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GLOBAL BRIEFING REPORT RIYADH_SAUDI ARABIA_21-22 NOV 2020

THE WORLD AFTER THE PANDEMIC ANA C. ROLD, EDITOR-IN-CHIEF

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G L O B A L B R I E F I N G R E P O RT CONTENTS

CONTENTS

F E AT U R E S

C O V E R S T O RY

Accelerating Transformation and Innovation in the Healthcare Sector

SPECIAL REPORT

One Year On: Lessons Learnt and ‘New Normals’ in a Post-COVID World

THE WORLD AFTER THE PANDEMIC

By Makarem Sobhi Batterjee

56_79 November 2020 Edition in conjunction with the G20 Summit under the Presidency of Saudi Arabia

Ana C. Rold

75 Years of U.S. and Saudi Partnership By H. Delano Roosevelt

Time is Running Out for the G20 to Address COVID-19

Build Back Better: The Future We Want, The UN We Need

By John W.H. Denton

Separate and Unequal Won’t Suffice to Channel Investment to Address Racial Inequity

New University Alliance Gets to Address Persistent Global Challenges

By Megan Kashner

By Annelise Riles

The Negative Impact of Illicit Trade on Financing the UN Sustainable Development Goals

A Virtual G20 Summit Underscores the Importance of this Year’s Agenda

By Jeffrey Hardy

By Gerald Feierstein

Think 20 Summit: COVID-19, East Asia, and the Global Response.

The Case for a New Glocalism, Powered by AI By Shalini Trefzer and Luca Flurin Brunner

By Alan Donnelly

32 COVID-19 Will Herald a Seachange in Global Affairs

Innovative 3-D Elevation Program Has Huge Economic Promise

Can COVID-19 Help Jettison America’s Denial of Racism?

By Paul Nash

By Gail C. Christopher

Protest, Race and the American Future

By Nicholas Consonery & Evan Myers

By Courtland Cox & Charles “Charlie” Cobb

EDITOR (LSE) Erik Berglof

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How Will the Coronavirus Change China’s Belt and Road Initiative?

CREATIVE DIRECTOR Christian Gilliham christian@cgcreate.co.uk (+44) 7951 722265

By Gulden Turktan

By Gigi Dawe

EDITOR-IN-CHIEF Ana C. Rold editors@diplomaticourier.org

The Story Behind the Establishment of the W20

Accountants: A Modernized Role in a Post-COVID-19 Economy

By Burhan Al-Gailani

PUBLISHER/CEO & FOUNDER Chris Atkins

COMMUNICATIONS OFFICER (LSE) Carolina Stern PROGRAMME DIRECTOR (LSE) Piroska Nagy-Mohacsi EXECUTIVES Ray Baker, Phil Cook, Anthony Leigh Jones, Delano Johnson, Tyrone Eastman & George Gabriel, President of the Middle East and Africa

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PUBLISHER’S LETTER

Chris Atkins PUBLISHER, CEO & FOUNDER CAT COMPANY, INC.

Dear Readers, Welcome to this not-business-as-usual G20 Summit edition. First, I hope you and yours are keeping safe and healthy. What a year it has been. The COVID-19 pandemic, the still contentious U.S. presidential elections, no G7 Summit for the first time in 24 years, and a G20 virtual summit. Inour own world of publishing everything has also been upside down. We have had to make some changes to our normal coverage this year and we hope you like the new direction. Next year marks an auspicious milestone for this company and myself. It will be my 25th year of being involved in publishing this publication for the first G7 Summit in 1997, which has now evolved to the Group of Nations brand and Global Briefing Report. Our company’s mission has been and continues to be to educate the global community on the most vital topics affecting our society and the agenda and leaders at the G7, G20, and all affiliated summits. With our awardwinning Group of Nations Global

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Briefing Report, we have created an unprecedented opportunity for private sector leaders and civil society to have a voice at these summits even when they don’t have a physical seat at the table. I want to thank all our Knowledge Partners for their help in making these publications a great resource for the G20 and G7 global community to gain a better understanding of the vital work that needs to be accomplished to make the world a better place for us now and for future generations. I also want to thank Ana C. Rold—our Editor-in-Chief of over a decade—and her team at Diplomatic Courier for their editorial support. We look forward to the G20, B20, and W20 summits to be held by the presidency of Italy and the G7 Leaders’ Summit to be held by the United Kingdom in 2021. Our team is excited and already working on next year’s publications. Do reach out to us with your ideas and questions and we will be happy to work with you.

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EDITOR’S LETTER

Ana C. Rold EDITOR-IN-CHIEF CAT COMPANY, INC.

Welcome to the 2020 edition of the first blended Group of Nations Global Briefing Report. It’s fair to say this has been a most unusual, challenging, and also tragic year for people, organizations, and entire nations. We are dealing with several firsts: the first time to not have a G7 Summit and the first time to have a virtual G20 Summit. But this is not the first time—nor will it be the last—humanity is dealing with such unprecedented upheaval due to a pandemic. The true question is: will we be better students of history so that we may weather the next pandemic—and its accompanying crises—with more resilience? The COVID-19 pandemic is a crisis on its own right. But it has also exposed and accelerated several other crises that are colluding together. Even before 2020, the agenda of the G20 was abundantly ambitious. Global financial transparency, climate change, automation and the future of work, agriculture and food security, health, wealth, and so much more. The issues at hand are as big as ever and bubbling at the heels of major political upheavals and key elections in the Americas, Asia, and Europe. Despite its shortcomings, the G20 remains a key forum for managing the global economy. And unlike its kindred organization, the G7, the G20 includes both developed and developing economies in its membership, which

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allows for more inclusion and collaboration. With the advent of the B20, W20, C20, Y20, T20, U20— engagement groups that encompass a wide-ranging group of interests in civil society, business, academia, and policy—as well as this year’s virtual format, has made this the most open and inclusive G20 Summit to date. Whether by design or necessity, this year’s model has opened up the process to a new era of inclusive engagement. As I have said in previous editions, even though the G20 was the result of the financial crisis in 2008, the institution has adopted a proactive approach to future crises. Initially a diagnostic venue, the G20 has now evolved into a “wellness clinic” where issues are debated and looked at from a future-forward vantage point. The members are looking to prevent and mitigate, not just “cure” after the fact. For that reason, the articles you see in this edition—curated always carefully to include voices from a multitude of disciplines and expertise—tend to take a futurism tone. The authors are not just diagnosing the issues of the day, they are offering innovative solutions that defy established expectations. We hope you enjoy reading the selection of articles for this blended edition and always feel free to contact us with your comments and feedback. ◆

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Contested elections, an unrelenting pandemic, and global diplomacy in disrepair. The virtual G20 Summit meets under extraordinary conditions to discuss building resilience for LIFE after the pandemic. By Ana C. Rold

Even before the COVID-19 pandemic locked down the world, we were living in an age of paradoxes. We produce enough food to feed the entire world but people still go to bed hungry. Healthcare innovators are hacking aging and extending our lifespan, but people still die from preventable diseases. Now, the novel coronavirus is spreading an even more dangerous strain of inequality. Those with higher incomes are still getting paid and can â&#x2020;&#x2019; GROUPOFNATIONS.COM

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→ work from home, while the working-class and poor are far more likely to have to keep going to their workplaces and face greater risk of infection. Underlying diseases that make COVID-19 more dangerous and fatal predominantly afflict poorer populations (who were already dealing with obesity, heart disease, and other non-communicable diseases at epidemic proportions). Government aid was already painfully inadequate for those most in need (or in most cases never arrived), but now desperation is climbing faster on the charts than infections. We’ve been tested before and the rise of populism nearly everywhere in the liberal democratic world has made it clear that our worldview is being tested. This pandemic is simply accelerating the test of what kind of a society we want to be. But there are many areas where global leaders—and especially the Group of 20—can turn this crisis into opportunity to rebuild systems and institutions.

Multilateral Institutions: Just like the post-war era gave rise to the international institutions that maintained peace and advanced multilateral collaboration in the 20th century, the post-pandemic era will give rise to new and improved institutions. “The fastest institutions to bend or break with the onset of the pandemic should be the first ones to fix in the post-pandemic world,” says Dante Disparte. Global Health Security: What better system to improve than healthcare itself? We know it’s broken but up to now have been lazy to fix it. This is a perfect time to improve existing institutions like the World Health Organization as well as put in place the global health governance mechanism we are lacking. Irina Bokova, Hakima el Haite, George Papandreou and Joël Ruet make a very compelling argument on how to do this. And as for going it alone?: The very thing that brought this virus to our doors—our interconnectivity—is the very tool that will help us overcome it. Without diplomacy, sharing of science, GROUPOFNATIONS.COM

data, and technology we will suffer. Anna Tunkel and Elizabeth Cohan are architects of multiplier partnerships. In the post-pandemic world, they say, we have no other choice but to join forces. Partnerships between private sector, governments, and individuals will ensure that we are quite literally addressing these challenges together and that no one is left behind in solution-making. Global Economic Recovery We start with a singular and overarching theme: “Restarting Economies,” where Dr. Kim Bettcher cautions us, “The complexity of restarting economies worldwide will entail more than just allowing businesses to hang an ‘open’ sign and limiting the number of customers. For starters, there may be no door.” Ultimately, policy and business leaders will have to cooperate to completely reimagine how they shape their national strategies for recovery. In the “Great Reshoring” Andrew Wilson discusses the current risks and challenges that established supply chains are experiencing. The pandemic has greatly accelerated the need for change and diversifying risk. Policies rooted in liberal-democratic values will have a leg up in kick-starting a new era of sustainable growth. Liberal market values are not to be taken for granted, however. In “Corruption Is Like a Coronavirus” Frank Brown explains that corruption, just like a virus, is adaptable, pernicious, and has found the ideal conditions to flourish. And just like with a pandemic, our focus should not just be on the short-term battle of containment, but also on the longterm goal of reduction—and even eradication—of the disease. The pandemic has produced a moment of opportunity for authoritarians around the world. While all nations grapple with the immediate crisis response, undemocratic actors are flourishing under the radar. “The world’s democracies must take a more aggressive approach to holding authoritarians accountable,” says John Zemko in “Protecting Democracy Amid the COVID-19 Crisis,” outlining opportunities to change this narrative.

Liberal market values are not to be taken for granted, however. In “Corruption Is Like a Coronavirus” Frank Brown explains that corruption, just like a virus, is adaptable, pernicious, and has found the ideal conditions to flourish. In the COVID-19 world women have the most to lose. But there are even more burdens placed on women we hadn’t fully considered yet. In her piece “COVID-19 Brings New Economic Challenges for Women,” Barbara Langley vividly illustrates how the pandemic threatens to undo decades of advancement for women’s economic empowerment. No national economic recovery stands a chance if this progress rolls back. Just like women, those outside of the system face the biggest threats. In “The Informal Sector: Facing Crisis on the Outside of the System,” Dr. Kim Bettcher and Adam Goldstein examine

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the hidden risks to economic recovery when entire sectors of the economy— the informal sector—are excluded from stimulus and other social benefit systems. “A resilient recovery is unachievable without hearing and substantively including the voices of business owners who operate outside the formal system,” they explain. When the lockdowns started, the digital economy’s development accelerated. Adoption of cashless practices, e-commerce, and work from home are just some of the ways businesses around the world are coping with the new normal. Louisa Tomar and Morgan Frost see “Inclusive

Participation in the Digital Economy” as paramount to economic recovery. Now more than ever we have an opportunity to close this gap that permeates every sector of business and society. So, what of the future? Look to “Association and Chambers” for solutions says Stephen Rosenlund. Already, chambers of commerce and business associations around the world are taking the lead in recovery efforts around the world. They are uniquely positioned to do so as their very existence hinges on a resilient and prosperous membership. ◆

About the author ANA C. ROLD is the Founder and CEO of Diplomatic Courier, a Global Affairs Media Network. She is the Host of The World in 2050—A Forum for Our Future and teaches Comparative Politics at Northeastern University. She has served as the Editor-in-Chief of the Group of Nations publications since 2009.

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Accelerating Transformation and Innovation in the Healthcare Sector By Makarem Sobhi Batterjee, President, Saudi German Hospitals Group

Mr.Makarem, SGH Group President

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The COVID-19 pandemic has shown us that countries around the world including those with the most robust healthcare systems were not well prepared to handle a global health crisis of this magnitude. The pandemic has exposed the gaps in the current healthcare sector, testing the readiness of the international health community to deal with the situation. While unprecedented challenges still arise as COVID-19 evolves, more opportunities have opened for nations to step up and build stronger and more coordinated global response with enhanced strategies to save and protect lives. The international community has deployed fundamental measures with far-reaching impact to help all affected communities and ease the burden brought about by the crisis. In the Middle East, the Kingdom of Saudi Arabia has been an active contributor to global efforts to beat the pandemic. The Saudi Government has, in fact, pledged hundreds of millions of dollars for the production and distribution of new diagnostic and therapeutic tools, as well as the delivery of sufficient protective equipment supply to medical workers who are battling the virus. Not stopping there, the Kingdom also recently announced that it would grant 500,000 riyals to the families of healthcare workers who died from COVID-19 . The Kingdomâ&#x20AC;&#x2122;s timely and welcomed move has coincided with the Saudi Government fulfilling its duties and responsibilities as the holder of the G20 Presidency for 2020. Under this role, Saudi Arabia hosts various conferences on diverse pressing financial and socio-economic related topics, including global healthcare

cooperation. High-level delegates and representatives of the 20 global economies have been participating in these series of dialogues that have begun early this year. At the beginning of the year, the G20 Health Working Group (HWG) convened in Jeddah to discuss a host of issues facing today’s health systems, especially the repercussions of the novel coronavirus. A statement released by the organizers after the meeting showed that the attendees discussed the role and importance of real-time information sharing, value-based healthcare (VBHC) and digitalized health solutions in implementing better prevention strategies and mitigation measures and enhancing patient care and safety. Saudi German Hospitals Group’s digital transformation and innovation Digital health has taken the centre stage as the pandemic evolves. Integrating technological advancements into the healthcare delivery process and practices has gained momentum given previously unheard-of reduced mobility, limitations and constraints. Many hospitals and healthcare institutions around the world have been ramping up their digitalization initiatives to meet the health demands of their patients. In Saudi Arabia, Saudi German Hospitals Group, one of the largest private hospital groups in the Middle East and North Africa, is at the forefront of the transformation of the local healthcare industry, in line with Saudi Vision 2030. Saudi German Hospitals Group’s purpose is to relieve people’s suffering and improve their lives. This means that we aim to reach as many people as we can to bring them world-class comprehensive care. Offering highquality medical care to over two million patients every year, we want to accelerate the success of our global vision and, therefore, improve each patient’s experience, satisfaction and trust. We can achieve this by adopting next-generation digital tools, as well as leveraging our continuously growing network of accredited tertiary care

hospitals and clinics, diversifying speciality areas, expanding community involvement and delivering worldclass medical education. Saudi German Hospitals Group strongly believes that the deployment and the full rollout of wellness and preventative care programs, telehealth, and further sub-specializations will transform the landscape of healthcare. In addition, it can provide a healthier and more holistic patient experience that restores the body, mind and soul. Today, the group has built state-ofthe art facilities supported by the latest technological and medical equipment. However, what matters most is that behind it are its talented teams of healthcare and administrative professionals who are committed to delivering care with empathy and compassion. Over the last few years, I have personally been focused on hiring the best team possible to meet the needs of the community. From highly educated administrative staff to the most medically successful clinical teams; everyone joining our group meets world-class standards. Saudi German Hospitals Group continues to build itself a reputation as an influential regional force that drives immense development within the healthcare industry.

