we volunteered to be its host and we were up against limited competition because of memories of Copenhagen. That failure was a resounding one, not for the organisers but for the international community …

Prospects for the future What matters is that we always need prospects for the future, an accepted destiny, confidence in ourselves. That is the responsibility of Europe … It must have ambitions. But what ambitions? First, defence. We have begun work on this with the shared determination to develop new capacity, to ensure that our defence industries cooperate more and to include countries such as Poland that want to play a full part in the enterprise. President François Hollande has A second ambition: energy. I have mentioned the climate but said that, on every occasion, peace I could also have said that where competitiveness is concerned there is the first solution sought by France through dialogue and negotiation is a great deal that we need to do on energy: to implement a policy both to diversify our resources and to pool our networks; to put in place a genuinely effective European energy community. elections will take place this year … That example may inspire other The digital economy. We must also master the technology, protect countries, and I have in mind Egypt, which has experienced violent our personal data, put this mass of information to good use. That is events, but where the goals must be the same: the search for a democratic an attractive ambition for Europe … way forward in which the rights of every individual can be respected … And, finally, it is my wish that Europe should not necessarily Our concern for Iran was great. It remains so but there is now have constantly to enlarge its borders but should rather talk to an interim agreement reached after ten years of impasse. France … major countries, and Russia in particular, within the framework of laid down requirements in all of the discussions – requirements that a strategic relationship. have become those of the entire international community. There is no question of allowing Iran to equip itself with nuclear weapons. But in the meantime, we should note the progress that has been achieved: the Excerpts from President François Hollande’s speech to the Diplomatic Corps, enrichment process has been halted … Élysée Palace, 17 January 2014

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G7 INTRO 07 Hollande.indd 27 20/05/2014 19:58 INTRODUCTIONS AND LEADERS’ PERSPECTIVES

A proactive contribution to peace

North Korea’s ongoing development of nuclear weapons and ballistic When addressing the North Atlantic missiles is a ‘clear and present danger’. Even this year, North Korea has repeatedly launched ballistic missiles towards the Sea of Japan and Council, Japan’s prime minister released statements indicating another nuclear test. These launches and another nuclear test clearly violate the relevant United Nations Security Shinzo Abe described his country Council resolutions. The situation also involves the risk of proliferation of nuclear materials and related technologies to third countries and NATO as “natural partners” including Iran. This is no longer an issue confronting East Asia alone, but rather a critical challenge facing the international community.

ver the almost 70 years since the end of World War Two, Japan has followed the path of a peace-loving nation and consistently made efforts to realise the fundamental values, On the foundation of this unwavering path we such as freedom, democracy, human rights and the rule of have followed as a peace-loving nation, Japan law, embodied in the United Nations Charter. Japan will Ocontinue to adhere steadfastly to this course into the years to come. will commit even more strongly than ever At the same time, Japan has made steady contributions to world before to fostering global peace and prosperity peace and stability across various individual fields, from international peace cooperation, disarmament, non-proliferation, international counterterrorism and the advancement of ‘human security’ to disaster management cooperation. In Cambodia, the Golan Heights, Haiti It is a matter of course that the North Atlantic Council released and South Sudan, as well as in the Indian Ocean for the fight against a statement that condemns in the strongest terms the nuclear test international terrorism, and in Iraq for providing reconstruction North Korea conducted in February 2013. In the Asia-Pacific, defence assistance, as many as 50,000 members of the Self-Defense Forces expenditures and arms imports have been increasing dramatically since the end of the Cold War have worked for peace in such in recent years. In particular, China’s foreign policy approach and locations all around the world. its military developments have become issues of concern for the Japan is shouldering roughly 11 per cent of the total United international community, including Japan … In the South China Sea, Nations peacekeeping operations budget, a figure second only to the there has been a series of actions based on unilateral claims, and a United States. Japan has carried out more than $300 billion of official sense of urgent vigilance is mounting among regional countries. development assistance (ODA) in total to 190 countries and regions to For Japan, realising peace and prosperity in the Asia-Pacific is a top date. Japan’s ODA marks its 60th anniversary this year. Looking back, priority. We will act in cooperation with any nation who seeks to play a we see that Japan has extended hands of assistance to our friends in constructive role towards that end … Asia and elsewhere around the world since the time when Japan was Japan has reliably been materialising the assistance to Afghanistan still impoverished after the war. that I pledged seven years ago … Japan’s assistance to Afghanistan, On the foundation of this kind of unwavering path we have followed at a total scale of $5.4 billion since 2001, has steadily brought forth as a peace-loving nation, Japan will commit even more strongly than ever positive results through partnerships with NATO and others in the before to fostering global peace and prosperity. Moreover, I believe that international community. NATO’s future directions are now under Japan should play a more proactive role in order fully to defend freedom consideration towards its next summit to be held in Wales, the United of overflight, freedom of navigation and other global commons … Kingdom, in September. Japan will for its part develop its partnership Japan is a ‘natural partner’ of NATO … Together we triumphed in with this ‘future NATO’ from the standpoint of putting our ‘proactive the Cold War, and more than two decades have passed since that time. contribution to peace’ into practice … The security environments surrounding Japan and Europe are each Japan places great importance on the concept of human security. once again becoming increasingly severe … We are implementing down-to-earth assistance in such areas as It is fair to say that the current situation in Ukraine is the greatest capacity building for women as well as maternal and child health and challenge for post-Cold War Europe. We cannot accept changes to the the protection and promotion of women’s rights in countries around status quo by force or coercion. This is a global issue that also impacts Asia. Asia and in other developing countries. It is truly tragic that during Japan strongly urges all parties concerned to respect the rule of law and armed conflicts, a large number of women suffer wounds of both the territorial integrity and to behave responsibly with maximum self-restraint. mind and body that do not easily heal – a situation that remains rife The easing of tensions in eastern Ukraine is of the foremost importance. even here in the 21st century … We will encourage the restoration of democracy as well as national I would like to close by asking one more time: why Japan and NATO? dialogue and integration. Towards that end, Japan will steadily We are more than simply natural partners that share fundamental values. implement the $1.5 billion of economic assistance to Ukraine that it We are also reliable partners corroborated by concrete actions … already pledged at the G7 summit in the Hague. We will be proactive I sincerely look forward to Japan turning new pages of cooperation in in providing assistance towards the upcoming presidential election the months and years to come as a reliable natural partner of NATO. and in making contributions to the Organization for Security and Co-operation in Europe’s Special Monitoring Mission … The security landscape of the Asia-Pacific is also becoming Excerpts from a speech by Prime Minister Shinzo Abe at a meeting of the increasingly severe. North Atlantic Council in Brussels, 6 May 2014

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G7 INTRO 08 Abe.indd 28 20/05/2014 20:04 INTRODUCTIONS AND LEADERS’ PERSPECTIVES

Prime Minister Shinzo Abe has called the situation in Ukraine “the greatest challenge for post-Cold War Europe” FRANCOIS LENOIR/REUTERS

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G7 INTRO 08 Abe.indd 29 20/05/2014 20:02 INTRODUCTIONS AND LEADERS’ PERSPECTIVES

The Mediterranean is the heart of our political and cultural actions

Italian prime minister Matteo Renzi stresses the importance of Europe-US relations, and Italy’s support for the people of North Africa

he great challenge that’s been thrown out in the relationship between the US and the European Union is a fascinating challenge. I do think that in Europe we need reforms, but we also need more growth. I think that Europe must be the place where politics will give hope back to our families … TOur grandfathers had to fight for Europe. The United States had to fight to save democracy in Europe. And in Europe, there was a fratricidal war. I know that my mother used to cry before the Berlin Wall, when that boundary fell, when it broke down. And my generation is the Erasmus generation. I’m thinking of a future generation where there will be a stronger unification process, and where in Europe there will be peace and stability, but where there will also be growth and the fight against youth unemployment. We will be investing in our hopes and our prosperity …

We need to support the desire for freedom and democracy of the Libyans and of the people living in North Africa

And I think that in the EU semester during which Italy will have the presidency, we will be delivering the same message. And, clearly, Italy will work on the reform and process that is under way … I can just confirm that we do want to change Italy, because we are convinced of the fact that if we change Italy, we’ll be helping Europe to change as well, and we’ll be strengthening our relations with the US evermore. So from this standpoint, I do confirm the commitment of our country together with European partners and together with the United States, and in particular in the Mediterranean region. The Mediterranean is the place that the Romans used to call ‘Our Sea’ – ‘Mare Nostrum’. Maybe it’s not the most appropriate translation. In other words, in Latin they say ‘Mare Nostrum’. But we mean when we say this that there were youngsters who triggered the Arab Spring and, therefore, we need to support all this. We need to support the desire for freedom and democracy of the Libyans and of the people living in North Africa. So this is what I mean despite the difficult moment in connection with the Ukrainian when I say it’s ‘Our Sea’, in particular … crisis. President Obama and the European nations in the G7 meeting Europe should not consider the Mediterranean as a frontier. discussed, in fact, the crisis in Ukraine, and we shared the view that It should be seen as the heart of our political and cultural and we do not uphold the decisions made by Russia. This goes against moral actions. international law. And we tried to convey a message showing our Now, I also wish to underscore that the relations between the unity, our strength and our great concern, and yet our great resolve – United States and the European Union and Italy are still strong, the resolve of the international community.

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G7 INTRO Matteo Renzi.indd 30 20/05/2014 20:11 INTRODUCTIONS AND LEADERS’ PERSPECTIVES

The Mediterranean is the heart of our political and cultural actions

During the Italian presidency of the European Union, Prime Minister Renzi hopes to be able to move forward in economic cooperation and also in ICT REUTERS/GIORGIO PEROTTINO REUTERS/GIORGIO

I also appreciated the words of President Obama at the G7 and in connection with our traditional values and the hopes that meeting when he reiterated the need to look into energy issues we have in terms of boosting employment and doing this also more thoroughly. I think that during the Italian presidency of the through the ICT sector. EU, we’ll be able to work with determination and resolve and tenacity. And I also hope that during our presidency of the EU, we’ll be able to move forward in economic cooperation and also Taken from remarks made by Prime Minister Renzi during a joint press in ICT [information and communication technology], for example, conference with US president Barack Obama in Rome, 27 March 2014

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G7 INTRO Matteo Renzi.indd 31 20/05/2014 20:11 EDITOR’S INTRODUCTION

Seeking to strengthen democratic security and solidarity worldwide

resources it badly needs, as well as helping The crisis in Ukraine is at the heart of the G7 to identify the places where certain leading Russians have hidden their ill-gotten wealth. agenda, but resolving key global challenges will This will make the next round of targeted or smart sanctions more effective in damaging require the cooperation of Russia and deterring those supporting Russia’s forceful expansion into Ukraine. G7 leaders By John Kirton, G8 Research Group will further examine how and when they might need to impose more serious broader sanctions against key sectors, such as energy, he G7 summit, being held in East in 1979, recalling that their coordinated, minerals and banking, on which Russia’s Brussels on 4-5 June 2014, multifaceted strategy then led within a decade natural-resource-based economy depends. promises to be a significant event to the demise and ultimate disappearance of in several ways. It will be the first the energy-empowered Soviet Union that had Still fragile economic recovery annual G7 summit held without invaded Afghanistan in late 1979. A third focus is on mobilising more resources Ta Russian leader being present since Boris G7 leaders will again commit to energy from the International Monetary Fund Yeltsin started attending as a guest in 1992. conservation and efficiency, starting with and other global financial institutions and It will be the first such summit since 2002, efforts to stop governments subsidising and donors to quickly and reliably give Ukraine when the G7 leaders issued a stand-alone thus wasting fossil fuels. They will also shift the money and impose the tough conditions statement from their last G7 session within to alternative and renewable fuels, regulatory it badly needs to become a strong modern the larger G8 summit, which Russia had reforms and improved infrastructure to open state. Here the primary task is to stamp out joined as a full member in 1998. It will be and integrate markets across Europe and on the corruption that has crippled Ukraine the second G7 summit within three months, both sides of the Atlantic and Pacific oceans, since its independence in 1991. Only then following the G7’s emergency meeting in the especially so that the abundant supplies will the money that flows in not rush out to Hague on 24 March, held on the margins of from the energy superpowers in North tax havens abroad, but instead be used to the larger Nuclear Security Summit. It will be America can easily flow to a Europe and build the physical and human security that the first regular summit held in a country that Japan where they are needed most. If the Ukrainian people deserve. With such is not itself a member of the conditions and supports in G7/8, marking the advent of the place, G7 leaders at Brussels European Union, headquartered can mobilise further funding in Brussels, as a G7 summit Trade liberalisation will seek to connect a to build the armed forces and host. And it will be the first reforming Ukraine with its European neighbours government ministries needed summit in decades to showcase to convince all Ukrainians and strengthen the democratic that they will be much better solidarity and responsibility that off in a democratically strong, the G7 members share as the basis for their necessary, G7 leaders could signal or start united, sovereign state of their own. efforts to build a better world. the release of the excess oil from the large A fourth focus is on managing the global strategic petroleum reserves that the economy, to keep the geopolitical risks from Dependence on gas imports United States and other members of an expansionist Russia and China from At the centre of the summit agenda is the the International Energy Agency have damaging investor confidence and thus the crisis in Ukraine, in its many forms. The accumulated, and could even restart the still-fragile economic recovery and financial first is energy security. Building on the nuclear power reactors recently shut off in stability that the G7 members and their results of the G7 energy ministers’ meeting energy-dependent Japan and Germany. These global democratic partners now enjoy. in Rome on 5-6 May, the leaders will moves should steadily and substantially Emphasis will be placed on the tough tasks identify ways to keep gas and other energy reduce the world price for oil and gas, and of structural reform, tax fairness, fiscal supplies flowing to Ukraine, to Central thus the fiscal resources, economic growth sustainability and trade liberalisation. Trade and Eastern Europe, and to the European and currency value of Russia and other liberalisation will seek to connect a reforming Union as a whole. They will seek to diversify unfriendly petro-dollar states. Ukraine more closely with its like-minded their sources of supply, thus reducing A second focus, building on the priority European neighbours and to combine the their dependence on gas imports from an placed on transparency at last year’s G8 Lough world-leading market power of the EU and unpredictable and thus unreliable Russia that Erne Summit, is on recovering stolen assets, the US through a transatlantic free trade has shut off the flow in the recent past. In especially those taken from Ukraine’s state and and economic partnership deal. doing so they will be guided by their success citizens by their former rulers. This will give A fifth focus will be on strengthening in confronting the oil shock from the Middle the Ukrainian Government some of the fiscal G7 members’ defence spending and

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1 John Kirton.JSindd.indd 32 20/05/2014 20:17 EDITOR’S INTRODUCTION

G7 leaders need to find ways to keep energy supplies flowing to Ukraine, to Central and Eastern Europe, and to the European Union as a whole ITAR-TASS PHOTO AGENCY/ALAMY PHOTO ITAR-TASS

sharing, and encouraging their partners of goals to galvanise global action for the G7 will address. These include ending the in the now 28-member North Atlantic 15 years beyond. Another task is to define deadly civil war in Syria and removing all Treaty Organization to do so, too. All can the framework for an effective climate change chemical weapons there; the Middle East thus better bear the burden of providing control regime, to be approved by the full peace process; countering civil conflict, democratic security to a Europe that feels United Nations when its leaders meet in Paris insurgency and terrorism in North Africa newly endangered and, through the Deauville at the end of 2015. Also demanding attention and sub-Saharan Africa, notably in Mali, the Partnership and in other ways, to a still- are issues of food security and cyberspace. Central African Republic and Nigeria; and troubled Middle East, North Africa and halting nuclear proliferation in North Korea, sub-Saharan Africa as well. Halting nuclear proliferation Iran and elsewhere. As such threats arise Beyond this focus on the immediate All these global challenges will eventually from within Russia in Chechnya and fundamentals stand the broader global require the cooperation of a responsible Dagestan and from Russia’s nearby issues that lie ahead. One task is to advance Russia if they are to be solved before the neighbours in Iran and North Korea, there development and health, by helping to meet the harmful consequences and costs overwhelm are strong incentives for a Russia, rationally Millennium Development Goals by their due all. The same is true of many of the political pursing its national and human security, to date next year and by shaping a new generation security challenges beyond Europe that the return to the democratic G8 fold.

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1 John Kirton.JSindd.indd 33 20/05/2014 20:17 BUSINESS VIEWPOINTS

Private-sector-led growth and the global economy

Providing valuable services and infrastructure, the private sector helps foster growth in emerging markets. Here, business leaders explain how they are working with governments to expand international trade

DSM Nutritional Products

Dr Manfred Eggersdorfer Dr Klaus Kraemer Dr Manfred Eggersdorfer is senior Dr Klaus Kraemer is the director of vice president for nutrition science Sight and Life, the humanitarian and advocacy at DSM Nutritional nutrition think tank of DSM, and Products, and professor of healthy adjunct associate professor in the ageing at the University of Groningen Department of International Health at in the Netherlands. Prior to DSM, the Johns Hopkins Bloomberg School Manfred Eggersdorfer worked for of Public Health. Sight and Life helps BASF, Ludwigshafen, Germany, in to improve the lives of some of the positions including head of research world’s most vulnerable populations and development fine chemicals. by supporting innovations to eradicate Dr Eggersdorfer is an honorary malnutrition. As a nutrition scientist professor at the University of with over 25 years’ experience in Groningen’s Faculty of Medical Sciences and a member of the research, advocacy, communication, and strategic and organisational advisory board of the Johns Hopkins Bloomberg School of Public leadership in nutrition and public health, Dr Kraemer has expertise Health. He is also a published author on the subject of vitamins. in research and product development, as well as programme work.

What is your company’s vision for DSM intends to establish open innovation nutritious products. Demand for nutritious expanding in the global marketplace platforms in emerging economies. This will food should be created through a public- to fuel your corporate success? provide in-depth consumer insights and allow sector-driven awareness campaign. Structured We connect our unique competencies in life the development and production of affordable demand via vouchers should be created via sciences and materials sciences to create products tailored to market needs. governments to ensure access to food by the solutions that nourish, protect and improve most vulnerable. performance. We believe that improved Where will the next big emerging nutrition of the population in emerging markets be and how are you preparing How are you working with governments economies will reduce malnutrition, improve to work in and with them? to put in place the reforms needed to health and the ability to escape from poverty One of the most promising markets for DSM access and expand these markets? and increase economic well-being. This will to grow is South-East Asia. DSM applies a DSM works with local governments directly, provide growth opportunities for companies novel approach to engage with stakeholders through industry organisations, UN agencies for investing in emerging economies. across sectors from governments, civil society, and academia to strengthen capacity to the United Nations and business. This develop e.g. food fortification standards and What strategy and assets are you provides in-depth insight in local nutritional methodology for [their] enforcement. DSM also pursuing to this end? problems and opportunities for co-creation helps to identify nutrient gaps in populations DSM is expanding into fast-growing of effective solutions. For this approach, DSM and supports research on the impact of economies with application centres for works with local stakeholders on effective nutrition interventions on nutrition status and food and beverages, premix plants and the standards for nutritious products. health. A solid evidence base is the ultimate co-creation of local food solutions with requirement for DSM to build a sustainable customers. We engage in PPPs [public-private What can G7 governments do to fuel business and contribute to resilient societies. partnerships] that go beyond traditional strong, sustainable, balanced, private- DSM adheres to the transparent sharing of knowledge transfer, where we partner sector-led growth? expertise with policymakers and government and co-lead with other sectors to achieve The most challenging obstacles for a company authorities in all markets, and has registered backward and forward integration in product like DSM to venture into the BoP [bottom of in the European Commission’s voluntary development, distribution and marketing. the pyramid] market is the lack of demand for register of lobbyists active in Brussels.

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CEO Roundtable.indd 34 21/05/2014 11:48 BUSINESS VIEWPOINTS

GE Healthcare

Skander Malcolm key emerging markets through a strategy of localisation, expanding Skander Malcolm is the president and footprint and building operational capabilities to meet the evolving chief executive officer of GE Healthcare’s needs of customers and ultimately patients across the region. 84-country Eastern and Africa growth Malcolm joined GE in 2003 and most recently served as president markets region. and CEO for GE Capital Australia and New Zealand, a specialist Appointed in December 2012 and financial services company of more than $16.5 billion in assets, based in Istanbul, Turkey, Malcolm leads focused on consumer and commercial funding. GE Healthcare’s operations in Russia He brings over 20 years’ experience in the financial services and the CIS, Turkey and Central Asia, sector in roles covering the United Kingdom, United States and and the Middle East and Africa. Australia, having previously held several senior leadership roles at In this position, Malcolm is focused Westpac Bank and Household International (now part of HSBC). on driving the organic growth of GE Malcolm holds a Bachelor of Economics degree from the Healthcare’s businesses across these University of Sydney in Australia.

What is your company’s vision for healthcare access and improve healthcare Emerging markets need help from G7 expanding in emerging markets? quality by 15 per cent by 2015. As of 2013, we and European countries in the form of skills, We are a technology and infrastructure have invested $4.2 billion with 100 validated knowledge, financing and manufacturing. In company, which can bring financing – we product innovations, touching more than our experience, it is most effective when it is see emerging markets as needing all three. 1.5 billion lives. localised, creating local knowledge, skills Whether it’s healthcare, power generation, This strategy has helped GE Healthcare and, of course, jobs. transportation or cleaner energy, our prioritise its investments, drive big ideas Consider Iraq: where health expenditure customers in emerging markets look to us forward, partner with thought leaders and grew from $143 to $226 per capita, an to help them build their infrastructure as link more closely with the healthcare increase of 58 per cent (between 2009-12), they build. In emerging markets, we think system, touching the efforts of hospital and where a massive workforce upgrade we can help solve these infrastructure managers, doctors, clinical specialists and, and more than 60,000 new hospital beds challenges they face, whilst adding local ultimately, patients. are required to cover the current need. Or capabilities and skills, and, of course, jobs. One example is the recent Africa: with over a billion people (more At GE Healthcare, globalisation is healthymagination mother and child initiative than 60 per cent under the age of 30 a cornerstone of our strategy, and our we launched in Nigeria. Together with the years), where it is estimated that there are operations are organised around key Nigerian Federal Ministry of Health, and only two doctors for every 10,000 people growth regions to ensure close proximity USAID, we are investing $20 million to help in sub-Saharan Africa. The healthcare to our customers. Moreover, we are making tackle maternal and infant mortality. What challenges facing these governments are significant investments in the development is unique about this programme – and it not insignificant. These governments know of emerging-market healthcare with over 50 per cent of all revenues coming from outside of the United States. At GE Healthcare, globalisation is a cornerstone of our An example of our global business model is GE Healthcare’s Eastern and Africa strategy, and our operations are organised around key growth growth markets (EAGM) region, covering 84 countries stretching across Russia, the regions to ensure close proximity to our customers. We are CIS and Central Asia, Turkey and the Middle making significant investments in emerging-market healthcare East and Africa. We have grown our business to over $1 billion in revenues, with more than 1,800 staff as well as more than 300 local partners and we have invested very is typical of how we are tackling emerging that not addressing their massive healthcare significantly in developing products and markets – is that we are not just providing challenges is simply not an option, and are solutions that fit the needs of our customers. equipment, we are also providing training, taking steps to address them. As a result we education, financing and whole solutions that are optimistic about the emerging markets How would you describe your current will remain locally operated. and we are investing. strategy to this end? As the cornerstone of sustainable economic What business activities and Governments around the world development, countries need education partnerships are you currently pursuing invest considerably in healthcare and healthcare. That is why our growth is in your region where the G7 countries but sustainability is a considerable accelerating in regions like the Middle East, and European Union can help? How in challenge. In the emerging markets Russia and Africa. Indeed, everywhere we turn will this benefit the G7 and EU? where the needs are many, how is go, we see ministries of health working hard Advancing healthcare in the emerging sustainability ensured? to improve access to quality and affordable markets is good for everybody. Indeed, Sustainability is a significant issue healthcare for their people. in a global economy, it makes sense for regardless of where you are in the world, In response to this, GE launched a three- the G7 countries and the European Union and in the emerging markets – where in pillar strategy we call healthymagination. to support the development of emerging- some settings governments are establishing Healthymagination is our global $6 billion market healthcare. This will contribute to healthcare infrastructure from scratch – commitment to develop 100-plus innovations a more stable economic recovery and faster ensuring the long-term effectiveness of these that will lower healthcare cost, increase growth for all. investments is essential.

G7 BRUSSELS JUNE 2014 | 35

CEO Roundtable.indd 35 21/05/2014 11:48 BUSINESS VIEWPOINTS

In the emerging markets, what we have As we approach a new era of innovation change the way healthcare providers learned is that technology alone is no longer in a wide range of fields, how does work together to use big data and analytics enough. Instead, we are designing new models GE foresee future developments in to manage the patient through the of healthcare delivery leveraging relevant technology and their likely effects on healthcare system. technology, a significant focus on training industry and society? With these technologies, GE is and skills enhancement, and nurturing True to its heritage, GE is at its core a enabling caregivers to spend more time sustainable partnerships to develop localised technology and innovation company. Each caring for patients and we have committed solutions aligned firmly with the needs of year, the company invests five to six per cent $2 billion to harnessing data and developing our customers. of revenue back into R&D. software for healthcare to reduce costs, We are also addressing some of the major In Healthcare, the scale and rate of optimise care delivery, and eliminate healthcare challenges such as reducing innovation is set to significantly transform unnecessary waste. waste, improving healthcare efficiencies the sector in the next 10 years as Healthcare GE is also leading the way in advanced and eliminating unwarranted variation in continues to industrialise. manufacturing. Material science and diagnosis and therapy. In some countries Indeed, innovation in healthcare has a analytics are transforming the way that we further match this with consumer different meaning, depending on where our factories can operate. education highlighting the importance of you are in the world; what is consistent Digital tools will make us faster and health awareness and disease prevention. is that it has to be economically and more efficient. We are a leader in advanced Through this approach, we strive to increase clinically relevant. fabrication innovations like 3D printing, to sustainability by ensuring that improved In a digital world, the ‘industrial internet’ lower product cost and drive speed. This clinical and patient outcomes are ‘built in’ for GE Healthcare is about creating and is making our factories smarter, more to our solutions. enabling technologies and services that will distributed and reconfigurable.

International Gas Union

What is your organisation’s vision for improve local air quality. IGU expects that expanding in the global marketplace gas will increase its share in power generation to fuel your success? and in the transportation sector. IGU works The global gas industry is a tremendous through our extensive Asian membership success story, with natural gas now and network to advance the gas industry accounting for over 23 per cent of primary in the Asian region. energy consumption worldwide. The International Gas Union (IGU) expects What can G7 governments do to that this figure will rise to 25 per cent fuel strong, sustainable, balanced, or more by 2035. private-sector-led growth? IGU encourages international trade Energy diplomacy is a 21st-century reality, in gas by supporting non-discriminatory and changing political concerns have a policies and sound contracting principles direct effect on our markets. As gas is and practices, promoting development of an increasingly international business, Torstein Indrebø technologies which add to the environmental geopolitical issues can have a direct impact Torstein Indrebø is secretary general of benefits of gas and further enhance safe on the prospects for investment and further the International Gas Union. He holds a production, transmission, distribution and expansion in the global marketplace. Master of Science in Business from the utilisation of gas. Governments and the G7 group Norwegian School of Economics and should invite industry representatives and Business Administration, Bergen and What strategy and assets are you organisations like IGU to dialogue meetings. A has a degree in Petroleum Taxation pursuing to this end? closer cooperation between policymakers and from the University of Bergen. The world’s conventional and unconventional industry will help to attract the investments Indrebø started his career with the natural gas resources are equivalent to more in energy infrastructure needed for global Ministry of Defence and Ministry of than 250 years of global consumption, energy security. Foreign Affairs before joining the Oil so there is no problem with underlying and Gas Division of Norsk Hydro in 1980. availability. This fact enables gas to be How are you working with He was assigned to Mobil Oil in the US positioned as a foundation fuel for the world’s governments to put in place the from 1985-86 before returning to Norsk current and future energy, delivering less reforms needed to access and Hydro’s Natural Gas division in Norway. carbon-intensive energy solutions, and as the expand these markets? In 1995 Indrebø was appointed perfect partner for renewable energy sources. IGU and the International Energy Forum vice president and head of the Oil and With almost no pollutants, increased use jointly organise Ministerial Gas Fora that Gas office of Norsk Hydro in Brussels, of gas will also contribute to improved air explore the geopolitical and economic realities Belgium. In 2001 Indrebø assumed the quality in urbanised areas. of developing new markets and expanding position of vice president strategy and international trade by promoting dialogue business development, natural gas. He Where will the next big emerging between producing and consuming countries. served as president of the Norwegian Gas markets be and how are you preparing We are actively engaging in energy issues Association from 2001-05. Following his to work in and with them? with global and regional organisations, and appointment as secretary general of the The largest gas market growth in the coming publish an extensive range of publications International Gas Union in 2007, Indrebø years is expected in Asia. This is dominated addressing relevant topics (www.igu.org). transferred the IGU Secretariat to Oslo, by the growing energy needs in China and IGU is available for further interaction Norway under the sponsorship of Statoil. India, and the contribution that natural gas through G7 processes or bilaterally with can make to reduce air pollution and individual governments.

36 | G7 BRUSSELS JUNE 2014

CEO Roundtable.indd 36 21/05/2014 11:48 9 out of 10 CEOs know sustainability matters*... but how many have a plan?

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P_1167_210x297_G8Summit_Bolle_Cane_Ingl.indd 1 07/05/14 15.33 eni_placed.indd 1 09/05/2014 10:52 ENERGY AND CLIMATE CHANGE AS G7 PRIORITIES

The pursuit of energy security and market stability in the oil industry

Energy resources – both conventional and non-conventional – remain abundant, but the industry faces issues around deliverability and sustainability PLANETPIX/ALAMY

shared goals of enhancing energy security Not just for the oil sector, but for the energy industry – from the perspectives of producers and consumers – and advancing market stability. as a whole, cooperation and dialogue are key to the With the global energy system expected to grow significantly in the coming creation of a stable and sustainable future decades, joint understanding of each other’s requirements must continue to evolve through By Abdalla Salem El-Badri, secretary general, open dialogue and cooperation. It is essential Organization of the Petroleum Exporting Countries that all better appreciate one another’s viewpoints, that all strive to be realistic in their targets and goals, and that all are pragmatic in their discussions. oday, anxieties and concerns multinationals, national or international There are plenty of resources to meet about local, regional and global energy companies, upstream or downstream future energy growth patterns – from energy security top the agendas players, consumers or producers. both fossil fuels and non-fossil fuels. Oil, of countries worldwide, not just The key to this is to view the entire energy conventional and non-conventional resources with regard to oil, but across the system holistically, especially given the ever- are clearly abundant for the foreseeable future. Tentire energy value chain. It is thus essential increasing linkages at local, regional and And with technological advances continuing to understand the needs and requirements global levels. Understanding the interrelated to extend the reach of the industry, reduce of each and every stakeholder – whether nature of the challenges and opportunities costs and unlock additional resources, the those stakeholders be individuals or large the world faces will help us all to achieve our availability of resources is not a concern.