Saudi German Hospital Cairo and Riyadh are now part of the Mayo Clinic Care Network, which carefully selects members based on their commitment to high quality care.

Saudi German Hospitals Group’s core values and sustainable global health system Embarking on the digital transformation journey is also the key to creating a sustainable global health system. In the case of Saudi German Hospitals Group, digital tools are essential to its daily operations to guarantee better health outcomes and deliver trusted and accessible healthcare solutions and services with greater social value. The group is taking this further by sustaining its compassionate and person-centered systems. This direction is reflected in the strategies of its hospitals and clinics located across countries in the GCC and MENA region. The group aims to bring its commitment and dedication to creating a world-class healthcare system to as many global markets as possible, in addition to providing → 15

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→ innovative, comprehensive, patientcentric care to everyone irrespective of their location to make a positive impact on their lives and help ease their suffering. We seek to realize these goals by designing, building and operating greenfield multi-specialty tertiary care hospitals across the MENA region; supporting our hospital network with outpatient medical clinics, specialty centres, emergency departments, laboratories and pharmacies; and continuously enhancing the quality of healthcare services provided across our hospitals and outpatient facilities while improving financial and operational efficiency. Moreover, we have been consistently collaborating with our strategic partners here and abroad. Through our foundational association with German university hospitals, which inspired the ‘Saudi German’ name, we have always believed in the power of partnerships with public and private entities such as the Batterjee Medical College and the Saudi Ministry of Health. In keeping with this belief, we have also implemented our International Visiting Professor Programme to develop the knowledge and expertise of our doctors through training. Under our International Visiting Professor Programme, globally renowned professors work together with our doctors to treat our patients as well as lead regular training sessions. Adding to our string of global accomplishments is becoming a member of Mayo Clinic Care Network, a select group of independent health systems that are carefully vetted and chosen for their commitment to high-quality patient experience. Saudi German Hospital Cairo and Saudi German Hospital Riyadh are now part of the prestigious network, which carefully selects its members based on their commitment to high quality care. Our other similar initiatives include GROUPOFNATIONS.COM

The COVID-19 crisis has brought immense lessons and opportunities that can make the world more resilient and motivate many industries to accelerate their transformation journey. organizing large-scale and specialized medical conferences, events and residencies that develop knowledge and enhance cooperation in the Saudi and regional healthcare community; raising awareness of public health issues in the community through workshops, events and training, including basic life support courses and seminars; buying and developing

land and real estate to support the company’s strategic growth; contributing to thriving Batterjee Medical Cities; and developing telemedicine, including online video consultations, to remotely serve our patients’ health needs. Starting as a small organization in 1988, with one hospital in Jeddah, Saudi German Hospitals Group is continuously growing – broadening its reach and covering more locations across the region. More than three decades since its foundation, it has firmly set its sights on its global expansion to help increase the quality of life of many more people through its innovative healthcare solutions. Saudi German Hospitals Group believes that integrating technologies into strong medical capabilities will have a great impact on its processes and procedures, saving time and cost, which will ultimately benefit the patient. The COVID-19 pandemic has brought immense lessons and opportunities that can make the world more resilient and motivate many industries to accelerate their transformation journey. In healthcare, digitalization results in faster and more efficient services to patients without compromising their safety. Using virtual clinics and electronic appointments are slowly becoming the new reality. Today, hospitals and doctors have been quick to adopt telehealth services to provide nonCOVID-19 patients with alternative form of consultations with their physicians from the comfort of their homes. The global healthcare community is now in a pivotal moment in history. It is now being called on to build on the momentum that has been created due to the pandemic, to not only reap the benefits today but to also be more prepared for a post-pandemic world. ◆

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REDEFINING THE HEALTHCARE INDUSTRY IN THE REGION

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75 Years of U.S. and Saudi Partnership By H. Delano Roosevelt

2020 has been an eventful year in many respects, but our team at the U.S.-Saudi Business Council (USSBC) has remained steadfast in our mission to continue working with U.S. and Saudi companies to increase cross-border trade and investment. This year marks two important milestones in the U.S.-Saudi relationship: the 75th anniversary of the start of relations between the U.S. and Saudi Arabia, and Saudi Arabia’s hosting of the G20, notably with participation of the USSBC in the B20 Saudi Arabia’s Trade and Investment Taskforce. 75 Years of Trade and Trust It was near the end of World War II when my grandfather, President Franklin Delano Roosevelt, sat down with Saudi Arabia’s first leader, King Abdul Aziz Al Saud, to lay the foundation of an enduring economic, strategic, and cultural alliance between our two nations. This meeting, which took place on Feb. 14, 1945 in the Suez Canal, was instrumental in creating the bonds between the United States and Saudi Arabia that have persisted through the end of the 20th century to today. Fate has given me the opportunity to continue the legacy of “Peace through Commerce,” set by my grandfather, of strengthening trade ties and creating personal bridges of friendship between our business communities. Saudi Arabia is in the midst of an expansive cultural and business

transformation and is actively looking for products and services to feed the growth of these new industries as well as partners for research and development and joint ventures. The opportunities for U.S. companies in the Saudi economy are diverse and plenty, thanks to the ongoing Saudi effort to digitalize, modernize, and diversify their economy under their ambitious Vision 2030 national development plan. Under the umbrella of Vision 2030, Saudi Arabia is diversifying its industrial base away from its traditional dependence on oil and gas and is opening sectors like entertainment, sports, tourism, and culture. These many substantial changes create opportunities for U.S. companies to provide products and services to respond to increased demand across a broad range of sectors. The Kingdom is the largest economy in the MENA region and the 19th largest economy in the world. The U.S. is Saudi Arabia’s secondlargest trade partner, with U.S. exports of goods and services to Saudi Arabia supporting thousands of American jobs. Furthermore, Saudi Arabia was ranked last year as the U.S.’s 23rd largest export market, its 26th largest supplier of imported goods, and one of its leading trade partners in the Middle East. Both countries have signed a Trade Investment Framework Agreement to continuously work towards expanding this trade relationship across a range of

Saudi Arabia is in the midst of an expansive cultural and business transformation and is actively looking for products and services to feed the growth of these new industries as well as partners for research and development and joint ventures. GROUPOFNATIONS.COM

economic sectors. In addition to these robust economic links, our two countries are also connected through interpersonal ties. Sixty percent of the Saudi population is under 40 years of age and many are well-traveled internationally and relish international experiences. The United States is a popular destination for Saudi exchange students: the Kingdom ranks fourth among foreign countries that send students to the United States for undergraduate and advanced degrees. Over the last decade, more than 250,000 Saudi citizens and their families have received visas to study in the United States and experience life in small American towns and cities, bringing home memories of their personal experiences with U.S. culture and its people. The interpersonal relationships that are a byproduct of the educational experience of Saudi students in the United States and the many U.S.-Saudi business partnerships that have flourished over the years are a natural extension of the trust-built relationship started by our two countries’ leaders 75 years ago. It is these bridges of friendship that have helped our mutual alliance to continue through both easy and challenging times. I am confident these relationships, led by improved commercial ties, will continue to grow even stronger through the 21st century. The simple concept of Peace through Commerce envisioned by my grandfather is as relevant today as it was in 1945. The G20 Summit in Saudi Arabia The transformation of the Saudi economy and society was highlighted on the international stage this year with Saudi Arabia, the only Arab country in the G20, serving as the host of the 2020 G20 summit. The USSBC is honored to have earned a spot as a member of the B20, the official G20 engagement group with the global business community.

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The USSBC is also proud to highlight that Mr. Yousef Abdullah Al-Benyan, Vice Chairman & CEO of USSBC member Saudi Basic Industries Corp. (SABIC), was appointed as the B20 Saudi Arabia Chairman and successfully led the group through the challenging events of this year. The B20, consisting of six different taskforces and a Women in Business Action Council, included contributions from many of the USSBC’s members, some of whom served in a leadership role: Air Products and Chemicals (co-chair of Energy, Sustainability, and Climate taskforce), Citigroup (co-chair of the Women in Business Action Council), Dow Chemical Company (co-chair of Energy, Sustainability, and Climate taskforce), the Olayan Group (chair of Trade & Investment taskforce), Samba Financial Group (chair of the Women in Business Action Council), Saudi Basic Industries Corp. (co-chair of Integrity & Compliance taskforce), and Saudi Telecom Company (chair of the Digitalization and Integrity & Compliance taskforce). Throughout the deliberations of the B20 this year, the USSBC served as a platform to amplify the policy recommendations developed by the various taskforces. In addition, the USSBC publicized the B20’s events, communiques, and initiatives, including the B20 special initiative to address the COVID-19 pandemic. Compiled from the advice and expertise of its members (including the USSBC and its members) the B20 Trade and Investment taskforce recommended advocating for the needs of MSMEs (micro, small, and medium-sized enterprises), supporting legislation and infrastructure investment to enable growth of e-commerce and digitalization, supporting inclusive multilateral trade agreements, maintaining momentum towards achieving the UN’s Sustainable Development Goals, and providing recommendations to support the → 19

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strengthen national health systems, and facilitate research and development into prevention, diagnosis, and treatment of the disease. The G20 advocated for its member countries to take the lead in coordinating response efforts and assisting fragile and crises-prone states improve their response and preparedness by increasing access to finance for public health system capacities, providing advisory support from community health experts, and improving financing for healthcare infrastructure. The emergency meetings held in response to the COVID-19 pandemic have since led to an injection of over $5 trillion into the global economy by the countries of the G20. The G20 has promised to continue its coordination with international bodies like the World Health Organization, International Monetary Fund, World Bank Group, United Nations, and others to do whatever it takes to overcome the pandemic.

→ services sector (particularly the food, tourism, hospitality, and retail sectors, who were affected the most by the pandemic). The taskforce’s recommendations were ultimately incorporated into the B20’s 25 policy recommendations to the G20. These 25 final policy recommendations were formally presented by the B20 to the G20 during the virtual summit on November 21-22. The recommendations were divided into three themes: Empowering People, Safeguarding the Planet, and Shaping New Frontiers. In the words of the G20, the recommendations aim towards transforming for inclusive growth, redesigning multilateralism for a new era, repurposing business through stakeholder capitalism, reinvigorating

the battle to save the planet, building resilient trade systems for inclusive growth, humanizing technological transformation, and advancing the global economy by leveling the playing field for the most vulnerable nations. The B20 and G20 were quick to respond to the outbreak of the COVID-19 pandemic from its onset, calling an Extraordinary G20 Leaders’ Summit on March 26, followed by a series of Extraordinary Ministerial meetings with all the working groups of the G20 to ascertain the pandemic’s health, social, political, economic, and humanitarian risks and find a path forward through the crisis. The working groups drew up recommendations to strengthen the global outbreak response capacity,

The Future of U.S.-Saudi Ties As this year draws to a close, the challenges that arose will undoubtedly continue through 2021. It is our sincere belief that the lessons learned, and the plans drafted during the 2020 G20 meetings in Saudi Arabia, will meet these challenges and succeed in creating a more resilient and inclusive world. With the world adjusting to a new normal, and with Saudi Arabia planning to reopen to international travel after January 1, 2021, international trade will return to its pre-pandemic levels and U.S. companies seeking new markets to grow their export capabilities have a willing partner in Saudi Arabia. We at the USSBC are ready to support U.S. companies in any industry take advantage of the tremendous opportunities to grow their business in Saudi Arabia. ◆

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G L O B A L B R I E F I N G R E P O RT COVID-19 G 2 0 _ F E AT U R E

Time is Running Out for the G20 to Address COVID-19 The G20 needs to move beyond non-binding pledges and start taking coordinated action in response to COVID-19. By John W.H. Denton AO

Ahead of next month’s virtual G20 leaders’ summit, the world is entering a critical juncture in response to the COVID-19 crisis. With over 40 million cases and more than 1 million deaths recorded globally, the economic and human suffering from the pandemic is frustratingly far from over. As countries around the world battle second – and even third – waves of the virus, G20 leaders must embrace a responsibility to unite in the pursuit of policies that will speed up recovery efforts and set the foundations for a rapid and resilient global recovery. For starters, G20 leaders need to come to the (virtual) table with substantive commitments for addressing the pandemic’s lingering consequences, including the protectionist and reactionary measures adopted earlier this year. This wave of tit-for-tat export restrictions and policy flipflops created massive uncertainty in personal protective equipment (PPE) availability, leading to shortages in supply for health workers worldwide. Now that the initial shock of COVID-19 has passed, G20 countries must remove these temporary restrictions and ensure that they do not transition to longer term distortions. Better still, G20 leaders should devise trade policies that will ensure rational and equitable access to muchanticipated COVID-19 vaccines for all countries. Already, 156 economies have committed to the multilateral COVAX facility, a global risk-sharing mechanism for the equitable distribution of inoculations. Several key manufacturing countries are, however, showing worrying signs of vaccine nationalism. If decisive action is not taken, a scramble to secure early doses of proven vaccines may emerge. Indeed, GROUPOFNATIONS.COM