G7 BRUSSELS JUNE 2014 | 39

2.2 El-BadriAG.indd 39 20/05/2014 17:01 SPONSORED FEATURE

The European Gas Research Group and the challenge of innovation for our energy future

proportion of electricity from renewable The past decade in particular has seen sources. A larger proportion of final energy a transformation, with few, if any, of the is used to provide heating and mobility. original industry giants standing still, and It is known that gas grids typically carry a slicing of the old vertically integrated far more energy than electricity grids, and gas companies into a much larger pack therefore the debate needs to be firmly of leaner, more focused companies, each about energy, not just about electricity. concentrating on a part of the chain. Dealing with intermittency, back-up Along with these changes, mergers power and peak heat as well as aspiring and deregulation have led to many gas to decarbonise transportation will companies becoming multi-utility players undoubtedly require support from the and energy companies. GERG now has infrastructure of the gas networks. a growing role in providing the ‘glue’ of Robert Judd In order to succeed in meeting the innovation, developing the ideas and the Secretary general, European Gas challenges of secure, affordable and projects that will show how our existing gas Research Group (GERG) sustainable energy, we will need to create infrastructure can be integrated into a future many new ways of interacting with our ‘smart’ interdependence. energy networks. These will need to enable The current focus of GERG is enabling the integration of renewables of all types, new gas technologies to integrate with he world of energy is becoming the addition of demand-side responses renewables and increasing their flexibility: more complex, and the old rules and close coupling of gas and electricity • The existing gas grid provides a flexible no longer apply. This is as true networks. All of this will need to done in storage medium for energy and avoids for research and innovation as a ‘smart’ way. There is a dilemma to be costs of electricity grid reinforcement and it is for the business models faced within this, as individual networks under-utilisation of renewable capacity. Tof the industry. The gas industry can no are subject to significant economic and • Flexible gas-powered generation is longer be seen as mature – we need to technical regulation that focuses them on developing, which can support the work alongside renewables, address the shorter-term horizon and issues such intermittency of renewables. the challenges of decarbonisation and as unbundling, asset life extension and • Decarbonisation of the gas network harmonisation, and fit a whole new portfolio providing value to customers. A major is happening through a mixture of of unconventional resources into our challenge will be to provide the regulatory power-to-gas and biomethane injection. strategic planning. Energy security is clearly environment to allow innovations to be • The integration of a new generation of becoming more important than ever before. tested on live grids and to send the signals gas end-use appliances will provide a Europe has set the pace on challenging to the grid operators to work on horizon lower cost and flexible alternative to a targets for the decarbonisation of its energy developments over longer periods of time. dependence on increases in electricity systems. Global energy systems are also GERG has been part of the gas industry transmission capacity. adapting to this challenge, which is highly picture for more than 50 years now. In dependent on generating a substantial that time it has witnessed huge changes. Natural gas technology will be vital in enabling the smart supply and demand- managed, low-carbon integrated energy network of the future. GERG is working across a rapidly changing landscape of partners to make this future a reality.

GERG, Avenue Palmerston 4 Brussels 1000 T: +32 475 80 29 22 /+44 7796 610189 E: [email protected] W: www.gerg.eu

This gas pipeline is typically carrying 10 times as much of our energy as an electricity transmission cable

European Gas Research Group_placed.indd 2 20/05/2014 16:09 ENERGY AND CLIMATE CHANGE AS G7 PRIORITIES

The energy industry has a responsibility to maintain confidence in – and enhance the security of – the energy system on which everyone depends MIKE PERRY/ALAMY

The main focus is on issues related to to reliable and sustainable modern energy gas and coal market outlooks. OPEC has also deliverability and sustainability. services. With around 1.2 billion people been closely involved in several of the G20’s For the oil industry, this includes lacking access to electricity and some energy-related work streams, including the developing a better understanding of the 2.8 billion relying on biomass for their role of the oil price reporting agencies and factors that could have medium- and basic needs, energy poverty must receive the ways to enhance JODI-related activities. long-term impacts on supply. For example, urgent and critical attention of world leaders. the energy and environmental policies of Sustainable development is a high priority for Finding common ground a number of consuming countries provide OPEC members. It is the main objective of the In addition, a number of cooperative activities an unclear picture of their potential impact financial and technical assistance they provide have taken place over the past year as part on future oil consumption levels and to developing countries, directly through their of the well-established European Union- overall energy demand. There is thus a own aid institutions, as well as through the OPEC energy dialogue. These include the need for clearer policies – ones that are OPEC Fund for International Development. 10th ministerial-level meeting, a joint round reliable and predictable. To help meet some of the challenges table on the safety of the offshore oil and gas Moreover, there is a need to continually and uncertainties facing the global oil industry, and a study – and subsequent round improve the understanding of other matters market and the world in general, we at table – on potential staffing bottlenecks in the – such as the effects of excessive market OPEC believe in continually looking petroleum industry. And 2013 saw the second volatility, the role and impact of financial to explore ways to develop and expand high-level meeting of the OPEC-Russia energy speculation, human resource dialogue take place in Moscow. requirements and potential Those of us in the energy staffing shortages. business have a responsibility to In addition, there are There is a need to continually improve the do everything possible to maintain other, broader issues to be understanding of the effects of excessive confidence in – and enhance the considered by the industry’s security of – the energy system stakeholders, as well as world market volatility, financial speculation and on which we all depend. And, of leaders, in the years ahead. human resource requirements course, central to this is dialogue These include environmental and cooperation, which I am sure protection, climate change all participants in the Brussels and sustainable development. Summit appreciate. Among activities in this area are the our dialogue and cooperation with others. Obviously, each stakeholder will have ongoing United Nations climate change We recognise the value of strong and mutually differing agendas and challenges, which negotiations. The Organization of the beneficial relationships. means that one can never expect to Petroleum Exporting Countries (OPEC) A prime example of this is the proactive find complete consensus on everything. recognises the importance of being part participation of OPEC in the International Nevertheless, it is important to continue to of these negotiations to develop solutions Energy Forum (IEF), which plays an work towards finding common ground on that safeguard the legitimate interests of important role in strengthening energy issues of mutual concern. Thus, all need to all parties. However, it is essential that cooperation and dialogue between producers look for shared solutions, wherever and these multilateral negotiations reach an and consumers. This includes OPEC’s whenever appropriate, and to have an agreement that is comprehensive, balanced, involvement in the Joint Organisations Data environment that is conducive to reaching fair and equitable – one that respects all Initiative (JODI), as well as in various forums, constructive end results. All need to make the principles and provisions of the United such as those between OPEC, the IEF and the sure that they have input from each and Nations Framework Convention on Climate International Energy Agency (IEA). Over the every stakeholder. Change and its Kyoto Protocol. past year, this has included workshops and These are all important tasks, especially It is also essential that all remain symposia on energy outlooks, the interactions since they have one common objective: a focused on ensuring everyone has access between physical and financial markets, and stable and sustainable energy future for all.

G7 BRUSSELS JUNE 2014 | 41

2.2 El-BadriAG.indd 41 20/05/2014 17:01 SPONSORED FEATURE

Meeting South Africa’s nuclear needs

reactor for radioisotope production and molybdenum-99 on a commercial scale research activities. without using weapons-grade uranium. In addition, the company is responsible Being a world leader in the production for the management and operation of and supply of radiochemicals, NTP is the Vaalputs National Radioactive Waste among the world’s top three radiochemical Disposal Facility in the Northern Cape on producers and enjoys a reputation built on behalf of the National Radioactive Waste consistent, reliable service and product- Disposal Institute (NRWDI). quality excellence. Necsa engages in commercial NTP exports its products to nearly 60 business mainly through its wholly countries on five continents and maintains owned commercial subsidiaries: NTP world-class quality, safety and regulatory Radioisotopes SOC Ltd (NTP), which compliance systems and performance. Phumzile Tshelane is responsible for a range of radiation-based Chief Executive Officer of products and services for healthcare, life A diverse supply chain The South African Nuclear sciences and industry, and Pelchem SOC As a research and development company, Energy Corporation (Necsa) Ltd (Pelchem), which supplies fluorine our supply chain is diverse, and is not only and fluorine-based products. These main limited to raw material supplies for our subsidiaries supply local and foreign products, but extends to sourcing talent markets, earning valuable foreign and intellectual property. Our linkages are History of Necsa exchange for South Africa. very important and include government The South African Nuclear Energy Necsa is also responsible for departments, research institutions, Corporation (Necsa) was established as promoting public understanding of universities, international partners, the a public company in the 1940s in terms nuclear science and technology, and private sector, regulatory bodies and of the Nuclear Energy Act, 1999 (Act No facilitates regular communication with professional bodies. 46 of 1999), and is wholly owned by the the public and its stakeholders. The importance of these partnerships State. The main functions of Necsa are is their contribution towards our commercial to undertake and promote research and Cutting-edge technology success and their influence on our ability development in the field of nuclear energy Since the early 1990s, the Necsa Group, to carry out our responsibilities as and radiation sciences and technology; to through the SAFARI-1 nuclear research mandated by the South African process source material, special nuclear reactor and the Necsa subsidiary NTP Government, especially when it comes material and restricted material; and to Radioisotopes SOC Ltd, established itself to enabling us to contribute to the cooperate with persons in matters falling as a world leader in the production and National System of Innovation (NSI) to within these functions. supply of radiochemicals used in the support general economic growth and diagnostic nuclear medicine procedures. development in South Africa. Operations, capabilities Our technology is cutting edge and and responsibilities second to none, as can be observed in Corporate culture Inherent in its mandated activities is the innovative qualities of our products. Our robust incentive schemes for workers the responsibility for the operation and Today, we are the only company in the and suppliers are designed to attract a utilisation of the SAFARI-1 nuclear research world producing the medical isotope called wide spectrum of job seekers and suppliers

Phumzile Tshelane holds a Bachelor of Science Tshelane has held a number of key positions in other Honours (BSc Hons) degree in Nuclear Physics and an entities, namely: Executive Development Programme. • Vice president, Nuclear Industry Association of He was appointed as the chief executive officer of the South Africa (NIASA); South African Nuclear Energy Corporation Ltd (Necsa) with • Non-executive director of NIASA, acting as Eskom effect from 1 September 2012. representative. He also served in the finance committee of Prior to his appointment, Tshelane served as acting the NIASA board; general manager of the Eskom Nuclear New Build division • Non-executive director at Necsa; from June 2010. • Founder member and steering committee chairperson He has participated in long-term national and international of the South African Nuclear Human Asset and academic research projects, been the recipient of the Ford Research Programme; and Foundation Research Internship in 1988, and was awarded the • Founder member and chairperson of the board of directors first prize for his physics essays in 1989 and 1993. of the RGM School of Excellence.

NECSA_placed.indd 2 14/05/2014 12:05 SPONSORED FEATURE

The SAFARI-1 Research Reactor in Pretoria, South Africa

who are experts in their fields. We strive and implement projects to enable further Our long-term strategy is engraved in to meet and exceed all our targets in growth of the resource base to ensure our vision as a highly profitable, world-class terms of job creation, localisation, skills that Necsa is effectively able to service organisation that boasts the best nuclear development, and contribution to economic the current and future nuclear research products and component-production growth and development. needs of our nation. facilities. We would like to root our success The Necsa Group growth prospects for in our world-class technological capability, Sustainability and the environment the near future include the following: R&D programmes and increased national As a nuclear organisation operating a • government decisions regarding the competence in terms of design, quality nuclear research reactor and several procurement process of the planned management, project management and nuclear facilities, sustainability risks nuclear power reactor fleet; architected engineering. relating to safety, security, regulatory • projects towards the establishment of compliance and commercial success a low enriched uranium fuel and target- of subsidiaries are managed very closely plate manufacturing plant at Necsa; and monitored continuously. • in-principle decision-making PO Box 582 A comprehensive environmental regarding a multipurpose reactor Pretoria 0001 monitoring programme is in place to meet to replace SAFARI-1 at the end of South Africa the requirements of the Air Quality Act, its operational life; the National Environmental Management • further market penetration for new T: +27 12 305 4911 F: +27 12 305 3111 Act and the National Water Act. Resource NTP business initiatives relating to new usage, waste generation, and the impact products and services (for example, www.necsa.co.za on media and ecology are monitored F-18 FDG, gamma irradiation and and illustrated in our various public radiography sources); reports and submissions to Parliament, • demonstration of the plasma-based and are discussed routinely with our waste-to-energy system; neighbouring communities. • demonstration of the uranium recovery process that was proven Towards the future on laboratory scale; and The main focus in the years ahead is to • further expansion of our networks further align the organisation’s expenditure and clinical trials of candidate framework with the available resource base radiopharmaceuticals.

NECSA_placed.indd 3 14/05/2014 12:05 ENERGY AND CLIMATE CHANGE AS G7 PRIORITIES

Water security for growth

In a world of climate uncertainty, investment in water infrastructure is central to growth and prosperity

By Benedito Braga, president, World Water Council

hroughout history, managing demonstrate that everyone, in both rich and water resources has been the poor parts of the planet, can be affected by common thread connecting extreme water-related disasters, and must social stability, human wealth, be prepared for them. The operation of large prosperity, economic growth flood-risk reduction infrastructures on the Tand sustainable ecosystems. Water has been Mississippi and the Yangtze in the 2011 floods central to achieving good public health, of record, as well as the Delta Works in the food security and sustainable energy. Water North Sea and other such initiatives, continue infrastructure and its good management to prevent enormous damage to life and have been humanity’s major adaptive property: some estimate the returns on these measures to increase options for decision- investments to be reaching benefit-to-cost makers in times of drought and floods, to ratios of almost seven to one. help make cities more resilient and to With floods demolishing homes, with guarantee the quality of the environment. projections of upwards of 60 per cent of the Earth’s population to be living in vulnerable coastal megacities in 40 years’ time, with droughts destroying crops while demand for Hydropower reservoirs and food increases, with widespread depletion in their multipurpose operations the quality of water, with changing climate are increasingly important risks and uncertainty, the imperatives of water infrastructure to achieving sustainable elements in the strategy for economic growth and building resilient coping with climate variability societies are stark. Increasing resilience cent or lower; for developing countries it The question that all must ask is what the is routinely higher than 20 per cent. Today the world faces a major ethical water sector can do to increase resilience In the US, the cumulative benefit of public policy dilemma. Water and security and to reduce the vulnerability of social avoided losses from floods is as much as debates are raising public anxiety about how systems. How can we adapt to the wide- $700 billion. If water is stored and changes in climate patterns will affect water ranging impacts of changing patterns managed well, economic growth is possible; availability and water-related extreme events. of climate variability across sectors and decision-makers have greater options for At the same time, little is being invested across continents? dealing with stress on natural systems and in what are known to be effective adaptive Adapting to climate variability means thus preserving social stability. Based on means to cope with such projected events. understanding the role that water plays hundreds of years of experience and on Humanity faces inherent uncertainty in in the global economy, in socioeconomic today’s uncertain climate variability, water dealing with climate change phenomena, to development and in the well-being of people. professionals are becoming convinced that which the hydrologic cycle is inextricably Adapting means ensuring that measures hydropower reservoirs and their multipurpose linked. Water resources are the most are taken to make all sectors of society operations are increasingly important vulnerable to the impacts of climate change more resilient and robust. elements in the strategy for coping with and variability. Public concern about climate The capacity to manage uncertainties climate variability and change. is not about climate per se, but about the of too much or too little water is central to consequences of water-related impacts such the ability to grow and prosper. This requires A pact for water security as floods, droughts or increased variability in specific infrastructure. Lack of infrastructure Water security consists, primarily, of attaining rainfall. By and large, felt impacts of climate is much greater in developing countries. basic human requirements for everyday variability are manifested through water. In the developed world, where water life, ensuring safe drinking water, hygiene The impacts of Hurricane Katrina in the infrastructure has been implemented, and health while maintaining the good United States in 2005 and the droughts and damage due to floods and droughts as functioning of ecosystems. Water security consequent poor harvests in Russia in 2010, a percentage of gross domestic product also means guaranteeing economic and which affected international food prices, has been pushed down to around five per social security, using water to produce food,

44 | G7 BRUSSELS JUNE 2014

8.3 BragaAG.indd 44 20/05/2014 19:16 ENERGY AND CLIMATE CHANGE AS G7 PRIORITIES

Water security for growth

In developed countries, where water infrastructure has been built, damage due to floods and droughts is down to five per cent of gross domestic product DANITA DELIMONT/GETTYIMAGES DANITA

energy, and the goods and services needed The World Water Council advocates outcomes are needed to achieve integrated, for development and rising living standards. global recognition of water as a milestone in sustainable and resilient practices. These Changing climate patterns are affecting the forthcoming Sustainable Development needs go beyond external aid. They call for water security. Due to uncertainties in Goals and calls for the inclusion of a financing mechanisms that simultaneously precipitation patterns and consequent stand-alone goal on water security in the build local capital markets, manage risks stream flows in rivers and creeks, adaptive post-2015 development agenda. to capital investments and create revenue water management is needed, including streams, while also delivering widely management tools on both the supply Water as a human right distributed public benefits. and demand sides. On the demand side, Since 2010, the world has witnessed major G7 leaders will certainly consider conservation measures must be events acknowledging the importance of the importance of investing in water implemented. On the supply side, the role water. For example, in 2010 the United infrastructure as a response to climate of engineered storage systems must be Nations General Assembly officially variability and change. By recognising expanded to meet multiple uses of water, recognised access to water and sanitation interdependencies and common goals in water such as water supply, irrigation, inland as a basic right, and in 2012 the Rio+20 security, they can create the conditions for navigation and hydropower. declaration included a dedicated chapter on the long-term well-being of cities, economies, These issues were highlighted during water and sanitation. These events testify to societies, humanity and, indeed, the planet. recent World Water Council dialogues a growing awareness of the importance of An enormous challenge lies ahead in on water, climate change and adaptation, water at the highest possible political level, inventing new financing mechanisms for which revealed very different viewpoints an objective towards which the World Water investing in water infrastructure. Placing among countries. Developed countries Council has strived since its creation in 1996. water investments into mainstream are more likely to think of the environment The technical solutions already exist. economic policies and endorsing a water and security in terms of global environmental However, economic incentives and innovative security pact will help assure water changes, whereas developing countries means for financing multipurpose water availability, manage its distribution, and are more concerned with the human infrastructure along with effective cross- thus guarantee security throughout the security issues raised. sectoral partnerships based on win-win world in many other domains.

G7 BRUSSELS JUNE 2014 | 45

8.3 BragaAG.indd 45 20/05/2014 19:17 ENERGY AND CLIMATE CHANGE AS G7 PRIORITIES

Escaping the poverty trap

the next 16 years to deliver a low-carbon Fiscal policy reforms may be required to unlock economy. Of this, nearly $1 trillion is over and above the business-as-usual trajectory. the potential of public and private finance for Fiscal policies are particularly important in a low-carbon, green-economy transition. green growth and climate resilience Governments have a variety of fiscal instruments at their disposal that should be By Achim Steiner, United Nations under-secretary general and used to facilitate the transition, from taxing executive director, United Nations Environment Programme fossil fuel use or emissions and reforming energy subsidies that promote wasteful and environmentally harmful economic activity, to supporting clean technology and sustainable ifting the world’s 1.2 billion the global temperature rise below 2°C this production with the help of fiscal incentives. poorest to a life of dignity is century might swiftly diminish. an ambition, a challenge and To address such challenges, economic Source of new revenue an established target for the and financial strategies need to be shifted Constructive fiscal measures can reflect global development community. towards investment paradigms that environmental externalities through full- LAchieving it will require financing, innovation, simultaneously provide sustainable pathways cost pricing of energy and transportation technology and capacity building, along to economic development, conserve natural services. They can also provide a significant with effective governance and mutually resources, create jobs and achieve prosperity source of new revenue. In the United States beneficial partnerships. for wide sections of society. it is estimated that a levy of $25 per ton of But generating sustainable growth Allocating just two per cent of global GDP carbon dioxide could bring in about one and prosperity can only be achieved within for greening economic sectors will produce a per cent of the country’s GDP, or more than the safe operating systems of a resource- higher global GDP within 10 years, compared $1 trillion over a decade. constrained planet. with a business-as-usual scenario, studies Confronted by a fiscally constrained The share of the poorest 40 per cent of show. Building the momentum of the global world, fiscal policy reforms might appear to the population in global wealth is marginal: transition towards a green economy requires be a daunting challenge to a green economy less than five per cent of gross transition. Yet external crises domestic product (GDP). It is – be they fiscal, economic reduced further by the impacts of Governments have a variety of fiscal or environmental – can climate change and the erosion be a catalyst for policy reform. of natural capital. It is this instruments at their disposal to facilitate the Energy subsidies account segment of humanity that relies transition to a low-carbon, green economy for a significant portion of on nature as a safety net, for GDP annually. Petroleum nature is the wealth of the poor. subsidies alone amounted to Recognizing the value of natural $200 billion in 2011. Removing resources demands rethinking the traditional substantial redirection of investment to $500 billion of fossil fuel subsidies could links between resource use and economic increase the current level of public and private boost the global economy by around prosperity. And while visions, methodologies sector flows to key priority areas. The bulk 0.3 per cent and reduce global greenhouse and tools may vary, an appreciation of the of this will need to be mobilised through gas emissions by six per cent by 2050. value of natural capital is at the heart of financial markets. Of the $409 billion spent on subsidies efficient development planning. While much of the world’s private capital on fossil fuel consumption in 2010, only By 2050, humanity could devour an is locked up in carbon-intensive investment eight per cent reached the poorest income estimated 140 billion tonnes of minerals, throughout the developed world, developing quintile. Energy subsidies appear to perform ores, fossil fuels and biomass per year – country investment in a low-carbon future poorly as a means of supporting the incomes three times its current appetite – unless is on the rise. Clean energy investments of poor social groups. economic growth is ‘decoupled’ from reached $244 billion in 2012, while outlays Globally, the energy sector accounts natural resource consumption. in developing countries reached $112 billion, for around two thirds of total greenhouse At the same time, the effects of climate according to estimates by the Renewable gas emissions. Estimates for global energy- change are already occurring on all Energy Policy Network for the 21st Century. related carbon dioxide emissions reveal a continents, and the world remains ill prepared But such progress remains inadequate. 1.4 per cent increase in 2012, according to face these impacts, according to the latest Progress in green investment continues to to the International Energy Agency (IEA). report produced by the Intergovernmental be outpaced by investment in fossil fuel- Unless the world finds ways to double the Panel on Climate Change. Should the intensive, inefficient infrastructure. As a rate of energy efficiency, energy-related global community not embark on wide- result, greenhouse gas levels continue to rise. carbon dioxide emissions are expected ranging actions to narrow the greenhouse The World Economic Forum estimates to rise by 20 per cent by 2035. gas emissions gap by 2020, the chance of that an annual investment in infrastructure The newly launched report, Global remaining on a least-cost path to keeping of approximately $6 trillion is needed over Trends in Renewable Energy Investment 2014,

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Solar panels at a water pump station near Douz in southern Tunisia: clean energy investments in developing countries reached $112 billion in 2012 WOLFGANG WINTER/ALAMY WOLFGANG

reveals that total investment in renewables – on an unsubsidised basis even without dangerous climate change. This is only excluding large hydroelectric projects – environmental externalities priced in. achievable by re-evaluating investment fell for the second year running in 2013, Annual emissions of greenhouse gases priorities, shifting incentives, building reaching $214 billion worldwide – 14 per would have been 1.2 gigatonnes higher if the capacity and improving governance. cent lower than in 2012 and 23 per cent same power had been generated by the non- There are choices to be made to enhance below the 2011 record. renewable technology options that today still preparedness and adapt to the challenges dominate the energy mix – further widening ahead. And as governments get ready to Falling prices for solar panels the gap between where emissions are heading convene in Nairobi for the first-ever United Yet the drop in investment had some silver and where they need to be in 2020, if the Nations Environment Assembly – the most linings. Sharply falling prices for solar panels world is to have a realistic prospect of staying influential environmental forum feeding and wind turbines meant renewable energy under a 2°C temperature rise. directly into the General Assembly – it is in 2013 accounted for more than 43 per The IEA predictsB:193 that mm an unprecedented imperative that we seize the moment to cent of the newly installed power capacity long-term shift in investmentT:180 mm from fossil promote robust policy action for greener and globally. In an increasing number of locations, fuels towards a cleaner energy portfolio is more equitable living. The choice is ours, S:170 mm these technologies are now being installed needed over the next few decades to avoid and so is the historic responsibility. B:73 mm S:50 mm WE WANT TO HELP POWER T:60 mm THE GLOBAL ECONOMY

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2.3 SteinerAG.indd 47 20/05/2014 17:04 This advertisement was prepared by BBDO New York Filename: P45258_D_GE_ITL_V6.indd CLIENT: General Electric Proof #: 6 Path: Studio:Volumes:Studio:MECHANIC... Created: 5-8-2014 4:41 PM PRODUCT: GE G7 Summit echanicals:P45258_D_GE_ITL_V6.indd Saved: 5-8-2014 4:41 PM JOB#: P45258_D Operators: Sekulovski, Jovan / Wolcott, Catherine Printed: 5-8-2014 4:43 PM SPACE: Strip Ad 4/C Print Scale: None BLEED: 193 mm x 73 mm TRIM: 180 mm x 60 mm Fonts Ink Names SAFETY: 170 mm x 50 mm GE Inspira (Regular) Cyan GUTTER: None Graphic Name Color Space Eff. Res. Magenta PUBS: G7 Summit ge_winnipeg__v9a7484.psd (CMYK; 712 ppi), GE_Logo_solo.ai Yellow Black ISSUE: June 14 TRAFFIC: Mary Cook ART BUYER: None ACCOUNT: David Slifer RETOUCH: n/a PRODUCTION: Michael Musano ART DIRECTOR: Diego Contreras COPYWRITER: Rob Kleckner ENERGY AND CLIMATE CHANGE AS G7 PRIORITIES

Climate-change governance: achievements, hopes and dangers

Tony Blair made climate change one of his Global leaders must put climate protection at top summit priorities, assembled the world’s largest carbon emitters at the summit the heart of key agendas in the wake of the dire through the G8 Plus Five process, which brought in Brazil, China, India, Mexico and warnings spelt out in the IPCC’s latest report South Africa, and persuaded the United States to accept a new climate-change By Ella Kokotsis, G8 Research Group regime that would move ‘beyond Kyoto’ to include all existing and emerging powers. Gleneagles thus marked the emergence of a new consensus among the G8 members on n 30 March 2014, the group’s governance of climate issues from the importance and urgency of the effects of a Intergovernmental Panel 1975-80, 1987-92, and again from 2005-09, changing climate on energy, health, security on Climate Change (IPCC) and with notable dips in between. and the global economy. released its most compelling Although the process of governing From 2005-09, the G8’s focus shifted scientific evidence to date of the global climate change by the G7/8 has from reacting defensively to climate issues to Ocatastrophic consequences of global climate been both challenging and constraining, becoming more proactive in the development change. The report concludes what many in the group is credited with leading climate of governance regimes that would deal the scientific community have been affirming governance in ways that other international with climate issues in more innovative and for years, namely that “increasing magnitudes environmental institutions have largely failed inclusive ways. Recognising the failure of the of warming increase the likelihood of severe, to do. Since its inception in 1975, the G7/8 United Nations Framework Convention on pervasive and irreversible impacts” – impacts has put climate protection at the forefront Climate Change and the Kyoto Protocol in not only on the natural environment and of its policy objectives, alongside economic, containing the world’s largest carbon emitters marine ecosystems, but also on food security, health, energy and security goals, reaching – led by China – the G8 embraced these freshwater availability, agricultural incomes consensus repeatedly among its leaders on the actors in more inclusive, burden-sharing and human health. importance of stabilising emissions through ways. By bridging the efforts of G8 energy According to the report, the striking energy efficiency, conservation, investment ministers as well as carbon-consuming and feature of observed impacts is that they are and technological innovation. producing countries through G8-centred “occurring from the tropics to the poles, bodies, the leaders put in place more from small islands to large continents, and An important turning point comprehensive and inclusive initiatives to from the wealthiest countries to the poorest”. But while the G7/8 has performed well further institutionalise the process by which Taken together, the cumulative effects of a on climate issues linked to energy, its these actors would consolidate their climate significantly changing climate are projected to performance historically has been less mitigation efforts. drastically increase the rate and likelihood of impressive on issues linked to carbon sinks And since 2009, the G8’s success has violent conflict around the globe, particularly and marine protection. It also failed to deliver been most evident in effectively recognising in high-density urban poverty hotspots. the convention on forests that it promised at the need to be more inclusive on climate its Houston Summit in 1990. Furthermore, governance issues and decisions. Early commitments during times of failed consensus, summit At its most recent 2013 summit in Lough Yet 35 years ago, the leaders of the G7, leaders have had to retreat to issues on the Erne, Northern Ireland, G8 leaders noted meeting in Tokyo, declared in their final margins of the climate question, focusing they would pursue “ambitious and communiqué the need to “expand alternative for example on acid deposition (1985 Bonn), transparent actions” on climate change sources of energy, especially those which observation networks (1989 Paris), clean through various international forums, help to prevent further pollution, particularly water (2003 Evian) and the ‘Reduce, Reuse, including the Major Economies Forum on increases of carbon dioxide and sulphur Recycle’ initiative (2004 Sea Island). Energy and Climate, the International Civil oxides in the atmosphere”. But the 2005 Gleneagles Summit marked Aviation Organization and the International By boldly acknowledging the need to an important turning point. British host Maritime Organization. Moreover, in joining halt the concentration of carbon dioxide emissions in the world’s atmosphere, the leaders embarked on a process that would see the G7/8 produce close to 400 discrete Words in the global climate vernacular are largely viewed commitments on issues related to energy as mere rhetoric without the commitment of hard cash by and climate governance since its inception in 1975. The G7/8’s leadership, however, the largest industrialised countries to fund climate-related has been exerted unevenly over this programmes and initiatives 40-year period, with clear surges in the

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the Climate and Clean Air Coalition, the G8 A man wearing a mask cycles through members formally recognised that climate a smog-covered Beijing, China. The G8 change was “a contributing factor in increased members have joined the Climate and economic and security risks globally”. Clean Air coalition But words in the global climate vernacular are largely viewed as mere rhetoric without the commitment of hard cash by the largest industrialised countries to fund climate- related programmes and initiatives. To this end, the G8 leaders reiterated at Lough Erne their commitment to mobilise $100 billion of climate finance a year by 2020 through a “wide variety of sources”.