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some countries are already taking steps to hedge their bets with advance agreements. As the representatives of 80% of world trade, G20 leaders have an opportunity to motivate a more cooperative approach by sending a clear message, backed by action, that preserving the lives of millions and the livelihoods of billions through this pandemic will require open trade in essential medical supplies and equitable access to any effective vaccines that become available. The current resurgence of COVID-19 cases in Europe is evidence that no economy will recover fully from the crisis until the viral spread is effectively contained throughout the world. While many developed economies are able to grapple with infection peaks, there is an absolute imperative to ensure that developing economies are given adequate fiscal space and assistance to contain the pandemic and preserve local productive capacity. Most notably, G20 economies need to agree on a new package to provide immediate debt relief to any country struggling under the weight of debt to guarantee critical health services to its population. Developing economies should not have to face a choice between servicing sovereign debt obligations or paying to safeguard the lives and livelihoods of their citizens. If a debt crisis is allowed to take hold of emerging economies, the effects of the pandemic will only worsen. Rather than let the debt crisis escalate, G20 leaders must extend and broaden debt service relief to the world’s poorest countries. This is all the more urgent, as recent market turbulence highlights the looming risk that the supply of trade finance – supporting as much as 90% of world trade – will retrench significantly just as demand returns to the economy. Without access to cost-effective trade

If decisive action is not taken, a scramble to secure early doses of proven vaccines may emerge. credit, businesses, particularly small ones, will find it difficult to ensure operations and a much-desired economic rebound will likely fall flat. To stave off business closures that risk preponderantly steamrolling small and medium-sized businesses, G20 leaders should work with the private sector to shore up the niche but essential market for trade finance. Doing so would complement the “significant progress” G20 trade ministers have said they want to achieve in long-running discussions on WTO reform that have yielded little in the way of 21st century rules for pressing issues like digital trade and sustainability. Recent statements have struck encouraging tones, but modernising the global trading system to work for everyone will require more imagination and political will than has been shown to date. The G20 once proved itself capable of steering a coordinated response to what emerged as the Global Financial Crisis in 2008. But the playbook of yesteryear will not meet the exigencies of a health-driven crisis in 2020. The multiple challenges created by the spread of COVID-19 require an adapted approach. For G20 leaders, decisive actions remain within reach when it comes to setting the global economy on a more solid footing for an expedited recovery. But having impact will require global leadership of the kind the G20 should aspire to provide. ◆ 23

G L O B A L B R I E F I N G R E P O RT PERSISTENT GLOBAL CHALLENGES G 2 0 _ F E AT U R E

New University Alliance Gets to Address Persistent Global Challenges Universities are best poised to serve as central nodes in the network of actors that must come together to address today’s global challenges. By Annelise Riles

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What role should universities play in addressing global challenges such as climate change, inequality and, now, the novel coronavirus pandemic? That is the question university leaders worldwide, myself included, have begun to explore in earnest as the complexity of the global challenges we currently face demands collaboration and action from every sector of society. Universities are perhaps best poised to serve as central nodes in the network of actors that must come together to address today’s global challenges. They already serve as hubs of connectivity— bridges to and from different parts of the world, deeply rooted in local communities yet inclusive of people, perspectives and cultures from across the globe. Universities are also the birthplaces of some of humankind’s most significant discoveries and innovations—from x-rays and ultrasounds to solar power and rocket fuel to e-mail and webcams—and that legacy continues with universities worldwide taking the lead on developing vaccines, smart personal protective equipment and other interventions to combat COVID-19. Universities also enjoy the luxury of the long view, more so than corporations tied to seasonal sales cycles and national governments tied to short-term election cycles. As many have noted, higher education institutions have “moved from the periphery to the center of governmental agendas” and are now seen as crucial sources of policy innovation and social impact. Yet they are also highly decentralized places where strategic coordination and collaboration can be difficult without the structures to support it. The U7+ Alliance of World Universities, launched in 2019, is one such structure that shows promise of yielding novel solutions to pressing global challenges. It is the first coalition of university presidents dedicated to defining concrete actions universities can take to collectively address global challenges in coordination with government leaders worldwide. SciencesPo hosted the first U7+ Summit in Paris last year as a precursor to the 2019 G7 Summit, under the

high patronage of French President Emmanuel Macron. The inaugural U7+ Summit included leaders from 20 countries and 47 universities representing more than 2 million students around the world. It concluded with a set of concrete commitments to tackling global issues ranging from climate change to inequality to the ethics of artificial intelligence. Commitments are of course easy to articulate and much harder to fulfill, but the U7+ Alliance has made impressive progress over the past year, despite the global travel restrictions, stay-at-home orders and other aspects of the COVID-19 pandemic that have made fast fossils of traditional forms of collaboration. Alliance members from Senegal to Singapore have self-organized into working groups, each of which is dedicated to taking concrete actions to address a global challenge—small yet critical and collective steps toward achieving the Sustainable Development Goals 193 countries have adopted. Leaders from 21 universities have already begun collaborating to develop and publish specific targets for improving energy efficiency and reducing greenhouse gas emissions. The working group, led by the University of Toronto and University of Edinburgh, developed a framework for taking inventory of how universities are monitoring and doing their part to reduce greenhouse gas (GHG) emissions. “Many universities are just beginning to formulate how best to develop carbon offsets for emissions… there is an opportunity to develop best practices for less carbon intensive internationalization,” the group reported. Another U7+ working group, led by the Université de Montréal and composed of university leaders from more than a dozen universities worldwide, has spent the past year exploring how higher education institutions can support the ethical development and use of digital innovations and artificial intelligence. The group published a position paper this year that set forth 16 recommendations for “how universities might bolster their leadership role in the responsible use of technology in

Another U7+ working group, led by the Université de Montréal and composed of university leaders from more than a dozen universities worldwide, has spent the past year exploring how higher education institutions can support the ethical development and use of digital innovations and artificial intelligence.

society.” The paper proposes a new Digital Innovation and Artificial Intelligence (DI&AI) Academic+ Network that promotes cooperation between universities, public agencies, firms and civil society organizations that can “speak as a single voice on core DI&AI” issues. “Universities can exercise strong leadership, alongside tech companies and governments, in developing and promoting guidelines about how data sciences and digital innovation should be handled,” the group reported. Other working groups have focused over the last year on issues closer to “home,” yet no less significant in fostering meaningful solutions to global challenges. The University of Ottawa and the Université de Bordeaux, for example, are working alongside Osaka University, the University of Cape Town, the University College of London and more than half a dozen other institutions to develop new approaches to fostering global citizenship — those that “develop self-reflective people, capable of adjusting their values and behavior, with flexible problem-solving skills and the ability to adapt to complex and unfamiliar environments.” Another group of nearly a dozen universities led by Sciences Po and the University of British Columbia has trained its attention on developing new ways to incentivize and reward students for demonstrating good global citizenship. Morocco’s Université Mohammed VI Polytechnique will make a civic engagement learning program a mandatory part of its bachelor’s degree

program and Sciences Po integrated mandatory civic learning into all of its undergraduate education programs. Efforts such as these to foster global citizenship are critical to developing the next generation of global leaders. These are but a few examples of the U7+ Alliance’s work in its pioneer year—work that will continue this November, when my home institution, Northwestern University, will convene university leaders from 20 countries spanning six continents in partnership with Columbia University, Georgetown University and the University of California, Berkeley. This year’s Summit will build on work U7+ Alliance members initiated in France last year to develop commitments to addressing key issues including climate and energy, inequality, technological transformation and, now, preparation for global health crises, including the COVID-19 pandemic. The Summit arguably couldn’t come at a better time, as the pandemic rages on, demanding radical new forms of collaboration among actors within and outside of the academy. The world is on the verge of a global reset in which traditional paradigms, political alliances and modes of operating no longer hold. In today’s global environment, innovation and change are coming from collaboration across disciplines, sectors and geographies—not traditional silos of expertise, geography and culture. The new genius is a collaborative genius, and universities are perhaps best situated to foster it as gateways to and from the world. ◆ 25

G L O B A L B R I E F I N G R E P O RT V I RT U A L G 2 0 G 2 0 _ F E AT U R E

A Virtual G20 Summit Underscores the Importance of this Year’s Agenda The very need to hold the summit virtually underlines the significant challenges that confront the world today and makes its agenda—empowering people, safeguarding theplanet, and shaping new frontiers so vital for a world decimated by COVID-19. By Gerald Feierstein

This year, the G20 summit will be held virtually. As a result, the world will be deprived of the customary images that surround these events … the group photos, the glittering halls with their flag-festooned conference tables, the luxurious surroundings where the world’s most powerful political leaders gather to break bread and discuss the critical issues of the day over lavish banquets. But the very need to hold the summit virtually underlines the significant challenges that confront the

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world today and makes its agenda… empowering people, safeguarding the planet, and shaping new frontiers… so vital for a world decimated by the Covid-19 global pandemic. In 1933, as the United States sank deeper into the economic calamity of the Great Depression, newly-elected President Franklin Roosevelt used that disaster to generate one of the greatest bursts of social and economic creativity the country has ever seen. Indeed, the foundational result of that moment was the implementation of the basic

pillars of the U.S. social safety net that exist today. Similarly, a world beset by pandemic and its associated economic collapse can use this moment to build the new institutions and political, economic, and social infrastructures that will make for a stronger, more resilient, more sustainable future for all of the earth’s population. While the immediate cause of the current global crisis is a once-in-acentury public health event, the threat of future systemic disruption like

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that we are experiencing today can come from many different directions. Assuredly, public health experts warn that future pandemics are almost certain as the world’s growing population intrudes in previously remote regions and comes in contact with unknown viruses. But in the Middle East, climate change, environmental impacts, and severe water crises, too, threaten societies in the region. Rising sea levels, drought, desertification, food insecurity, and rising temperatures will potentially make the region’s cities uninhabitable and place unbearable strains on national institutions. Crises that arise from mass migrations and the impact of refugee populations that are the result of both natural and man-made disasters can similarly overwhelm the capacity of governments and the private sector to deal with them. On top of each of these systemic threats, all of the societies in the region will grapple with the challenges of sustaining economic growth and providing meaningful prospects for their burgeoning populations. Developed prior to the emergence of the Covid-19 pandemic, this year’s G-20 agenda contains many of the elements of an essential global response to this public health catastrophe. Indeed, many of the potential measures to push the world on to a more positive trajectory are contained within that agenda. As an element of Empowering People, the agenda emphasizes boosting economic opportunities, especially for women, youth, and groups traditionally denied access to equal opportunities. There is a broad consensus that our working lives have been changed permanently by the pandemic. These changes can generate both positive and negative outcomes. Now is the time to consider how we can use emerging technologies and out-ofthe-box ideas not only to re-imagine the work place but also to expand opportunities for these historically disadvantaged groups. Similarly, the development of safe, accessible health care systems will be an essential feature of post-pandemic recovery. Like the re-imagined work place, expanded use of new technologies like telemedicine can bring quality health care to populations that have never had access

to advanced medical treatments before. In fact, the speed with which the world’s leading medical research institutions were able to crack the genetic code of the SARS-CoV-2 virus and develop literally dozens of promising strategies for treating and, hopefully, preventing the disease has been astounding. Like strategies for expanding economic, educational, and health opportunities for people, the G-20 emphasis on Safeguarding the Planet is a critical component of a global response to the environmental challenges coming increasingly into focus. The sudden and involuntary drop in global economic activity as a result of the wave of Covid-19 infections sweeping the world produced an unexpected but deeply revelatory moment: the appearance in polluted cities around the world of blue skies and clear air and water. No other event in recent memory has so tangibly and dramatically underscored the need to reduce our dependence on the burning of fossil fuels to drive our economic activity and reinforced our collective desire to move toward clean, renewable energy for the economy of the future. But in a season marked as well by the dramatic increase in storms, fires, rising temperatures, and floods, the G-20 emphasis on addressing not only the development of renewable energy sources but also the implementation of urgent steps to protect and expand our forests, manage our water, and safeguard our food sources is critical to our survival as a civilization. Finally, tying together its proposals for empowering people and protecting

Our future as a civilization and even as a species depends on our ability to come together to address critical global challenges and devise appropriate solutions.

our planet, the G-20 agenda calls on governments and societies to invest in Shaping New Frontiers. The pandemic has exposed the many challenges that the world confronts and has brought to the surface a broad array of political, economic, and social ailments that must be overcome if we are to achieve a broadly sustainable and positive outcome for all of our people. But it has also highlighted our progress in developing and implementing the technological advances that can form the foundations on which we build a better future. From cutting edge medical research, to communications, and energy generation, the world is on the cusp of an amazing new era of progress if we can seize it. The G-20 agenda rightfully lays out an ambitious set of goals that will help the world usher in that new age of sustained progress that will make the world a better place for all of us. In 1624, the English poet John Donne wrote that “no man is an island.” The G-20 itself, of course, is an implicit recognition of that fact. Our future as a civilization and even as a species depends on our ability to come together to address critical global challenges and devise appropriate solutions. Without anticipating the emergence of the Covid-19 pandemic, but nevertheless foreseeing it, this year’s G-20 agenda identifies a realistic roadmap for implementing appropriate measures to confront the challenges we are currently facing. For the Middle East as a region, today’s crisis is also an opportunity to rethink the way governments and societies can cooperate in overcoming shared challenges. Many of these challenges are beyond the capacity of individual countries to solve. Thus, developing regional public health institutions, regional approaches to climate and environmental challenges, and regional cooperative mechanisms to manage the fallout from natural and man-made disasters can enhance the ability of individual governments to respond effectively and reduce the collective impact of these predictable events. The response to the pandemic has given rise to the hope that this, too, will be part of our post-pandemic recovery plan. ◆ 27

G L O B A L B R I E F I N G R E P O RT A RT I F I C I A L I N T E L L I G E N C E G 2 0 _ F E AT U R E

The Case for a New Glocalism, Powered by AI Be it space-traveling, political debate, energy production or our century-old passion for the artsâ&#x20AC;&#x201D;our newly created glocalism provides an idealistic but achievable vision of the world in a few years. Technologies such as AI can help, but a variety of ingredients will make the right mix for this new recipe for a less vulnerable global society. By Shalini Trefzer and Luca Flurin Brunner

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Pre-2020 common sense: “There is no way we can shut down these factories.” “Living without air travel in the 21st century? Impossible!” “Seriously? If we shut all these things down, we may as well just turn off most of the global economic engines and go home!” In the past few months, this last exclamation has become more of a reality than a doomsday scenario. The COVID-19 pandemic has blown every one of these nuggets of conventional wisdom to smithereens. As terrible a toll as the pandemic has exacted from nearly every country and community by now, it has also brought about an opening of new vistas and a vision of how things could be in the future, in ways we never imagined were possible. If you believe in miracles—or at least in the power of changing the world—we invite you to join us on a journey that is at the very beginning of unfurling in the minds of millions around the world. Walk with us as we imagine an optimistic vision for a globalized world that values inclusion and strong communities, looking out for the world and for one another. In the world as it was, interconnectivity was a necessary condition for globalization.