Effecting change What obstacles do world leaders currently confront in meeting these global challenges? The challenges presented by global climate change are vast and their impacts have the potential to affect every species and human being on Earth, as the most recent IPCC report concludes. But one of the biggest challenges currently faced by world leaders is their ability, and indeed competence, not only to comprehend the vastly complex and largely uncertain characteristics of the climate debate, but also to act in a concerted and comprehensive fashion in the face of this mounting, yet disputed, scientific consensus. How world leaders at future summits can best help in this regard is indeed a complex question. Over the past 40 years the G8’s governance of global climate change has been neither continuous nor complete in addressing the vast array of issues related to climate mitigation and control. To effect change in the climate debate moving forward, world leaders must exert leadership in ways that have yielded successes in the past – through initiation, leadership, inclusion and collective support of global climate governance initiatives. But to do so, world leaders must place climate protection at the apex of their health, development, security and economic agendas. Only by continuing to recognise the complex interdependencies of climate mitigation B:193 mm can world leaders take the political steps T:180 mm needed to reverse these alarming and S:170 mm

threatening global climate trends. KYUNG-HOON REUTERS/KIM

SO WE’RE BUILDING THE INFRASTRUCTURE B:73 mm S:50 mm TO HELP POWER THE GLOBE. T:60 mm

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2.4 KokotsisJS.indd 49 20/05/2014 17:10 This advertisement was prepared by BBDO New York Filename: P45258_C_GE_ITL_V6.indd CLIENT: General Electric Proof #: 6 Path: Studio:Volumes:Studio:MECHANIC... Created: 5-8-2014 3:57 PM PRODUCT: GE G7 Summit echanicals:P45258_C_GE_ITL_V6.indd Saved: 5-8-2014 3:57 PM JOB#: P45258_C Operators: Sekulovski, Jovan / Wolcott, Catherine Printed: 5-8-2014 3:58 PM SPACE: Strip Ad 4/C Print Scale: None BLEED: 193 mm x 73 mm TRIM: 180 mm x 60 mm Fonts Ink Names SAFETY: 170 mm x 50 mm GE Inspira (Regular) Cyan GUTTER: None Graphic Name Color Space Eff. Res. Magenta PUBS: G7 Summit IGCC_Polkpower.tif (CMYK; 474 ppi), GE_Logo_solo.ai Yellow Black ISSUE: n/a TRAFFIC: Mary Cook ART BUYER: None ACCOUNT: David Slifer RETOUCH: n/a PRODUCTION: Michael Musano ART DIRECTOR: Diego Contreras COPYWRITER: Rob Kleckner GLOBAL HEALTH GOVERNANCE

Maternal and child health at the centre of the development agenda

Global mortality rates for young children and pregnant women have almost halved since 1990, but many deaths are preventable and must be avoided OLIVIER ASSELIN/ALAMY OLIVIER

countries between 2000 and 2011 resulted While the improvement of maternal and child from health improvements, with progress on maternal and child mortality a key contributor health is a laudable aim in its own right, it is also to this increase. The commission calls for the mobilisation of resources to forge the a driver of sustainable economic growth convergence of the child and maternal survival rates of low- and middle-income countries with By Anthony Lake, executive director, UNICEF those of today’s high-performing upper- and middle-income countries within a generation. In 2010, the G8 recognised the moral and the economic significance of improving maternal t is, perhaps, obvious that putting more than that: it is also a key to sustainable and child health. The G8 Muskoka Initiative on equitable investments in maternal and growth and prosperity for all countries. Maternal, Newborn and Child Health catalysed child health at the centre of the future As the recent Lancet commission on Global global action to reduce maternal and infant global development agenda is a moral Health 2035 persuasively argues, there is an mortality and improve the health of mothers and imperative. Anyone who has seen a enormous pay-off from investing in health. children in the world’s poorest countries. Now Ichild or woman in pregnancy die for want of For example, as much as 24 per cent of the part of the United Nations secretary general’s a vaccine or antibiotic knows this. And it is economic growth in low- and middle-income Every Woman Every Child strategy, the initiative

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Maternal and child health at the centre of the development agenda

aims to assist developing countries in preventing for the development of countries. For all opportunity to shed light on the remaining 1.3 million deaths of children under five years of children to realise their full potential and gaps and renew this collective commitment. age and 64,000 maternal deaths between 2010 contribute productively to their communities Getting the right metrics to measure progress and 2015 – a key contribution to the effort to and nations, maternal and child health will be of critical importance. As the old adage achieve the Millennium Development Goals on needs to remain a global priority. It requires goes, what gets measured, gets managed. maternal and child health (MDGs four and five). accelerated and more equitable interventions. The post-2015 agenda must include clear Globally, mortality rates for both young targets on ending preventable maternal, children and women in pregnancy have almost Need for clear targets newborn and child deaths within a halved since 1990. Maternal mortality decreased Equity-focused strategies are not only good news generation, building on the consensus of 177 from 400 to 210 maternal deaths per 100,000 live for the most disadvantaged; they spur long-term, countries brought together in ‘Committing to births between 1990 and 2010. Child mortality sustainable economic growth for countries as Child Survival: A Promise Renewed’, a global under five years old was reduced from 90 to 48 a whole. Andrew Berg and Jonathan Ostry at movement of governments, civil society and deaths per 1,000 live births between 1990 and the International Monetary Fund found that, the private sector working to end preventable child deaths within a generation. Targets to assess progress towards universal health coverage are also being considered, and must A dollar invested in the health of a mother or child helps include and prioritise essential maternal, create a ladder of opportunity from which families, newborn and child health interventions. communities and countries can realise their ambitions Finally, disaggregated indicators for all targets – and potential targets on closing equity gaps – are imperative for accounting for and addressing existing inequalities. 2012. This is testimony to the commitment of globally, a 10-percentile decrease in inequality For too long, improvements in health have donors, governments and communities. Yet, increases the expected length of an economic primarily been seen as a dividend of economic despite progress, MDGs four and five will not be growth period by 50 per cent. Other recent growth. It is time to acknowledge that equitable achieved by 2015. studies point to the fact that measures to tackle investments in maternal and child health are If one looks beyond global averages, entire inequalities, such as equitable investments in important drivers of sustainable growth, and countries are left behind – 38 have made health and education, can induce growth. to scale them up. It is the joint responsibility no significant progress on child mortality. A dollar invested in the health of a mother and common interest of the global community. Most of these are fragile and affected by or child does more than improve individual The world’s leaders have demonstrated their conflict but, even within countries with rapid well-being – a worthy goal in itself. It also commitment to maternal and child health progress, disparities are often widening. On helps create a ladder of opportunity from in the past. They must do so again now, as current trends, MDG four will not be achieved which families, communitiesB:193 mm and countries they debate the future development agenda. until 2028 and, as a result, an additional can realise their ambitions.T:180 mm This is an issue that cannot wait – the future 35 million children will die between 2015 The current process of defining the future prosperity of countries will depend on healthy S:170 mm and 2028. This is a tragedy. It is also a loss development agenda presents a historic children born to healthy mothers today.

BY TRAINING OVER 10,000 B:73 mm S:50 mm HEALTHCARE CUSTOMERS T:60 mm GLOBALLY EACH YEAR

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3.1 Lake.indd 51 20/05/2014 17:14 This advertisement was prepared by BBDO New York Filename: P45258_B_GE_ITL_V6.indd CLIENT: General Electric Proof #: 6 Path: Studio:Volumes:Studio:MECHANIC... Created: 5-8-2014 10:56 AM PRODUCT: GE G7 Summit echanicals:P45258_B_GE_ITL_V6.indd Saved: 5-8-2014 10:56 AM JOB#: P45258_B Operators: Sekulovski, Jovan / Wolcott, Catherine Printed: 5-8-2014 10:57 AM SPACE: Strip Ad 4/C Print Scale: None BLEED: 193 mm x 73 mm TRIM: 180 mm x 60 mm Fonts Ink Names SAFETY: 170 mm x 50 mm GE Inspira (Regular), Arial (Bold) Cyan GUTTER: None Graphic Name Color Space Eff. Res. Magenta PUBS: G7 Summit Healthcare_Ultrasound Manufacturing LineImage quality Yellow Black ISSUE: June 14 check_0687.psd (CMYK; 326 ppi), GE_Logo_solo.ai TRAFFIC: Mary Cook ART BUYER: None ACCOUNT: David Slifer RETOUCH: n/a HI RES ART PRODUCTION: Michael Musano ART DIRECTOR: Diego Contreras Printed On Laser Printer COPYWRITER: Rob Kleckner GLOBAL HEALTH GOVERNANCE

Unite in the fight against HIV/AIDS, tuberculosis and malaria

continue to improve access to antiretroviral The G7 members must renew their commitments treatment while expanding public education programmes to young people. to tackling HIV/AIDS, tuberculosis and malaria, The ongoing success of the Roll Back Malaria partnership requires sustained as millions are still missing out on vital treatment political commitment to maintain this momentum. There is a need to expand the By Joy D Fitzgibbon, Global Health Diplomacy Program, University of Toronto distribution of insecticide-treated mosquito nets to children under five in sub-Saharan Africa, and to scale up vector control in sub-Saharan Africa. More children under five must receive access to artemisinin- he United Nations’ Millennium this goal. The global incidence of malaria based therapy, which reduces illness and Development Goals (MDGs) has declined by 25 per cent since 2000 death from the most common form of were created to harness the and deaths from malaria have dropped by malaria. Finally, drug and insecticide collective power of governments 42 per cent. Since 2000, 3.3 million people’s resistance is growing: five countries in and leading international lives have been saved, 90 percent of whom Tdevelopment agencies to address the needs of were children under five living in sub-Saharan the world’s poorest people. Included in these Africa. In countries with malaria control, the goals was a commitment to improving global percentage of children dying from malaria Leaders should renew their health by combating HIV/AIDS, malaria and has fallen by 20 per cent. In sub-Saharan commitments to provide tuberculosis. The G7 has the opportunity to Africa more children sleep under insecticide- WHO with the resources to secure and accelerate progress on these goals treated bed nets. And many countries now as the world moves towards and beyond the provide free, rapid diagnostic testing strengthen surveillance on 2015 MDG deadline. through the public sector. global drug resistance Improved access to treatment for Progress so far tuberculosis has saved 22 million lives MDG six pledges to “combat HIV/AIDS, between 1995 and 2011. By the end of malaria and other diseases” by reaching three 2002, all countries with a high incidence of South-East Asia have malaria strains targets. The first is to “have halted and begun tuberculosis were also addressing multi-drug- resistant to artemisinin, and 64 countries to reverse the spread of HIV/AIDS”. This resistant tuberculosis (MDR-TB). The MDG have mosquitos resistant to insecticides. The goal has been met. HIV/AIDS infections are of reducing the mortality rate of tuberculosis funding gap is approximately $2.8 billion. declining in most regions and have decreased patients by 50 per cent from 1990 may be met The incidence of tuberculosis is declining overall by 33 per cent. if political commitment continues. In 2012, by only two per cent per year. Continued The second target is to “achieve, by 2010, 8.6 million people were newly diagnosed and future success requires improved patient universal access to treatment for HIV/AIDS for with tuberculosis and 1.3 million died, which detection – WHO’s Stop TB Partnership all those who need it”. While this has not been is a decline from 2011. The new diagnostic estimates that the healthcare system is met, 9.7 million people were treated in 2012 – test known as Xpert MTB/RIF represents a missing three million patients who have the 1.6 million people more than in 2011. Fewer critical diagnostic advance as it allows for disease. It also requires expanding access to HIV-positive patients die from HIV/AIDS. earlier treatment of MDR-TB patients with MDR-TB treatment. Drug resistance could Earlier treatment with antiretroviral therapy the appropriate drug regimens. Today, 88 reverse the progress in managing tuberculosis. increases the patient’s life span and decreases low- and middle-income countries receive In 2012, 450,000 people were diagnosed the risk of transmitting HIV to others. In access to this equipment. with MDR-TB, 10 per cent of whom had response to new research, in 2013 the World extremely drug-resistant tuberculosis – a form Health Organization released guidelines to Outstanding challenges that is more difficult and expensive to treat. simplify and expand antiretroviral treatment Each year, 2.5 million people are newly The challenge is to advance new scientific so that people newly diagnosed with HIV infected with HIV. Of these, 1.6 million are discoveries and rapidly implement them in might receive early treatment. This policy in sub-Saharan Africa. While new infections high-risk communities. The funding gap to change will prevent an additional three are declining, as of 2011, 34 million people accomplish these goals is $2 billion. million deaths and 3.5 million infections in live with HIV, seven million of whom are low- and middle-income countries by 2025. eligible for but lack access to antiretroviral The G7 contribution The third target is to “have halted by 2015 treatment. While the MDG target of universal G7 members need first to bridge the funding and begun to reverse the incidence of malaria access in 2010 was missed, it will still be gaps and honour all pledges to the Global and other major diseases”. At present, 59 out possible to reach this goal if current trends are Fund to Fight AIDS, Tuberculosis and Malaria. of the 97 countries reporting malaria have met sustained. Public health interventions must Some of these pledges are outstanding.

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A South Sudanese woman gets a blood test for HIV/AIDS, malaria and tropical diseases. Each year, 2.5 million people are newly infected with HIV JOERG BOETHLING/ALAMY JOERG

Second, antimicrobial drug resistance patients. Leaders should also renew their and leading academic researchers, for the is a looming global crisis that threatens to commitments to provide WHO with the purpose of informing science and finance undo progress on tuberculosis and malaria resources to strengthen surveillance on ministers. G7 decisions on economic growth and has other important domestic public global drug resistance. When the group and poverty eradication must support, not health implications for G7 members. The G7 of senior officials issues its report in 2015 erode, global health efforts. leaders should deepen the commitments they on the global research infrastructure for Advances in HIV/AIDS, tuberculosis and made at Lough Erne by agreeing to promote innovation, established in Okinawa and malaria campaigns since 2000 are significant, research and development through strategic restated in Lough Erne, it should include but subject to reversal. The response of the partnerships on new drugs and diagnostic world health research and innovation. G7 members is critical to maintaining and tools, and on the public health structures Third, the G7 shouldB:193 mmhold a cross-sectoral accelerating this fragile progress. Efforts such necessary for maintaining gold-standard meeting on economicT:180 reform mm and global as the ones proposed here could provide care for those affected by antimicrobial drug healthcare delivery, drawing on expert an effective and lasting contribution far S:170 mm resistance, including tuberculosis and malaria knowledge from WHO, the World Bank beyond 2015.

WE’RE BUILDING HEALTHY B:73 mm S:50 mm RELATIONSHIPS AROUND T:60 mm THE WORLD.

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3.4 Fitzgibbon.indd 53 20/05/2014 17:16 This advertisement was prepared by BBDO New York Filename: P45258_A_GE_ITL_V5.indd CLIENT: General Electric Proof #: 5 Path: Studio:Volumes:Studio:MECHANIC... Created: 5-8-2014 10:59 AM PRODUCT: GE G7 Summit echanicals:P45258_A_GE_ITL_V5.indd Saved: 5-8-2014 10:59 AM JOB#: P45258_A Operators: Sekulovski, Jovan / Wolcott, Catherine Printed: 5-8-2014 11:00 AM SPACE: Strip Ad 4/C Print Scale: None BLEED: 193 mm x 73 mm TRIM: 180 mm x 60 mm Fonts Ink Names SAFETY: 170 mm x 50 mm GE Inspira (Regular), Arial (Bold) Cyan GUTTER: None Graphic Name Color Space Eff. Res. Magenta PUBS: G7 Summit 050_Detail_Doctor_Vscan_Parent_PreTeen_0178.psd (CMYK; 736 Yellow Black ISSUE: June 14 ppi), GE_Logo_solo.ai TRAFFIC: Mary Cook ART BUYER: None ACCOUNT: David Slifer RETOUCH: n/a HI RES ART PRODUCTION: Michael Musano ART DIRECTOR: Diego Contreras Printed On Laser Printer COPYWRITER: Rob Kleckner SPONSORED FEATURE

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Ce fichier est un document d’exécution créé sur Illustrator version CS5. R 176 V 28 B 46 CallingR 166 G 199 B 230 for champions: can world leaders rise to the challenge and win the fight against tuberculosis?

onsidering today’s medical “of the past”. As a result, public and private led to poor programme implementation, advances, with genetic tests institutions reduced investments in TB with incorrect treatments that lead to an predicting Alzheimer’s and control and medical research, to the point emergence of resistance to the few TB infants being functionally cured where only two new TB drugs have been drugs we have. of HIV, it seems absurd that a approved in the past 40 years. Simple, The result is a frightening rise of multi- Cfully preventable disease known to us for effective diagnostic tests like those used and extensively drug-resistant tuberculosis centuries is today the second deadliest for HIV or malaria are not available for (MDR- and XDR-TB), man-made calamities infectious disease on the planet. Yet it TB. Neglecting immunisation, neglecting that occur when a person becomes is true, and both of us have witnessed public education and neglecting the search resistant to at least two of the first-line first-hand how the devastating effects for better tools to safeguard against this medicines. XDR-TB is resistant to both of tuberculosis (TB) have ravaged our airborne disease has led to a massive first- and second-line drugs. XDR-TB was communities from North America to resurgence of TB cases. reported by 58 countries in 2010, but by Africa. Having spent decades to mobilise Although TB remains predominant in 2012 surged to 84 countries.2 Shockingly, international efforts to curb TB, we can middle- and low-income countries, no most of the high-burden MDR- and XDR-TB both attest to the progress still urgently place is isolated. One third of the world’s countries are in the WHO European Region. required to make our vision of TB population is infected with TB bacteria Despite the high morbidity and urgency elimination a reality. and over 8.5 million people become sick for new solutions, political commitment to In 1970, most forms of TB were curable every year.1 With increased worldwide TB remains low. In 2006, G8 leaders in yet new, virulent drug resistant strains were mobility no person is immune. For example, St Petersburg pledged new support, stating beginning to appear. Today, over a million London witnessed a large outbreak of TB they were “determined to achieve tangible people a year continue to die from TB. in the early 2000s. Last year, Californian progress”. Some areas they agreed to work Worse yet, we now have fewer effective high schools experienced a TB scare on included improved access to prevention tools to treat TB, to the point where some when 45 students were diagnosed as and treatment, strengthening capacity of patients are sent home to die because we TB-infected. The list of such examples is health systems, and supporting innovative lack medicines and the proper care to treat increasing. Nevertheless, the voice of the clinical research, among others. These them. How is this possible? TB community remains weak. leaders must keep up their commitment The answer lies in a combination of Without increased pressure from people in 2014 so that progress can continue. neglect and complacency –neglect from affected by TB worldwide, it is difficult for Unlike other infectious diseases that gain world leaders who have not focused a champion to emerge who feels inspired headlines such as SARS, TB infects and enough attention on the TB threat and to take on the cause and for him or her to kills slowly, which is why a long-term view complacency from TB advocates who demand more investments in new tools and sustained effort is required. We hope continue to use the same tired approaches and implementation of more effective that this year’s summit will help identify a that fail to capture the public’s attention. policies. The lack of national commitments champion and thereby inspire other world Most G8 countries considered TB a disease and discipline to control TB has frequently leaders to join the fight.

About Otsuka Pharmaceutical Co Ltd

Otsuka Pharmaceutical Co Ltd is proud to partner in the public health and case management models that reduce global efforts to eliminate TB. Its corporate philosophy the spread of drug resistance, improve rational use of of addressing the world’s unmet medical needs has new TB medicines and prevent – not just treat – TB. led Otsuka to invest in improving TB care and control Continuing to lead efforts to find new TB treatments worldwide, focusing on both public- and private-sector for more than 30 years, Otsuka is the largest funder of treatment. The company remains committed to developing TB drug development worldwide.

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This includes bringing more funding to Political commitment to control TB is the permit more than a million preventable the table. Currently, the majority of funds number one recommendation of the WHO deaths each year. Society cannot afford for TB R&D come from only a few sources and the cornerstone to its eradication. to become complacent and must cultivate led by the US government, the Bill & Regardless of whether it is Africa, the champions that can keep government Melinda Gates Foundation, and a few from Americas, or any other region, we share accountable in fulfilling its promises. With the private sector such as the Japanese the same message: no country should be proper attention and dedication, the fight pharmaceutical company Otsuka, which allowed to let its guard down again and against TB can be won. alone provides a quarter of the total global spending on TB drugs.3 When funding for such an urgent cause is dominated by only a few, it places the entire system on a precarious footing. The global nature of TB means that no government, organisation or company can defeat it alone – everyone has a role to play. To be fair, not every country is neglecting TB control. Many have expanded their efforts. For example, Latvia and Benedict Xaba is the former health Dr Lee B Reichman is the founding Estonia, which had the highest MDR- minister of Swaziland and ministerial executive director of the New Jersey and XDR-TB rates in the world, have TB champion for the STOP TB Medical School Global Tuberculosis successfully increased treatment control, Partnership Coordinating Board Institute in Newark, New Jersey detection rates and public awareness, containing the spread of the disease and 1 World Health Organization (WHO) Global Tuberculosis Report 2013 reducing mortality. Their investment, 2 World Bank 2013 data anchored in strong political will, paid off. 3 Treatment Action Group 2013 Report on Tuberculosis Research Funding Trends, 2005-2012

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Proactive prevention: the Caribbean contribution to global health

$15,000 per year in out-of-pocket costs, plus The Caribbean Community is taking a leading role the indirect costs of lost income, the man and his family soon become poor. He dies with his in elevating non-communicable diseases to the relatives resenting the effect of his illness. In contrast, evidence now exists on global development agenda how millions of preventable deaths may be avoided and economic losses greatly reduced By C James Hospedales, executive director, Caribbean Public Health Agency by putting added focus on prevention and investment. The World Health Organization estimates that key measures for cutting tobacco exposure and harmful use of alcohol, esides being famous for Olympic and widespread risk factors such as tobacco as well as promoting healthy diets and sprinters and beautiful beaches, use, unhealthy diet, physical inactivity and physical activity, will cost $2 billion per year the Caribbean was the first harmful consumption of alcohol, plus a lack for low- and middle-income countries, or less area in the world to eliminate of access to quality health services. than $0.40 per person. Tobacco control and measles after the May 1991 ‘Big Tobacco is the biggest killer on the planet; dietary salt reduction have benefit-to-cost BBang’ immunisation campaign. More than at current trends up to one billion people ratios in the order of 20 or 40 to one. 20 years of measles-free benefits have accrued, will die in the 21st century as the result of including the prevention of thousands of cases tobacco use. More than one billion people in Need for whole-of-society approach and hundreds of deaths. With leadership the world are now overweight or obese, facing Up to 80 per cent of heart disease and from the Pan American Health Organization approximately 50 per cent higher lifetime diabetes, and half of cancers are preventable and two years of planning, the campaign health costs. The alarm has intensified as or treatable. However, given that the root vaccinated 91.4 per cent of children between children increasingly become overweight causes of NCDs lie mostly in non-health the ages of two and 14, stopping measles and unfit, with associated educational, sectors such as education, agriculture, transmission and establishing proof of mental health and employment problems, trade and finance, urban planning and concept. This model was adapted to eliminate in addition to national security concerns transportation, combined with cultural indigenous measles throughout the Americas about youth failing admission criteria to habits and private sector forces, successful and gave a glimpse into the possibility that uniformed services. Besides contributing to intervention requires a whole-of-government global eradication was and a whole-of-society approach, possible. The Caribbean at all levels from local to countries’ ability to punch global. Some interventions, above their weight heralded One billion people will die in the 21st century such as cycling and walking as their success two decades later from tobacco. More than a billion people alternative modes of transport, in elevating the issue of chronic have triple bottom-line returns: non-communicable diseases are now overweight or obese good for health, good for (NCDs) to the United Nations climate change due to lower General Assembly. emissions, and good for energy NCDs, the harmful use of alcohol is also a security and the fuel import bill. Some Threat to global development major contributor to mental health problems, interventions, such as reducing dietary salt, Global health and economic development all types of injuries and violence, damaged require close collaboration with the food face significant threats from NCDs such families, and reduced workplace productivity. manufacturing industry. as heart disease, stroke, cancer, diabetes The human and economic costs are and chronic respiratory disease, plus not sustainable for government, business and Leadership and raising NCD awareness overweight and obesity epidemics. Closely families. The World Economic Forum and In 2001, the governments of the Caribbean related are mental health problems such as Harvard University have estimated a Community recognised that the “health dementia. Representing some two thirds of $30 trillion economic impact due to NCDs of the region is the wealth of the region” all mortalities, these conditions are the major over a 20-year period, rising to $46 trillion – the countries having had Caribbean preventable causes of death in most countries if mental health conditions are included, Cooperation in Health (CCH) programmes and drive the upward spiral in avoidable representing millions of families being in place since 1985. The latest example is the health costs. NCDs are a cause and effect pushed into poverty. By way of example, Caribbean Public Health Agency (CARPHA) of poverty. More than 80 per cent of NCD take a 45-year-old man with diabetes and programme, which was established by deaths are in developing countries, with half kidney failure requiring dialysis, who resigns the Caribbean Community and Common in the prime productive years. The epidemic his job and has two female relatives give up Market (CARICOM) in 2010. A merger of of NCDs is being driven by population aging their employment to care for him. At some five regional health institutions, CARPHA

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Morant Bay, Jamaica: health interventions in terms of cycling and healthy eating require a whole-of-society approach involving non-health sectors GETTY IMAGES

encompasses surveillance and response to agriculture and labelling standards. An today’s development paradigms. Excessive emergencies, laboratories, nutrition and food evaluation of the Port-of-Spain declaration consumption of food, tobacco, alcohol security, health research, environmental is under way to learn lessons on how to and fossil fuels underpin the epidemic of health, and pharmaceutical quality. It aims accelerate multi-sector implementation. The NCDs and the ever-increasing concern to provide a more efficient, effective and CARICOM summit led to the historic UN about climate change. synergistic approach to the region’s health and High-Level Meeting on NCDs in September Caribbean countries as small states are development challenges. 2011. Subsequently, Caribbean countries particularly vulnerable to external human- The recognition of NCDs as a ‘super participated actively in the development of the made or natural shocks. They have banded priority’ in the 2005 Report of the Caribbean global monitoring framework and targets. together to take joint action on common Commission on Health and Development led problems such as NCDs, recognising their to the first heads-of-state summit on NCDs Leading the way threat to economic growth and sustainable in September 2007. It issued the Port- Caribbean countries have been contributing development. Other world leaders should of-Spain declaration, Uniting to Stop the to redefining global health through proactive take note and follow through on their Epidemic of NCDs. Annual monitoring of the prevention, including being the first region commitments made at the UN High-Level 27 commitments in the declaration shows in the world to eliminate measles and Meeting on NCDs, including the need for movement on indicators under the control leading the charge to elevate NCDs to the whole-of-government and whole-of-society of health, but less progress on indicators global development agenda. In reality, approaches, to remove these preventable requiring multi-sectoral action, such as trade, NCDs are symptoms of the failure of impediments to growth.

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The Democratic Republic of Congo: investing in child development

he Democratic Republic of children fewer than five years decreased MDG 5: Improve maternal health Congo (DRC) is the second- from 31 per cent to 24 per cent, and the Between 2000 and 2010, maternal largest country in Africa with prevalence of acute malnutrition decreased mortality decreased from 930 to an estimated population of from 16 per cent to 11 per cent. However, 540 deaths per 100,000 live births. 71 million. More than two thirds the prevalence of chronic malnutrition However, without a concerted effort, Tlive in poverty. Decades of continued has remained very high and stagnant at the country will not reach the target armed conflicts have weakened the 43 per cent. More than two million children set for 2015. social sector – including health. In spite are affected by acute malnutrition and more of these challenges, the country has than six million children are stunted. MDG 6: Combat HIV/AIDS, malaria and made encouraging progress to reduce other diseases The HIV epidemic in DRC mortality among children and women. MDG 4: Reduce child mortality Over the is generalised. In 2008, HIV prevalence past decade, child mortality fell from 213 was estimated at three per cent in the Progress towards achieving the to 158 deaths per 1,000 live births. At this general population and 3.7 per cent Millennium Development Goals rate, DRC will not reach the MDG 4 target among pregnant women. In 2011, MDG 1: Eradicate extreme poverty and by 2015. The country remains the world’s respective figures were at 2.6 per cent hunger Between 2001 and 2010, third-largest contributor to child mortality, and 3.5 per cent among pregnant the prevalence of underweight among following India and Nigeria. women attending antenatal care facilities.

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Causes of slow progress towards achieving the MDGs Deaths per thousand live births There are several factors within the health system and bottlenecks that limit access to quality health services Under-five mortality decline DRC Industrialised countries 1970-2010 for women and children: 1970-2035 Projected (industrialised countries - assumed constant) • frequent stock outs of essential DRC 1970 - 2010 Projected DR 0.7 per cent ARR commodities and drugs; ProSmoothed 8.6 per cent ARR • limited availability of trained and motivated health personnel; 260 • financial barriers to access services; 240 On current trajectory DRC does • geographical barriers in certain areas 220 not reach MDG targets at all of the country; and 200 180 • overall low quality of healthcare. 160 2010 140 465,000 Opportunities 120 U5 deaths 100 • High coverage of antenatal consultations In 2035, 80 (first visit) – 87 per cent. MDG 4 TARGET 391,000 60 • High coverage of births attended by a vs 41,000 deaths 40 2015 skilled personnel – 74 per cent. 20 449,000 vs 164,000 deaths • High coverage of the first dose of 0 the pentavalent vaccine (diphtheria, 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 pertussis, tetanus, haemophilus B, Year hepatitis B) – 85 per cent. • Fivefold increase in the use of ready-to-use therapeutic foods to and other basic commodities. To reduce interventions. In hard-to-reach areas, the treat severe acute malnutrition household financial barriers to access community-based approaches will improve between 2008 and 2012. healthcare and to improve motivation access to health services. • Existence of community-based of health personnel, the approach approaches implemented to scale, also incorporates a voucher system. In nutrition such as the Healthy Villages programme. Furthermore, this approach will ensure The treatment of acute malnutrition will be a win-win, as it will piggyback on high- scaled up through the provision of ready-to- Implementation strategies coverage interventions such as antenatal use therapeutic foods at community level. The government has developed a strategy care and immunisation to facilitate rapid Prevention will be strengthened, particularly for the provision of family kits containing scaling-up of the family kits. In turn, this the implementation of multisectoral and essential drugs, nutritional supplements will trigger and increase in coverage these coordinated interventions, by ensuring both direct nutrition-specific interventions (optimal infant and young child feeding) and broader multisectoral nutrition-sensitive interventions (water, sanitation and ‘A Promise Renewed’ is a global initiative to align actions and mobilise more food security). In this regard, the DRC’s resources in favour of women’s and children’s health. The intention is to reduce commitment to global initiatives, such as infant and child mortality, by 2035, to fewer than 20 deaths per 1,000 live births. The Scaling Up Nutrition (SUN), will facilitate guiding principles of the initiative are: equity, national leadership, multisectoral the mobilisation of partners and resources action, efficiency and mutual accountability. for large-scale actions. To monitor progress, the government has developed a score card In response to high child and maternal mortality rates, the Government of DRC, based on child survival indicators. in line with this global initiative, has committed, since June 2012, to accelerate progress towards MDGs 1, 4, 5 and 6. More specifically, this commitment will: • increase the coverage of high-impact interventions against the main child-killer diseases (malaria, acute respiratory infections, diarrhoea and severe acute malnutrition); Contact details • increase the coverage and quality of antenatal care to reduce the incidence T: 00243 81 700 54 63 of low birth weight, prematurity and prevent neonatal and maternal tetanus, E: [email protected] mother-to-child HIV transmission, and pregnancy complications (such as [email protected] hypertension, malaria, anemia, bleeding); • increase the coverage and quality of skilled attendance at birth in health facilities to reduce complications related to bleeding, infection and eclampsia for mothers, as well as hypothermia, asphyxia and neonatal infection for newborns; and • increase the coverage and quality of routine immunisation and introduce new high-impact vaccines to reduce child mortality.