Unfortunately, left unchecked, that interconnectivity, which has brought so many together, has also led to an unprecedented vulnerability to economical, societal, and ecological domino effects (as Bartol & Coden stated in 2017). However controversial its spread has been, most business and community leaders are calling for globalization in a new shape; not a roll-back of the planet to pre-global conditions. Our notion of globalization aims to be even more people-centered, supported and skyrocketed by emerging technologies such as artificial intelligence (AI). At the same time, every one of us read (or perhaps even experienced first-hand) with horror the drama of life and death as it exploded and played out in and among communities. Globalization simply could not replace the local hospital, the community kitchen, the teachers who had to rapidly shift into digital education mode, the maintenance and critical service personnel who make the local worlds inside the big globe, go around. Those communities who invested in their infrastructure, those societies which responded well with the right measures, fared far better and their people endured less suffering than those that did or could not. After COVID-19, it’s a safe bet to say that no one who lived in a community which was better prepared to take care of them is going to argue against the value of building local expertise and resilience.

Hence, we call our proposal for a new, more sustainable global narrative “the new Glocalism.” As we envision it, Glocalism in its perfect form is the inherent interdependence of highfunctioning local economies and societies on the micro level, and a richly interconnected globalized world on the macro level. In a nutshell, we believe in the power of Thinking Globally and Acting Locally. It seems that communities are in the best position to ignite this fire, and technologies like AI will play a major role in fueling it as it takes shape. And, yes, we think the time is right to leave apocalyptic scenarios in the dust and pursue this dream. Reinforced by the COVID-19 pandemic and a world suffering from many other tribulations, such as the wars in Syria and Yemen, or the global financial crisis in 2008, populists all over the world are trying to pull their old romanticized nationalist narratives out of the mothballs. Politicians like Hungary’s Prime Minister Viktor Orbán try to push nationalism and autocracy under the guise of protecting public health. This is the wrong trajectory. As Canadian Prime Minister, Justin Trudeau, framed it, “withdrawing support from globalization is taking us in the wrong direction.” COVID-19 has shown us that the same globalization that made it possible to spread a pandemic also made it possible for humans to collaborate to find a cure in ways they otherwise could not have. → 29

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For years, systems thinkers around the world have been calling upon us to understand the interconnectedness of our choices and their outcomes to the natural world, which surrounds and nourishes us.

→ If we want to build bridges and not walls, our mindset should start shifting towards creating resilience and effective systems of checks and balances. Can technologies such AI help us do this? How?

The Necessity of “Systems Thinking” and Shared Data We have built our new glocalist vision on the foundation of three key assumptions: 1. When it comes to technological innovations—at least the machine learning that drives most of today’s AI—depends on the quality of the underlying data. There is much benefit that humanity can derive from sharing key data for the success of technology as a common resource. Our privacy debates have gotten increasingly stuck in a deadlock. To those of you who might say, “you want me to share my gold?” our humble response is, “some of it, yes.” Well done on recognizing that data is the new gold, but we need to finally make this gold a public good and start collaboratively thinking about its safe usage. A glance at Estonia’s public data system is worth a read in this context. 2. Dialogue—and eventually consensus around checks and balances—is critical if we are going to have a world where the riches of globalization benefit communities everywhere. We cannot think in bits and pieces any more, we must all become adept at recognizing interconnections and the bigger picture. Interconnectivity needs appropriate regulation, but more importantly awareness and preparedness for system failures or unforeseen events. 3. The way to reliably achieve both 1) and 2) is by making “systems thinking” GROUPOFNATIONS.COM

a mandatory subject in schools all over the world. A new common goal for our precious, but often quarreling multilateral organizations. This corresponds to the UN’s SDG 4 (Quality Education). We mentioned AI as one of these disruptive, yet promising, forces of our proposed new glocalism. Let us examine, with some examples, how AI can support the vision we have imagined, across humanity, for all societies, enabling and transforming healthcare, travel, energy, art, and even off-planet travel. For years, systems thinkers around the world have been calling upon us to understand the interconnectedness of our choices and their outcomes to the natural world, which surrounds and nourishes us. 2020 started off with the COVID-19 bang, which continues to foment and torment nearly the entire human world. Every aspect of life, from the rhythms of community to the global supply chain of materials and finished goods, to intergenerational interaction, has been turned on its head; already existing crises have become even more complex. AI in the Service of Humanity Yet, the pandemic has made seemingly impossible things happen. The skies over world metropolises such as New Delhi, Jakarta, Tokyo, and New York City sparkle blue like in pre-industrial times. Wild animals are roaming parks and places they would never otherwise dare to enter. City noises are a thing of the past (except the sirens). The night sky is peppered with sparkly stars. Never before has the interconnectedness of the planet been on display as it is now. These are unprecedented times and they’re proving to us that not everything we take for granted is so, that we must

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put humanity’s collective will and creativity to use to build resilience at the community level. In our global world, it’s becoming increasingly clear that we are only as safe, or as healthy, or as sustainably prosperous as our weakest and most vulnerable. Can AI help? We think yes. What if we used AI to understand better how to: 1. Protect industries by distributing their supply chains around the world and at the same time, building manufacturing strength locally. 2. Enable physicians and researchers to share data and research outcomes and at the same time, invest into robust hospital infrastructure and teaching programs at the country-level. 3. Create common-property data sets to power extremely intelligent global forecasting systems which can be deployed at the community level in times of threat from global events, pandemics, war or civil unrest. Every human is impacted by today’s technological shifts. Addressing this impact on the individual level is just as important as tackling it on the societal level. When it comes to AI, for a long time the dialogue has been around whether we should strive for the development of a sci-fi-like superhuman or cyborg. Or, should we restrict the further development towards artificial general intelligence and finally superintelligence. AI governance, legal boundaries, and stable AI ethical principles will be crucial to avoid irreversible damage for humanity, potentially caused by the evil use of AI or unintended consequences of it. In addition, we want to shed light on the huge potential of AI in the service of humanity. The tiring battle between tech enthusiasts and tech skeptics impedes our view of the countless opportunities. Augmenting, Not Replacing Human Intelligence First of all, it is important to understand that the goal of creating and strengthening AI-powered systems should not be a goal in itself. Moreover, we stand for an AI whose goal is

complementing and enhancing human intelligence rather than replacing it. A few great applied examples are: › Anticipating the risk and mitigating the aftermath of natural and human catastrophes using fast performing disaster prediction and resources allocation systems, such as a machine learning—driven map of water sources in crisis zones. › Creation of AI tools to efficiently fight the spread of fake news, demagoguery, and targeted misinformation. As elaborated by Marr (2020) artificial intelligence can be used to verify the truth of articles. Since the amount of content generated daily is too much for humans to effectively monitor, artificial intelligence offers a solution that makes it possible to unmask fake news and the distortion of facts. › Remote voting systems to keep democracy alive during lockdowns, such as the current one. Democratic institutions should never be silenced, freedom of expression should not be a “fair weather human right.” Luckily, several working groups, which emerged out of the numerous fully virtual “fight COVID-19” hackathons all over the world have already attended to this matter and started advising governments and other decision-making bodies. › A virtual “Stammtisch” app where interested people are matched by AI algorithms to other users in order to create new contacts and to fuel new inspirational thoughts, notably in times of physical distancing. › Re-imagining what is possible for the most vulnerable among us, as well as cities and governments from being able to deploy AI right at the edge. Safely and protecting the dignity and agency of the humans it serves. Many more so-called “AI for Good” use cases can be explored in this comprehensive analysis or by attending the AI for Good Summit in Geneva in fall 2020. We already briefly introduced you to the concept of common-property data. Now, let’s apply it to human health. If there is one major lesson the pandemic has taught us, it is that sometimes learning from one another can literally make the difference between life and

death. Our world, when we are not shuttered by a nanoscopic virus, is full of movement: of people, of goods, of services, of solutions, and of trouble as well. In such a world, we already have the means to use technology to bring increasing levels of care and health security to everyone on the planet. We ask ourselves, if an entire society is trained to be systems thinkers and problem solvers, what is possible for us in improving our healthcare? The sky does seem to be the limit. It is imperative that we share certain health and wellbeing data into a common pool that belongs to all humanity and can be made available to innovators and researchers, as well as governments and companies. This data pool will allow us to develop AI-inspired solutions faster with more effective outcomes, which can be deployed where needed in our communities and beyond. The first such “common pool data” examples are already out there, we just have to scale them up to a universal level. Obviously, this will require us to trust and communicate in ways beyond what we are currently used to, but what is the alternative? Not unveiling healthcare’s full potential? Be it space-traveling, political debate, energy production or our century-old passion for the arts—our newly created glocalism provides an idealistic but achievable vision of the world in a few years. Technologies such as AI can help, but a variety of ingredients will make the right mix for this new recipe for a less vulnerable global society. Let us embark on this journey together. ◆

About the author SHALINI TREFZER is a contributor to Diplomatic Courier and has a Bachelors in Environmental Resources Engineering. She has spent much of her career in managing productdevelopment programs in Technologyand Pharma. LUCA BRUNNER is Managing Director of CognitiveValley - The AI Movement, a Switzerland-based foundation on artificial intelligence and its implications. Luca is also Co-Head and Co-Founder of the global network of grassroots think tanks “Open Think Tank Network” and International Outreach Ambassador for the “Youth Café” in Kenya.

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Innovative 3-D Elevation Program Has Huge Economic Promise A Conversation with Siva Yam, President of U.S.-China Chamber of Commerce. By Paul Nash

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G L O B A L B R I E F I N G R E P O RT ECONOMY

Nearly a hundred years have past since U.S. President Franklin D. Roosevelt took office in 1933 and gave the American people what he called a “New Deal.” In addition to various financial reforms, FDR’s New Deal included a series of public works and infrastructure projects bigger than anything previously initiated in American history. The New Deal was designed to lift the nation out of the economic stagnation caused by the Great Depression. Today, after a major global financial crisis in 2008, followed by a destructive trade war with China, and a deadly pandemic, America once again finds itself in desperate need of a largescale economic stimulus initiative. Innovation can trigger new bouts

Innovation can trigger new bouts of secular growth— but it cannot be innovation that simply disrupts and destroys traditional industries.

of secular growth—but it cannot be innovation that simply disrupts and destroys traditional industries. It has to be innovation that spawns new industries while also helping traditional industries to grow and prosper.One promising innovation has been the development of accurate and reliable high-density geospatial elevation data gathered for threedimensional mapping. Acquired using Light-detection and ranging (LIDAR) technology, such elevation data can facilitate the planning of new telecommunications networks like 5G, and can help utility companies to improve all aspects of network asset management. It can also help governments and insurance companies to more accurately forecast property and casualty risk from natural disasters such as fires and flooding. And, it is expected to play a key role in the successful development of autonomous ground and air vehicles, providing critical terrain, path and elevation data used by their navigation systems. The federal government already recognizes the potential economic benefits of such data. In 2011, the U.S. Geological Survey (USGS), under the Department of the Interior, commissioned Dewberry, a professional engineering services firm, to document the national requirements for improved

elevation data and to estimate the benefits and costs of meeting these requirements. The result was an 800-page report titled “National Enhanced Elevation Assessment.” This report gave birth to USGS’s national 3-D Elevation Program (3DEP) to collect elevation data across the United States using LiDAR over an eight-year period. 3DEP is part of the broader National Geospatial Program (NGP), which aims to provide a foundation of digital geospatial data representing the topography, natural landscape, and manmade environment of the United States. Data available from this program is intended to help improve the decisionmaking and operational activities of governmental, non-governmental, and corporate entities. 3DEP was undertaken as a national program because high-quality 3-D elevation data is simply unaffordable if acquired only to meet a specific need in a specific area. Many industries, such as wind-power generation, require high-quality surface data over large areas to plan effectively. While conducting the program at the national level has clear cost benefits, the program’s biggest challenge appears to be its funding structure. The federal government pays only part of he cost of collecting data on any particular area. The remainder of funding must come from the state, county, or city on →

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ECONOMY

What the U.S. economy needs right now is this very type of national program to create jobs and stimulate the economy Christopher Payne, CEO of Veridaas

→ which data is being collected. Without that local funding, USGS cannot gather data on that area. 3DEP stipulates the collection of two points of elevation data per square meter. Dewberry noted that the total program would cost approximately $1 billion over an eight-year period, which is justified by the potential benefits of the data collected. Dewberry estimates that the data gathered will “have the potential to generate $1.2 billion to $13 billion in new economic benefits each year.” Since the Dewberry report, LIDAR technology has markedly improved. Companies like Denver-based VeriDaaS Corporation, which uses L3Harris’ proprietary Geiger-mode LiDAR system can now collect over 30 points of elevation data per square meter at less cost than the 2 points USGS required

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when the 3DEP program began. With the cost-benefit equation now so much more favorable and the United states poised to slip into another recession, why is the federal government not fully funding 3DEP as part of its proposed $2 trillion stimulus package? “What the U.S. economy needs right now is this very type of national program to create jobs and stimulate the economy,” says Christopher Payne, CEO of Veridaas. “It seems to me that it might be a good time for the federal government to consider fully funding this program, given the magnitude of its potential economic benefits.” “Now is the time for infrastructure investment that gets companies and people working towards true economic recovery and future growth,” he added. Michael Likosky, who heads the

Infrastructure practice at 32 Advisors, a strategy and investment firm in New York, wrote in a recent infrastructure update note on April 3, 2020, that the United States should “not be thinking about an infrastructure stimulus in the way we have up until now.” “Some in Congress are talking about new types of infrastructure,” he noted, and “we need more of this type of thinking.” Likosky, who has advised the U.S. Treasury, U.S. senators, governors, and mayors, added that “we need to think about infrastructure in the way we are thinking about our medical emergency, in the lexicon of civics.” ◆

About the author DR. PAUL NASH is a Toronto-based Correspondent and Editor at Diplomatic Courier magazine.