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Joint commitment can kickstart growth

The return to the G7 structure enables leaders to focus on a key strength of the forum

By Robert Fauver, former US G7/G8 sherpa

nce again, the leaders of the Europe: it is likely to approach three per cent major industrial countries are this year. However, despite these real growth meeting at a time of uncertainty performances in the UK and Germany, in their own and the world’s European unemployment is expected near-term economic outlook. to remain high by historic standards with OData for the fourth quarter of 2013 had levels of youth joblessness disturbingly high indicated that perhaps the major economies and long lasting. were at last experiencing solid economic The bright spot among the G7 economies expansion. Unfortunately, developments this year is Japan. It is apparent that the three- during the first quarter of 2014 dashed those pronged macro and micro policy approach optimistic expectations. And, for the fourth that Prime Minister Shinzo Abe has put into straight year, expectations of a sustained, place has affected the real economy and, strong recovery in the United States were more importantly, business and consumer shattered with the release of weaker than expectations. Business seems to be willing for anticipated first-quarter real growth in gross domestic product (GDP). Economic forecasts prepared by the International Monetary Fund for its April The G7 leaders have not meetings had also indicated an optimistic focused on tackling structural outlook for 2014 and 2015. Unfortunately, these projections were completed before problems for years. It is time the release of the disappointing data on for them to do so in Brussels GDP growth in the US during the first three months of this year and the weaker than expected economic performance in Europe management if the slowdown is sharper during the early months of 2014. the first time in many years to look inward than currently anticipated. India is likely At the time of writing, the European for investment opportunities instead of only to see growth pick up at the margin if the growth outlook is particularly cloudy, as looking abroad for profitable investments. global growth strengthens and Indian the Ukrainian situation has raised worries Given the large sums of cash available to exports expand faster than in recent years. regarding the future cost (and availability) of major Japanese firms, this new confidence Given the downside risks for global growth, natural gas and oil from Russia. Furthermore, in the domestic economy could be very this mild optimism could be excessive. Europeans are deeply concerned about the important for stimulating domestic demand. Russia – given an already weak domestic potential use of further economic sanctions Unfortunately, for the first time in situation – faces uncertainty over the effects against Russia in response to the crisis. These years, the BRICS grouping of Brazil, Russia, of business and consumer confidence due worries are undoubtedly holding back both India, China and South Africa is not likely to economic sanctions. consumer and business spending. Yet despite to provide much strength to the global these uncertainties, Germany continues to economic outlook in 2014. China is adjusting G7 cooperation and coordination expect a significant strengthening of GDP to slower GDP growth, partly as a result With a return to the original G7 structure growth this year after a lacklustre 2013. of a slowdown in exports and partly as a for this year’s economic summit, the Domestic demand is picking up as industry consequence of conscious government policy leaders have an opportunity to return it to and consumer confidence grows. Germany choices to restrict the domestic economy. its original strength. In earlier days, will lead the eurozone in terms of real growth While real growth will remain strong by the annual summit process focused on performance with a rate between 1.5 and world standards, it will represent a continued macroeconomic policy actions that could 2 per cent. But, for a change, the United slowing of GDP growth in China – and strengthen the near-term outlook among Kingdom’s rate of real growth will head up could result in changes in domestic policy the participating countries. In the past,

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A weaker than expected economic performance in Europe throughout the first quarter of 2014 was compounded by worries prompted by the Ukraine crisis PIDJOE/GETTYIMAGES

leaders used their finance ministers to lay the employment growth. While the Organisation has yet developed a successful retraining groundwork for a substantive communiqué at for Economic Co-operation and Development programme for the 21st century. By working the summit. Their joint commitments fortified has attempted to tackle structural problems jointly, the G7 members could tackle this consumer and business confidence, which in for years, the G7 has not focused on them glaring problem. turn enhanced – at the margin – the near- since the late 1970s. Aside from these structural issues, leaders term economic performance. should address other labour market rigidities In recent years, the original principle High levels of unemployment and the need for tax reforms in many of the summit process has fallen out of It is time for G7 leaders to focus on structural countries. They could, for example, instruct practice. In earlier periods, the leaders of problems in their joint communiqué in their finance ministers to seek to unify the major industrial economies urged their Brussels. All participating countries face corporate tax rates and principles in order finance ministers and central bankers to large unfunded national pension schemes. to end tax evasion by corporations moving engage in a process of economic policy With aging populations and continued high profits to tax havens. Finally, leaders need ‘coordination and cooperation’. The concept levels of unemployment, unfunded liabilities to strengthen their commitment to reducing was straightforward. With economic are growing faster than is acceptable. By trade barriers, whether in the area of goods, authorities working in concert, the effects sharing their commitment to stabilising services, investment, intellectual property of macroeconomic policy changes could pension plans, confidence levels would be protection or labour mobility. Leaders could reinforce each other and the sum of the strengthened in all G7 members. Similarly, endorse the breadth of the Trans-Pacific effects would be greater than if policy labour force retraining is a critical problem Partnership now being negotiated and suggest actions were undertaken in isolation. facing the G7 area. Technological innovation that it may provide the next model for trade The industrial economies face domestic has rendered large portions of national labour liberalisation discussions. Leaders could rigidities that dampen domestic demand and forces untrained for work. No single country also endorse the transatlantic negotiations.

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Generating decent jobs for youth

benefits. It ranges above 30 per cent in the Great Depression-level unemployment rates are middle-income G20 countries and, in some cases, reaches more than 80 per cent of the hitting young people especially hard. World leaders workforce. The ILO estimates suggest that informal employment has declined in only 26 must act now to address the global jobs challenge out of 49 countries for which reliable statistics are available. In addition, the most recent ILO By Guy Ryder, director general, International Labour Organization school-to-work transition surveys in a number of African countries show that more than 50 per cent of young women and men are self- employed, often trapped in low-productive abour markets around the world has increased from 5.7 per cent in 2007 and survivalist informal employment. are in severe distress. With the to 8.4 per cent in 2013. Even by 2016, the Hence, moving out of informality is of projections of weak, uneven and unemployment rate in this group of countries paramount importance for low- and middle- uncertain growth recovery in is projected to be 8.1 per cent. The European income countries. the global economy in 2014 and Union has suffered the worst fate in terms Another distressing trend is the significant Lprobably beyond, the prospects of a rapid of labour market distress, with the overall drop in the global youth labour participation and sustainable turnaround are grim. Action unemployment rate projected to be around rate. It is now two percentage points below is needed by global leaders and proactive 11 per cent in 2016 compared with 7.2 per pre-crisis levels. This suggests that young measures are called for from policymakers in cent in 2007. What is even more worrisome people, discouraged by the lack of adequate each country to change the pace and direction is the widespread concern among analysts job opportunities, have lost hope, given up the and make employment recovery a global that what started off as short-term, cyclical search and are dropping out of the workforce. priority and a national reality. unemployment is mutating into long-term, This does not necessarily mean that they Across the world today, about 202 million structural unemployment. The Organisation make the transition to education or some form people are unemployed, and average for Economic Co-operation and Development of training. The share of young people who are unemployment spells have increased (OECD) estimates that long-term neither in employment, education or training considerably. The global recession of 2008-09 unemployment has increased sharply and has increased in 30 out of 40 countries. and its aftermath continues to take a heavy persistently in many high-income countries. Young people who are not productively toll on people at the start of their working life. Examples include Spain (+27.6 percentage engaged in either the world of work or The labour market outlook for young people points between the last quarter of 2007 to the education and training must not be allowed has deteriorated in nearly every region of the first quarter of 2013), the United States (+18.8 to give up on their aspirations for a better world, with the sharpest change occurring percentage points between the last quarter life and future for themselves, their families in the Middle East and North Africa. In of 2007 to the first quarter of 2013) and the and for societies. Southern Europe, the youth unemployment United Kingdom (+10.9 percentage points). rate has reached proportions not seen since Youth employment: the Great Depression. Worldwide, about two a tripartite challenge in every five unemployed people are aged One of the core strategic objectives of 15-24 – a total of 75 million young men and Young people who are not the ILO is to support a portfolio of policy women looking for a job. productively engaged in work, actions that enable its members to make The International Labour Organization significant progress towards full and (ILO) estimates that the global jobs gap – education or training must productive employment for all. It works the difference between what would have not be allowed to give closely with its tripartite constituents – prevailed had pre-crisis global growth governments, employers and workers – to been sustained and what prevails now – is up on their aspirations develop a shared vision of how to make the 62 million today and is expected to increase collective aspiration of attaining full and to 81 million by 2018. productive employment for all a reality. The estimated global jobs gap is merely In the case of low- and middle-income Addressing the challenges of quality job the tip of the iceberg. There are manifold countries, the overall unemployment rate generation in today’s distressed economic manifestations of labour market distress and its duration are not necessarily the best and social environment, the ILO engages in across the world: the changing nature of indicators of labour market distress. The policy research on what works in terms of unemployment; deterioration in the quality of issue is the scale and persistence of low- generating good jobs; offers policy advice jobs and pay; the persistence of high levels of productivity employment, which, of course, at the country level; and advocates actively, ‘working poverty’; rising trends in inequality; predates the crisis years of 2008-09. with its development partners, in global and and polarisation in the labour markets. One way of gauging this change is to regional forums, for policy coherence and The advanced economies have experienced focus on the incidence of informality: those action in promoting more and better jobs. For a surge in unemployment since the global groups in the labour force earning a living example, the ILO is actively seeking to shape recession of 2008-09. The unemployment under precarious conditions or employed on a the full, productive and decent work agenda, rate in the high-income G20 members casual basis without access to social security once again with its tripartite constituencies

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Generating decent jobs for youth

A queue for an unemployment registry in Madrid. Long-term unemployment in Spain increased by 27.6 percentage points between 2007 and 2013 PAUL WHITE/AP/PA IMAGES WHITE/AP/PA PAUL

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4.3 Ryder.indd 63 20/05/2014 17:31 http://www.pinterest.com/ eduint/unite-4-education/

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Unite for Quality Education is a campaign of Education International

2014_EI_G8_final.indd 3 27/03/2014 11:11:29 Education International_placed.indd 1 15/04/2014 09:27 ECONOMY, GROWTH AND JOBS

Young people march in London ahead of the 2009 G20 summit. Across the world, two in every five unemployed people are aged between 15 and 24 ANNA LATIMER/ALAMY ANNA

and its development partners, in the post-2015 community of practitioners, and to extend specific training programmes. Multiple development agenda that will succeed the the global reach of the best possible collective influential international organisations have Millennium Development Goals. The ILO is knowledge by forging and leading stronger endorsed such a message; for example in the also actively supporting the G20, through its partnerships with its development partners. World Bank and International Monetary Fund various task teams and in particular the Task Drawing on its experience, the ILO is jobs reports as well as the McKinsey Global Force on Employment, with evidence-based consistently advocating short- and long- Institute jobs report on Africa. analyses and policy assessments of how to term initiatives, and demand- and supply- Some common threads of a global realise the leaders’ commitment to promoting side measures, enabling macroeconomic narrative are emerging. These include the stronger growth and quality job generation. frameworks, and effective labour market urgent need to tackle weak aggregate demand The ILO call for action on the youth policies and institutions to address the in today’s global economy through a nuanced employment crisis, adopted by the global global labour market distress and promote approach to fiscal consolidation, incentive- community of governments, employers and quality job generation, decent work and compatible initiatives to promote priority workers at the June 2012 International more inclusive societies. Such measures and job-creating sectors, appropriate skilling of Labour Conference, is a case in point. It initiatives should be tailored to country- the workforce, and labour market policies that demands urgent and targeted action, but it specific circumstances. strike the right balance between attenuating also offers a policy portfolio of tried and tested structural impediments to job creation measures that can have a significant impact Global leadership and protecting workers from precarious in breaking the vicious cycle of disconnects Global leaders including the G7 play a key working conditions. It must also be tackled from the labour market, reinvolving the role in driving action on youth employment by increasing investments in infrastructure, disadvantaged youth and re-establishing the within a broader commitment to tackling the promoting financial inclusion, better basis for longer-term sustainable economic overall jobs deficit. connecting education with the world of work, and employment recovery. A fundamental step is the recognition and paying particular attention to the plight of Internally, the highest importance has that generating decent jobs is at the core of young people. been given to more and better jobs, and in shared economic prosperity and is a necessary A bold and persuasive statement of particular jobs and skills for youth, as areas pillar for recovery. commitment by world leaders – including of critical concern for the global community. Furthermore, the G7 leaders can put those of the G7 – backed up by a credible The ILO has undertaken a reorganisation to forward a shared vision for a comprehensive plan to build on collective knowledge and the reinforce and further expand knowledge on range of policy actions to promote more and converging consensus to address the global what works in fast-changing labour markets, better jobs rather than focusing on narrow jobs challenge could do much to galvanise to harness synergies across its diverse approaches to labour market reforms or people into action.

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Education for sustainable, shared prosperity

by the skills of workers. Since 1995, upper- Successful education systems fuel economic secondary graduation rates have increased by an average of eight percentage points among growth, but depend on countries first identifying OECD countries with comparable data. Although graduation rates are not measured the policies that will help promote learning for all in terms of skills, the improved education performance has certainly contributed to By Harry Anthony Patrinos, lead education economist, World Bank, producing the human capital that is central and Gaurav Tiwari, education consultant, World Bank to meeting the challenges of society. Students in high-performing OECD countries are graduating at a better rate than are students in low-income countries. Based on the OECD productive labour force is the These figures are consistent with each evidence alone, countries need to invest in result of an efficient, equitable, country’s educational performance – only education for sustained prosperity. good-quality education system; 36 per cent of adults aged 25-64 have earned Growth research demonstrates that what this is the crux of the drive for the equivalent of a high-school degree in people actually learn in school significantly sustainable growth, employment Mexico, compared with 81 per cent in Norway changes the role of education in economic Aand social equity. An effective education – although the quality of education plays a system emphasises learning for all, and the significant role in the quality of employment. reason for this is simple: learning promotes Mexican students scored on average growth, development and poverty reduction. 420 points in reading literacy, maths and Research shows that what The equity aspects of a strategy for learning science in the OECD’s Programme for people actually learn in school are crucial because major access challenges International Student Assessment (PISA), remain for disadvantaged populations at lower than the OECD average of 497, changes the role of education all education levels. compared with 500 in reading literacy, in economic development Strategies to reach the most vulnerable, maths and science by the Norwegian students. and partnership between the public and OECD secretary general Angel Gurría has private sectors are crucial to achieve such fittingly said that competitiveness and future goals. Emphasising the central role for public- job prospects will depend on what people can development. That is, a good education private partnership, Liberian president do with what they know. orients individuals with a set of skills relevant Ellen Johnson Sirleaf said recently that The lack of a fair distribution of skills to the market, at the same time making growth alone could not provide answers in society is another factor contributing to them more likely to find a job that meets and we have to build capacity. overall inequality. Highly unequal income their aspirations. distribution, lack of access to education A good education is an important requisite The major challenges on the way to and poor-quality education for the poor for finding a job. In Norway, 88 per cent of securing sustainable prosperity aggravate the problem severalfold. If access individuals with at least a tertiary education Securing sustained prosperity hinges on is inequitable, it diminishes the performance have a paid job, compared with an estimated growth, which depends on favourable policy and compromises the social and economic 56 per cent for those without an upper change, matching the skills produced by the benefits of schooling. Ghana is a case in point: secondary education. Even in Finland, education system with the demands of the in the past, the country suffered from access whose students consistently perform well in labour market, as well as macroeconomic and equity issues along gender, geographic the PISA tests, an estimated 85 per cent of stability around the world. However, and socioeconomic lines; but the country has individuals with at least a tertiary education according to the World Bank, growth in the made gains by adopting appropriate policies, are working, compared with an estimated Middle East and North Africa is expected to such as equalising educational opportunities 42 per cent for those without an upper remain weak for the next two years, while at the basic level. secondary education. Similarly, in Austria, growth in developing countries will pick up an estimated 86 per cent of individuals with from 4.8 per cent in 2013 to a slower than Education as a central contributor at least a tertiary education have a paid job, previously expected 5.3 per cent this year, to meeting these challenges compared with an estimated 50 per cent for 5.5 per cent in 2015 and 5.7 per cent in 2016. Education produces human capital with those without an upper secondary education. According to the Organisation for relevant skills, capable of helping to meet the These statistics demonstrate that the more Economic Co-operation and Development challenges of economic growth and social educated an individual, the better the chances (OECD), more than 75 per cent of people in equity. The distribution of skills in society is of employment, whatever the country. Norway aged 15-64 years have a paid job, closely related to the distribution of income, Returns to investment in education are compared with nearly 60 per cent in Mexico. and economic growth is strongly affected a useful indicator of the productivity of

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4.4 Patrinos & Tiwari.indd 66 20/05/2014 17:34 ECONOMY, GROWTH AND JOBS

On average, a year of schooling is associated with a rate of return in terms of income growth of 10 per cent a year – more in low-income countries JAN TADEUSZ/ALAMY JAN

schooling, and an incentive for people to well – is crucial to improving education knowledgeable about the state of the invest in their own human capital. Each year quality and learning for all. various education systems, and more of schooling contributes to an individual’s Third, competent teachers – selected sensitive to their needs. This will also earnings. On average, a year of schooling is from the best candidates, supported by the allow countries to assess existing associated with a rate of return in terms of right training and incentivised according policies and make the necessary income growth of 10 per cent a year. This is to results – serve as the motivated and interventions to ensure sustainable higher in low-income countries, demonstrating qualified individuals for desired results. and shared prosperity. the need for further investment in education Research suggests that salaries and alternative 2. An evidence revolution: the call for and where the supply of schooling is scarce. employment opportunities are important use of more evidence of policies that Only a productive education system can influences on the attractiveness of teaching. make a difference will make a case for ensure sustainable, shared prosperity. The Effective teacher retention is an important good governance. At the same time, elements of a successful education system facet of a successful education system. the evidence-based practice would can be pieced together using the results of Fourth, good governance is another complement the readily available data, the Systems Approach for Better Education ingredient for a successful education system. and also help policymakers contextualise Results (SABER), the World Bank initiative to The right policies on school autonomy and the work in education. collect and analyse policy data on education accountability, the role of government in 3. A service delivery revolution: the right systems around the world through evidence- education, and public-private partnerships environment encourages innovation, risk- based frameworks, highlighting the policies are crucial, especially during times when a taking and evidence-based policymaking. and institutions that help promote learning for country’s economy is weak. The propensity for innovation and risk- all. Those elements include the following. taking can help growth become a norm, First, information is required on where How the G7 leaders can help not just in developing countries, but all the education system is and where it needs Helping countries identify and implement around the world. This is all done in the to go. The SABER Education Management the best policy mix depends on the name of building better systems for shared Information System helps countries identify availability and use of data, evidence from the prosperity and growth. areas for improvement in data collection, field, and a concerted effort to innovate, take comprehensive data system management and risks and make policy based on evidence. The Enabling countries to use education for the use of data in decision-making. G7 leaders at Brussels can contribute to these sustainable and shared prosperity is the Second, information obtained from efforts by facilitating three revolutions: inevitable intervention for today. Such a assessments on whether all students in an 1. A data revolution: the availability of revolution is very much in the reach of world education system are learning – and how data will make policymakers more leaders, and a responsibility they all share.

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4.4 Patrinos & Tiwari.indd 67 20/05/2014 17:34 CYBERSECURITY

Big and open data

While ‘big data’ offers huge opportunities, businesses must act fast in order to exploit them

By Neelie Kroes, vice president, European Commission, responsible for the Digital Agenda for Europe

oday the world is witnessing a practice. Of course, technical safeguards new industrial revolution – a count as much as rules. So it will also actively digital revolution, driven not invest in innovative technical solutions that by coal or steel, but by high- can enhance privacy ‘by design’, or easily performance computing, and anonymise or pseudonymise data. Tfuelled most of all by the power of data. Supported by its cybersecurity arm, the From industrial processes to scientific EU Agency for Network and Information research, most activities produce data, data Security (ENISA), the EU will also look at that anyone can now use on an unprecedented big data security risks – and set out how to scale, allowing new products and services, manage and mitigate those risks, for example new business models and processes, and new through tips on how to store data to prevent ways to make scientific discoveries. it from becoming compromised. As more and ‘Big data’ is expected to grow 40 per cent more sectors go digital, the right ‘cybersecure’ per year, surpassing €10 billion ($13.9 billion) mindset should be embedded everywhere, with by 2015. That is about seven times faster than companies able to detect and disrupt attacks. the overall information and communication The current copyright framework is technology (ICT) market. In the United often an obstruction, especially for scientists Kingdom alone, the number of specialist big hoping to use data or text mining. Such data staff working in larger firms could rise by research is often innovative and life-saving: 243 per cent in the five years to 2017. the EU is already looking at how to reform To seize these opportunities and compete, the copyright framework so that it no longer Europe needs to be quick and effective. It stands in the way of such research. And, even needs to develop the enabling technologies under the current framework, I urge the EU’s that underpin innovation; it needs better national governments to allow those activities ICT infrastructure; and it needs better skills. as much as they can – after all, the power At the same time it needs the right policies often lies in their hands. – on interoperability, privacy, security and Finally, in many sectors – finance, for intellectual property. example – requirements to house data in a Tomorrow’s data-driven economy will certain country or area limit the cross-border be research-rich, full of opportunities for flow of information: they are a barrier to the business and for modernised public services. EU single market in cloud computing and big Data sets and the infrastructure they use data, and an obstacle to European leadership. will be available, high quality, reliable and The EU will be looking very carefully at those interoperable – and able to create new value, barriers, and at what more it can do – as well benefiting the economy and boosting society. as consulting on issues of data ownership and The framework for this activity will need liability, especially for the Internet of Things. to ensure privacy, security and coherent rules From sustainable health to smart cities, on data ownership. The European Union’s there is a huge data dividend waiting to proposed reform on data protection aims to be delivered. Awaiting Europe are a more make those rules modern, strong, consistent competitive economy, more innovative and and comprehensive, and to safeguard nimble small businesses, better public services, privacy in the digital age, while building and a better quality of life for its people. I do trust and confidence. not want to see the European economy, or The EU will be consulting on voluntary people, suffer for lack of capacity; nor do I guidelines on big data applications: looking want to see an over-reliance on solutions from at how issues such as data anonymisation, abroad. I want European leadership. In the information notices, consent and consumer emerging global data economy, no one can privacy could work and be improved in afford to miss out, or get left behind.

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5.1 KroesAG.indd 68 20/05/2014 17:38 CYBERSECURITY

With expected annual growth of 40 per cent, big data will necessitate large numbers of specialist staff, as well as investment in skills and infrastructure JOSE LUIS PELAEZ INC/GETTYIMAGES LUIS JOSE

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5.1 KroesAG.indd 69 20/05/2014 17:36 CYBERSECURITY

Strengthening standards for cybersecurity and surveillance

Surveillance is a vital tool in the fight against terrorism and organised crime, but governments must do more to convince the public of its necessity

By John Lyons, chief executive, International Cyber Security Protection Alliance

n the wake of Edward Snowden’s it is that one person in a relatively junior role revelations, a great deal has been said, could gain access to significant amounts of mainly by politicians in the United critically important information. It happened States, about what steps will be taken before in the US in the case of Private Bradley to ensure that citizens’ privacy is Manning. To have it repeated so soon with Irespected. There have been embarrassments Snowden – a contractor at the US National too at ministerial level, about the US and UK Security Agency – suggests that there are intelligence agencies ‘spying’ on their allies systemic failures in the way in which very and friends – something that, apparently, they important information is stored and accessed. have been doing for years. Lessons are clearly not being learnt and Security, intelligence and law enforcement remedial measures not being implemented agencies have complained about the quickly enough. disastrous effects the publication of these It is self-evident why this is important to national secrets could have on their ability to the future integrity of information held by fight terrorism and organised crime. governments and companies. However, one So how does the international community of the less attractive, and possibly equally expect to address these issues of security damaging in the long term, by-products of and privacy? These two often conflicting these revelations is their impact on citizens’ requirements are fundamental rights that are trust in their governments and security vitally important to all. Yet few governments agencies. This growing lack of confidence will be likely to address the issues at all, in governments’ ability to secure important leaving the G7 members to draw up their information will have detrimental knock-on own doctrines governing future national effects on many areas of daily life. communications surveillance activities. Policies relating to, for example, the need PETERHOWELL/ISTOCKPHOTO Along the way to doing so, it is helpful for doctors and hospitals to share medical to understand the context in which such information nationally will struggle to gain have to be invented because it is imperative operations are carried out. To do this acceptance by patients and many of their to keep secrets between those who ‘need to thoroughly and honestly, and keep citizens doctors. When governments fail to secure know’ what they are. engaged and win their support, governments information from unauthorised access, or to (Of course, not all governments carry out need to be much more open about the safeguard information when it is in the hands this work for these reasons. There are many necessity for such surveillance. This failure to of those who require it, they do themselves that conduct this type of surveillance for the communicate to citizens the proportionality and every citizen a disservice. purpose of identifying those who disagree and necessity argument is one of the clearest with them in order to incarcerate them. This lessons learnt from the Snowden fiasco. Transparency: vital for gaining article is not concerned with such regimes.) public support These are some of the arguments that Systemic failures First and foremost, governments that carry could be put forward to form the basis of an According to Oxford Dictionaries, the out communications surveillance with awareness campaign directed at citizens: definition of a fiasco is “a complete failure, the aim of protecting the lives of citizens • Communications surveillance is carried especially a ludicrous or humiliating one”. and preventing harm must embark upon a out by security and law enforcement That precisely describes the Snowden affair. public information awareness campaign that agencies only to save lives and reduce All organisations that hold highly sensitive supports these activities. This can be achieved harm to citizens. information, be they in the government sector without revealing techniques or secrets about • Such operations are necessary and or in industry, would do well to consider how government capability; however, methods proportionate to counterterrorist

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5.2 Lyons.indd 70 20/05/2014 17:41 CYBERSECURITY

Strengthening standards for cybersecurity and surveillance

Recent revelations have lifted the lid want to concentrate their activities on on government surveillance activities, identifying, disrupting and, wherever prompting questions over intelligence possible, bringing to justice those who agencies’ failure to secure information would seek to inflict harm on others.

Examples of successful operations that have been brought to court could be highlighted without the need to reveal techniques. Blogs and Q&A sessions could also be created to answer the public’s questions. The media should be engaged in the campaign, and ministers should speak about these activities and hold public debates about them. This level of engagement should be continuous and not reactive.

‘Blue-on-blue’ surveillance Some might be forgiven for thinking that government security agencies should have enough to do by surveilling countries that are potentially hostile. What hope is there for international accord and for building lasting trust among countries already party to treaties such as NATO’s if a government cannot be sure that its allies are not spying on it? Countries need assurances that this trust, hard won and easily lost, is not jeopardised by security and intelligence activities carried out on the basis of some outdated doctrine. On the other hand, it could be argued that governments ought to be better able to protect their communications and information against threats from any quarter. This is axiomatic, but it should nevertheless become the norm that one does not spy on one’s friends. Perhaps, it would be more helpful instead to alert them Governments that carry out surveillance with the aim of to weaknesses in their systems and help repair these, rather than use them to infiltrate protecting the lives of citizens must embark upon a public government systems. information awareness campaign that supports these activities It is difficult for governments to justify seeking to discipline those who have illegally gained access to their systems while at the same time conducting surveillance of other operations and in the fight against and phones to support their illegal governments’ systems. In the interests of organised crime. Sometimes, individuals operations and to cause harm to innocent international harmony and to encourage the who carry out criminal acts will also be people at home and in other countries. sharing of vital intelligence among countries the subject of surveillance activities. • In order to identify this criminal activity that are already members of a club, they • All operations are authorised at ministerial and the people engaged in it, it may be should at least consider signing up to an level and overseen by an independent necessary to conduct surveillance of agreement that outlaws surveillance on each organisation that reports to parliament and ‘innocent’ communications by citizens other. Security and intelligence agencies identifies inappropriate activity. who are not engaged in criminal activity. can then get on with the job of conducting • Terrorists and organised criminals are using Authorities will work hard to ensure that communications surveillance on hostile very sophisticated applications available this information is discarded as quickly countries and on those who would bring on the internet, mobile devices, computers as possible. They do not need it and they death and destruction to the streets.

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5.2 Lyons.indd 71 20/05/2014 17:41 TRADE, TAXATION AND TRANSPARENCY

Promoting growth and development through trade MIKE THEISS/NATIONAL GEOGRAPHIC SOCIETY/CORBIS GEOGRAPHIC MIKE THEISS/NATIONAL

The implementation of the Bali package of prolonged periods when progress has not been forthcoming, not only because of the multilateral trade agreements will require all WTO large number of complex issues on the table, but also because of the changing geopolitical members to work together in a spirit of generosity dynamics and the worst financial crisis in three generations. As a result, while the WTO’s dispute By Yonov Frederick Agah, deputy director general, World Trade Organization settlement and monitoring functions were operating reasonably well, its role as a forum for negotiating new global trade rules was he past two decades have seen the These open markets did not come about clearly not. In the run-up to the ministerial fastest rate of poverty reduction by accident. Successive rounds of multilateral conference in Bali in December 2013, there in history. International trade has trade liberalisation under the General was a widespread perception that yet another played, and continues to play, a Agreement on Tariffs and Trade (GATT) high-profile failure would deal a devastating central role in this. Successful redefined the openness of the global economy blow to the WTO’s credibility. Fortunately, Tdeveloping economies have embraced market- from the wreckage of the 1930s and ’40s. The members were able to break the stalemate, oriented policies and used the open global World Trade Organization, which succeeded reaching a landmark agreement. economy as a source of demand, technology the GATT in 1995, has further enhanced the and ideas. Open access to important markets rules and ever-stronger norms in favour of The Bali package makes it possible for developing countries to liberalised markets. Multilateral trade deals are never easy, but pursue export-led growth strategies – and The most recent round of multilateral trade when they are struck, they matter. And this many are doing so, with great success. Led by negotiations, the Doha Development Agenda, is very much true of the Bali package, which China, they have taken advantage of steadily was launched in 2001. Its objective was to has three main pillars: trade facilitation, diminishing trade barriers at home and put the concerns of developing countries at development and agriculture. abroad to import what the world offers, and the heart of the negotiating agenda. Since In commercial terms, trade facilitation export what it is willing to buy. 2001, however, the Doha round has suffered is the most important outcome of the Bali

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6.2 Agah.indd 72 20/05/2014 17:44 TRADE, TAXATION AND TRANSPARENCY

Promoting growth and development through trade

The post-2015 agenda will shape policy for the next decade and a half. It would make sense for it to reflect the connections between trade, growth and sustainable development

members. Ministers also created a mechanism tangible development gains, particularly for monitoring and improving the operation for the poorest countries, at the centre of of the many provisions in WTO rules that their efforts. As progress on agriculture will grant special and differential treatment to be linked to industrial goods and services, developing countries. members are considering the increasing need In agriculture, members took a further for balance across the different areas of the step towards phasing out the highly trade- negotiations, so that all of them can both distorting agricultural export subsidies contribute and benefit. and measures with equivalent effects. They In tandem with these additional reforms agreed on procedures aimed at ensuring that to multilateral trade rules, which might be existing import quota obligations did not go termed the demand side of the trade equation, unused because of red tape rather than low many countries still need help building supply market demand. They renewed a longstanding capacity if they are to boost their participation political commitment to cutting trade barriers in international trade. The aftermath of the and subsidies to cotton – an issue of economic financial crisis has taken a toll on official Simplifying customs procedures and and symbolic importance in the Doha development assistance flows, and aid for trade making them more transparent, the trade negotiations, in particular to the West African has been no exception. It is therefore crucial facilitation agreement was one of the Bali countries that grow it. Ministers also took an that donors adhere to the commitments they conference’s most important outcomes important decision on food security, agreeing have made and halt this downward trend. to a measure to protect developing countries Global development policy discussions, from legal challenges at the WTO over public such as the ongoing talks on a successor ministerial. While tariffs have come down over expenditures incurred while stockpiling agenda to the United Nations Millennium the years, actually getting goods across borders staple foods for distribution to the poor. Development Goals, would also benefit from remains costly in many places. By simplifying active participation by governments that are customs procedures and making them Putting the plan into action both major markets and sources of private as more transparent, encouraging cooperation WTO members now face a twofold task: well as public development assistance. The among customs agencies and establishing fully implementing the Bali agreements post-2015 agenda will shape government predictable rules for transit, the agreement and devising a work programme on how to policy and catalyse support from new actors on trade facilitation will substantially lower proceed with the rest of the Doha agenda by for the next decade and a half. It would make trade-related costs. An important aspect of the end of 2014. Both objectives will require sense for the agenda to reflect the deep-rooted the trade facilitation agreement is the linkage all members to work together in a spirit of connections between trade, sustained growth of the provision of financial and technical generosity and compromise. The process and sustainable development. assistance with the taking on of obligations by of devising the work programme should, In the area of global partnerships and trade developing members. of course, be inclusive and transparent, relations, the ongoing bilateral and regional The development-specific agreements involving all members at every step. deals being negotiated have the potential to adopted in Bali included a package for the Since the start of 2014, delegations in complement the work of the WTO. But they least-developed countries (LDCs). WTO Geneva have been deliberating over the cannot replace the gains that a multilateral members strengthened their commitments potential content of the post-Bali work trade agreement can deliver, especially for the to providing duty-free/quota-free market programme. WTO director general Roberto emerging markets, largely because the WTO access to LDC exports, and to stepping up the Azevêdo has urged negotiators to choose goals remains the only forum that can bring all monitoring of such access. They agreed on that are realistic and ‘doable’ in the light of countries, and all issues, to the table. Clearly, indicative parameters on how members can each other’s political constraints, and to be therefore, the world requires an effective make it easier for LDC merchandise to qualify ambitious where possible, but also to use WTO to maximise the contribution of free for these preferential access schemes. Another what they have learned from over a decade of trade to economic growth, employment, decision puts in place a process for granting negotiations about what cannot be achieved. poverty alleviation and sustainable LDC service providers market access on terms He has asked them to explore creative development, all of which remain top more favourable than those extended to other approaches, while keeping the delivery of priorities for all governments.