G L O B A L B R I E F I N G R E P O RT CHINA G 2 0 _ F E AT U R E

How Will the Coronavirus Change China’s Belt and Road Initiative? The COVID-19 pandemic has dramatically shifted the economic and geopolitical landscape for global emerging markets (EMs) ahead of the G20 this November and raises new questions about China’s role in international governance. By Nicholas Consonery and Evan Myers

The COVID-19

pandemic has dramatically shifted the economic and geopolitical landscape for global emerging markets (EMs) ahead of the G20 this November and raises new questions about China’s role in international governance. The outbreak, and subsequent actions by governments to slow its spread, have undermined 2020 growth outlooks around the world, accelerating underlying financial and political risks. Concerns are particularly acute for EM countries. In its April 2020 World Economic Outlook, the IMF forecast growth of -1.0% in 2020 for emerging and developing economies, down from its expectation for 4.4% at the start of the year. Within these countries, it GROUPOFNATIONS.COM

flagged Russia, Mexico, and South Africa as particularly vulnerable. The IMF cautioned that the slowdown in global activity this year would be “much worse than during the 2008–09 financial crisis.” This crisis is also materially different in another way: it comes in the wake of a step change in China’s role in the international financial architecture that has unfolded in recent years. The relative share of international financial risk borne by China is much higher now than during the global financial crisis, because of its successes in expanding debt financing under the Belt and Road Initiative (BRI) since 2013. The BRI is a government-led global development strategy intended to

improve China’s economic and political connectivity on a transcontinental scale. Personally championed by President Xi Jinping, the program involves the use of state banks and capital to fund infrastructure abroad, especially in emerging markets. It carries added political benefits for Beijing by developing partnerships with foreign governments in need of capital. In short, the BRI brings China’s sizable financial sector to bear on the developing world in order to enhance the country’s position on the international stage. Beijing has mobilized an impressive amount of capital to support BRI projects over the past 7 years. According to a 2019 World Bank study, Chinese

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While many observers point to BRI as a sign of China’s interest in a larger global role, the coronavirus presents a much more direct test of the country’s appetite for US-style leadership.

financial institutions have offered at least USD 575 billion in infrastructure financing under the program since 2013; other recent studies indicate this number might be the lower bound. But BRI projects have been characterized by a lack of transparency around project terms and minimal coordination with other international financial institutions (IFIs). Chinese banks also have tended

to give short thrift to sustainability considerations, an expected exercise for the IFIs. As a result, the exact size of the BRI is uncertain. But known outstanding debt owed to China under the program in 2017 surpassed the loan books of the IMF, World Bank and of all other 22 Paris Club governments combined. While China was able to use BRI to mobilize capital on a grand scale,

the project was relatively straightforward for Beijing. As the world’s largest exporter economy, China had excess financing capacity in the form of a massive foreign exchange reserve. And thanks to its state-owned financial institutions, Beijing could readily mobilize large amounts of capital. China certainly was pushing on an open door, given the need for infrastructure investment globally and particularly in its backyard in the Asia region. According to a 2017 Asian Development Bank report, EMs in Asia will need $1.7 trillion per year in infrastructure to sustain growth and tackle other key priorities like poverty relief and climate change. → 39

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→ While many observers point to BRI as a sign of China’s interest in a larger global role, the coronavirus presents a much more direct test of the country’s appetite for US-style leadership. In April and May private sector creditors represented by the Institute of International Finance agreed to collaborate with the Paris Club to put in place a framework to manage debt distress among lower-income countries. They did so in coordination with G-20, and China participated in this effort. As the world economy remains in low gear this year and public health situations worsen in EMs, global public pressure on China to put forward a more comprehensive debt relief plan for its BRI-participating partners will mount. China’s participation in the G-20 debt relief effort for low-income countries was also straightforward for Beijing. In 2019 the World Bank indicated that only 1% of the estimated USD 575 billion in total BRI financing flowed to low-income countries. Instead, the vast majority went to middle-income EMs, some with high needs to finance fiscal spending like Ukraine, Turkey, Malaysia, Thailand, and Indonesia. Long before the coronavirus outbreak, the World Bank had also already identified that nearly two-thirds of BRI-participating EMs faced “elevated debt vulnerabilities”—which it defined as debt above 50% of GDP or gross financing needs above 15% of GDP. GROUPOFNATIONS.COM

China’s participation in the G-20 debt relief effort for lowincome countries was also straightforward for Beijing. As current circumstances exacerbate risk factors, these vulnerabilities are more likely to surge. The risk for debt failure is particularly severe in the middle-income EMs most dependent on private capital and most integrated in global markets. In turn, their financial distress has the greatest potential for contagion. How will China respond to these risks? How will it behave as a creditor nation, and what will this mean for its future in global governance? Beijing faces real limitations on what it can do in the short-term. The current government will want to save scarce resources for meeting domestic economic needs at this period of uncertainty. And Beijing has also long-felt it is in its geopolitical benefit to manage episodes of debt distress bilaterally. Any bilateral debt relief from China may also lack transparency as in the past, making it harder to obtain broad private sector relief in the G-20 initiative. In sum, putting a comprehensive plan forward would require a shift in China’s strategic behavior.

Over the longer-term though, there is a potential silver lining. One of the most prominent points of criticism about the BRI is that Beijing has not prioritized rigorous debt sustainability reviews for host countries—leaving China open to accusations that it was engaged in “debt trap diplomacy:” a deliberate effort to saddle countries with liabilities they could not repay, in order to secure access to strategic assets abroad. Well before coronavirus, the Chinese government was already signaling that it intended to better incorporate sustainability considerations into its lending practices in response to these pressures. The second annual Belt and Road Forum in Beijing in April 2019 } featured a flurry of sustainabilityrelated discussions and developments, including China’s Ministry of Finance issuing a new debt sustainability framework (DSF) for BRI projects. The DSF laid out procedures and metrics for undertaking debt sustainability analysis including debt coverage ratios, macroeconomic projections, debt carrying capacity assessments, stress tests, and other considerations. It was a near-exact replica of the Joint World Bank-IMF Debt Sustainability Framework for Low Income Countries, which has been in place since 2005. The (perhaps virtual) G-20 summit in Riyadh this November, along with continued economic uncertainties around coronavirus both globally and within China, offers Beijing an opportunity to recalibrate its BRI program along the lines it promised last year. Putting real priority to sustainability considerations would not just to respond to these rhetorical pressures, but fundamentally make the BRI more durable and beneficial for both China and its partner countries moving forward. ◆ 1. https://voxeu.org/article/china-s-overseas lending-and-looming-developing-country debt-crisis 2. https://voxeu.org/article/china-s-overseas lending-and-looming-developing-country debt-crisis

About the author NICHOLAS CONSONERY is the director of global markets research at Eurasia Group. EVAN MYERS is an intern with the firm.

The global Covid-19 pandemic started as a health crisis, but politics will determine the outcome.

Eurasia Group: at the core of geopolitics Today’s geopolitical environment is increasingly complex, with risks coming at an accelerated pace as the world order undergoes significant change. It has never been more important for business decision-makers and investors to incorporate political risk into their strategies to spot the opportunities and manage the risks that politics creates—and to lead their organizations through turbulent times. Our services include a comprehensive suite of geopolitics solutions for clients. We offer unique and integrated products and services that combine best-in-class political risk advisory with the tools required for success in today’s politically charged global economy. Eurasia Group’s dynamic partnerships with leading firms in the investment, consulting, and broader professional services space complement our politics-first capabilities and expand our suite of client solutions.

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Accountants: A Modernized Role in a Post-COVID-19 Economy By Gigi Dawe

As business goes, so goes accounting. Keeping pace during these troubled times is challenging, but it is not a challenge we can afford to lose. According to the S&P Global Market Intelligence, the COVID-19 pandemic has accelerated transition to the global information economy by five years1. Economies the world over are urgently looking for ways to make that transition; economic recovery and continued prosperity depend on it. For their part, investors and corporate leaders recognize a need to reimagine the role of business in this COVIDinfluenced economy. Alongside this, financial performance is no longer the sole determinant of business success. New technologies; changing societal attitudes towards inclusion and sustainability; growing distrust of information and institutions; and evolving business models are reshaping what constitutes value in today’s world. Non-traditional sources of value are rapidly emerging. Corporate assets are increasingly intangible (brands, relationships GROUPOFNATIONS.COM

and data), and/or non-financial (social and environmental). Businesses are having to adapt to this by increasingly making decisions based on real-time rather than historical information – dramatically impacting the traditional role of accounting. Accountants must embrace new ways of creating and measuring value and embrace new technologies and methods that allow us to harness the power of information in this datadriven world. Fortunately, the Canadian accounting profession is exploring ways to adapt to the evolving landscape – to unleash the power of the profession to serve the evolving needs of business and society. Businesses have always depended on accountants to inform their most significant decisions. As investors and leaders rethink the role of business in our world today, accountants must innovate to align the power of our profession with that future in mind. Eighteen months before COVID-19

turned up the heat on the move to the digital economy, Chartered Professional Accountants of Canada (CPA Canada) had launched an ambitious multi-stakeholder consultation process that challenged the status quo and considered what implications arising from a rapidly changing environment could mean for the accounting profession locally and globally. The factors that we believe are impacting the profession include: › a swiftly evolving digital environment led by the overwhelming pervasiveness of technological change › the speed and scope of digitization, including the impact of new technologies such as AI and blockchain › changes in the needs of users and the move to real-time dat in making decisions › the exponential increase in data combined with a lack of standards related to data governance and integrity

› the increasing importance of intangible assets in driving organizational value › the need for trust and ethics in the information age as people and organizations struggle to understand what information can be relied on The foundational accounting competencies of careful analysis and interpretation of financial data for evidence-based decision making, professional judgement and skepticism, integrity and standard setting offer a strong basis to add value in entirely new ways. We recognize however, that reimagining the profession requires reinvention; pivoting from its traditional basis of historical reporting to providing relevant insights that will drive new opportunities to create value for all stakeholders. Measuring value beyond financials In an economy based on value that is measured in intangibles, accountants are key to creating and delivering organizational value. Building on the profession’s foundation in measurement, accountants can be prepared to make a shift from a historical transaction-based focus on performance to an orientation that supports organizational decision-making and drives future sustainable value creation. Given that businesses assets are increasingly intangible, they are defined as ‘hard to measure’. But due to how important these assets are to our economy and society; accountants have a real opportunity – and maybe a duty to build models and frameworks capable of recognizing and assessing these new ‘non-traditional’ sources of value. By developing new models to measure the value of assets, accountants can help businesses perform. Using data to make decisions As businesses are faced with an increasing amount of financial and non-financial data the ability to transform that data into digital intelligence is crucial to remaining competitive in the marketplace. By

leveraging its core attributes of trust and integrity, and its responsibility to act in the public interest, accountants can provide both the rules for data governance and the assurance that decisions are being made based on the value this data brings. Providing assurance in a digital world of nonfinancial information will be essential to establishing trust in a society where it is rapidly dissipating. Accountants are up to the challenge The objective of embracing change challenges accountants to transition from being keepers of the finances to becoming proactive contributors to the real-time evaluation of a broader understanding of performance. Our traditional mindset of looking back in time to report on what has already occurred must be reoriented to a real-time and forward-looking point of view. New and emerging technologies will combine with the digitization of corporate information and allow real-time automated reporting. This will support muc more sophisticated modelling of what will occur in the future. These changes will require the coordination of many players within the accounting circle, including governments, standard setters, regulators, professional service firms, educators, academics, technology providers, and professional accounting bodies locally and globally. With coordinated effort, the profession can respond and add value to the multifaceted changes business and society are facing. The challenges facing the global environment are unprecedented, but the process of reimagining accounting demonstrated that the profession is well-positioned to adapt to the information age and the new realities of a digital era. Through an unwavering vision and commitment to tackling the changes discussed in this article, the profession has an opportunity to impact the advancement of the interests of society and the public good, and to play a part as leaders of positive change around the world. ◆ 1. https://www.spglobal.com/ marketintelligence/en/topics/coronavirus

In an economy based on value that is measured in intangibles, accountants are key to creating and delivering organizational value.

About the author GIGI DAWE leads the Corporate Oversight and Governance department at the Chartered Professional Accountants of Canada (CPA Canada). As such, she oversees CPA Canada’s development of influential, thought leading resources and events that improve board performance. Gigi launched the governance discipline at CPA Canada to facilitate enhanced board and executive response to market demands. Recently she has been actively involved with CPA Canada’s initiative to reimagine the future of the accounting profession. Her history includes consulting in organizational development in a variety of industries. Gigi is a board member of Youthdale Treatment Centres. She also co-chairs the International Corporate Governance Network’s Corporate Board Governance Committee and sits on the advisory board of Simon Fraser University’s Next Generation Governance Project and Advisory Committee of the Canada Climate Law Initiative. She is a past board member of Active Healthy Kids Canada and Family Daycare Services Toronto. Gigi is a member of the National Association of Corporate Directors, the Institute of Corporate Directors, and the International Corporate Governance Network. Gigi obtained a Master of Laws at Osgoode Hall Law School. She teaches Corporate Responsibility and Ethics in the Masters of Financial Accountability program at York University.