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6.2 Agah.indd 73 20/05/2014 17:44 the rate of capital accumulation that, in turn, reduces productivity, including labor productivity. The double Fair share and fair taxation; taxation of corporate equity income both at the business and shareholder level results in an additional tax on saving and investment. a balancing act. The economic costs associated with corporate income taxes are significant relative to total corporate tax revenues.

The drag on a country’s economy from the economic distortions caused by excessive corporate income tax is high compared to the actual revenues collected. Lower corporate tax rates reduce these economic distortions, as there is an exponential relationship Craig Alexander Peter van Dijk between distortions and marginal tax rates. However, SVP & Chief Economist SVP & Head of Tax compliance costs borne by corporate taxpayers and tax TD Bank Group TD Bank Group administration costs borne by governments continue to be high. These compliance costs can be particularly onerous as a relative matter for small and mid-sized In 1927, U.S. Supreme Court Justice Oliver Wendell Many countries trade off lower corporate income taxes businesses (SMEs) – and, SMEs are the job creation Holmes observed that “taxes are what we pay for to stimulate jobs and investment, which in turn result engine of most economies. civilized society.” Reasonable people agree with this. in other non-corporate tax revenues. However, like most things in life, balance is called Real reforms could reduce the economic costs of for. Excessively high taxes can represent a cost to Policymakers seek to improve the lives and welfare of current corporate income taxes. society because they dampen economic growth. The their citizens by attracting foreign direct investment, composition and mix of taxes are also important, encouraging domestic investment and entrepreneurship, It is not necessary to eliminate the corporate income because not all taxes have the same impact on the and incentivizing job creation. Government policies to tax to significantly enhance economic growth, reduce drivers of the economy. The choices that are made stimulate investment, jobs, and entrepreneurship often economic distortions, and reduce tax complexity. regarding how, what, and whom to tax are critically take the form of lower corporate tax rates, accelerated Reforms within the system could reduce the adverse important to ensuring that the cost of civilized society depreciation allowances, corporate tax credits, and other effects of current corporate income taxation. A recent is funded at the least economic cost to society. tax incentives. The increased economic activity that is OECD report outlined several fundamental corporate created with these supply-side policies often result in tax reforms that would be beneficial, including Today, the concept of “fair taxation” has captured the higher individual income, payroll, consumption, and integration of corporate and individual income taxes, a public’s attention around the world. Reasonable people property tax revenues. These increased tax revenues, shift to a corporate cash-flow tax, and allowances for agree that everyone should pay their fair share. The in turn, offset some or all of the effects of the lower returns on corporate equity. focus of many headlines and blogs is on the particular corporate income taxes. question of whether multinational companies are paying Reform of the corporate income tax also requires a enough tax. These stories often spark vigorous public Corporate taxes in a global economy are increasingly recognition that business income is increasingly earned in debate and as such deserve thoughtful analysis. And, borne by workers. non-corporate form through vehicles such as partnerships the right answer to the question of fair taxation should and trusts. reflect due consideration of the impact of corporate With greater mobility of global capital, recent taxes on the drivers of economic growth and prosperity. economic analysis of the economic burden (or Therefore, we must consider more than just the incidence) of corporate income taxes show a universe of corporate structures. Because business Spurred in part by the public spotlight on the tax significant percentage of the corporate tax is borne income can be earned in many forms other than profile of multinational corporations and with the by persons other than the owners of capital. Like the through a corporate structure, governments must more strong support of the G7, the OECD has embarked positive effects of many corporate tax incentives on broadly consider how business tax bases are impacted on a major project aimed at addressing government jobs, personal income and the overall economy, the by the use of non-corporate structures. By focusing concerns about base erosion and profit shifting negative effects of corporate taxation are borne widely on taxing income from business activity irrespective of (BEPS). We welcome this project as the forum for throughout a country’s economy. High corporate its legal form, governments may be able to raise more a truly global discussion of the effectiveness of taxation makes a country less attractive for business revenue, create a level playing field for all business and existing international tax policies and of potential investment, including inbound investment by foreign- reduce the harmful impact on their economies. changes to these policies that could have significant headquartered companies. Less business investment implications for cross-border trade and investment. reduces job opportunities, constrains the capital stock However, it would be short-sighted for the G8 and and limits productivity growth, the last of which is the OECD policymakers to limit their consideration of the primary source of national income growth that fuels Now is the time for the G8 and the OECD to seize the issues and the solutions merely to corporate income worker compensation. opportunity and expand the global discussion around tax. A holistic approach is called for, with thoughtful BEPS beyond the current focus on corporate income tax. consideration given to the right mix of corporate and Corporate income taxes are more harmful to economic other tax revenue generating tools to best serve the growth than other taxes. It is imperative that policymakers take a broader fiscal needs of governments, while helping to foster view of the global tax environment and consider the economic growth, prosperity and the global recovery. Recent OECD analysis shows that corporate taxes are economic, policy, and revenue dimensions of the whole more likely to reduce a country’s economic growth suite of tax approaches available to governments in than other taxes. Again, corporate income taxation funding civilized society. That is the key to ensuring lowers the after-tax return to capital, which slows truly fair taxation and fostering prosperity.

TDSP1402009_G8_Article_v5.indd Bank_placed.indd 2 1 14/05/2014 12:02 2014-05-13 1:06 PM the rate of capital accumulation that, in turn, reduces productivity, including labor productivity. The double Fair share and fair taxation; taxation of corporate equity income both at the business and shareholder level results in an additional tax on saving and investment. a balancing act. The economic costs associated with corporate income taxes are significant relative to total corporate tax revenues.

The drag on a country’s economy from the economic distortions caused by excessive corporate income tax is high compared to the actual revenues collected. Lower corporate tax rates reduce these economic distortions, as there is an exponential relationship Craig Alexander Peter van Dijk between distortions and marginal tax rates. However, SVP & Chief Economist SVP & Head of Tax compliance costs borne by corporate taxpayers and tax TD Bank Group TD Bank Group administration costs borne by governments continue to be high. These compliance costs can be particularly onerous as a relative matter for small and mid-sized In 1927, U.S. Supreme Court Justice Oliver Wendell Many countries trade off lower corporate income taxes businesses (SMEs) – and, SMEs are the job creation Holmes observed that “taxes are what we pay for to stimulate jobs and investment, which in turn result engine of most economies. civilized society.” Reasonable people agree with this. in other non-corporate tax revenues. However, like most things in life, balance is called Real reforms could reduce the economic costs of for. Excessively high taxes can represent a cost to Policymakers seek to improve the lives and welfare of current corporate income taxes. society because they dampen economic growth. The their citizens by attracting foreign direct investment, composition and mix of taxes are also important, encouraging domestic investment and entrepreneurship, It is not necessary to eliminate the corporate income because not all taxes have the same impact on the and incentivizing job creation. Government policies to tax to significantly enhance economic growth, reduce drivers of the economy. The choices that are made stimulate investment, jobs, and entrepreneurship often economic distortions, and reduce tax complexity. regarding how, what, and whom to tax are critically take the form of lower corporate tax rates, accelerated Reforms within the system could reduce the adverse important to ensuring that the cost of civilized society depreciation allowances, corporate tax credits, and other effects of current corporate income taxation. A recent is funded at the least economic cost to society. tax incentives. The increased economic activity that is OECD report outlined several fundamental corporate created with these supply-side policies often result in tax reforms that would be beneficial, including Today, the concept of “fair taxation” has captured the higher individual income, payroll, consumption, and integration of corporate and individual income taxes, a public’s attention around the world. Reasonable people property tax revenues. These increased tax revenues, shift to a corporate cash-flow tax, and allowances for agree that everyone should pay their fair share. The in turn, offset some or all of the effects of the lower returns on corporate equity. focus of many headlines and blogs is on the particular corporate income taxes. question of whether multinational companies are paying Reform of the corporate income tax also requires a enough tax. These stories often spark vigorous public Corporate taxes in a global economy are increasingly recognition that business income is increasingly earned in debate and as such deserve thoughtful analysis. And, borne by workers. non-corporate form through vehicles such as partnerships the right answer to the question of fair taxation should and trusts. reflect due consideration of the impact of corporate With greater mobility of global capital, recent taxes on the drivers of economic growth and prosperity. economic analysis of the economic burden (or Therefore, we must consider more than just the incidence) of corporate income taxes show a universe of corporate structures. Because business Spurred in part by the public spotlight on the tax significant percentage of the corporate tax is borne income can be earned in many forms other than profile of multinational corporations and with the by persons other than the owners of capital. Like the through a corporate structure, governments must more strong support of the G7, the OECD has embarked positive effects of many corporate tax incentives on broadly consider how business tax bases are impacted on a major project aimed at addressing government jobs, personal income and the overall economy, the by the use of non-corporate structures. By focusing concerns about base erosion and profit shifting negative effects of corporate taxation are borne widely on taxing income from business activity irrespective of (BEPS). We welcome this project as the forum for throughout a country’s economy. High corporate its legal form, governments may be able to raise more a truly global discussion of the effectiveness of taxation makes a country less attractive for business revenue, create a level playing field for all business and existing international tax policies and of potential investment, including inbound investment by foreign- reduce the harmful impact on their economies. changes to these policies that could have significant headquartered companies. Less business investment implications for cross-border trade and investment. reduces job opportunities, constrains the capital stock However, it would be short-sighted for the G8 and and limits productivity growth, the last of which is the OECD policymakers to limit their consideration of the primary source of national income growth that fuels Now is the time for the G8 and the OECD to seize the issues and the solutions merely to corporate income worker compensation. opportunity and expand the global discussion around tax. A holistic approach is called for, with thoughtful BEPS beyond the current focus on corporate income tax. consideration given to the right mix of corporate and Corporate income taxes are more harmful to economic other tax revenue generating tools to best serve the growth than other taxes. It is imperative that policymakers take a broader fiscal needs of governments, while helping to foster view of the global tax environment and consider the economic growth, prosperity and the global recovery. Recent OECD analysis shows that corporate taxes are economic, policy, and revenue dimensions of the whole more likely to reduce a country’s economic growth suite of tax approaches available to governments in than other taxes. Again, corporate income taxation funding civilized society. That is the key to ensuring lowers the after-tax return to capital, which slows truly fair taxation and fostering prosperity.

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Sound investment policies for sustainable economic development

International development institutions can help encourage investment in next year’s Sustainable Development Goals

By Mukhisa Kituyi, secretary general, United Nations Conference on Trade and Development

ountries worldwide are Due to be adopted next year, the SDGs are convinced that foreign direct expected to pursue a development agenda investment (FDI) can contribute encompassing environmental and social to sustainable economic sustainability as well as economic growth. development, inclusive growth This new set of goals will make mobilising Cand poverty alleviation. This is why countries investment for sustainable development an seek to attract foreign investment and why even greater priority. liberalisation, promotion and facilitation Against this background, it is a positive dominate the investment policy landscape. sign that developing countries and transition At the same time, policymakers are economies have been gaining a larger aware of the potential risks to economic share of global investment flows, both as stability from unfettered and uncontrolled recipients and sources. Recent United Nations capital flows. Recent experience has Conference on Trade and Development shown that financial crises can rapidly (UNCTAD) statistics on investment show wipe out development gains that have that FDI inflows to developing economies Foreign direct investment can taken decades to attain. Many countries are now exceeding those to developed help improve access to basic are now revisiting their entry conditions countries. Furthermore, FDI outflows infrastructure such as water supply, for investment, and strengthening the from developing countries and transition roads, electricity and sanitation related regulatory environment. economies now account for almost Moreover, there is greater realisation that 40 per cent of global investment. attracted FDI due to low labour costs face a the degree to which FDI makes a lasting Nonetheless, there remains huge dual challenge of keeping such investment contribution to equitable and balanced untapped potential for private investment into from moving elsewhere and ensuring that economic growth depends on wider policies economic sectors and activities relevant to FDI feeds into broad-based economic and strategies. These can help to create the SDGs. Development strategies and related development. Low-cost labour is a mixed the links with the domestic economy that policies face the challenges of alleviating blessing. It continues to help many developing build productive capacity, especially in existing constraints for such investments, countries attract FDI and can open up developing countries. Investment policies also mobilising new financial resources, new business opportunities when other need to respond to other challenges related to channelling investment into SDG sectors and jurisdictions become more expensive as sustainable development, namely persistent activities, and ensuring positive sustainable investment locations. But, given that wages global imbalances, climate change, food development outcomes of these investments. tend to rise with economic development, and energy security, and poverty reduction. depending on low labour costs to encourage Furthermore, FDI can also help to improve the Moving beyond low-cost labour FDI is not a sensible long-term strategy. local population’s access to basic infrastructure At the same time, it is not easy for countries, Moreover, relying only on cheap labour- (such as roads, electricity, water supply and in particular developing countries, to induced FDI prevents host countries from sanitation), education and health services. find, defend and strengthen their place as moving up the value chain. Commitment to meeting these challenges an investment destination in a globalised To become more attractive for higher-value will be reflected in the Sustainable economy. It is less problematic for countries FDI, governments need to put more emphasis Development Goals (SDGs) currently under that have a natural competitive advantage, on enhancing domestic productive capacities. discussion by the international community such as mineral resources, or are attractive to Education and training are key. Both play for the post-2015 agenda, when the UN investors because of their sheer market size. an important role not only in manufacturing Millennium Development Goals expire. However, countries that have traditionally and services, but also in improving the

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efficiency of agricultural production. Within advantage of attractive natural conditions for important role in promoting investment into development strategies, there also can be investment in renewable energies. In addition, SDGs. Through their technical advice and a case for targeting specific industries or it is necessary to promote and strengthen financial support, international development activities with comparative advantages that corporate social responsibility. institutions can significantly contribute to improve the chances of integration into Countries may also have legitimate reasons shaping an enabling framework for such international value chains. for restricting FDI in individual sectors as part investment. Furthermore, international The need to of their development investment agreements can help increase legal align national strategies. These stability, predictability and thereby investor investment policies can include the confidence in host countries. However, with SDGs implies Many countries are now protection of infant still more could be done to strengthen the a stronger focus on revisiting their entry industries, the wish sustainable development dimension of quality investment. conditions for investment to build national these treaties, in particular through a better This requires champions, concerns balancing of rights and obligations in treaty that governments about a crowding out provisions, by preserving sufficient regulatory improve their of local actors, space for host countries and by a greater regulatory framework for environmental and and national security interests in sensitive emphasis on social and environmental social protection and that they vigorously industries and critical infrastructure. concerns in relation to FDI. enforce respect for human rights, core labour However, vigilance is needed to ensure Published in June, UNCTAD’s World rights and safety regulations, among others. these policies do not become a pretext for Investment Report 2014 is devoted to the It also means governments should put more investment protectionism – a risk that is question of how to enhance the role of private emphasis on policies to promote low-carbon particularly high during economic and investment for the SDGs and is proposing a FDI. Many developing countries have the financial crises. International policies play an global action plan for investing in SDGs.

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Advancing global action to support fiscal sustainability

allow countries to draw up coordinated, The OECD is working with international partners comprehensive and transparent standards. It will address the gaps between different to eradicate tax evasion and tax avoidance, but countries’ tax systems, while respecting their right to design their own rules; it will strong political leadership is still needed revise the existing international rules on tax treaties and transfer pricing, introduce more By Angel Gurría, secretary general, transparency by companies, and improve Organisation for Economic Co-operation and Development cooperation between governments. The BEPS project builds on a broad engagement, drawing on experience and n the aftermath of the global financial untaxed anywhere, have been the subject perspectives beyond governments, including crisis, strengthening the resilience of unprecedented concern among political those of global business leaders, civil of all economies and societies requires leaders and the public alike. At stake here is society groups and labour representatives. a multifaceted approach across a the integrity of the corporate income tax. The OECD works closely with all the number of policy areas. Tax policy is at the core of national stakeholders and has put in place a number IIn the international tax sphere, the sovereignty, with each country being free to of mechanisms to ensure full transparency Organisation for Economic Co-operation and devise its corporate tax system in the way in the process, with a large number of Development (OECD) is working in two key it considers most appropriate. However, public consultations. areas. First, it has a project on base erosion in a globalised world where economies are and profit shifting (BEPS) that is modernising increasingly integrated, domestic tax systems the rules for the taxation of multinational designed in isolation are often not aligned. This corporations. Second, it is seeking to end may result in double taxation or in double Tax evasion and avoidance offshore tax evasion via the automatic exchange non-taxation – one of the root causes of BEPS. of information (AEoI) on tax matters. distort the allocation of Tax evasion and tax avoidance have been Tax transparency resources in an economy depriving national governments of precious In 2013, the OECD worked together with its resources for decades. The problem has been G8 and G20 partners to achieve a quantum getting worse over the years, as individuals and leap in international tax transparency and companies have become smarter at exploiting in the fight against tax avoidance and tax Although BEPS is a global concern loopholes and inconsistencies in tax rules evasion. At the G8 Lough Erne Summit, requiring global solutions, the nature across countries. With the fiscal pressures leaders supported efforts to tackle BEPS and scale of the risks faced by developing imposed by the crisis, this problem has and committed to work with the OECD to countries – and the challenges involved in become even more significant. develop a multilateral model of automatic addressing them – may be different. There Tax evasion and avoidance, when left exchange of information. is wide recognition that BEPS deprives unchecked, also raise the question of This work gained further political developing countries of essential tax revenue: economic fairness and efficiency, which is impetus at the G20 St Petersburg Summit. In on average, 20 per cent of tax revenues in particularly relevant in a context of severe response to a call from the G20, the OECD developing countries derive from corporate fiscal consolidation and social duress. developed, together with G20 members, income tax, compared with eight to 10 per Taxation underpins the social contract, and a comprehensive and ambitious G20/ cent in OECD countries. In these countries, is a powerful instrument to reduce inequality OECD Action Plan on Base Erosion and BEPS results in capital flight and gives and create opportunities for all citizens and Profit Shifting aimed at revisiting the rules, multinational corporations a competitive companies to prosper in an increasingly standards and transparency of international advantage over domestic businesses that competitive environment. taxation. At St Petersburg, leaders welcomed are not able to take advantage of cross- Tax evasion and avoidance also distort the G20/OECD BEPS project and endorsed the border tax planning strategies. the efficient allocation of resources in an associated action plan. In order to minimise To address this issue, the OECD is working economy, and hence have a negative impact BEPS, leaders called on member countries to with developing countries on its own account on growth. In the light of G20 members’ examine how their domestic laws contribute and through the G20 Development Working ambitious commitment to raise the collective to BEPS and to ensure that international and Group. The OECD put in place a series of gross domestic product by two per cent over national tax rules do not allow or encourage regional BEPS consultations – in Africa, the next five years, the need to fight BEPS as multinational enterprises to reduce overall Asia and Latin America, as well as a specific well as tax evasion has never been so urgent. taxes paid by artificially shifting profits to consultation for francophone countries – In recent years, international tax matters, low-tax jurisdictions. which bring together senior policymakers and in particular cross-border tax planning The G20/OECD BEPS action plan will to discuss challenges specific to developing strategies that enable corporate profits to go roll out over the next two years and will countries. The first series of regional

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Automatic exchange of information will help authorities in the fight against individuals who evade tax by exploiting inconsistencies in different tax systems VINCE CLEMENTS/ALAMY

consultations was attended by more than exchange of information ‘on request’ between on Transparency and Effective Exchange of 80 countries and over 300 delegates. tax administrations, which is now led through Information is developing a road map to show The OECD is also working with the the OECD Global Forum on Transparency developing countries how they can overcome United Nations and the International and Exchange of Information for Tax obstacles to participation in AEoI, which Monetary Fund to avoid duplication of Purposes. The forum counts more than will assist them in meeting the standard and efforts and ensure the institutions’ work 120 jurisdictions as members, including thereby allow them to share the benefits of streams complement each other. more than 60 developing countries. improved global transparency. Work on the BEPS project is only part By the G20 Brisbane Summit in November of the plan to modernise the approach to 2014, the OECD will deliver the technical Political leadership countering international tax evasion. The details of the AEoI standard that will allow Today, together with its G20 partners, OECD also promotes the automatic exchange the G20 to take the next step and move the OECD is changing the rules governing of information on tax matters as the single towards its effective implementation. As international tax practices that lead to lost global standard. This year, it has taken a major announced in St Petersburg, the G20 leaders tax revenues. As it uses its expertise and leap forward in improving international tax expect to begin to exchange information experience to find the most appropriate cooperation that will enable governments to automatically by the end of 2015. One of solutions, strong political leadership is still better fight offshore tax evasion. the main legal instruments that provides for needed. At an international level, leaders AEoI, the multilateral Convention on Mutual should continue to draw attention to the need International standard Administrative Assistance in Tax Matters, for collective action to deliver on these two Following a call from the G20 leaders at the has now been signed by 64 countries, with important initiatives. These efforts should be St Petersburg Summit, the OECD delivered another 14 jurisdictions covered by way of augmented by swift action at the domestic to the G20 a proposal for a new international territorial extension. level to undertake the requisite national standard for AEoI – the common reporting The OECD again recognises that reforms. Coordinated political support and standard – which was endorsed at the developing countries may face specific international cooperation are crucial as February 2014 meeting of G20 finance challenges in implementing AEoI, inasmuch we define the policy approaches and tools ministers and central bank governors. This as there is varying capacity to implement it in required to create the international tax builds on previous work to ensure effective an effective and timely way. The Global Forum systems of the 21st century.

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Clamping down on tax evasion: why taxpayer information is the new industrial revolution

With 44 countries already signed up for early adoption, it is possible we will see Lorraine White, agreements concluded soon. Mariano Giralt, Managing Director, Managing Director, Head of EMEA Does the CRS close the gap on tax Head of EMEA Securities Tax & evasion completely? Tax Services US Tax Services As recognised by the OECD, we are living in a highly integrated world where cross-border portfolio investment is or many years, governments have • Foreign Account Tax Compliance Act commonplace and an important feature been working actively to combat FATCA Effective on 1 July 2014; in a global economy. offshore tax evasion. Adopting • Intergovernmental Agreements Investors making cross-border various legal actions to enforce (IGAs)Designed to enable investments will typically aim to receive the disclosure of cross-border non-US financial institutions to income from their investments. Such Ffinancial account information, governments comply with FATCA; investments may be subject to source- have added a significant and powerful • G5 Multilateral Pilot European country taxation and, absent a simplified tool to improve cross-border tax Union Initiatives To expand Automatic mechanism to collect any tax relief that compliance: automatic exchange of Exchange of Information (AEOI) the investor may be entitled to, source- financial account information. between EU member states; and country taxation is applied anonymously • UK FATCA With British Overseas to the income paid. If that end investor is The OECD’s standard for automatic Territories and Crown Dependencies. not reportable under the CRS and CAA exchange of information initiatives, and despite the fact that CRS In 2012, the G8 and G20 leaders asked the What are the OECD’s CAA and CRS? due diligence and reporting requirements Organisation for Economic Co-operation The CAA is a bilateral agreement, will go a long way towards addressing and Development (OECD) to develop a but governments can conclude bilateral residency-country tax concerns, it may not standard to facilitate automatic exchange of or multilateral AEOI agreements. It capture everything. tax information between non-US countries. draws heavily on the principles outlined in The OECD’s other work in the area of Published on 13 February 2014, and the Model 1 FATCA IGA and establishes tax compliance could be the final piece in formally endorsed by the G20 leaders a legal basis for AEOI between tax the jigsaw to achieving full disclosure. on 23 February, the OECD’s model authorities. The CRS contains the reporting That work is the Treaty Relief and Competent Authority Agreement (CAA) and due diligence rules and imposes Compliance Enhancement (TRACE) project, and Common Reporting Standard (CRS) obligations on financial institutions to which was endorsed in January 2013 by are designed to be a standardised and collect and report financial account the OECD’s Committee on Fiscal Affairs. cost-effective model for the multilateral holder information to their home It is designed to reduce compliance costs exchange of taxpayer information. government. However, it has no and facilitate cross-border investment by Presenting this new standard, the direct legal force and will, therefore, enabling financial institutions to act as OECD Secretary-General Angel Gurría need to be translated into local law before financial intermediaries, by providing tax said: ”This is a real game changer. it can be implemented. relief at source on cross-border portfolio Globalisation of the world’s financial Financial institutions required to report investment and simultaneously reporting system has made it increasingly simple include banks and custodians, depository account holder information to the source for people to make, hold and manage institutions, brokers, certain collective country. The implementation of the investments outside their country of investment vehicles and certain insurance OECD’s CAA and CRS implies a significant residence. This new standard on automatic companies. The scope of information to investment in technology and resources exchange of information will ramp up be reported includes interest, dividends, for local governments and their financial international tax cooperation, putting income from certain insurance contracts institutions. Substantial efficiencies governments back on a more even footing and other similar types of income, account can be achieved for both businesses as they seek to protect the integrity of their balances and gross sales proceeds from and governments by aligning tax systems and fight tax evasion.” financial assets. While the CAA and CRS implementation covering both AEOI The OECD developments on the set a minimum standard for information and TRACE initiatives simultaneously. automatic exchange of information to be exchanged, governments may The benefits derived from TRACE complement existing measures recently choose to exchange information beyond implementation would not only offset implemented by governments, such as: this minimum. many of the additional compliance

BNY-Mellon_placed.indd 2 25/04/2014 15:45 SPONSORED FEATURE

About BNY Mellon

BNY Mellon is a global investments company dedicated to helping its clients manage and service their financial assets throughout the investment lifecycle. Whether providing financial services for institutions, corporations or individual investors, BNY Mellon delivers informed investment management and investment services in 35 countries and more than 100 markets. As of 31 March 2014, BNY Mellon had $27.9 trillion in assets under custody and/or administration, and $1.6 trillion in assets under management. BNY Mellon can act as a single account holders to identify their residence KYC without violating customer privacy, point of contact for clients for tax purposes and provide an additional presents opportunities. looking to create, trade, hold, cross-check for governments. To that end, for well-prepared manage, service, distribute financial institutions it can lead to an or restructure investments. The start of industrialising client data? improved and more comprehensive BNY Mellon is the corporate There will now be vast amounts of data to identification of customers and a brand of The Bank of New York collect, manage and mine in order to meet reduction in time to onboard customers Mellon Corporation (NYSE: BK). the reporting requirements under these to new products or services. Additional information is available various tax evasion initiatives. The method With full transparency over investment at www.bnymellon.com, or follow in which data is collected and recorded activity and products becoming the us on Twitter @BNYMellon will be vital to its effectiveness. The way norm across the globe, financial in which financial institutions interact institutions that have solutions in with customers and conduct know your place to meet these various tax- costs associated with new information customer (KYC) and anti-money laundering reporting initiatives will have a distinct reporting requirements in AEOI, but would (AML) procedures for capturing the relevant competitive advantage. Customers also reduce many of the administrative tax information will need to be enhanced. will be looking for certainty that their burdens governments currently face in New local AML rules will include tax financial institutions are compliant and running tax relief systems. avoidance as a money laundering offence. able to assist them in meeting their Furthermore, the momentum of the Therefore, customer relationship teams will reporting obligations. proposed CRS effort may be enhanced need to be trained to identify and determine BNY Mellon supports these core if governments agree that a financial sources of wealth in addition to wrestling tax-compliance objectives and believes intermediary cannot operate the TRACE with the jigsaw of tax residency definitions the cross-border gathering and exchange system unless it is resident in a country of each customer. of information is an essential aspect of that participates in the CRS, or otherwise Coupled with the reporting of the global financial markets, with financial agrees to AEOI with the source country. information, this puts significant strain on institutions playing a key role as tax By tying TRACE to the proposed IT systems that collect data from customers intermediaries globally. CRS, financial institutions will have a and share customer information from or We strongly encourage the strong incentive to urge their respective with other sources. development of a standardised and truly governments to adopt the CRS. In addition, This industrialisation of client data, global framework for customer due participation in TRACE by financial creating centralised information hubs diligence, reporting and simplification institutions will provide an incentive for and designing solutions to integrate of cross-border tax relief.

The material contained in this article, which may be considered advertising, is for general information and reference purposes only BNY Mellon and is not intended to provide legal, tax, accounting, investment, financial or other professional advice on any matter, and is not to One Canada Square be used as such. The contents may not be comprehensive or up-to-date, and BNY Mellon will not be responsible for updating any London E14 5AL information contained within this article. These articles, and the statements contained herein, are not an offer or solicitation to buy or sell any products (including financial products) or services or to participate in any particular strategy mentioned and should not www.bnymellon.com be construed as such. Registered in England and Wales with FC005522 and BR000818. The Bank of New York Mellon is supervised and regulated by the New York State Department of Financial Services and the Federal Reserve and authorised by the Prudential Regulation Authority. The Bank of New York Mellon London branch is subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. Details about the extent of our regulation by the Prudential Regulation Authority are available from us on request.

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The G7/G20 tax agenda: time to secure progress across the world

The results of initiatives to end tax avoidance and evasion will depend on how fully they are applied

By Dries Lesage, Ghent Institute for International Studies, Ghent University

rofits should be taxed tax authorities stay ahead of corporations where economic activities and their armies of tax advisers for a long deriving the profits are time, rather than the other way around. “ performed and where A related concern is that the BEPS value is created.” Such initiative may not remove the extreme was theP conclusion of G20 finance ministers complexity of the matter. This could be at their February 2014 meeting in Sydney, all the more problematic for developing Australia, on the issue of the taxation of countries, which are likely to continue multinational corporations. to struggle with the exact determination Recognition of this principle at that of transfer prices for multinationals’ political level was long overdue, but intra-firm trade. The 2013 G8 summit nevertheless historic. In close partnership at Lough Erne and the OECD have with the Organisation for Economic Co- already hinted at this problem. operation and Development (OECD), the The fundamental question remains G20 is currently working on a project to whether developed and developing countries prevent tax base erosion and profit shifting would not be better off with a regime of (BEPS). The measures put forward should ‘unitary taxation’ and the apportionment enable governments to tax corporations of countries’ taxing rights based on an easy adequately according to the economic formula, rather than sticking to the current realities of multinational groups and the ‘at-arm’s-length principle’, which treats cross- actual geographies of production. With this in mind, the project addresses transfer price manipulation, aggressive tax incentives The BEPS initiative must now and other devices that make it possible for taxable profits to surface in tax havens or other ensure that tax authorities low-tax jurisdictions in purely artificial ways. stay ahead of corporations

Danger of inertia since the problem is not one of hidden billions Notwithstanding this progress, the greatest in each other’s countries – it is all about tax concern at this point is that the G20/OECD border trade between entities of the same havens. So, how are the G7, G20 and OECD approach might not be radical enough, and multinational group as if this trade occurs to convince dozens of secrecy jurisdictions to that in just a few years’ time the work will between independent parties. implement automatic information exchange? have to be done all over again. A similar With regard to the second major challenge So far, the communiqués produced by leaders situation occurred with regard to the G20/ – cross-border exchange of information on and finance ministers remain silent on this OECD’s tax information exchange regime. individual taxpayers – work is currently crucial question. After several years of muddling through on under way on a detailed new OECD standard the basis of the suboptimal ‘information upon that countries can adopt for their bilateral Two-way dialogue request’ standard, recently the G20 and OECD dealings. As endorsed by G8 and G20 leaders, In the past 16 years, since information fully embraced the more effective standard of this standard implements the principle of exchange has moved higher up the multilateral automatic information exchange. automatic exchange of information (AEoI). agenda, the OECD and G20 have considered But the new standard at the global level is This is a giant leap forward. The big question concerted ‘sanctions’ against non-complying nowhere close to being implemented yet, and now is how this standard will be spread jurisdictions several times. But they always precious years have been lost. In the world across the world. For now, G20 governments stepped back, to give dialogue on an equal of global tax cooperation, policy inertia and have agreed to apply the standard among footing between OECD/G20 countries and conservatism are costly for public treasuries. themselves, and to promote it vis-à-vis other tax havens a chance. In those formats, the tax The BEPS initiative must now ensure that countries. The latter part is critical for success, havens have mostly dragged their feet.

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The G7/G20 tax agenda: time to secure progress across the world

Work is under way on a new OECD standard, endorsed by G8 and G20 leaders, that implements the principle of automatic exchange of information JACOBH/ISTOCKPHOTO

At this stage, a critical evaluation of these Action might include measures that sophisticated, but secretive, financial centres processes would be useful. At present, the touch upon the financial and economic ties – and, to a lesser extent, on ‘normal’ countries international dialogue takes place within the with non-complying jurisdictions. In order exchanging information. Tax havens should OECD-led Global Forum on Transparency to avoid more years lost, at the Brussels be the focus, and preferably through genuinely and Exchange of Information for Tax Summit the G7 leaders should come up with multilateral arrangements and instruments. If Purposes. Two-way consultations about how courageous ideas on this issue. As with the the G7 and OECD are serious about improving to design and implement the new standard BEPS initiative, a key question about AEoI is the recently discovered tax-development are surely preferable to unilateral action, what’s in it for poor countries not represented nexus, they should prioritise the flow of as long as these talks deliver. But if, in a in the G7, G20 or OECD? Certainly, it will be tax-relevant information from tax havens to globalised world, secrecy jurisdictions use possible for them to enter into bilateral treaties developed and developing countries alike. their sovereignty to undermine the actual with OECD and G20 countries committing The odd thing here is that the bulk of tax autonomy of the rest of the international themselves to reciprocal AEoI. global taxation governance is monopolised community, the other countries are allowed by international institutions that exclude to use their sovereignty to the full to enforce Focus on tax havens poor countries. Will the G7 Brussels Summit, their own domestic tax rules concerning the But in addition to the huge technical challenge hosted by the pro-development and pro- worldwide income of their citizens. of complying with the standard, this poses multilateral European Union, speak out in Concretely, such an expression of the question of how useful all these efforts favour of a substantial upgrade of the United sovereignty can take the form of concerted would be. The overall success of the new Nations’ tax work in partnership with the action by OECD and G20 countries. standard hinges on compliance by more OECD and other relevant institutions?

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Improving tobacco control and boosting government revenues

The World Health Organization’s Framework Convention on Tobacco Control (WHO FCTC) has been described as the world’s first public health treaty. It has been developed in response to the global tobacco epidemic and contains a set of wide-ranging measures and recommendations that will ultimately lead to governments having better control of the tobacco market. What is less well known is the significant impact this treaty can have on increasing government revenues

is the requirement that a global track and international resources and attention trace system for tobacco products – seen on the global health issue of tobacco) as being fundamental in helping to stop the recommends that the most up-to-date flow of illicit products – is established within technologies should be adopted, wherever five years of the protocol coming into force. possible – in particular, state-of-the- art monitoring of the supply chain, and The problem and the solution tracking and tracing systems on products Customs officials across the world face themselves. Introducing track and trace the constant challenge of trying to technology would give each pack of prevent cross-border smuggling by cigarettes a unique identity stored sophisticated and well-funded criminal centrally on a secure database. operations. The WHO estimates that up WHO FCTC also requires a unique, Helen Cochrane to 600 billion cigarettes are circulating in secure and non-removable identification Director, Government Revenue Solutions the black market, which represents about marking to be fixed to each pack. De La Rue 10 per cent of the total cigarette market. Highly secure labels and printing This is, without doubt, a global problem. technologies have been used to great effect The illicit trade in tobacco products in this area, and with the addition of unique, comes in many forms, from petty criminal machine-readable barcodes this provides he WHO FCTC, the first activity to the work of highly organised law-enforcement officials with a powerful international treaty negotiated by criminal gangs. The activity can be broadly set of tools. the WHO, features an extensive categorised into three areas: Customs officials can be armed with series of measures to combat the • Smuggling involves moving undeclared barcode scanners and authentication tools health impact of tobacco. Some products between tax jurisdictions to rapidly identify and prosecute illicit trade Trelate to price levels and taxes; others are operated on a small scale by individuals and facilitate genuine trade. non-financial approaches, such as regulating or highly organised gangs trading very The challenges for governments are the ingredients, packaging and labelling of large quantities; to select and integrate the technology tobacco products, and promoting smoking • Counterfeiting of cigarettes requires into existing processes, retain cessation campaigns and research. access to raw materials and implementation independence from The FCTC’s governing body, known equipment and often involves large- the tobacco industry and ensure that as the Conference of the Parties, can scale manufacturing. The resultant taxpayers get value for money. make recommendations and decisions to cigarettes have none of the safeguards promote the implementation of the treaty of legitimate products and often have The benefits by adopting a protocol. Added to the FCTC highly increased toxicity levels; and Many countries already run successful tax at the end of 2012, the first protocol, Illicit • Tax evasion involves the falsification stamp programmes for tobacco, alcohol Trade Protocol (ITP), focuses on eliminating of shipping and taxation documents and pharmaceutical products. In 2011, the illicit trade in tobacco products. A total to allow criminals to take advantage of more than 80 governments had tax stamp of 53 countries, plus the European Union, different tax levels between territories programmes in place and there were over have now expressed their political approval without physically moving the products. 150 billion tax stamps in use to fight illicit of the treaty by signing up to implement the trade and boost government revenue. protocol, and that number is likely to grow The crimes are similar and interlinked That means there are still more than over the coming months. and all have the same outcomes – 100 countries that could benefit from The ITP is the framework that will help impacting public health, fuelling criminal implementing a government revenue governments across the world control activity and reducing government revenues. solution on tobacco products. It is the supply chain more effectively and The WHO’s Tobacco Free Initiative (a estimated that close to $33 billion in consistently. A key element of the protocol WHO programme set up in 1998 to focus tax on tobacco products is not being

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collected. These countries are missing Europe, Asia and Africa the implementation industry experts sharing knowledge, best out on significant and predictable sources of unique code verification systems has practice and information across borders. of government revenue. As illicit products led to significant gains, including revenue A coordinated approach can deliver are blocked from the market, consumers increases in excess of 100 per cent. a significant return on investment switch to taxed products, which increases Stemming the huge tide of illicit for taxpayers. The benefits to tax collections. cigarettes passing through borders and governments are clear – compliance circulating in countries on all continents can with the WHO protocols, reduced illicit The partner: De La Rue only be achieved through coordinated and trade and better health controls, which As more countries seek to adopt the sustained efforts by police and customs are all funded by the improved collection WHO FCTC treaty and accompanying officials, government departments and of existing taxes. protocol, De La Rue’s status as a long-term trusted partner of governments in areas of key national interest, such as banknote production and identity Helen Cochrane is an expert advisor to both governments and global organisations systems, means it is well positioned on the critical elements of a successful revenue protection programme to help to help governments introduce robust combat illicit trade. Driving product and market strategy in De La Rue, Helen also revenue protection schemes. Its manages key stakeholder relationships and works with organisations such as the Government Revenue Solutions WHO, WCO, UN and product manufacturers. Helen regularly travels internationally business has introduced schemes in advising clients and stakeholders on strategies to combat illicit trade, protection of 20 countries across the world. revenues and health while maximising genuine trade and cross-border activity. De La Rue’s track and trace system is specifically designed to support government revenue protection programmes. It links secure stamps and unique codes to a central database holding important production and tax data, enabling De La Rue government officials to track activity and Jays Close, Viables verify products quickly in the field. Basingstoke Based on De La Rue’s experience, Hants RG22 4BS introducing unique identifying marks to United Kingdom individual products will enable product T: +44 (0) 1256 605000 verification, significantly reduce illicit trade E: [email protected] and boost revenue collected on the sale of high-tax products. Across North America, www.delarue.com

De la rue_Placed.indd 3 15/05/2014 12:11 TRADE, TAXATION AND TRANSPARENCY

Put an end to money laundering, bribery and corruption

no public oversight to determine the source Registers of beneficial ownership are a start, but or the intended recipients of such transfers. This creates an incentive for massive theft of governments need to do more to eliminate secrecy public money to continue, and for the thieves to enjoy the proceeds of corruption. By Cobus de Swardt, managing director, Transparency International An inventory of grand corruption cases compiled by the Financial Action Task Force in 2011 showed that politicians and public officials often abuse corporate secrecy. For orruption around the world is recommendations on basic due diligence and instance, out of 32 grand corruption cases facilitated by the ability to record-keeping are frequently overlooked. analysed (including embezzlement, bribery, launder and hide proceeds The overall problem is huge. According extortion and self-dealing), foreign accounts derived from the abuse of to the United Nations Office on Drugs and were used to hide the proceeds of corruption power, bribery and secret deals. Crime, the amount of money laundered in 27 cases. In most instances, the assets CDirty money enters the financial system and worldwide in one year is up to five per cent were hidden in more than one foreign is given the semblance of originating from of global gross domestic product. The ease of jurisdiction, including countries such as the a legitimate source, often by using corporate laundering and hiding stolen assets is of great United States (19 cases), the United Kingdom vehicles offering disguise, concealment concern to Transparency International, as well (13 cases) and Switzerland (15 cases), as and anonymity. For example, corrupt as many other organisations, governments and well as offshore havens such as the Cayman politicians used secret companies to obscure citizens. It must be ended urgently. Islands, Singapore, Hong Kong, Jersey and their identity in 70 per cent of more than the Bahamas. Moreover, in 28 cases, the 200 cases of grand corruption surveyed by An incentive for massive theft individuals involved (or their families) made the World Bank. Extensive research by numerous institutions use of corporations and shell companies to For far too long, crooked figures have has mapped the systems of money laundering, hide the beneficiaries – those who actually been able to stash the proceeds of corruption as well as the activities in international used the money for investments, luxuries easily in foreign banks or to invest them in financial havens that permit corrupt and lavish lifestyles. luxurious mansions, expensive cars or lavish individuals to easily set up ‘shell’ holding The good news is that there are glimmers lifestyles. They do this with impunity and in companies. They indicate the complicity of hope. At the G8 summit last year in blatant disregard for the citizens or customers of all manner of financial institutions Northern Ireland, leaders pledged to “take they are supposed to serve. and the associated professional firms that action to tackle the misuse of companies Importantly, the corrupt are aided handle the cash proceeds of corruption in and legal arrangements”. They further by complacent and sometimes complicit secret, dark channels. produced the G8 Action Plan Principles to governments of countries with banking Take secret companies, for example. Prevent the Misuse of Companies and Legal centres that facilitate money laundering Laws in many jurisdictions ensure that the Arrangements, and members agreed to add to and allow the corrupt to cross their borders identity of those relocating their money these principles with national action plans. to enjoy stolen wealth. Weak government through them cannot be disclosed. This actions are failing to prevent the corrupt from secrecy permits individuals and corporations Listing beneficial owners of trusts evading justice and have enabled cross-border to hide enormous financial transfers of stolen In October 2013, the UK set the tone. transfers of corrupt assets. Complacent and illicit funds with few or no questions During the Open Government Partnership governments responsible for protecting the asked about the real, living person, about Summit, UK prime minister David Cameron public from such criminal acts are de facto who controls the money, or about where they announced the creation of a central register supporting impunity for corruption. came from. This person is the ‘beneficial of the beneficial owners of companies in Banks, real estate companies and retailers owner’ – not a nominee or another company. the UK that would be publicly accessible. In of high-end goods are the final links in this In many cases shell companies can be set up November 2013, the leaders of the UK’s 14 chain, as they facilitate criminal behaviour by in a few hours and then be used to transfer overseas territories, including Gibraltar, agreed accepting illicit money as payment. Even the millions or billions of dollars, with virtually to consider establishing public registries listing the beneficial owners of trusts and companies. In a communiqué published by the Foreign and Commonwealth Office following In many cases, shell companies can be set up in a few hours the joint ministerial council meeting, the leaders pledged to launch consultations “on and then used to transfer millions of dollars, with virtually the question of establishing a central registry no public oversight to determine the intended recipients of beneficial ownership, and whether this information should be publicly available”.

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6.7 De Swardt.JSindd.indd 86 20/05/2014 18:17 TRADE, TAXATION AND TRANSPARENCY

Put an end to money laundering, bribery and corruption

Secrecy permits individuals and corporations to hide transfers of stolen and illicit funds with few questions

WEBPHOTOGRAPHEER/GETTY IMAGES WEBPHOTOGRAPHEER/GETTY asked about who controls the money

This is a start, but much more action is that their existing registers on companies Ending all theft of public money and needed by all leaders on this global threat contain beneficial ownership information eliminating bribery as an acceptable way to economic security. Governments leading about the true identity of the person or of doing business are indeed complex the reform of the international financial persons who own and profit from any challenges. Transparency International will system should commit to establishing public company, legal trust or foundation. continue to work with dedicated individuals corporate registers that include beneficial In addition, those countries with in government, the private sector and civil ownership information. The public has influence over secrecy jurisdictions such society to seek and implement solutions. every right to know who owns, controls or as Hong Kong, the Cayman Islands or Stopping the facilitation of cross-border ultimately benefits from these companies. Jersey, to name but a few, should push corruption through secret company Each government should take concrete these countries to establish public registers ownership is an important step that global steps to end corporate secrecy by ensuring of beneficial ownership. leaders can act on in 2014.

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6.7 De Swardt.JSindd.indd 87 20/05/2014 18:17 AFRICA AS A GLOBAL OPPORTUNITY

Turning economic growth into economic transformation

transport, power and water networks will Africa’s $50 billion annual infrastructure funding account directly for the missing growth. Filling the funding gap cannot be gap is a barrier to inclusive, sustainable growth achieved by public means alone: the challenge is to leverage what public funds there are, in By Donald Kaberuka, president, African Development Bank order to bring additional financing and ideas. Private capital is a large part of the answer: a $50 billion funding gap is small compared with what the private sector can offer, and any commentators make big 54 fragmented economies of Africa to coalesce organisations such as the African Development and bold statements about – across the regions, and across the continent. Bank need to mediate between the two. Africa and its development The collective task is to facilitate trade, and prospects, and the swinging plug the gaps in hard and soft infrastructure Take risk out of the equation pendulum of success and to build conduits for Africa’s integration into Financing infrastructure projects is Msetback. Mine is simple: I believe that this the global economy. Second, Africa needs to notoriously hard, with high transaction is a unique moment in Africa’s economic manage its natural resources better, taking costs, sometimes serious political unknowns trajectory. Over the last decade, sub-Saharan advantage of the current strong cycle of and a lack of bankable projects that are Africa has outperformed the rest of the world commodity prices and ploughing back the ready to go. The key is to take the risk in terms of growth, and almost all stable proceeds into national priority areas such as out of the equation. The prerequisites countries in Africa have a good chance of health and education, rather than into foreign are in place: the policy and regulatory becoming ‘middle income’ by 2025. bank accounts. Third, the challenges of those arenas, the public-private partnership Africa is growing, but it is not growing African states that are designated as fragile, frameworks, the independent regulators. fast enough, or evenly enough. What it needs This was what triggered the private-sector- is not five per cent growth in gross domestic led telecommunications transformation product (GDP), but at least a sustained seven of the 1990s, and it can do the same for per cent. The decline in poverty rates over It is time for a different value the infrastructure (and especially energy) the past 10 years – from 58 per cent to transformation of the 2010s. 48 per cent – is painfully slow, and there are proposition based on African The tools of risk mitigation – such as still not enough jobs for the 15 million young countries taking charge of the African Development Bank’s credit people who come onto the market every year. funding and managing their guarantees – are also in place, giving comfort Meanwhile, the population rises. to investors, especially in high-risk and I see a landscape influenced by four own development low-income countries. And for each dollar at megatrends that are shaping Africa in an the bank’s disposal, it estimates that it can irreversible way. First is the emergence of a leverage a further six. This is a very smart way multipolar economic world, bringing new to use public money. And, if it can go further investment sources and export destinations, home to tens of millions of people, must be in combining this ‘smart aid’ with the vast development experience and know-how. addressed. Fragility undermines countries – national savings and reserves that are now Second is the demographic potential – human it is also contagious, and can weaken entire invested outside Africa – in the form of the capital – of a young and increasingly urbanised regions. I have just set up a high-level panel newly launched Africa50 Infrastructure Fund continent of one billion people. Third is under Liberian president Ellen Johnson Sirleaf – it will succeed. the continuing discovery of large amounts to tell us how to do this even better; one of So there are no ‘business as usual’ of natural wealth. Fourth is the ongoing its key findings is that fragility should not solutions if Africa really is to move to the opportunity to leapfrog through technologies be seen as a category of state, but as a risk next level, which is true economic such as the mobile phone, bringing the inherent in the development process. transformation. It is time for a different benefits of better service delivery and the At the root of all these challenges is the value proposition based on African countries reduced cost of doing business. gap in African infrastructure. Infrastructure taking charge of funding and managing The question remains: how can Africa is both the means to trade and the means their own development. This is what the turn economic growth into true economic to economic and social development. The African Development Bank is trying to help transformation? Many of the foundations primary task of the African Development with: its 10-year strategy for the period from are in place, including increasingly sound Bank and the continent is to close the 2013 to 2022 bears the title ‘At the Center economic policies and sound institutions. $50 billion annual infrastructure funding of Africa’s Transformation’. The strategy What more still needs to be done? deficit, which costs Africa no less than is built on achieving growth that is both The first thing to do is to achieve real two per cent annual GDP growth every year. inclusive and sustainable – it is growth for all, regional economic integration, and allow the Building and rehabilitating the continent’s and growth for all time.

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7.1 KaberukaAG.indd 88 20/05/2014 18:20 AFRICA AS A GLOBAL OPPORTUNITY

Turning economic growth into economic transformation

Infrastructure is the means to trade and to economic and social development, but Africa’s infrastructure funding deficit costs it two per cent GDP growth a year AFDB

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7.1 KaberukaAG.indd 89 20/05/2014 18:20 SPONSORED FEATURE

Climate finance: show me the money

t a recent meeting on climate and turning these into growth poles that The ideas soon crystallized into what change with a group of will feed Africa’s booming population and has become the main driver behind every African parliamentarians secure its industrial aspirations. important discussion on climate change in South Africa, everyone, Last year, Africa had hoped that in Africa – the Climate for Development except fellow MPs, was developed countries would commit in Africa Programme, or ClimDev-Africa. Abaffled by a question from one of the at the last Conference of the Parties participants who, on listening to a (COP19, held in Warsaw, Poland) to ClimDev-Africa: a solution presentation on climate finance, could provide a detailed climate finance from within hardly hide his feeling of disillusionment. roadmap 2013-20, through which they The programme is mandated at “Show me the money,” he said, after demonstrate how they intend to fulfill the the highest level by African leaders the presenter spoke about the so- $100 billion promise by 2020 – that is, a (AU Summit of Heads of State and called ‘fast-start finance’, under which scenario showing a gradual increase in Government) to create a firm foundation developed countries had committed to climate finance between 2013 and 2020. for Africa’s response to climate provide Africa with $30 billion in new and Such a scenario would have included change. Beyond the AUC-UNECA- additional climate finance by 2012. That intermediate targets (say, for 2013 and AfDB partnership, the programme same sense of frustration still prevails 2017), indicated the share of public works closely with other institutions among African delegations to this day. finance, and provided clarity on the mix and partners specialising in climate Even a cursory look at how the of both direct budget contributions from and development. international community has handled developed countries as well as alternative Each of the three main partners climate change negotiations would tend sources of public finance. Nothing of the contributes towards the achievement of to justify Africa’s growing dissatisfaction sort came to pass in Warsaw. the overall goal by drawing from inner with the entire architecture of climate strengths to support each of the three finance. For example, every single report pillars of the programme. ECA’s African on the process has pointed to the dismal Climate Policy Centre (ACPC) is a hub level of mismatch between promises International for a demand-led knowledge base on and actual disbursements on climate cooperation is climate change in Africa. It addresses finance commitments by developed the need for greatly improved climate countries. One study by the African important and critical information for Africa and strengthens Climate Policy Centre reveals that only the use of such information for decision- a small fraction – less than 11 per cent for durable impact making, by improving analytical – of currently provided climate finance capacity, knowledge management and meets the UN specification of being dissemination activities. ‘new and additional’. The objective of the Climate Change Consequently, Africa has come to the However, be it on climate finance, and Desertification Unit (CCDU), which conclusion that the experience with the research or on policy formulation, is led by the AUC, is to provide policy fast-start pledges and discussions of the Africa is not standing still, as initial and political guidance, and to enhance $100 billion promise suggest that the action taken in 2009 by the three coordination and harmonisation of adequacy and predictability of climate foremost development institutions on Africa’s activities in the field of climate finance may remain very low if the future the continent has continued to gain change. This entails effectively engaging climate finance architecture reflects traction. Just before the 2009 climate Africa’s political leadership at all levels, current practice. Today, just one in every talks in Copenhagen, the African Union and using the AU structures in order to 10 dollars is new and additional. Commission (AUC), the UN Economic advance climate change issues. Just like many developing countries, Commission for Africa (UNECA) and The ClimDev Special Fund (CDSF) is African states are vulnerable to climate the African Development Bank (AfDB) a demand-led fund that pools resources change and are among those least supported African governments to to finance investment activities on the likely to have the resources required convene the 7th Africa Development ground across Africa for the generation to withstand its adverse impacts. Yet, Forum (ADF 7) on the theme of and use of climate information for there is currently no indication that addressing climate change in Africa. climate-resilient development. The fund the magnitude of climate finance will Some 500 government representatives, provides grants to projects in line with meet the scale of what is needed. legislators, scientists, politicians, the ClimDev-Africa programme’s goal, Finance is one of the thorniest issues in policymakers and civil society groups, purpose and results areas, and they are current climate negotiations. However, including women and youths, attended implemented by national entities. programmes such as ClimDev Africa and deliberated extensively on the theme Through joint advocacy activities by recognise this tension, but point of the conference. The most important the three partner institutions, the fund to the necessity of rewriting a new outcome of that conference was a has mobilised more than 30 million narrative of opportunity that is strongly commitment by these institutions to help euros, and in the coming year will aligned with seizing potential gains in Africa design a common approach to the be able to fund some of the projects productive sectors, such as agriculture, way they deal with climate change. already screened by the programme’s

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Joint Working Group, of which there are more than 20. The constantly increasing number of demands for policy analyses and project formulation that the ACPC receives from African governments and regional institutions attest to the established credibility of ClimDev-Africa.

Essential international cooperation Aware of the global nature of climate change causes and impacts, ClimDev- Africa brings to the table an African perspective in the global climate change discourse, but more importantly, it shines a light on aspects of focused research that more often than not fall through the cracks when research plans are drawn. ClimDev-Africa has carried a consistent message to leaders of the region: climate change is a reality that is here to stay and investments in the production and use of climate services cannot be sustained solely through externally funded projects. The impression we have is that the message has gone down well. The other message it wants to bring to G7 leaders is that no region can effectively handle climate change on its own. International cooperation is important and critical for durable impact. place earlier for education, health or the industrialised countries will rise Working together water projects in Africa. to commitments by their respective Without greater accountability and Arguments could be made about the governments on climate finance, as well transparency in the so-called long- shift in budget line, but put in the context as on reductions in emission levels that, term climate finance, such that of failed promises that have bedeviled in the final analysis, is the only African countries are able to predict how climate talks between developed long-term solution to the threat that much of the money is new, where countries and Africa, there are more and climate change poses to humanity. it is coming from, and whether it will more people at all levels in Africa who be directed towards adaptation or think that discussions about climate mitigation projects, climate talks finance have run their course, and would only serve to buy time, even action needs to begin. Contacts: as extreme climate events continue The current feeling among climate Fatima Denton (PhD) to bring the reality of its devastating negotiators and within African Director effects to every region of the world. government circles that climate talks Special Initiatives Division (SID) Even as a good number of developed could be a ploy to avoid facing real Secretariat ClimDev-Africa countries have made substantial issues on the unfolding global calamity United Nations Economic contributions towards climate change could deepen the sense of distrust Commission for Africa (UNECA) programmes in Africa, the reality is among partners and spell failure yet PO Box 3001 that all the amounts contributed were again in the upcoming negotiations on Addis Ababa, Ethiopia neither new nor additional. They were the anticipated legally binding global T: +251 11 5445 427 F: +251 11 5510 512 mostly from resources previously treaty in Paris next year. E: [email protected] earmarked as either Overseas ClimDev-Africa, speaking as the W: www.climdev-africa.org Development Assistance (ODA) or main regional voice on climate change, from other foreign aid funds put in remains optimistic that leaders of

ClimDev_placed.indd 3 19/05/2014 16:45 AFRICA AS A GLOBAL OPPORTUNITY

The role of ICTs in developing Africa

Work must continue to ensure that all Africans have access to the continent’s rapidly growing network of mobile communications and broadband services

By Hamadoun Touré, secretary-general, International Telecommunication Union

n the 21st century, information and seven terabytes around Eastern Africa, communication technologies (ICTs) and four terabytes around Western Africa. have become ubiquitous. They now The investments being made in play an important role in the lives of infrastructure and services in Africa signify almost every person on the planet. As something far more profound than mere Itruly transformational drivers of social and bandwidth; they represent renewed confidence economic progress, ICTs have the potential and optimism in Africa’s digital future. to make the whole world a better place – and There is no denying, however, that there is nowhere is this more true than in Africa. still far to go. More than 80 per cent of people Indeed, Africa has offered many of the in sub-Saharan Africa are still offline, denied best examples of just how transformative access to the incredible wealth of knowledge ICTs can be in terms of development over and riches that the internet can bring into recent years, from the spectacular success of their lives. And even for those who do have mobile banking in East Africa, to smart apps access, it is still far too expensive, with mobile now being used across the entire continent broadband costing 40-60 per cent of average for tracking and preventing malaria, to income in sub-Saharan Africa. distance learning opportunities at every level of education, and to telecentres that help Transforming Africa preserve and enrich the cultural lives of rural In October 2013, ITU and the Government and remote communities. of Rwanda organised the Transform Africa largely been confined to the capital cities, Summit, to take stock of progress to date, the very rapid spread of mobile data and 3G ICT growth and to set the agenda for the coming years. services is changing this very quickly now, As a continent, Africa has witnessed quite The summit was attended by seven African with mobile networks bringing internet extraordinary ICT growth since the start heads of state, 46 ministers and more than access to many areas outside Africa’s main of the millennium, particularly concerning 2,000 participants. It focused on the theme of cities for the first time. mobile cellular communications. Back in ‘The Future Delivered. Today’, encapsulating 2000, mobile penetration in sub-Saharan the tremendous spirit of hopefulness seen Rapid adoption of mobile broadband Africa was under two per cent, and very few right across Africa now, which will help drive Indeed, mobile broadband is the fastest- people believed that mobile phones would forward rapid social and economic progress growing technology in human history. It took ever be anything other than a luxury for the on a scale never seen before. 125 years from the invention of the telephone wealthy few in rich urban centres. Today, The principal outcome adopted by the to the first billion fixed-line subscriptions however, mobile telephony is affordable and summit was the SMART Africa Manifesto and globally, and the world will probably never available right across the continent. The its implementation framework, the SMART reach a second billion. But it took just International Telecommunication Union (ITU) Africa Alliance, both of which were endorsed nine years to amass the first billion mobile estimates that by the end of 2013 mobile by the African heads of state at the subsequent broadband subscriptions, and two more cellular penetration in sub-Saharan Africa African Union Assembly in Addis Ababa, years to reach the second billion. surpassed 63 per cent. Ethiopia. The summit noted the extraordinary Africa has been incredibly quick to take There has also been tremendous progress progress that has already been made, in large advantage of mobile broadband, and is in internet access. In 2000, just one in 200 part due to solid and continued infrastructure catching up with other regions faster than people in sub-Saharan Africa was online, investment. Indeed, participants have already with any previous technological advance; but by the end of 2013 that proportion had surpassed the $55 billion committed in mobile broadband penetration rates in sub- grown to one in six people. Over the past few investment pledges at the ITU’s Connect Saharan Africa coming into 2014 were already years, submarine cables have tremendously Africa Summit in 2007, and are now confident close to those seen in the Arab States and enhanced international connectivity for that the final total for the seven-year period Asia-Pacific regions only two years earlier, many African countries. The continent now will exceed $70 billion. at the start of 2012. has more than 10 terabytes of submarine And, while improvements in internet Clearly, the time is right for Africa to connectivity around Northern Africa, about access in Africa over recent years have bridge the digital divide and step boldly

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7.2 Touré.indd 92 20/05/2014 19:01 AFRICA AS A GLOBAL OPPORTUNITY

The role of ICTs in developing Africa IMAGEBROKER/ALAMY

Telecentres such as this one in Accra, Ghana, can enhance the lives of rural and remote communities, demonstrating the transformative power of ICTs

into the hyperconnected future. ITU – the United Nations specialised agency for ICTs More than 80 per cent of people in sub-Saharan Africa are still – has redoubled its efforts in Africa, and all three sectors of ITU (radiocommunications, offline, denied access to the incredible wealth of knowledge and standardisation and development) have been riches that the internet can bring into their lives involved in projects across the region. The agency has been particularly active in capacity building, regional harmonisation, broadband wireless, and the creation and ITU has been working most recently with the Having seen the tremendous progress over maintenance of centres of excellence across administrations in Chad, Democratic Republic the recent years, I am confident that Africa the African continent. of the Congo and Gabon, as well as many will seize the opportunity and employ the other countries in the region. transformative power of ICTs to accelerate Digital access for schools and hospitals The goal, of course, is to make sure that its development. It is very important to To give just one example, ITU and Craig and all Africans have access not just to mobile point out that those who are committed to Susan McCaw’s Broadband Wireless Network communications but also to the benefits of Africa’s development, including partners project for Africa continues to implement fast, affordable broadband services. I am and investors, will be fairly rewarded. broadband wireless networks and develop ICT encouraged to see so many countries I am also confident that ICT-driven applications to provide free or low-cost digital in Africa working to adapt their policy Africa will be a place where people prosper, access for schools and hospitals, and for and regulatory frameworks to the where communities enjoy strong bonds, under-served populations in rural and remote broadband world. This has been one of the where businesses thrive, and where areas. The network is already operational very positive outcomes of the Broadband governments enable strong and sustainable in Burundi, and is being implemented in Commission for Digital Development, development as well as efficiently and Burkina Faso, Djibouti, Mali and Rwanda. which was set up by ITU and UNESCO in effectively serving their people. ITU, for its In terms of training, the ITU Academy 2010, to bring broadband to the top of the part, will continue to be a place where African has trained thousands of Africans in areas as development agenda, as a means of helping countries collaborate among themselves and diverse as regulatory best practice, the digital accelerate progress towards meeting the with other regions to turn such visions into dividend, internet exchange point (IXP) Millennium Development Goals, as well as the reality. I am proud of ITU’s role in supporting installation and fibre-optic training – and new sustainability goals to be set post 2015. Africa’s ICT development.