G L O B A L B R I E F I N G R E P O RT NAACP G 2 0 _ F E AT U R E

Can COVID-19 Help Jettison Americaâ&#x20AC;&#x2122;s Denial of Racism? Could this pandemic help us, as a whole society, to finally see and understand the dire consequences and overwhelming implications of racism? By Gail C. Christopher

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In American culture, denial is one of our most persistent, yet tacit, defense mechanisms, as it allows society to ignore aspects of reality, regardless of the scale. The denial paves a path for some to bestow more human value upon those they favor, thereby leading to the institutionalization and structuring of racism and associated inequity across the nation. Today, vast disparities in death and infections from the COVID-19 virus among Black people and in communities of color in the United States may make it impossible logically to comprehend any denials of the painful reality caused by centuries of collective adherence to racial hierarchy as a societal pillar and construct. Could this pandemic help us, as a whole society, to finally see and understand the dire consequences and overwhelming implications of racism I have observed in my decades of clinical practice as a holistic health care provider? Look at the devastation. The Centers for Disease Control and Prevention has found that a disproportionate number of COVID-19 hospitalized patients are African Americans, and that death rates among the Black/African American population (92.3 deaths per 100,000 population) and Hispanic/ LatinX (74.3) are substantially higher than that of the White (45.2) or Asian (34.5) populations. Further, counties with significant Black populations account for nearly 60 percent of recorded deaths and 50 percent of confirmed COVID-19 cases. When Milwaukee County in Wisconsin had 945 COVID-19 cases, nearly half the cases and 81 percent of the 27 deaths were African Americans, yet the county is only 26 percent Black. The disproportion in deaths and cases among populations of color is happening in urban and rural communities across the country. Hopefully, our nationâ&#x20AC;&#x2122;s people can use the shocking pain and suffering from this pandemic to find the courage to unite and move forward together, as our shattered society seeks to right itself, and move beyond the denial that has shaped our present. Government, corporate, civic, spiritual and

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Leaders must begin to help everyone recognize that longlasting injustices and harm to some is injurious to all, because we are interdependent and interconnected. community leadership during and post-COVID-19 must be committed to supporting collective healing and societal transformation. America’s future well-being is at stake. Leaders must begin to help everyone recognize that long-lasting injustices and harm to some is injurious to all, because we are interdependent and interconnected. Even more so as we witness the coronavirus virus ravaging White, Black and Brown communities, forcing us all to shelter or risk becoming casualties of the devastation. Propelled by monied, eager consumers, our consumption-driven economy mirrors our dependence upon one another. Milk not purchased is milk lost. Empty tables equal closed restaurants and unemployed workers. COVID-19 is moving us beyond denial by helping us realize the fragility in our economic systems. The very air we breathe — inhale and exhale — or “shed” in today’s viral parlance, makes us interconnected and interdependent as well. The molecules of this virus seem to adhere better to particulate matter in the polluted air of densely populated spaces. This helps to make accountability for air quality standards everyone’s concern. To be clear, if air puts more people at risk of illness and therefore death, the burden on the nation’s bewildered public health and medical infrastructure is a shared burden. Cruise ships, airplanes, crowded streets and buildings illustrate the interconnectedness of our vulnerable society. COVID-19 is moving us beyond denial by helping us realize how the air we breathe connects us. Our human need for help is another stark and humbling reminder of our interdependence. → 45

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Fears of being helpless in a violently divided future with total economic collapse can rush in like a back draft in a fire. Or we can see opportunity in the implications of the stark reality of now. → Who is here to provide help and care in our homes, hospitals, institutions and essential businesses? Can we pay, protect, and care for them as they care for us? These are among the many challenges we face. Will COVID-19 catapult us to new levels of humanity, compassion and capacity for policies and practices that honor our interconnected, equal worth as human beings? Or will most merely survive and continue to wear the mask of perpetual denial of racial hierarchy as a defining American ideology? The choice is ours. The time is now. If far too many Americans have been living in a state of denial about the vast racial and economic inequities in our society, seeing the stark reality of these injustices during this pandemic is only a baby step and potentially very fleeting. Denial is a stubbornly comfortable psychological tool. Ask any recovering addict. If a critical mass of people is now seeing and recognizing our structured inequities— some for the first time— the next vital step involves acknowledging the consequences of these inequities. COVID-19 is helping with this phase, too. Here are glimpses of consequences and disruptions created by this pandemic that demonstrate our web of mutual dependence: GROUPOFNATIONS.COM

“What, no meat in my grocery store because the meat-packing plant shuttered after hundreds of workers became infected with the coronavirus because they had no personal protective equipment?” “My toddler cannot go to her childcare center because after six weeks of closure and no cash flow, it had to go out of business. The owner did not succeed in securing a small business loan through the Payroll Protection Program, even as publicly traded companies received millions. There are no other childcare options in my neighborhood because it is a ‘COVID-19 hot spot.’” “I cannot get my prescription for high-blood-pressure medication refilled to cover weeks of sheltering in place because my insurance won’t pay for the increased amount. I cannot pay ut of pocket because my income is reduced.” If and when people can move through the phases of denial — facing the facts and the consequences of both longstanding unjust inequities and our mutual interdependence, as COVID-19 compels us to do, then the frightening next phase — facing the implications — could be difficult.

Fears of being helpless in a violently divided future with total economic collapse can rush in like a back draft in a fire. Or we can see opportunity in the implications of the stark reality of now. We can feel the needless suffering of so many and see ourselves and loved ones in their faces. Empathy can move us to exercise our civic agency in this democracy and work for policies and new structures of equity and fairness. Moving through the comfort of denial to this degree of resilient agency and action requires the energy of determination, fueled by positive emotion. Yes, feelings comprise the last rung on the ladder of denial. Feelings can either paralyze us and send us scurrying back to our original place of denial (now even more firmly entrenched); or new feelings can move us to purposeful action. In clinical practice I learned that people move through four stages of denial — fact, consequences, implications and feelings — and truly change their behaviors and actions only when they believe they have the resources required for successfully coping and being resilient. Most often, these needed resources are human. People need to know they are valued, worthy and cared for. Love replaces fear. The societal prescription for this nation during and post-COVID-19 is first a relational one— a transformation in how we see, perceive and value people: all people. This is a collective change of heart that can generate new government and corporate priorities and practices, as well as new media and communications imperatives, as well as new health system priorities and expenditures. We can, together, stop denying the intertwined vulnerability caused by centuries of ignoring the full humanity we share and begin to build a new social contract, unlearning and replacing the existing social design whose legacy is explicit and implicit human-value hierarchy. ◆ About the author GAIL C. CHRISTOPHER is the executive director of the National Collaborative for Health Equity, senior scholar at the Center for Advancement of Well-Being at George Mason University, founder of the RxRacial Healing movement, and former senior adviser and vice president of the W. K. Kellogg Foundation.

“Riyadh Airports” Company:

Taking Saudi Arabia a Step Closer to Future Readiness

Aviation is one of the most global of all industries by nature with the capability of transforming a country into an economic powerhouse. As a mainstay sector of economy, it is a key component of business, connecting people, communities, and cultures across continents. The sustain this industry through robust measures, strategies, investments, and initiatives. Considered one of most important companies managing and operating airports in Saudi Arabia, “Riyadh Airports” Company was established as part of the privatization program of the country’s aviation sector. The Company manages and operates King Khalid International Airport (KKIA) in the Saudi capital Riyadh, and is currently working on developing the infrastructure of KKIA by expanding its facilities and introducing new services. “Riyadh Airports” Company strives to provide service that is par excellence to its partners and stakeholders locally, regionally, and globally. To meet this end, “Riyadh Airports” is committed to ensuring its pleasant, safe, and efﬁcient services elevate customer experience to new levels of satisfaction. Since the G20 Summit will be hosted virtually this year, KKIA will serve as a fruitful example of the innovative and results oriented approach adopted by the Kingdom in its mission to meet its national agenda. The Kingdom plays a crucial role in stabilizing the regional and global economy. Taking one step forward, the Saudi Vision 2030 closely aligns with the core G20 objectives of macroeconomic stability, sustainable development, empowerment of women, enhanced human capital, and increased ﬂow of trade and investment.

To ensure the Kingdom keeps its pace in implementing the directives and initiatives of Vision 2030, “Riyadh Airports” has been investing heavily towards expansion and strengthening its infrastructure. The company is keen to excel in three focus areas: innovation, safety, and collaboration. Major refinements are in progress that include linking interior concept finishes, color schemes, and unparalleled design elements that reflect the culture, history, and the multiple communities that call the Kingdom their home. The pace of development to realize this vision is in full swing. “Riyadh Airports” wants to ensure that the arrivals and departures of people traveling to and from the KSA are seamless, smooth, and of utmost comfort. Since the airport is the first touchpoint providing a view into the future readiness of the Kingdom, it also serves as an ideal platform to showcase the leadership’s vision of investments through solid enhancements. In addition, it will demonstrate how the Kingdom plans to bring the world closer to the country through business and tourism. According to IATA, the aviation sector of Saudi Arabia contributes USD 20.2 billion towards its GDP. With the enhancements, advancements, and investments by “Riyadh Airports”, a future wherein the country’s airports support the Kingdom to turn into an economic powerhouse and consolidate its foothold at the forefront of global economic growth is not far away.

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Protest, Race and the American Future The protests following the murder by police of George Floyd and the devastating impact of COVID-19 on Black and Brown communities push forward our thinking about new possibilities for an American future built around commitment to the ideas and practices of justice for all. By Courtland Cox and Charles â&#x20AC;&#x153;Charlieâ&#x20AC;? Cobb

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The protests following the murder by police of George Floyd and the devastating impact of COVID-19 on Black and Brown communities push forward our thinking about new possibilities for an American future built around commitment to the ideas and practices of justice for all. We in the Black community have experienced the American justice system in a variety of ways. Since the days of slavery we have been murdered by police who are rarely punished, railroaded into prisons and seized and killed by mobs and vigilantes protected by local and state governments, especially when white women have falsely claimed sexual assault, or as the old expression goes, when accused of having engaged in “reckless eyeballing.” The issues raised by the current protests are hardly new. #Black Lives Matter (BLM) itself was formed in 2013 following the acquittal of George Zimmerman, who fatally shot 17-yearold Trayvon Martin for no apparent reason other than he was young and Black and “out of place,” which to Zimmerman meant he was suspicious and dangerous. BLM, Dream Defenders, BYP 100 and other groups that constituted the Movement for Black Lives have protested this and other such murders in numerous communities since then. We could fill up the rest of the pages here with a listing of Black men and women killed by trigger-happy police or because of vigilante violence. Clearly, earlier protests against police violence have done little to eradicate such practices, but some important differences are worth noting and applauding. Protesters are much more diverse — Black, White, Latinx, Asian. And unexpectedly, protest has been worldwide. Smartphone technology has played a major role in gaining outraged attention on police violence and violations of civil rights, making it impossible to ignore the issue and highlighting the kind of protective lying far too often engaged in by establishment authorities. But while technology has captured the injustice of policing, it has taken a pandemic to understand the underlying conditions that have produced this rage.

Clearly, earlier protests against police violence have done little to eradicate such practices, but some important differences are worth noting and applauding. Ironically, the inequities plaguing our society today are more visible because of the impact of COVID-19 on Black and Brown communities. The virus has laid bare the fact that African Americans continue to experience the highest overall morbidity and the most widespread occurrence of disproportionate deaths. American Public Media (APM) Research Lab reports that the Black mortality rate across the U.S. has never fallen below twice that of all other groups, “revealing a durable pattern of disproportionality.” If they had died of COVID-19 at the same rate as white Americans, reports APM, at least 14,400 Black Americans, 1,200 Latino Americans and 200 indigenous Americans would still be alive. We mourn George Floyd, Trayvon Martin, and the thousands of others killed by police, but the startling approximately 30,000 deaths of Black Americans in the last 120 days reflect a larger, more systemic problem. Not only have these communities been disproportionately devastated by this virus, but this impact highlights failures in health care and education which, like police violence, have been matters of great inattention by much of the nation’s political leadership. Today, during the COVID-19 pandemic, we have seen the president of the United States issuing orders forcing workers in the meat processing plants to go back to work. The processing plants, in order to maintain profits, have not refitted their plants to protect the workers from the coronavirus, knowing that many of their workers will become ill or die. → 49

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→ The so-called American justice system is totally blind to the profitsover-people decision by big business to send workers to their deaths. While they are blind to these criminal acts of the ruling class, they pay laser-like attention to Eric Garner’s selling loose cigarettes, Michael Brown allegedly taking one or two items from a store, and many other petty actions that amount to little or nothing in terms of the tragic consequences they caused ordinary citizens. In addition to focusing on the inconsequential, the purpose of the police is also to clear the poor from the sight of the wealthy. Therefore, the homeless, the mentally ill, and those hustling to make a dollar just to survive are treated harshly and inhumanely. As we make the call to end economic exploitation — which we define as owners of land, factories and capital who pay the labor that they use little or no wages — defended by sometimesbrutal police tactics, we have to look beyond the police budgets for the housing requirements, social service needs, food necessities, health care and education required in Black and Brown communities. The trillions of dollars necessary will have to come from the taxes paid to the state, local and federal governments. The problem is not a lack of resources, but how those resources are allocated and who benefits from them. The federal government spends over $20 billion annually to support the big agribusiness companies. In addition, companies such as Alcoa, Intel, General Motors, Ford, Chrysler, Shell and Nike have received billions of dollars in federal subsidies. It should also be noted that tech companies such as Tesla, Google, Apple and Facebook have received millions of dollars in state and federal subsidies. All of these companies have trillions of dollars in market capitalization and are highly profitable. The support needed to ensure that the needs of all Americans are met is not one of money, but one of will. The will to support Wall Street, big banks and big business have been quite evident during the COVID-19 pandemic. Of the nearly $6 trillion expended over the last four months, almost $5 trillion of it has been used to support the capital GROUPOFNATIONS.COM

markets and big business, with little or no accountability. But the lack of political will to make the necessary investments in Black and Brown communities is also evident in the way society approaches policing. The usual solutions suggested with regard to police violence: body cameras, police sensitivity/diversity training, community police boards, and other proposed resolutions, while worthwhile, do little to address the problem. The assumptions that govern the criminal justice system lie deep in the U.S. culture of white supremacy and privilege. For example, the first instinct of many police departments is to protect their own no matter how egregious and unjust the actions of any particular officer. This is reminiscent of gang culture. Often the police close rank punishing any who cross that “blue line.” We live in a society in which white supremacy and privilege drive many of the institutions that affect our lives. This is cultural as well as political. The base assumption of the American justice system is that rich people can

do no wrong and the role of the police is to protect them and their property. The other base assumption is that most criminality exists in poor communities and in the urban areas; that has generally meant Black and Brown communities. This is not written into law but certainly exists in practice. The demonstrations have been successful in bringing to the attention of the American public the violence used by police to maintain order. The demonstrations have been impressive, both for their diversity and for the variety of locations where they occurred: in large urban cities, suburban areas, rural communities and in small towns across the country. We’ve even seen images of white people protesting alone in white communities — standing, or in wheelchairs and on walkers — with signs proclaiming, “Black Lives Matter” or “No Justice No Peace.” The size and diversity of these demonstrations were not accidental or spontaneous. These demonstrations were the product of years of resistance

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The work of the Civil Rights Movement to resist white supremacy has always involved the white community, first because of the need for allies in the struggle for human and civil rights.

by the Black community to the pervasive system of Jim Crow that was developed to protect and serve white supremacy. Today’s demonstrations had their beginnings in the resistance of Black soldiers returning from World War I. In a 2018 article featured on Time.com, Brandeis University Professor Chad Williams noted that, African Americans “had labored and shed blood for democracy abroad and now expected full democracy at home.” Williams wrote that, “The war had changed African Americans and they remained determined to make democracy in the United States a reality.” Williams quoted a May 1919 editorial from The Crisis magazine founder W.E.B. DuBois, titled “Returning Soldiers”:

“We return. We return from fighting. We return fighting. Make way for democracy. We saved it in France, and by the Great Jehovah, we will save it in the United States of America, or know the reason why.”

For most of the 20th century, he resistance of the African American community to Jim Crow was spearheaded by the NAACP, particularly its local branches. It is not often recognized how connected the work of the Student Nonviolent Coordinating Committee (SNCC) was to the groundwork laid by the NAACP. Brown v. Board of Education which, despite being imperfectly implemented, nonetheless resulted in ending school segregation as the law of the land; the lynching of Emmett Till; the successful 1955 Montgomery Bus Boycott, the first mass movement of the modern Civil Rights Movement; the courage of the Little Rock Nine — all helped create the climate that led 17- and 21-year-olds to challenge the system of segregation with sit-ins and Freedom Rides. The legendary civil rights strategist Ella Baker, who was the NAACP director of branches in the 1940s and later executive director of the Southern Christian Leadership Conference (SCLC), provided the guidance and organizing philosophy that grounded SNCC’s grassroots work in the Black Belt. She plugged SNCC into the network of NAACP branches she had helped organize – as well as her many other contacts — enabling us to work effectively on voter registration in Mississippi, Alabama and elsewhere in the South. As a result of the combined work of the NAACP, SNCC, the Congress of Racial Equality (CORE), and SCLC, today there are a number of Black mayors, legislators and Black people on juries throughout the South. Many have commented on the diversity of protesters, taking special note of the involvement of white people. This, too, is not new. The work of the Civil Rights Movement to resist white supremacy has always involved the white community, first because of the need for allies in the struggle for human and civil rights. Certainly, Ms. Baker’s contacts with white progressives, such as Anne and Carl Braden of the Southern Conference Educational Fund (SCEF) and Myles and Zilphia Horton at Highlander Center, were important to SNCC’s work. The white community was also involved in the 1964 Mississippi Summer Project, participated in large numbers in the

1965 Selma to Montgomery March, and, of course, most recently, in the Movement for Black Lives demonstrations. Second, and equally important, civil and human rights issues are important to others besides Black and Brown communities. Therefore, there should be no surprise as to the size, scope and scale of these diverse demonstrations. And, as is often pointed out, these demonstrations have been greatly aided by the ability to document the atrocities on smartphones. However, we need to note that while hundreds of thousands of people are in the streets for George Floyd, Breonna Taylor and Ahmaud Arbery, Black people are also dying at twice their percentage of the population from COVID-19 because of the underlying conditions caused by economic exploitation. Even as legislation will be passed in the Congress and in state legislatures to ban chokeholds, noknock entry, and the harassment of Black people for inconsequential activities, millions of African Americans, poor whites, Latinx, Native Americans and Asians will be lining up for food, be evicted from their homes, and will die because of lack of health care and because they continue to receive an education that does not prepare them for the 21st century information economy. In short, when we say there is a systemic problem, we mean that we live and are governed by a system that fails millions. We cannot run away from the enormity of this fact. Even as we tinker with various reforms, we should keep in mind that real change — the kind that leads to a better society — requires tackling these hard realities. ◆

About the authors COURTLAND COX is a SNCC (Student Nonviolent Coordinating Committee) veteran and chair of the SNCC Legacy Project (SLP). He is a former director of the Minority Business Development Agency (MBDA) at the U.S. Department of Commerce. CHARLES E. COBB JR. is a journalist, author and a SNCC veteran and SLP board member. His latest book is This Nonviolent Stuff’ll Get You Killed—How Guns made the Civil Rights Movement Possible.

G L O B A L B R I E F I N G R E P O RT UN75 G 2 0 _ F E AT U R E

Build Back Better: The Future We Want, the UN We Need The United Nations turns 75 this year, at a time of immense challenge.

According to the UN Development Programme, the world is on track to experience its first decline in human development since 1990 – when the first Human Development Report was published – due to a ‘triple hit’ on health, income and education. Over 400,000 people have died of the virus, and health systems in many countries have been put under strain. Global per capita income is expected to fall by 4% this year. Around 94% of the word’s workers live in countries that have had workplace closure measures in place. Working hours are estimated to have declined by 10.7% this quarter, compared to 2019 – which is equivalent to 305 million full-time jobs. Young people have been particularly hard hit. Almost 77% of young workers were in informal jobs when the crisis hit, and more than one in six is thought to have stopped working since the onset of the crisis. Meanwhile, education closures have affected over 90% of the world’s students. If you factor in those who do not have internet access, the effective out-of-school rate is 60% for primary school-age children. The pandemic has exposed the fragility not only of our health systems, GROUPOFNATIONS.COM

but of all our institutions. At the same time, it has underscored how crucial it is for us to work together – across borders, sectors and generations. Yet, as the Secretary-General of the United Nations, Antonio Guterres, has said: “We have seen some solidarity, but very little unity, in our response to COVID-19.” The pandemic appears to be accelerating underlying rifts in geopolitics. Will we emerge from this crisis stronger and more united? Or more deeply divided? Born of a wartime alliance, the United Nations is no stranger to upheaval and political rivalries. Its founding represented the hopes of a war-weary generation that countries could work together to prevent future wars, and the factors that lead to them, such as poverty and human rights abuses. But it was also a pragmatic response by world leaders, who realized that cooperation and compromise were less costly than war. Multilateralism always has been an interplay of national and shared concerns. When governments have come together, the results have been lifechanging, with huge strides forward in education, and in tackling extreme poverty and hunger. Over the past 75

years, we have moved from a world in which a third of the population lived in non-self-governing territories and most women did not have equal voting rights to one that is freer by many measures. We have won great victories. The eradication of smallpox – spearheaded by the World Health Organization, with sustained political and financial support from the international community – alone has saved millions of lives. It remains the only infectious disease to have been wiped out. Yet progress has been uneven, and failures well-documented and tragic. And now, the hard-won gains of previous decades are under threat – from the pandemic, but also the underlying global trends it is exacerbating, from our inability to tackle the climate emergency, to entrenched inequalities, the impacts of new technologies and major shifts in our population. These challenges cannot be solved by any one country alone, no matter how big or powerful. The line between national and international interests is blurring. The pandemic has laid bare our dependencies. We are only as strong as the most vulnerable among us. We need international cooperation

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to galvanize action and to harness the opportunities the future holds, whether that’s recovering from COVID-19 or building a zero-carbon world. The past months have shown that major transformations can be achieved in short timeframe when political leadership is aligned with support from the public. Now is the time to end business. Now is the time to put into practice the commitment to future generations

We need international cooperation to galvanize action and to harness the opportunities the future holds, whether that’s recovering from COVID-19 or building a zerocarbon world.

that is central to the UN Charter, and to make progress on the UN we need for the future we want, as envisaged in the Sustainable Development Goals. That is the spirit in which the UN’s 75th anniversary was conceived: not as a celebration, but as a moment of reflection – and of listening to “we the peoples”. It is vital that the global public has a voice as decisions are taken that will have lasting consequences for the future of humanity.

In January, the UN launched its most ambitious exercise to date to gather public opinion and crowdsource solutions to the challenges we face, through a one-minute survey (www. un75.online) and through dialogues within and between communities. To date, over 170,000 people in 191 countries have completed the survey, and around 1000 dialogues are taking place all regions. The results so far show overwhelming support for multilateralism, with a clear uptick since the pandemic. The top priorities for recovery are: universal access to healthcare, strengthening solidarity between people and nations, and rethinking the global economy. Taking a longer view, the most popular answer by far is “more environmental protection”, with climate change seen as the defining trend shaping our future. “Less conflict” and “more respect for human rights” are second and third. When asked for solutions, greater involvement by stakeholders, particularly youth, civil society and cities in global decisionmaking are emerging as popular answers. The results will be presented to world leaders in September, when governments will adopt a declaration on the 75th anniversary. The declaration has great potential to serve as an inspiring vision for the future, and a message of hope to the global public. Ahead of that moment, we invite people from all walks of life to contribute their views. We continue to seek partners who can help us reach young people, marginalized communities, and those who may not typically engage with us, including our critics. We cannot afford to leave anyone behind. Now is the time to lift everyone up and build a better future for all. ◆

What we do now will have lasting consequences for humanity. Share your priorities for a better future. Have YOUR say at www.un75.online #UN75 #ShapingOurFuture 53

LSE GLOBAL POLICY LAB CONTENT 58

INTRODUCTION

You cannot solve a global pandemic with national policies

Piroska Nagy-Mohacsi

Baroness Minouche Shafik

62 Politicians can’t hide behind scientists forever – even in a pandemic Andrés Velasco and Sir Tim Besley 64 Nine ideas to strengthen our global firepower against COVID-19 Erik Berglof 66

How can emerging economies deal with the debt crisis? Insights from the LSE Maryam Forum Jintao Zhu and Ricardo Reis

68 The quiet revolution of emerging market central banks Piroska Nagy-Mohacsi 70 What are the smart COVID-19 containment options for developing countries? Adnan Q. Khan 72

A renewed chance to address Climate Change and the Ocean

The case for a COVID-19 carbon tax

Torsten Thiele

John van Reenen and Ralf Martin

76 The ECB’s pandemic emergency programme is huge – use it to support the green transition John Gordon

78 Message to World Leaders from LSE Maryam Forum Student Leaders Maryam Forum Student Leaders

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One Year On: Lessons Learnt and ‘New Normals’ in a Post-COVID World November 2020 Edition in conjunction with the G20 Summit under the Presidency of Saudi Arabia

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LSE GLOBAL POLICY LAB

Introduction One Year On: Lessons from COVID-19 and ‘New Normals’ for a Post-COVID World Piroska Nagy-Mohacsi Interim Director, Institute of Global Affairs, London School of Economics and Political Science November 2020 Edition in conjunction with the G20 Summit under the Presidency of Saudi Arabia. The year 2020 may well be remembered as the biggest challenge humanity has faced since the Second World War. Indeed, in many respects it has felt like a war: unprecedented simultaneous health, economic shocks hitting every country and many lives lost. Economies and societies put on freeze in waves of lockdowns amidst what has been aptly called “radical uncertainty”. Families separated. Chaos in initial policy responses in many places and political chaos still in some. The virus is under control or even eradicated in some countries, while in others it is still spreading dangerously fast. Yet 2020 will also be remembered as transformational. Unprecedented global scientific cooperation has brought a vaccine within reach in less than a year from when the COVID-19 genome was posted on the internet in January 2020. Under lockdowns, digital technologies, while already extensively in use, have allowed an accelerated shift in the way we work, study, shop, interact and enjoy leisure. While policy responses have varied by government, by and large, the first battle to avoid a global economic meltdown has been won. The credit goes to fiscal and monetary authorities that have stepped out of their comfort zone to deliver unprecedented support to Wall Street and Main Street in both advanced, and for the first time, in most emerging markets. Risks still remain high and there is still much to be done to win the war. However, we can now draw on early evidence of what works and what does not in a host of areas from healthcare to education, to work and investment and what the related appropriate policy

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We have created a unique ecosystem where renowned academics, policymakers, business leaders and our excellent LSE students work directly together on the biggest challenges of our time, organised into six work streams. At our virtual Maryam Annual Forum on 8, 9 and 10 December we will present our assessments and issue a public letter – our “Call to Action” – addressed to G7, G20 and national leaders with our research-informed policy recommendations. In this edition, we offer a taste of the work we have been doing and the evidence we have been collecting. We hope that our unique Maryam Forum platform will help national and international leaders to find the most optimal and sustainable policy solutions to our staggering global emergencies. ◆ responses can be. A key lesson is that leadership matters more than ever, and not only in government but in business and civil society as well. Another is that science and evidence matter. We are also learning that the young generation, whose economic and labour market prospects have been particularly hit by the pandemic, is eager to have its voice heard more clearly, particularly in areas where policy decisions today irreversibly impact their future. Science -informed inclusive leadership is what we need to tackle the big challenges ahead of us. This is the context in which we at the London School of Economics and Political Science recently launched a new initiative on transformative leadership, the Maryam Forum.

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Insights from the LSE Maryam Forum volume: academics lead a public-private platform

ey to delivering on the Maryam Forum’s ambition of transformative leadership is a series of ‘“Co-Labs”. These year-round working groups of leading academics, policy makers, business representatives and LSE students seek to implement innovative research-based policy solutions to support the transition from rulership to leadership. In these Co-Labs, participants will work together to come up with policy and research priorities relating to six urgent challenges that the world is currently facing and that are critical to achieving the 2030 Agenda for Sustainable Development.

are not founded in evidence. This Co-Lab focuses on two urgent priorities: migration and labour markets, including integration and the role of cities; and public attitudes to and the politics of migration and the link to social cohesion.

Rethinking global finance and the international financial architecture: This Co-Lab looks at the rapidlychanging landscape of the global financial architecture. This includes the global financial safety net; the role of central banks; the changing interaction between monetary and fiscal authorities during the COVID crisis; as well as the intersection between monetary policy and financial markets in the context of current unprecedented levels of quantitative easing.

Democracy and Disinformation: Previously, non-democracies were defined by censorship and control over the media, while democracies guaranteed freedom of expression and the free flow of information across borders. Today, these assumptions have been turned upside down by digital technologies, and political actors can use online mobs and troll farms to drown out and intimidate critical voices and obscure truth. Against this backdrop, this Co-Lab examines whether we need a new way to define a democratic information environment, and discusses the kind of regulation and oversight that is required.