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7.2 Touré.indd 93 20/05/2014 19:01 AFRICA AS A GLOBAL OPPORTUNITY

Powering Africa forward

Africa generates 91 megawatts (MW) of Barack Obama’s Power Africa initiative is making power per million people. Comparatively, the United States has more than 3,300 MW per progress in lining up the financial deals needed to million people – 37 times more electricity to power homes, businesses and communities. double access to electricity in sub-Saharan Africa However, despite Africa’s dearth of available power, seven of the world’s 10 fastest growing By Andrew M Herscowitz, coordinator, Power Africa and Trade Africa countries are projected to be on the continent. Energy poverty remains a direct obstacle to sub-Saharan Africa’s economic growth and development. Electricity is integral to all atellite television is not the first of this luxury from time to time. Electricity development sectors, including education, thing that comes to mind when is not a luxury. Even the poorest people find agriculture and health. Governments and one thinks of energy poverty ways to pay for it when it is available, just as the private sector should partner to facilitate issues. However, throughout some they pay for the one billion mobile phones and finance the generation, transmission and of the world’s most remote villages in Africa, for which they often have to walk distribution of power, which would result Sand poorest urban areas, satellite dishes are a miles to find an outlet to recharge. in significant improvements in development common sight – even atop makeshift homes Around 600 million sub-Saharan Africans, indicators. Allowing a student to study at with dirt floors. Residents use these satellite or 70 per cent, live with no or limited access night, a farmer to collect market prices via dishes sporadically, most often during key to reliable electricity. In rural areas, that a mobile phone or a healthcare practitioner sporting events. They seem to cover the cost figure rises to above 85 per cent. Sub-Saharan to operate life-saving equipment are the

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7.3 HerscowitzJS.indd 94 20/05/2014 19:07 AFRICA AS A GLOBAL OPPORTUNITY

Powering Africa forward

Sub-Saharan Africa generates 91 megawatts (MW) of power per million people, The OECD estimates that the financing need for sub-Saharan compared with the more than 3,300 MW per million people in the United States Africa’s power sector is nearly $41 billion per annum. At current spending levels the financing gap stands at roughly $23 billion

notable progress has been made towards the Power Africa has already had a significant goals of adding 10,000 MW and 20 million impact in its focus countries, specifically connections in the six focus countries. in Ethiopia, Kenya and Tanzania. Its The Organisation for Economic collaboration with the Government of Co-operation and Development estimates that Ethiopia and other partners will provide the financing need for sub-Saharan Africa’s millions of people with access to clean power sector is nearly $41 billion per annum. electricity when new, privately owned At current spending levels from government, geothermal plants come online in the donors and the private sector, the financing country, an achievement made possible by gap for the energy sector stands at roughly Power Africa’s assistance in crafting the $23 billion annually. These figures prove framework for the first power purchase that no one can go at it alone. Power Africa agreement in Ethiopia. The 1,000 MW continues to expand its engagement with a Corbetti geothermal project is a first variety of partners, including G7 members. step towards tapping into the estimated Already, several G7 members work 15,000 MW of clean geothermal energy within sub-Saharan Africa to develop new available in East Africa’s Rift Valley. technologies and financing products, and to support projects in gas, geothermal, hydro, Need for coordinated effort solar and wind. G7 members have committed In Kenya, many partners have teamed up to expanding access to energy across Africa, to turn the high, consistent winds blowing utilising clean and renewable methods. across the country’s plains into clean, sustainable energy. The 300 MW Lake Maximising reach and impact Turkana Wind Project was shepherded A recent Power Africa partnership with through the rigorous financial agreement the United Kingdom’s Department for phase, and will increase Kenya’s electricity International Development (DFID) and the generation capacity by approximately Multilateral Investment Fund is funding a 25 per cent at the lowest energy price global investment index called Climatescope currently available. ULRICH DOERING/ALAMY that measures and ranks the investment In Tanzania, a 5 MW solar project climate for clean energy in developing had been long delayed due to obstacles in backbone of US president Barack Obama’s countries. Power Africa is also partnering concluding a power purchase agreement Power Africa initiative. Power Africa is a with DFID to support Big Results Now! – a at an appropriate tenor. As a result of Power partnership between the US, the governments ‘delivery unit’ that pushes focused energy Africa’s involvement, the Government of of Ethiopia, Kenya, Tanzania, Ghana, Liberia reforms at the presidential and ministerial Tanzania extended the standard power and Nigeria, the private sector, and other levels in Tanzania, with the potential to purchase agreement from 15-25 years, which bilateral and multilateral development replicate the model across several countries. enabled the private sector partner and other partners, and works to double access to The Japanese International Cooperation developers to become eligible for financing electricity in sub-Saharan Africa. Agency, the European Union and other and to finalise terms. Since Power Africa was launched in late partners are currently in dialogue with Power Power Africa recognises the need for June 2013, 12 US Government agencies have Africa to align their off-grid, geothermal and coordinated efforts to drive progress, worked in concert to provide legal, policy other renewable energy efforts. This type of including the provision of patient and financial assistance to close financial collaboration helps avoid duplication of efforts capital, technical expertise and access deals that will introduce or increase power and maximises reach and impact. to credit. As USAID administrator to people and communities on the continent. Power Africa’s transactional approach Rajiv Shah said: “Power Africa encourages Power Africa’s founding private sector of working out why particular transactions countries to make energy sector reforms, partners have continued to work to meet might derail and identifying targeted solutions while connecting entrepreneurs to commitments to mobilise more than is what will propel the initiative. Power Africa investment opportunities that are created $14.5 billion to support these efforts. To date, is taking note of what the private sector by those reforms themselves.” 2,800 MW have been financially closed, and highlights as necessary policy reforms, and We challenge all partners to continue more than 5,000 MW are planned to come ensuring that there is sustainable financing to address energy poverty, furthering our online in the near term, demonstrating that and strong governance for energy projects. efforts to Power Africa forward.

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7.3 HerscowitzJS.indd 95 20/05/2014 19:07 AGRICULTURE, FOOD SECURITY AND NUTRITION

Growing a better future for all

Targeted rural development can transform lives more dramatically than any other intervention

By Kanayo Nwanze, president, International Fund for Agricultural Development

t is, perhaps, ironic that at a time creates vibrant rural communities that in of growing global urbanisation, turn ensure a dynamic flow of economic investment in agriculture and rural benefits between rural and urban spaces. In development is needed more than this way, countries can have balanced and ever. Simply stated, populations that sustained development. Ionce fed themselves with what they grew Indeed, addressing the imbalance between have now migrated to cities but still depend rural and urban communities must be a on rural areas for their food and clean prerogative of all development efforts. As drinking water. It is blindingly obvious to say the World Economic Forum’s Global Risks that humans need clean water and a steady 2014 report so clearly indicated in January, supply of healthy, nutritious food to thrive. inequality is the risk most likely to cause And yet, at a time when global populations damage globally in the coming decade. are growing, available agricultural land is Nowhere is inequality greater than between shrinking and climate change is putting urban and rural areas. Ignoring problems pressure on yields and water systems in does not make them go away. Neglect of the many parts of the world, investment in rural space has led to a steady exodus of agriculture is too often an afterthought in people – particularly youth – from rural areas national and international budgets. to cities in search of better opportunities. Unfortunately, too many of these rural people do not have the skills, training or education they would need to find steady and well- Growth in gross domestic paid employment. As a result, too often the product generated by problems of rural areas merely shift to urban agriculture is at least twice as areas along with the migrating population, with no discernible reduction in inequality. effective in reducing poverty as growth in other sectors Need for investment The starting point for narrowing the gap between rural and urban communities must be investment in agriculture. Many studies For those working in development, the have shown that growth in gross domestic continuing neglect of agriculture and rural product generated by agriculture is at least development is incomprehensible. The best twice as effective in reducing poverty as way to achieve food and nutrition security growth in other sectors. By some estimates, and to maximise the impact of development it is as much as 11 times more effective for spending is to invest in rural areas and the sub-Saharan Africa. billions of people who remain there, even as There is no shortage of demand for food today’s cities grow. today, and no prospect of a shortage of Poverty continues to be deepest and demand to come. Agriculture has a bright most intransigent in the rural portions of future, but if it is also to help reduce poverty developing countries, which lag behind towns and improve food and nutrition security, and cities in rates of childhood nutrition, investment and growth will need to focus on education, health, job opportunities and a involving small-scale family farmers. Most host of other development indicators. Last of the world’s farms are small, particularly year, the World Bank reported that 76 per in developing countries, where there are an cent of the world’s poorest people still lived estimated 500 million small-scale family in the rural areas of developing countries, not farms. These farmers typically rely on their the cities. However, experience repeatedly own production for a significant proportion shows that inclusive agricultural development of the foodstuff consumed by their families.

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Growing a better future for all

Agriculture has a bright future but if it is to contribute to poverty reduction and food security, future investment will need to include small-scale farmers MARTIN HARVEY/GETTYIMAGES MARTIN

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Investment in rural people contributes to stability by addressing food and nutrition insecurity, which is often a contributing factor to civil conflict JAKE LYELL/ALAMY JAKE

At the International Fund for Agricultural many IFAD-supported projects, including which is saving women up to 300 hours a Development (IFAD), over the past 35 years, one in Yemen that has worked to protect year in time spent collecting water. Project we have seen that agriculture for development and promote rural livelihoods despite the participants report a significant reduction in can transform lives, build communities country’s critical security situation. About violent conflict in project areas. and improve food security when results are 5,000 women and men have participated Highly industrialised countries have long measured not just by higher yields but by in community-led advisory services that recognised the importance of agriculture to improvements in income, job opportunities, their own economies and food security. But reduced malnutrition, gender equality and to truly create a world without hunger, an better health. Indeed, undernutrition and even greater commitment to agriculture and poverty are complex problems that demand To truly create a world rural development is needed. This includes systematic solutions ranging from investment without hunger, an even a commitment to participate in shared, in infrastructure – such as roads, electricity greater commitment to normative frameworks for investment, such as and safe storage facilities – to developing non- the Voluntary Guidelines on Land Tenure and exploitative business opportunities for small- agriculture and rural responsible agriculture investment principles, scale farmers to access new markets. development is needed so that the people who most need to benefit from new opportunities in agriculture – rural Development in practice people – are not marginalised. Investing Targeted, inclusive rural development can in inclusive, sustainable agricultural transform lives more dramatically than any have introduced new crop varieties and drip development is, of course, good for the other form of intervention. Investing in rural irrigation in one of Yemen’s poorest and most 2.9 billion women, men and children who live people results in better livelihoods, improved insecure governorates. Evaluations have found in the rural areas of developing countries. But food security and nutrition, and healthier a considerable improvement in household it is also an essential investment for the future communities. It also contributes to stability food security and reduced rates of child health of the billions of people who make by addressing food and nutrition insecurity, malnutrition. The project has proved to be their homes in cities by providing a source of which is so often a contributing factor to popular with beneficiaries, who have invested clean air and water, protection for biodiversity, civil conflict. This has been borne out in their own money in a domestic water scheme, and a foundation for stable societies.

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8.1 Nwanze.JSindd.indd 98 20/05/2014 19:10 SPONSORED FEATURE

Sustainable Growth For Olam, unlocking mutual value is not just the right way to do business, it is the only way

Olam’s cotton operations in Mozambique are part of the Better Cotton Initiative programme, which aims to improve the social, environmental and economic aspects of sustainable cotton production

key theme of this year’s including rice. Growing more food for local collaborating with IFC, Solidaridad and summit is Sustainable Growth, consumption in the countries where we Hindustan Unilever Foundation to boost which resonates whether operate helps supplement imports and sustainable sugarcane productivity. your world view is from a improves the environmental footprint while In developed economies Olam is driving developed country or from creating long-term viable employment a different kind of sustainable innovation. Awithin an emerging economy. At Olam, we opportunities in agriculture. Working with major brands in the US for are privileged to see both sides. Feeding, In Gabon, we are working with the example, we have developed elite hybrid clothing and sheltering a growing world government in a Private Public Partnership onions which have higher yields and lower population is a shared global challenge, to ensure that palm oil is produced water and land requirements, minimising the answer to which lies in collaboration responsibly (to RSPO certification) so that our environmental impact. towards Sustainable Growth. social and environmental needs are taken So for governments, for brands and Tackling the issues around global into account. By also using our expertise the 3.9 million farmers we work with food security is one way in which we to support the smallholders growing palm alike, Sustainable Growth is fundamentally are partnering with countries, such as around our plantations, we will help to meet dependent on the transfer of agri Nigeria, to reduce net imports of staples Africa’s growing demands for this essential knowledge from the big players to the small and nutritious cooking oil. so that across the continents cultivated At a global level transparency and land reaches its potential and agriculture Company overview traceability are becoming ever more is a livelihood to be pursued. That is good critical as consumers everywhere want to for Olam, for our customers, for farmer understand how their food is sourced when livelihoods and, ultimately, for our world. Olam International is a leading supply chains are so complex. They are agri-business operating from seeking greater assurances from brands seed to shelf, supplying food and that ingredients like cocoa, and crops For enquiries, please contact Olam at industrial raw materials to over such as cotton, are fairly and sustainably [email protected] 13,600 customers worldwide. produced. This means collaborating with With a direct presence in our global stakeholders including NGOs, www.olamonline.com 65 countries, Olam has built certification bodies, customers and peers. a leadership position in many In Mozambique, our cotton operations of its businesses such as are part of the Better Cotton Initiative Edible Nuts, Spices & Vegetable (BCI) programme, which aims to Ingredients, Cocoa, Coffee, improve the social, environmental Cotton and Rice. and economic aspects of sustainable cotton production, while in India we are

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Working to achieve the vision of a world free from hunger

not only available but also regularly Investment in social protection is a vital component accessible, particularly to those most in need. The new sustainable development of initiatives to end hunger and malnutrition agenda offers the opportunity to fully integrate this twin-track approach. By Ertharin Cousin, executive director, World Food Programme Ensuring that nutritious food is fully accessible to the most vulnerable requires that universality and equity are embedded in the new goals and targets. Recent research he world stands ready for a nutrition causes half of the 3.1 million deaths confirms that reducing poverty rates through new development agenda. of children under five years of age that occur income growth does not translate directly Every country should seize each year. Developing and implementing into equivalent reductions in the rate of this opportunity to set a adequate nutrition assistance programmes hunger and malnutrition. Although rising course for development that is for maternal, newborn and early child incomes have helped to reduce hunger and Ttransformative, universal and sustainable. As health can prevent millions of these deaths. malnutrition at national levels, inherent the Millennium Development Goals (MDGs) Undernutrition and micronutrient deficiencies inequalities and social exclusion have often unified the world around a set of discernible result in lifelong educational and cognitive prevented the benefits of economic growth priorities, the new post-2015 goals and targets developmental impacts with detrimental from reaching the most vulnerable. discussed and ultimately agreed upon by consequences for the child and his or her To realise the long-term vision of members of the United Nations will inspire family, community and indeed country. If Zero Hunger, therefore, concrete steps global debates, inform policymaking and the global community fails to act now, these must be taken to ensure that economic influence government, as well as private sector consequences will remain far-reaching. growth translates into long-term benefits investments, for decades to come. For the No one organisation or government alone for everyone in society. world’s hungry, undernourished poor, the final can end hunger or fully meet the challenges of goals must generate the political will to realise chronic undernutrition. To truly address the Food safety nets a world free from hunger within our lifetimes. causes and consequences of hunger, the world Investments in social protection programmes The UN secretary general’s Zero Hunger needs a renewed partnership that builds the are a key element in enabling the equitable Challenge provides the foundation for capacity of governments, communities, civil elimination of hunger and malnutrition. translating this vision into reality. The vision society and individuals working together. These mechanisms include food-based ‘safety brings together five elements: eliminating How can such a partnership be achieved? net’ programmes. Indeed, safety nets have stunting in children under two years of age, been central to food security and nutrition guaranteeing universal access to adequate policy in many countries since at least the and nutritious food, ensuring that all beginning of the last century. Historically, food systems are sustainable, increasing Poor nutrition causes half these programmes played, and continue to smallholder productivity and income by 100 of the 3.1 million deaths of perform, a vital role in ensuring that the per cent, and eradicating food waste and loss. most vulnerable people, as well as those A number of countries have achieved children under five years unexpectedly affected by shocks, are some or all of the MDGs. However, reducing of age that occur each year protected from hunger and undernutrition. the global rate of hunger and malnutrition According to recent data from the World has proved to be one of the most difficult Bank, more than 98 developing and emerging development challenges faced by governments countries have implemented safety net and civil society. Some 38 countries will It is neither a question of simply increasing programmes. Many of these programmes achieve the MDG hunger target, yet 842 agricultural production or delivering provide targeted cash, voucher or food million people remain undernourished increased levels of assistance, although transfers to the most vulnerable. Assistance is around the world. These numbers starkly such programmes offer a part of the solution. often conditional on participation in special reflect the daunting challenge. A renewed partnership can be achieved by programmes that increase access to health approaching this work in a manner that and other basic services, restore or create Nutrition assistance addresses the immediate hunger and nutrition productive community assets, or improve In addition to the chronically undernourished, needs while simultaneously designing, when livelihood opportunities for the poorest. In a further two billion people suffer from appropriate, solutions that develop resilience many cases, these programmes also seek to micronutrient deficiencies. The impact of and the capacity of the most vulnerable to address the special concerns of marginalised this undernutrition will be felt for decades ultimately feed themselves. groups, including women and minorities. to come. Some 165 million children endure Working together, we must implement Ethiopia’s Productive Safety Net the effects of stunting. Furthermore, poor programmes that ensure nutritious food is Programme illustrates how investments

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In addition to 842 million chronically undernourished people around the world, a further two billion suffer from micronutrient deficiencies HADYNYAH/ISTOCKPHOTO

in social protection can both address the Well-designed safety nets can also Agriculture Organization and International underlying structural causes of hunger and contribute to wider poverty reduction Fund for Agricultural Development, WFP meet the immediate food needs of people goals. The second series of research papers will increase the agricultural value chain affected by climatic and other livelihood- published in The Lancet in June 2013 and ultimately identify conglomerates of affecting shocks. Every season, the size of the demonstrates the positive impacts of safety commercial and government buyers to response is calculated using the Livelihoods, net programmes with integrated nutrition provide long-term, sustainable and durable Early Assessment and Protection tool. objectives. Nutrition-focused safety nets market access. WFP and its partners will This tool was developed by the Ethiopian can dramatically accelerate progress in also work directly with agricultural Government with support from the World reducing undernutrition and raising economic cooperatives to explicitly link smallholder Food Programme (WFP) and other partners. productivity. Recent research findings indicate production to safety net programmes. The By monitoring rainfall patterns and predicting that children who benefited from a nutritional key to the success of this initiative is the crop yields, it is possible to adjust the size safety net programme in Guatemala earned effective utilisation of WFP’s purchasing of the programme and to scale up assistance nearly 50 per cent more as adults. power to kick-start local ventures. before households are affected by seasonal Each of the programmes described here food shortages, avoiding gaps between The power of markets helps WFP and the world achieve the goal meeting nutritious food needs and In rural communities, investments in of Zero Hunger. We can fully harness their programme service delivery. social protection programmes also have power when, combined with other efforts, Whether in developing or developed the power to transform economies. The they form a wholly integrated approach. The economies, the effectiveness of safety evidence demonstrates that reliable markets global ability to ensure that people do not net programmes is well established. As stimulate agriculture by creating the financial have to choose between nutritious food today income levels have risen in India, Indonesia demand for local production. Reliable and their health or education requirements of and Nigeria – among other countries – commercial or government markets will not tomorrow depends on the global community’s governments have increasingly adopted safety develop overnight. ability to address hunger and nutrition nets that place food security and nutrition at To address this gap, WFP is now challenges successfully, sustainably and the centre of national development strategies. implementing a patient procurement platform durably. In setting the post-2015 goals, world Evidence from a number of countries indicates initiative. Through this programme and leaders must embrace the proven potential of that safety nets have been an instrumental using its purchasing power, WFP will serve safety nets and other social protection tools. means to invest in development outcomes and as an initial catalyst market. Working with By establishing such equitable, universal reduce inequality. For example, South Africa’s developing country smallholder farmers, investments, we can achieve sustainable Child Support Grant has reduced the Gini the private sector and national governments, development and realise the vision of a coefficient by three per cent. together with partners such as the Food and hunger-free world in our lifetime.

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The humanitarian crisis in Syria poses a threat to world peace

people are living in areas that are hard Political objectives are getting in the way of helping to reach with humanitarian aid, and an estimated 241,000 are under siege: 196,000 the millions of people caught up in the Syrian people in areas besieged by government forces and 45,000 in areas besieged by opposition conflict, but the imperative to act is clear groups. They are not allowed to leave and humanitarian workers cannot enter. Those By Valerie Amos, under-secretary general and emergency relief coordinator, who have managed to leave these besieged United Nations Office for the Coordination of Humanitarian Affairs areas are thin and malnourished.

Hundreds of thousands of lives at stake igned in June 1945, the United neighbouring countries, the broader region and Many people are dying because they cannot Nations Charter stated that the the world. The influx of three million refugees get the medicines they need. A generation of purposes of the UN were to into bordering countries, including over a children has been brutalised and traumatised; “achieve international cooperation million who have arrived in Lebanon alone, everyone has now seen heart-rending pictures in solving international problems of is putting a huge strain on the communities of families cowering in ruined buildings San economic, social, cultural, or humanitarian hosting the refugees and on the economic and and babies being pulled from the rubble. character, and in promoting and encouraging social infrastructure of host countries. Fragile Every day that the world allows international respect for human rights and for fundamental relationships between different communities humanitarian law to be ignored and flouted, freedoms for all”. are being tested every day, leading to anti- the tenets of international justice and Further to this, as the UN secretary refugee rhetoric in some countries. Repeated accountability are undermined and the general’s January 2009 report on Implementing calls for the refugee burden from Syria to be achievements of 150 years of humanitarian the Responsibility to Protect noted: “Weaknesses shared more equitably by the international action are eroded, with profound of capacity and the paucity of will, including community continue to go largely unheeded. repercussions for the future. in many capitals that speak in favour of The conflict continues to do significant The UN Security Council came together in advancing goals relating to the responsibility damage to the people and the social fabric February 2014 to pass Resolution 2139 on the to protect, feed off each other provision of humanitarian aid in a particularly vicious cycle of in Syria. This was seen as a sign hesitation and finger-pointing in that, with hundreds of thousands the face of unfolding atrocities. Calls for the refugee burden from Syria to be of lives at stake and nearly three Most visibly and tragically, the shared more equitably by the international years into the conflict, Security international community’s failure community continue to go largely unheeded Council members could agree, to stem the mass violence and despite their political differences, displacements in Darfur, as well on the importance of tackling as in the Democratic Republic human rights violations and of the Congo and Somalia, has undermined of Syria. The economy has imploded, with of consistent and widespread delivery of public confidence in the United Nations the currency having lost two-thirds of its humanitarian aid in Syria. But, more than and our collective espousal of the principles value. Unemployment levels now stand at three months on, the needed step change relating to the responsibility to protect. I am nearly 50 per cent; essential infrastructure, has not happened. firmly convinced that we can and will do including the electricity and water supply Civilians continue to be targeted with better in the future.” systems, have been damaged or destroyed; indiscriminate attacks on residential areas. The founding values of the United Nations schools have closed and the health sector Humanitarian agencies continue to be denied set the framework for the way the organisation has been severely affected, with half of access to enable the delivery of much-needed works. These values, spelt out in the Charter, Syria’s doctors having left the country. aid. In April, less than 10 per cent of people clearly call for the international community The UN estimates that more than nine in hard-to-reach or besieged areas received to act when states do not protect their million people need aid and protection humanitarian assistance. The Security citizens from war crimes and violations of inside Syria; some 6.5 million people have Council is divided over what needs to be humanitarian and human rights law. In Syria, been forced from their homes, of whom half done to ensure the implementation of the these values are being eroded every day as are children, and many of them have fled strong statements it supported in Resolution the parties to the conflict violate international the conflict more than once. Well in excess 2139. This division is impeding progress. humanitarian and human rights law. of 130,000 people have been killed and Long-term differences between countries with The conflict in Syria is the greatest hundreds of thousands injured. In blatant influence on the Syrian Government or with humanitarian crisis facing the world today, disregard for the norms of international armed groups on the ground are being played posing a threat to peace and security in humanitarian law, an estimated 3.5 million out diplomatically and militarily. Another

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The humanitarian crisis in Syria poses a threat to world peace

The Syrian conflict has forced around 6.5 million people from their homes, of whom half are children, and many have fled the conflict more than once ROBERT MATTON AB/ALAMY MATTON ROBERT

complicating factor is the proliferation of of people is lost as countries, factions and supplies, healthcare and household goods. factions on both sides of the conflict. Over armed groups push competing agendas and This requires constant negotiations with the the past three years, hundreds of armed impose conflicting demands and conditions. government and with armed groups so that groups have been formed in Syria. As happens so often in conflict situations, the relief supplies can be taken across conflict In February, during negotiations for a humanitarian agenda is pushed into second lines and across borders. But the gap between humanitarian pause and the evacuation of place, behind political objectives. the needs and what humanitarian efforts are civilians from Homs, differences emerged able to do to meet them is huge, and growing between the governor and some local militias Massive humanitarian operation all the time. When Syrians ask me why the allied with the government. On the opposition UN agencies are already engaged in a massive world has abandoned them, I have no answer. side, divisions among armed groups have humanitarian operation in Syria, thanks to With an estimated 5,000 people dying developed into open warfare. Conducting the courage and dedication of their staff and each month, each of us needs to ask: what access negotiations with multiple armed their implementing partners on the ground. will it take for the international community groups, including some designated as terrorist These partners include the Syrian Arab Red to demonstrate the political will to find a organisations by the UN and some member Crescent, which has lost more than 30 of solution to the crisis in Syria? How can we states, is a complex and, at times, dangerous its volunteer staff to the conflict, and other best support and help the people of Syria? It is task. These divisions inevitably have an national and international non-governmental crucial that all UN member states fulfil their impact on the implementation of Resolution organisations. UN agencies and partner responsibilities under the UN Charter, not 2139. There is no unified approach; the organisations are reaching millions of only for the sake of the people of Syria, but overriding necessity of getting aid to millions people every month with food, clean water for the people of the world.

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Achieve secure borders through dedication, not tragedy

of SLTD records, and the global systematic The disappearance of Malaysia Airlines flight screening of SLTD by our 190 member countries at all border crossings. For us, MH370 has highlighted the need for global it is about achieving certainty that no one, anywhere, could travel across borders with systematic use of INTERPOL’s database of stolen a stolen or lost travel document and put lives at risk. However, when the two passengers and lost travel documents stepped onto MH370 using stolen passports, they revealed to the world just how far we By Ronald Noble, secretary general, INTERPOL are from this certainty: an average of four out of every 10 international passengers are still not screened against the SLTD database and, of those who are screened, only a handful of he disappearance of Malaysia Since it was created in 2002, the SLTD countries are responsible. Airlines flight MH370 left database has grown from a few thousand many in disbelief that with passports and searches to more than Using a stolen or lost passport the advanced technology and 40 million records and 800 million searches While no country can sit idly by and afford safeguards that exist, an airplane per year, resulting in more than 60,000 hits. to accept this reality, governments should Tcarrying 227 passengers and 12 crew While this growth is an impressive indicator not be the only ones responsible for this members could disappear into thin air. of its importance, it is history that tells the burden. Across the world today, the budgets When it took off in the early hours of more powerful tale. The story is of how of law enforcement and border security 8 March, no one could have imagined the SLTD could have stopped Ramzi Yousef from are dwindling, with expectations only hysteria that would follow, or the pain that entering the United States on a stolen Iraqi increasing. However, the threats they hundreds of families would soon have to passport, which he did before perpetrating protect people from also affect industries endure. From day one, there were simply and markets, which are often victims as more questions than answers: how was well as being in a position to act. This is it possible that contact could have been why INTERPOL is in the early stages of lost? Why were the emergency signals The lessons learned from implementing a new model where information not activated? What was the reason for MH370 may soon fade, along shared internationally by police can reach the disappearance: was it a malfunction, private sector entities, such as airlines, that intentional hijacking or terrorism? with the political will that is can help law enforcement and border security now demanding INTERPOL identify and stop criminals and terrorists The importance of screening from exploiting security gaps. For example, While the coordinated, multi-country search work harder to secure borders in the near future, SLTD will not only prevent and international investigation are gradually someone from boarding a plane using a stolen providing some answers, certain questions or lost passport, but, in partnership with could have been avoided in the first place. airlines, will also ensure that person will not One, which for days shifted the focus away the first World Trade Center attack in 1993; or even be able to buy a ticket. from finding the plane, is how two Iranian how it could have prevented Milorad Ulemek, Tragedy should never be the galvanising nationals travelling with authentic Iranian who crossed borders 26 times using a stolen force that drives the global community passports were able to board flight MH370 passport, from assassinating Serbian prime towards action. Yet the lessons learned from using stolen Italian and Austrian passports. minister Zoran Djindjic in 2003. MH370 may soon fade into the past, along If these passports had been screened What these stories, and that of the MH370 with the political will that is now demanding against INTERPOL’s stolen and lost travel case, demonstrate is that SLTD may have INTERPOL work harder to assist its members documents (SLTD) database, authorities 40 million records and 800 million searches, to secure their borders. would have seen these passports listed but it is that one record that is not shared While it must act now, INTERPOL cannot as stolen. The question would never have or that one search that is not conducted do it alone. The G7/8 is a critical partner, needed to be asked, and the families of those that could make all the difference. whose support is required in order to turn on flight MH370 would be one step closer the momentum for an effective global to the closure they deserve. Instead, the Standardised reporting and review screening regime into sustained action that passports were not screened, and INTERPOL is the first to recognise how little will bring such a regime about. It is about speculation in the media ran rampant, these big numbers matter, and that it is about creating safer skies together that will benefit fuelling debate on the fate of the flight, each and every record and search. This is all, and stronger mechanisms to protect the motivation behind it and the state of why from the start our only goal has been to borders and citizens, bringing us all one step aviation security globally. promote standardised reporting and review closer to a safer world.

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An average of four out of every 10 international passengers are still not being screened against INTERPOL’s database of lost and stolen passports GLOW IMAGES/GETTYIMAGES GLOW

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Protecting global security norms for nuclear non-proliferation

nuclear arsenals to eventually disarm. For the As well as curbing the spread of weapons, the G7 G7 leaders gathered in Brussels, the NPT’s two-sided bargain frames the challenges they nuclear powers must fulfil their obligation to disarm confront: trying to press forward on both the non-proliferation and disarmament fronts. By David Shorr, foreign policy and international affairs analyst As the bastions of the post-Second World War international order, their leadership will be vital to shoring up the multilateral framework. The task is made esides subverting the rights of lesson by flipping the scenario to imagine more urgent, and complicated, amid Ukrainians to choose a course that for Ukraine, keeping a nuclear arsenal uncertainty regarding Putin’s intentions: for their own country, Russian would have been a better guarantee will Russia play the role of status quo power president Vladimir Putin’s of its sovereignty. There are several things or renegade? In terms of the G7 role, it is brazen machinations in another wrong with this argument. First, it is a significant that the group includes three of Bsovereign state show an alarming defiance completely ahistorical view of the matter. the world’s five nuclear-armed NPT signatory of international norms. As leaders of the Second, it blithely casts the most destructive states as well as Western alliance relationships G7 and other countries decide how to weapons ever known as the basis for a in which nuclear doctrines and deployments respond, the underlying issue is about the peaceful regional neighbourhood. In reality, weigh heavily. preservation of norms. Does this sort of nuclear weapons are an international security norm-violating behaviour bring meaningful problem rather than an answer. Implications for nuclear talks with Iran costs and consequences? Is it a winning As Tom Nichols of the United States At the top of the agenda on the non- strategy for a political leader to flout Naval War College points out, the discussion proliferation front are the ongoing talks commonly agreed standards? Putin’s defection in 1994 was entirely about denuclearising about keeping Iran’s nuclear programme on from global norms is a reminder that the Ukraine’s military. The post-Soviet republics the civilian side of the line. That effort has rules-based international order cannot be gained a measure of positive momentum taken for granted – to preserve it, the rules recently – spurred by a strong international must be upheld. consensus for holding Iran’s feet to the fire The stakes go beyond the principles of According to the Nuclear Non- and by newly flexible approaches from both citizens’ rights of self-determination and Proliferation Treaty, none of the US and Iran. But will Russia use its seat nations’ mutual respect for sovereignty. at the negotiating table and in the United Russia’s sabotage of Ukraine also has the 190 state parties to that Nations Security Council to join in crafting a repercussions for nuclear non-proliferation. agreement should ultimately diplomatic solution or drive a wedge between The crisis raises new questions about whether have nuclear weapons the parties? The talks with Iran are nearing the Putin will play a constructive role in the expiry of a six-month interim deal meant to global non-proliferation effort, and how other buy time for a final agreement to be hammered key players might need to step in to fill any out. Here at a delicate moment, Putin could resulting leadership gap. Ironically for the were rather anarchic and uncertain to follow Russia’s avowed shared interest Brussels Summit, the G8’s big nuclear security begin with; nukes would only multiply the in preventing a nuclear-armed Iran and initiative, the Global Partnership Against the potential nightmares. Writing on his blog, instruct his foreign minister, Sergei Lavrov, Spread of Weapons and Materials of Mass The War Room, Nichols remembers thinking to help reach a deal. Or he could revert to Destruction – which is a useful technical at the time that “the Russian Federation was his government’s previous policy of running cooperation project with Russia – is bound to the Soviet successor state, and like most interference for Iran. In whatever ways they be overshadowed by larger issues. Westerners, I wanted to deal with one nuclear can, G7 leaders should nudge Putin towards Another set of questions harks back to state, not three or four new ones”. the first option rather than the second. Ukraine’s decision to give up its nuclear arms According to the landmark 1970 While it would be hard to achieve progress after gaining sovereignty in the early 1990s. agreement that set the rules and obligations on non-proliferation by circumventing Russia, By meddling in its neighbour’s internal for most of the world community, none pushing ahead on disarmament without it is affairs, Russia has violated the so-called of the 190 state parties to that agreement arguably the proper path forward. Throughout Budapest Memorandum of 1994. That should ultimately have nuclear weapons. The the nuclear era, agreements to limit or reduce agreement swapped Russia’s commitment to Nuclear Non-Proliferation Treaty (NPT) is a nuclear arms have been a bilateral affair – respect Ukrainian sovereignty in exchange for grand bargain aimed at minimising the role strictly between the US and the Soviet Union Ukraine shedding the sizable remnant Soviet of nuclear arms in international relations. It or Russian Federation. Since the biggest two nuclear force based on its territory. Given requires the nuclear ‘have-nots’ to stay that nuclear powers had vastly larger arsenals this background, some have drawn their way and, in return, obliges countries with than the three other nuclear-armed NPT

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The crisis in Ukraine raises new questions about whether Russia will play a constructive role in the global nuclear non-proliferation effort EFREM LUKATSKY/AP/PA IMAGES EFREM LUKATSKY/AP/PA

signatories (the United Kingdom, France and Cameron and their G7 colleagues can make preserving a robust rules-based order. The China), this had a certain logic. Now, however, a useful start in Brussels by acknowledging two issues suggested above as items for the G7 with the US arsenal less than a fifth of its peak the ripeness of the issue. are a mere fraction of the nuclear proliferation level, it is time for the other three countries to The extent of the Russian leader’s defection challenge, which also includes disarming start fulfilling their obligation to disarm. will become clearer in the months ahead. North Korea, securing the world’s vulnerable More optimistically, he could seize on nuclear nuclear material, defusing the India-Pakistan New frameworks non-proliferation issues as a chance to standoff and establishing a Middle East Devising new frameworks for disarmament by rejoin the world community’s international- free of nuclear weapons. But an agreement the three is a substantial project in itself, but law-abiding majority. Either way, the big with Iran and an arms control regime for US president Barack Obama, French president picture for international relations and the China, France and the UK would help François Hollande, UK prime minister David global diplomatic agenda is the challenge of pave the way for all the others.

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Tackling regional security conflicts: sanctions or military force?

cent, and the score of the proximate, but less An examination of past tactics used in response powerful, Italy was 80 per cent. And in the 46 commitments from 1996-2008 relating to cases to regional security conflicts may be useful in involving sanctions (including the few that ended up using force), average compliance was reaching consensus on the crisis in Ukraine 75.5 per cent. That of the US was 81 per cent, while that of Italy was 67.5 per cent. By Julia Kulik, G8 Research Group Protecting Ukraine’s territorial integrity At the time of writing, G7 leaders are ince the first G7 summit in from Kosovo in 1999 and overthrowing preparing to assemble, without Russia, for Rambouillet, France, in 1975, Muammar Gaddafi’s government in Libya a summit in Brussels on 4-5 June 2014, the G7/8 has been committed in 2011. Although it had some success in following their decision not to participate in to promoting and protecting Afghanistan and Mali, it was unable to achieve the Russian-hosted Sochi Summit set for the democracy around the world. the goal of bringing peace and stability to same time. The leaders will face one of the SUnited by the principles of democracy, human either region. However, in the four cases in most complicated regional security conflicts rights and the rule of law, the G7/8 members which sanctions were used, the G7/8 did not since they began meeting, as they have agreed have made clear the forum’s willingness to achieve clear success. on sanctions against fellow G8 member intervene in the internal political character of Success is also measured by how well G7/8 Russia. Admitted in 1998 after committing states if those principles were compromised. members comply with the regional security to democratisation, Russia has been an In the post-Cold War years, the G7/8 has commitments they collectively make. Of the active G8 member ever since. However, increasingly endorsed military intervention 16 regional security commitments assessed by in February 2014, Russia began actions in to address regional security conflicts, most the G8 Research Group from 1996-2011, G8 Crimea and Eastern Ukraine in a manner notably in Iraq in 1991, Kosovo in 1999, members have an average compliance score directly contradicting the principles of the G8, Afghanistan in 2001, Libya in 2011 and including the respect for the rule of law. Mali in 2013. In other conflicts and more The sanctions agreed on by the G7 have frequently, the G7/8 has chosen instead to not yet halted what is perceived to be Russia’s endorse the use of sanctions; for example in Among the cases involving expansion into Ukraine. The escalation of the Iran in 1980, Sudan in 2004, North Korea the use of force, the G7/8 has crisis in eastern Ukraine, which has included in 2006 and Syria in 2011. the occupation of government buildings by A number of factors contribute to the achieved its desired results pro-Russian militants, the mobilisation of G7/8’s decision to use a particular tactic in four out of five times Russian troops on Ukraine’s border and the an attempt to halt the escalation of regional seizure of seven members of an observer security conflicts and bring them to an end. mission sent to Ukraine by the Organisation A comparison of the cases in which the G7/8 for Security and Co-operation in Europe, will has authorised force and sanctions offer some of 78.5 per cent, just above its average for undoubtedly be a primary agenda item at the initial explanations. The first is that when the total 397 commitments assessed, at 75.5 Brussels Summit. G7/8 members are collectively more powerful per cent. Compliance with regional security At a G7 meeting in Rome on 5-6 May, than the target country they have been far commitments has been led by the United in the lead-up to Brussels, energy ministers more likely to use force than sanctions. The States at 90.5 per cent, followed in turn by considered solutions to reduce European same is true if the forum has the support of the Italy at 82 per cent, Canada and Japan each dependence on Russian gas. Improving relevant regional organisation, specifically the at 81.5 per cent, the European Union at 81 European energy security by diversifying North Atlantic Treaty Organization, and the per cent, the United Kingdom at 78 per cent, supply will diminish Russia’s energy relevant multilateral one, the United Nations. Germany at 72 per cent and Russia at 64.5 superpower status and allow for a more The proximity of members to the target per cent. What is notable is the unusually intensive and effective use of sanctions. country and any former colonial relationships high compliance of Italy, which is most often Without any sign at the time of writing of can also make the use of force more likely. the member physically closest to the target diplomatic or military retreat by Russia, G7 The effectiveness of these specific cases where force or sanctions are used and whose members must use the Brussels Summit to has been mixed. Among the cases involving compliance with commitments in all issue reach a consensus on how to protect the the use of force, the G7/8 has been more areas tends to be very low. territorial integrity of Ukraine and prevent successful, achieving its desired results four In the six specific commitments on cases any further Russian expansion in the region. out of five times. It was successful in removing where force was used, the G7/8’s average Anything short of this will leave European Saddam Hussein’s armed forces from Kuwait compliance was 77 per cent. The distant, but security vulnerable to what has been called the during the first Gulf War, removing troops highly capable, US achieved a score of 100 per greatest threat since the end of the Cold War.

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Tackling regional security conflicts: sanctions or military force?

A French soldier talks with a civil society leader in Mali, 2013. The G7/8 has, on occasion, endorsed military intervention to address regional conflicts REUTERS/JOE PENNEY REUTERS/JOE

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The political threats facing East Asia

Empathy is key to resolving disputes in some of East Asia’s most volatile hotspots

By David A Welch, chair of global security, Balsillie School of International Affairs, and senior fellow, Centre for International Governance Innovation

n science circles, the Pacific Rim is The second volcano is the Senkaku/Diaoyu known as the ‘ring of fire’ because of Islands, administered by Japan, but claimed its many active volcanoes. The label by China and Taiwan (islands that are, in is apt when applied to security fact, of volcanic origin). Uninhabited and of challenges as well. Like volcanoes, negligible strategic or economic value except Ithey dominate the landscape and stand as to those from Okinawa and Taiwan who work perpetual reminders of peril. They rarely their waters, the islands are symbolically erupt, but when they do, it is without important lightning rods for lingering much warning and at great human cost. historical grievances, national antipathies There are three particularly worrisome and geopolitical anxieties. The good news security ‘volcanoes’ in East Asia. By far is that all sides agree that these islands are the most complex and least tractable is not themselves worth fighting for. The bad North Korea, the world’s last remaining news is that history is full of examples of klepto-totalitarian state. Almost everything wars breaking out over useless islands. The about it is mysterious. Little is known of its ruler, Kim Jong-un, and even less about the power structure and dynamics of his inner either to put the dispute back in the box or to circle. When Kim came to power in 2012 The danger is not that the resolve it through diplomacy or adjudication. following the death of his father, analysts US or China will choose war Taiwan and Japan have managed to do the had expected that his youth would mean former by means of their April 2013 fishing he would play little more than a symbolic willingly, but rather that they accord; but Tokyo and Beijing cannot even role in a culture where age confers authority. will decide it is inevitable, as agree that there is a dispute to resolve. To the extent that he wielded influence at all, did Japan’s leaders in 1941 Japan insists that there is not, and China the smart money held, his Swiss education has so far refused to play its one card and exposure to life in the West would that would force Japan to agree that there incline him towards reform. It also held that is: namely, referring the matter to the his uncle, Jang Song-thaek, particularly well main danger here, analysts agree, is not that International Court of Justice. connected to the Chinese and known to Beijing or Tokyo will coldly calculate that By contrast, Japan and China also be an advocate of economic engagement, the likely gains of military conflict outweigh the disagree on the demarcation of maritime would be a key player. All in all, Kim’s likely costs, but that an unexpected event rights over a large part of the East China ascent seemed a hopeful sign. such as an encounter at sea, an air defence Sea continental shelf. The latter dispute Every expectation has proved wrong. Kim action, a landing by nationalist activists or implicates some valuable oil and gas deposits, has maintained the family tradition of erratic, even just a change in the political status quo but the two countries have in fact managed unpredictable foreign-policy behaviour, while will inflame passions and trigger escalation. this particular dispute relatively well. slamming the door on reform and having The third volcano is US-Chinese rivalry. his uncle shot. North Korea is determined to Resolution through diplomacy The United States fears that China seeks maintain and improve its nuclear arsenal and Many of these dangers can be reduced by to overthrow the US-centric San Francisco its missile capability. South Korea, Japan and improved channels of communication, system that has provided order and stability the United States – and, increasingly, China agreements on maritime codes of conduct in the region for more than 60 years. In – are unwilling to tolerate a nuclear North (such as the recently signed Code for particular, it is worried that, as China’s Korea forever. Thus Pyongyang appears set on Unplanned Encounters at Sea) and other rise continues, it will seek to dominate its a collision course with its neighbours even if it technical confidence- and security-building neighbours, assert control over crucial sea does – and perhaps even more so if it does not measures. But these dangers cannot be lines of communication and supplant the – manage to avoid economic collapse. eliminated until and unless the parties agree US as the dominant military power in the

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The world is struggling to manage the security challenges posed by North Korea, having failed to anticipate the direction in which Kim Jong-un would take the country

region, much as it has become its dominant and strategic materials, but China’s fears International Governance Innovation are economic power. In turn, China fears that of inadvertently hastening North Korea’s conducting in the context of our project Washington wants to ‘contain’ it, keep it collapse have thus far stilled its hand.) Japan, on Confidence, Trust and Empathy in weak, frustrate its economic development China and the US prefer to handle their security Asia-Pacific Security indicates systematic, and perpetuate its perceived historical challenges themselves and neither encourage but correctable, overestimations of threat. humiliation. China insists that it seeks to nor invite third parties to get involved. But What is needed is a frank, honest exploration rise peacefully and poses no threat to the even if they were willing to multilateralise of each other’s interests, needs, fears and legitimate interests of its neighbours. The US management of these issues, progress would hopes for the future. insists that its ‘strategic rebalance’ to Asia is be impossible in the absence of agreement on Sadly, the G7 is not well positioned to play not containment but a contribution to order the nature of the problem to be solved. a central role in bridging these empathy gaps. and stability. Neither has done a good job Japan and the US are the only two members of of convincing the other. The danger is not Lack of understanding the G7 directly implicated, and they are two that US or Chinese leaders will choose war What is the underlying problem? It is lack that enjoy high levels of empathy and trust. willingly, but that they will decide that it of empathy. With regard to North Korea, Except with respect to the defunct Six-Party is inevitable, as did Austrian and German the world’s failure to anticipate trends and Talks, Russia remains not much of a player in leaders in 1914 and Japanese leaders in 1941. events in the dictatorship makes the global East Asian security, so even if recent events For the most part, the proverbial ‘alphabet lack of understanding abundantly clear (and in Ukraine had not undermined Russia’s soup’ of security organs in the Asia-Pacific the ignorance is probably mutual). Without trustworthiness and standing, the G8 would region – APEC, ASEAN, ARF, EAS, ADMM, knowing how decision-makers in Pyongyang not be in a much better position to do so. The ADMM-Plus, SCO, and so on – have been see the world – what they want, need, fear, G7 does dominate the headlines once a year, marginal in managing these security perceive, judge and are willing to do or to however, and can at least help draw attention challenges. In the case of North Korea, this suffer with equanimity – it is impossible to to the underappreciated lack of empathy in is primarily because of the hermit kingdom’s know which carrots or sticks might work the region and to the importance of finding isolation. It does not participate in any of and which might backfire. With respect to ways of addressing it. Perhaps the greatest these forums, and none of them has any Chinese-Japanese and Chinese-American contribution G7 leaders in Brussels could make leverage over it. (China has the greatest relations, empathy may be in short supply, but is to help the governments and peoples of East influence, given Pyongyang’s dependence at least it is attainable in principle. Research Asia see that some of their most dangerous upon Beijing for crucial energy supplies that my colleagues and I at the Centre for volcanoes are of their own making.

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Keeping the faith: still focused on goals

consensus statements and be in agreement The planned interfaith leaders’ summit in 2014 on what needs to be done to address climate change, nuclear weapons or the small arms may have been disrupted, but the joint focus on trade, doing so with a clear level of studied expertise, than it is for them to be the Millennium Development Goals is unwavering in agreement with political leadership. This does not necessarily indicate By Karen Hamilton, general secretary, Canadian Council of Churches any growing polarisation between faith leaders and political leaders. It indicates the growing relationship and use of common terms and language that faith communities ince 2005, faith leaders of the leaders announced the suspension of their in many places around the globe are finding G8 members have gathered prior participation in preparations for the Sochi with each other. to the summits. These interfaith Summit. On 24 March, they announced It must, of course, be recognised that leaders’ summits have brought that a G7 meeting would instead be held there are religious and polarising aspects to together senior leaders of a wide in Brussels on the scheduled dates. many of the current conflicts in the world. Svariety of faith traditions, representing those This has had an effect on the interfaith In some cases there is a polarisation within of the G8 countries, to meet, to engage each leaders’ summit for 2014. However, the the faith community. This does not change other on the issues facing their countries commitments to the past interfaith leaders’ the fact that interfaith convergence is and the G8 summits, to involve the forum’s statements remain strong, clear and extremely growing on issues such as poverty, political leaders and to issue a statement. focused. With 2015 being the final year healthcare, the eradication of disease The statements, all of which can be found at for the MDGs to be reached, attention to and the education of children. www.faithchallengeg8.com, emphasise the these goals has increased as one of the key While there are fewer concrete details of priorities of the faith leaders for the sake of issues very consistently addressed by the the interfaith leaders’ summit process this the people of the world. year, because of the challenging situation in The interfaith leaders’ summits, whether Ukraine, the process is continuing in very in the format of face-to-face meetings, as The commitments to the past concrete ways for 2015. In the eight-year cycle most of them are, or via the 2012 Twitter of summits, Germany is due to host the G7/8 campaign and the 2013 open letter to the interfaith leaders’ statements political leaders in 2015. The faith groups of Financial Times, are intended to engage Germany have been planning their response not only the faith leaders but also the G8 remain strong, clear and and their gathering since 2012. political leaders and the general public. The extremely focused faith leaders commit themselves to ongoing, Strength and momentum detailed efforts in terms of such life-giving Spearheaded by the Evangelical Lutheran and life-changing global strategies as the Church of Germany, substantial planning Millennium Development Goals (MDGs), world’s faith leaders since 2005. The faith has already taken place for an interfaith climate change, and peace and security communities of the globe are aware that the youth event for 2015 to highlight the challenges. They also call upon the G8 commitments of the G8 members to meeting anticipated failure to achieve the MDGs. political leaders to take action in these these goals have, in many cases, not been met. The determination to focus on the final year vital areas and to keep the promises that The result has been a higher profile and of the MDGs is noteworthy; so too is the they have already made for the sake of renewed focus on the MDGs themselves and growing priority of the youth of the world’s the world’s people. their successors. The term ‘sustainable’ has faith traditions to jointly witness and engage been used extensively in thinking ahead to a in the issues before the G8. Unique challenges framework to succeed the MDGs. While a 2014 interfaith leaders’ summit These interfaith leaders’ summits have been in Russia would have been an important held in whichever country is hosting the G8 Change in ethos hard to measure opportunity to strengthen global faith political leaders every year since 2005. This Harder to measure but clear to see has been relationships and to make a strong statement year, 2014, has some unique challenges. The a change in ethos. It is now much more about future directions for the faith leaders G8 political leaders were to meet in Sochi common than it was in 2005 for faith leaders and the G7/8 in pursuit of sustainable living in Russia, following the Winter Olympics simply to assume that when they address such and equity for all people, the interfaith leaders’ held there. However, the tension between issues as the MDGs, for the health, well-being summit process has gained such strength and Russia and Ukraine and the response of and flourishing of the people of the world, momentum that its continuity, consistency the G7 members has meant that the G7 they will do so in a multi-faith way. It is and persistency will carry its statements will now meet alone. On 2 March, the G7 much easier for global faith leaders to issue and priorities into 2015 and beyond.

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Keeping the faith: still focused on goals

Slum dwellers in New Delhi, India. Interfaith convergence is growing on issues such as poverty, healthcare and the education of children 2014 ANADOLU AGENCY/GETTYIMAGES ANADOLU 2014

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Assessing compliance with the Lough Erne commitments

Research into how G8 members comply with their decline compared with the very high level of 35 percentage points in 2012. summit undertakings allows an assessment of Average compliance by commitment is almost uniformly distributed from 50 to 100 the effectiveness of global governance institutions per cent, with the sole exception of climate finance (at 45 per cent). As in previous years, only one commitment achieved a 50 per cent By Caroline Bracht, G8 Research Group, and Mark Rakhmangulov, average. No commitments were fully complied International Organisations Research Institute, National Research with by all members, unlike in previous years, University Higher School of Economics, Moscow with four in 2012, one in 2011, and three in 2010. Of the 18 commitments assessed, 11 had scores above the overall average of 70 per cent. This set of commitments is quite diverse and nderstanding how much compliance average of 70 per cent. This is on includes not only areas where the G8 usually and how well the G8 par with previous years. In 2010 the interim scores the highest, such as regional security members implement the summit score was 70 per cent as well and the final and terrorism, but also macroeconomic policy, commitments they make score rose to 73 per cent. Since 2010 the final information and communication, and health. enhances the group’s legitimacy compliance average has been increasing, Other commitments with high compliance Uas an international decision-making body in with final scores of 77 per cent in 2011 averages were on issues directly related to the pursuit of its core values of open democracy, and 80 per cent in 2012. Lough Erne Summit’s priority agenda of trade, individual liberty and social advance. tax and transparency. The G8 Research Group, based at the How members rank The level of compliance was highest University of Toronto, and the International Individual members’ interim rankings are on the commitment to cooperate in Organisations Research Institute at the mainly in line with past performance, with reducing global imbalances, with almost National Research University Higher School some variations. The United States and the all members achieving a score of 100 per of Economics in Moscow have collaborated European Union are tied for first place, each cent. However, the other macroeconomic on many compliance reports since 2006. receiving an overall score of almost 81 per policy commitment, on nurturing the These reports measure the global recovery by supporting extent to which G8 members demand, was considerably have implemented their lower, below the overall average priority commitments across a Compliance was highest on the commitment to score of 67 per cent. The three range of issues raised at each cooperate in reducing global imbalances, with trade commitments received summit. The reports rely on varying scores, with the one publicly available information, almost all members achieving 100 per cent on facilitating institutional and are distributed to a broad investment flows into bankable stakeholder community trade-related infrastructure for feedback to ensure projects in Africa coming in the comprehensive and accurate data cent. The United Kingdom follows with 78 highest at 78 per cent. The commitment to collection and assessment. per cent, just ahead of Canada and France pursue negotiations on bilateral, regional or The most recent compliance report, each with 72 per cent, followed by Italy and multilateral trade deals scored highly as well which assesses 18 of the 214 commitments Germany with 64 per cent, and Russia with (at 72 per cent), but the remaining one on made at the 2013 Lough Erne Summit, is 61 per cent. Russia’s score is slightly higher liberalising trade in green goods and services based on relevant government actions taken than its score of 59 per cent in 2012, but received only 50 per cent. from the day the commitments were made, considerably lower than in 2011 and 2010, 18 June 2013, until 13 January 2014. This when it ranked third and first respectively. Progress on open data period ends at the halfway mark between Japan ranks last among G8 members, with The majority of G8 members complied fully the Lough Erne Summit and the G7 Brussels an interim compliance score of almost with the commitment on implementing the Summit on 4-5 June 2014. Any actions 59 per cent. This is a deviation, as Japan’s Open Data Charter, including by developing taken by a G8 member since 13 January score was higher than the overall average in appropriate national action plans, producing will be considered in the final compliance 2012 and 2011. an average level of almost 84 per cent. Two report, which will be released on the eve The difference between the highest and interrelated commitments achieved a high of the Brussels Summit. lowest compliance scores is 22 percentage level of compliance: improving corporate For the six-and-a-half-month period after points, similar to the difference in the 2010 transparency, at 78 per cent, and raising the Lough Erne Summit, the G8 achieved a final report. This represents a considerable global standards and working towards

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Assessing compliance with the Lough Erne commitments

Leaders at the 2013 summit at Lough Erne: at 70 per cent, the G8’s interim compliance average was on a par with that of previous years REUTERS/YVES HERMAN REUTERS/YVES

common reporting standards in the extractive 67 per cent, but that was still below average. the situation in Ukraine and cooperation industries, at 72 per cent. All G8 members joined the Climate and Clean in many G8-related forums has been Climate change revealed a disappointing Air Coalition, but their level of support was suspended in the absence of an effective pre- but consistent trend. The G8 has consistently mixed for developing the relevant scientific scheduled presidency. However, independent performed poorly on its climate change evidence base and involving the private sector. assessment of compliance with summit-made commitments and this trend remained The final scores for complying with the commitments remains a powerful instrument unchanged. In fact, the only commitment Lough Erne Summit commitments, which will for analysing the effectiveness of global with an average below 50 per cent was be presented before the Brussels Summit, are governance institutions. Further research on the one on mobilising $100 billion in significantly affected by the decision of the the performance of the G7 members after the climate finance per year by 2020. Only two G7 members to suspend their participation Brussels Summit will facilitate comparative members complied in full and four countries in the preparations for the G8 summit in assessments of the group’s effectiveness complied partially. Another climate change Sochi, Russia. With the cancellation of the in comparison with other multilateral commitment was assessed at a higher score of Sochi Summit, attention is now focused on institutions, including the G8.

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10.2 Bracht & RakhmangulovAG.indd 115 20/05/2014 19:43 LEADERS’ PROFILES

European Union José Manuel Barroso José Manuel Barroso became president of the European Commission in November 2004. He was prime minister of Portugal from 2002-04 and president of the Social Democratic Party from 1999-2004. Before entering politics Barroso was an academic. Born in Lisbon on 23 March 1956, he studied law at the University of Lisbon and holds a master’s degree in political science from the University of Geneva. He is married to Margarida Sousa Uva and has three children. He has attended every G8 summit since 2005. © EUROPEAN UNION, 2013 UNION, © EUROPEAN ARMIN LINNARTZ/WWW.CDUCSU.DE JASON RANSOM JASON FRANÇAISE/ © PRÉSIDENCE RÉPUBLIQUE DE LA DEPARDON RAYMOND ELISABETTA VILLA/GETTY IMAGES VILLA/GETTY ELISABETTA

Canada France Germany Italy Stephen Harper François Hollande Angela Merkel Matteo Renzi

Stephen Harper was elected François Hollande was elected Angela Merkel became chancellor Matteo Renzi became prime prime minister of Canada in president of France on 6 May of Germany in November 2005. minister of Italy on 22 February January 2006, and was re-elected 2012. He served as first secretary Merkel was first elected to the 2014 after the resignation of in October 2008 and again in of the Socialist Party from Bundestag in 1990 and has held Enrico Letta. He became the May 2011. He was first elected 1997-2008. He was the deputy the cabinet portfolios for women secretary of the Democratic Party as a member of parliament in for Corrèze in the National and youth, environment, nature on 15 December 2013. In 2004 1993. Harper served as leader of Assembly of France from conservation and nuclear safety. he was elected president of the the opposition for several years 1988-93 and again from Before she entered politics, Province of Florence. In 2009, before becoming prime minister. 1997-2012. He was also the Merkel worked as a researcher having joined the Democratic Born in Toronto, Ontario, on mayor of Tulle from 2001-08. and physicist. Born in Hamburg Party, he won the election for 30 April 1959, he studied at the Hollande joined the Socialist on 17 July 1954, Merkel received mayor of Florence, a position he University of Toronto and the Party in 1979, and was an her doctorate in physics from the held until March 2014. Before University of Calgary, earning a economic adviser to François University of Leipzig in 1978. entering politics, Renzi worked master’s degree in economics in Mitterrand. Born in Rouen She is married to Joachim Sauer in his family business and was 1991. He and his wife, Laureen, on 12 August 1954, Hollande and has no children. Merkel has very active in the Boy Scouts. have two children. Harper has holds degrees from the École attended every G8 summit since Born on 11 January 1975 in attended every G8 summit since nationale d’administration hosting Heiligendamm in 2007. Florence, he graduated from the St Petersburg in 2006, and hosted (ENA) and the Institut d’Études University of Florence in 1999 the 2010 Muskoka Summit. Politiques de Paris (Sciences Po). Sherpa: Lars-Hendrik Röller with a degree in law. He and He has four children with his his wife, Agnese Landini, have Sherpa: Peter Boehm former partner, Ségolène Royal. three children. Brussels will Hollande’s first G8 summit be his first G7/8 summit. was Camp David in 2012. Sherpa: Armando Varricchio Sherpa: Paul Jean-Ortiz

116 | G7 BRUSSELS JUNE 2014 LEADERS’ PROFILES

Herman Van Rompuy Herman Van Rompuy was elected the first full-time president of the European Council on 19 November 2009. He was previously prime minister of Belgium from 2008 to 2009. Before entering politics, Van Rompuy was a lecturer. Born in Etterbeek, Belgium, on 31 October 1947, he holds a bachelor’s degree in philosophy and a master’s degree in applied economics from Katholieke Universiteit Leuven. He is married to Geertrui Windels and has four children. Brussels is Van Rompuy’s fifth G7/8 summit.

Sherpa: Didier Seeuws THE COUNCIL OF THE EUROPEAN UNION THE COUNCIL OF EUROPEAN ISSEI KATO/AP/PA IMAGES ISSEI KATO/AP/PA COPYRIGHT CROWN THE WHITE HOUSE

Japan United Kingdom United States of America Shinzo Abe David Cameron Barack Obama

Shinzo Abe was elected David Cameron became prime Barack Obama was re-elected prime minister of Japan on minister of the United Kingdom president of the United States 28 December 2012, having of Great Britain and Northern in November 2012, having previously served from Ireland in May 2010. He was first been elected for his first term as September 2006 to September elected to parliament in 2001 as president in November 2008. In 2007. He has been president of the representative for Witney, 2005, Obama was elected to the the Liberal Democratic Party and has served as party leader Senate, after previously working since 2006. He was elected to since 2005. Before becoming as a community organiser, a the first district of Yamaguchi a politician, Cameron worked civil rights lawyer and a state Prefecture in 1993. In 1999, for the Conservative Research legislator for Illinois. He was he became the Social Affairs Department and served as a born on 4 August 1961 in Division director and served political strategist and adviser to Honolulu, Hawaii, to a Kenyan in the cabinets of Yoshiro Mori the Conservative Party. Born in father and an American mother. and Junichiro Koizumi before London, England, on 9 October He received his bachelor’s degree becoming LDP secretary general. 1966, he received a bachelor’s from Columbia University in In 2005, Abe was nominated degree in philosophy, politics 1983 and a law degree from chief cabinet secretary in and economics at the University Harvard University in 1991. Koizumi’s cabinet. Born on of Oxford. He is married to He is married to Michelle and 21 September 1954 in Nagato, Samantha and has three children; they have two children. Obama Abe studied political science a fourth child died in 2009. has attended every G8 summit at Seikei University and public Brussels will be Cameron’s fourth since 2009, and hosted the policy at the University of G7/8 summit, having hosted the 2012 Camp David Summit. Southern California. He is 2013 Lough Erne Summit. married to Akie Abe. Abe attended Sherpa: Caroline Atkinson the 2007 Heiligendamm Summit Sherpa: Tom Scholar and the 2013 Lough Erne Summit.

Sherpa: Yasumasa Nagamine

G7 BRUSSELS JUNE 2014 | 117 Sponsors’ index

BNY Mellon ...... 80 Cargill ...... 2 ClimDev-Africa ...... 90 De La Rue...... 84 Democratic Republic of Congo – Ministry of Health ...... 58 ENI ...... 38 European Gas Research Group (GERG) ...... 40 FighTBack – Otsuka Pharmaceutical Co Ltd ...... 54 G20 Governance for a Globalized World ...... 119 G7 Research Group ...... 6 GE ...... 14, 47, 49, 51 & 53 Kuwait Fund for Development ...... 22 & 120 Lilly MDR-TB Partnership ...... 4 Necsa – South African Nuclear Energy Corporation ...... 42 Olam ...... 99 Repubblica di San Marino – Ministry of Finance and Budget ...... 18 Schneider Electric ...... 37 SICPA ...... 10 TD Bank Group ...... 74 Unite for Quality Education – Education International ...... 64

118 | G7 BRUSSELS JUNE 2014

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