Global emergencies and responses: As the COVID-19 crisis continues, this Co-Lab reviews how to prepare for and respond to future global emergencies. This includes examining lessons learned from the public health and economic measures deployed during the first wave of the pandemic; reviewing the role and potential of both global and national institutions; understanding how to capture and share data; and identifying how to design and roll-out effective national policies in real time.

Climate and the Oceans: This Co-Lab seeks to further build and draw attention to the investment case for ex-ante climate adaptation and resilience. Two aspects in particular are highlighted: the important financial risks of inaction; and the multi-faceted benefits of investing in natural capital.

Innovation and inclusive growth: In the wake of the pandemic, economic policies, including industrial policy, are being rethought as part of a broader reflection on the role of the state. In parallel, global value chains are being redesigned to address health and food security concerns and to manage the risks of future disruption. These shifts come on top of already-existing changes driven by digitisation, with possibly dramatic implications for patterns of production, innovation and economic inclusion in the coming years. Human Mobility: Voluntary migration and forced displacement attract central attention in both popular and policy discussions. However, these debates are often shaped by political narratives that

During Autumn 2020, the Co-Labs have been busy identifying the most critical questions in each area and preparing recommendations for national and global leaders. These will be unveiled during the first Maryam Annual Forum taking place on 8, 9 and 10 December 2020.

LSE GLOBAL POLICY LAB

You cannot solve a global pandemic with national policies Baroness Minouche Shafik Dame Minouche Shafik Director, London School of Economics Director of the LSEand Political Science

As we lock ourselves down to contain the spread of COVID-19, it is tempting to think that the solutions to the pandemic lie at a national level, writes Minouche Shafik (LSE Director). But although it will probably stall world trade, the virus respects no borders. International co-operation, woefully inadequate so far, will be vital if the pandemic is not to re-emerge. One of the paradoxes of this pandemic is that even as we are forced to turn inwards, we need each other’s cooperation more than ever. Most of us are becoming more self-reliant — staying at home, engaging less with others, even braving baking and home haircuts. And yet, only if everyone behaves in a collectively responsible manner will we be able to reduce infections and eventually normalise our economic and social lives. That same paradox applies to the world economy and the global health challenges we face. Nation states too are turning inward and throwing unprecedented resources at containing the pandemic. But the pandemic does not respect borders. Even if one country defeats it, the risks of it returning are high as long as it continues to plague the rest of the world. The world is still interconnected, just in different ways. What are the implications of the crisis for the world economy? And what does it mean for the balance of solving issues nationally versus globally? Trade growth has probably peaked Trade grew faster than GDP for several decades, but recent years have seen that slow. This crisis will accelerate that trend as supply chains will become shorter and more local. There are many reasons for this move toward localisation of

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already seen the boom of online shopping, entertainment, and financial services during this crisis. The movement of data across borders is increasing exponentially. This makes resolution of issues like digital taxation, profit shifting by platforms across borders, and the prosecution of cross-border digital crime even more imperative.

Adaptive rules for dam operation will be needed to deal with greater variability in reservoir inflows, and improved coordination of decisions across water– energy–food sectors will be required to achieve development goals sustainably. production. Because of the crisis, companies will give greater weight to security of supply over efficiency and cost. Automation is reducing the importance of wages in production costs, making it possible for firms to “re-shore” facilities nearer to home markets. And localisation is also a way to shield oneself from protectionism and trade wars. Globalisation will become more digital While the movement of people and goods is likely to decline, trade of online services will grow rapidly. We have

Interest rates will be low for a very, very long time Countries will emerge from this crisis with huge debt burdens. In past crises, those debts have been reduced through a combination of budgetary surpluses and economic growth rates that are greater than the rate of interest. Given how large debts are likely to become, it is hard to imagine being able to impose enough austerity to achieve the surpluses necessary to bring debt ratios down. Instead, many countries will likely resort to financial repression whereby savers earn returns below the rate of inflation to make it possible for governments to “inflate away” their debts. This will have implications for cross-border financial flows. Demand for social insurance will rise Warren Buffett famously said that when the tide goes in, you can see who is swimming naked. The coronavirus crisis has shown that millions of citizens around the world were in effect swimming naked – with no savings to fall back upon and no public safety net to support them and their families. Both poor and rich countries now have informal labour markets, as flexible modes of working have spread everywhere and employers’ commitment to their workers is ever weaker. So much of social policy in recent decades has

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shifted risks onto individuals in the name of efficiency and flexibility. The years ahead are likely to see a backlash against this as citizens demand that more health, work and old age risks be shared. While these are mainly national challenges, some will spill over into international agreements, especially around trade. All of these trends will reinforce countries’ tendency to focus on their domestic issues. Yet everything we know from history tells us that restoring economic prosperity and global health will require countries to look outwards and cooperate globally. The economic response must be global Many commentators from emerging markets took to referring to the 2008 financial crisis as the “North Atlantic Financial Crisis” to signal that the problem emanated from the US and Europe and was not truly global. This time is different. The economic consequences of coronavirus will adversely affect every country in the world. Commentators like Gordon Brown and Larry Summers have pointed out that while governments have broken all the economic rules to respond to coronavirus at the national level, the international response has been woefully inadequate. Even in the rich world, highly indebted countries like Italy or Spain have been less able to support their economies and populations than others like Germany or the Netherlands. For poor countries, many of which now have welldeveloped systems to transfer income to the poorest households through cash transfers and mobile banking, even fewer resources are available. This crisis needs a truly global response that includes more resources for the IMF and other multilateral institutions, comprehensive debt relief for the poorest countries, and a coordinated stimulus for economic recovery. The health response must be global, too You cannot solve a global pandemic at the national level. Just as the economic

response must be global, so the health response must include helping the poorest countries´ health systems to cope. The risks of spread in countries where social distancing is not possible (especially in slums, refugee camps and densely populated urban areas) may be devastating. Urgent funding is needed for essential equipment, vaccine development, therapeutics and support for weak health systems and vulnerable populations around the world. Without that, the epidemic will rage in highly populated parts of the world only to reappear in the countries that were hit first. At a time when there are strong forces pushing inward, we need to remind everyone that it is in their national interest to think outwardly and globally. This is not just about generosity — though that is a great thing — but also self-interest. ◆ This post represents the views of the author and not those of the COVID-19 blog or LSE.

Nemat (Minouche) Shafik is a leading economist, whose career has straddled public policy and academia. She was appointed Director of the London School of Economics and Political Science in September 2017. She did her BA at the University of Massachusetts-Amherst, her MSc at the LSE and her DPhil at the University of Oxford and, by the age of 36, had become the youngest ever Vice President of the World Bank. She taught at Georgetown University and the Wharton Business School. She later served as the Permanent Secretary of the Department for International Development from 2008 to 2011, Deputy Managing Director of the International Monetary Fund from 2011-2014 and as Deputy Governor of the Bank of England from 2014-2017, where she sat on all the monetary, financial and prudential policy committees and was responsible for a balance sheet of over £500 billion. Minouche has served on and chaired numerous boards and currently serves as a Trustee of the British Museum, the Supervisory Board of Siemens, the Council of the Institute for Fiscal Studies, and the Economy Honours Committee. She was made a Dame Commander of the British Empire in the Queen’s Birthday Honours list in 2015.

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LSE GLOBAL POLICY LAB

Politicians can’t hide behind scientists forever – even in a pandemic Andrés Velasco Professor of Public Policy and the Dean of the School of Public Policy at LSE

Sir Tim Besley School Professor of Economics of Political Science, W. Arthur Lewis Professor of Development Economics in the Department of Economics at LSE. It is dangerous when politicians ignore expert advice. But it is just as dangerous when politicians outsource their judgement to experts, especially if the margin of error is huge and the advice is contested, write Tim Besley and Andrés Velasco (LSE). Ultimately, it is the job of politicians to make the tough decisions about trade-offs. It is tempting to describe the unfolding response to the Covid-19 virus as a battle between science and politics. When US president Donald Trump suggested that injecting people with household disinfectant might cure them, or when Turkmenistan president Gurbanguly Berdymukhamedov endorsed the view that smoke generated by burning a type of grass called yuzarlik would safeguard against the virus, plain ignorance of scientific facts seemed to be at work. In other cases, politicians have appeared to be playing… well, politics, ignoring both science and common sense. Mexican president Andrés Manuel López Obrador denied for weeks that the virus was a threat and continued to hug and shake hands with supporters, only to flip suddenly and impose a lockdown without warning. Trump blamed China for the virus and closed off the US to migrants, and his base cheered. Brazil’s president Jair Bolsonaro followed the same script, claiming that the coronavirus crisis is a media trick. As an epidemiologist from the University of São Paulo put it: “It’s as if everybody’s on the same train heading towards a cliff-edge and someone says: ‘Look out! There’s a cliff!’ And the passengers shout: ‘Oh no there isn’t!’ And the train driver says: ‘Yeah, there’s nothing there!’”

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Dhaka’s urban poor have not received enough state assistance either, despite the government’s promise of a stimulus package of over $11bn to provide soft bank loans and to assist people. It is easy to see why NYU’s Gernot Wagner has argued that it helps to have political leaders with a science background, judging by the success of Germany in managing the crisis under Angela Merkel, who is a trained physicist, or that of Ireland under Leo Varadkar, who is a doctor. In recent years populist politicians have earned anti-establishment credentials and scored political points by disparaging experts, but the tide seems to be turning. Precisely because scientific and medical knowledge are so obviously necessary when dealing with a pandemic, the crisis has had one healthy byproduct: restoring a modicum of respect toward technical expertise. Both Donald Trump and UK prime minister Boris Johnson and his ministers have made it a habit to hold press conferences with their scientific advisers. Even more striking, Trump has had to endure the indignity of a poll showing that Anthony Fauci, the government’s top infectious disease

expert, enjoys an approval rating nearly twice as high as his own. So are science and politics on opposing sides of the tussle to craft the right policy response? We do not think so. Politics uninformed by science quickly becomes quackery. But science unmediated by politics is of limited use when it comes to solving a collective action problem such as a pandemic. One reason why science needs politics is that in a fast-moving and uncertain situation, not even experts can be sure of what to do. During the COVID-19 outbreak, questions about how extensive the lockdown should be or how long should it last, or whether wearing face masks should be compulsory, are intrinsically contested. Economists tend to discuss policy as if politics is what gets in the way of doing the right thing, and there are echoes of this attitude in debates involving scientists in the current crisis. Such frustration is justified when there is unambiguous consensus about the right policy or right advice, which just requires political will to become a reality. That is not the case today. A particularly difficult set of issues arise when policies have winners and losers. In the current crisis, many professionals can safely continue to do their jobs (and receive their incomes) from home, but factory workers and shopkeepers cannot, and they suffer the consequences. Similarly, young people who could go out to work with little risk to their health have to stay in for the sake of older people who are most at risk if they contract the virus. How can society adjudicate those difficult distributional questions? What are the proper roles for science

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and politics? The conventional wisdom is that trading-off the interests of gainers and losers is a matter of value judgments, so that expert knowledge is of little help in performing this task. That view is not quite right. Many tools of cost-benefit analysis, for instance, can help render judgments about trade-offs both systematic and transparent. Nonetheless, in complex policy decisions where many elements are poorly measured or intangible, cost-benefit analysis is at best a useful guide for policy, not a tablet of wisdom from which simple answers can be read. In short: making distributional choices is the job of politics, but that is a job best done taking judicious advantage of what science and expert analysis have to offer. Johnson and Trump understand this. They may not be particularly fond of experts, but they keep inviting their own scientific advisors to their press conferences because soft-spoken scientists add credibility. Yet the doctors with their lab coats and charts in turn need the politicians for something else: legitimacy and trust. The effectiveness of a public institution or policy depends crucially on how much citizens trust it. Just as a central bank can only do its job if citizens trust the currency it prints, the medical profession requires trust. Doctors need patients to follow their guidance, take medicines that they are prescribed and be willing to undergo invasive medical procedures if needed. And while the trust I place in an expert institution matters, other citizens’ trust matters just as much or more. If everyone in my neighbourhood trusts medical advice enough to vaccinate their children against measles or mumps, then even if I do not vaccinate my own kids the risk of contagion they face is very low. So private actions have public consequences, something that economists refer to as externalities. Such externalities are everywhere in the crisis. People who decide to leave home in order to go to work may increase the probability of contagion for others, while people who wash

their hands regularly have the opposite effect. Because staying home and forgoing income or queuing two metres apart all have costs, people will follow lockdown and social distancing orders only if they view those orders, and the process that lead up to them, as legitimate. And that legitimacy can only be provided by political leaders working within the confines of institutions that citizens both respect and trust. The fact that long before the virus hit most politicians’ credibility was at a nadir should not obscure another equally important fact: in modern secular societies, no one else can do the job of generating public trust. And if those modern societies are democratic, accountability is one key source of that trust. While the conventional view is that accountability is a constraint on political action, it is also an enabler. When politicians have announced lockdowns that impose economic costs, the public know that the politicians will ultimately be judged on whether the trade-offs are deemed to have been well-judged. Holding politicians responsible for a decision they have taken can enhance trust in that action. So it is dangerous when politicians ignore expert advice. But it is just as dangerous when politicians outsource

their judgement to experts, especially so if the margin of error is huge and the advice is contested. Making choices involving difficult trade-offs is what politics is all about. Politicians may not do this in a way that pleases many people, but that is in the nature of the beast. Their job today is both to get the balance between expert opinion and political representation right and to communicate the reasoning behind decisions taken. Some of the distributional effects of COVID-19 and the policies that have been put in place to fight it are only now becoming apparent. Those painful effects will doubtless make politics even more difficult and disputatious in the months to come. And that, unfortunately, is a problem that cannot be solved by injecting people with disinfectant or burning yuzarlik. ◆ This post represents the views of the authors and not those of the COVID-19 blog, nor LSE.

Andrés Velasco is Professor of Public Policy and Dean of the School of Public Policy at the LSE. He is a former member of the G20 Eminent Persons Group and ran for the presidency of Chile in the June 2013 primaries. He also was the Minister of Finance of Chile from March 2006 to March 2010. He is the author of nearly one hundred academic articles, several academic books and two novels. He has served as a consultant to the International Monetary Fund, the World Bank, the Inter-American Development Bank, and to governments, central banks and private businesses around the world. Sir Tim Beasley is School Professor of Economics and Political Science and Sir W. Arthur Lewis Professor of Development Economics at the LSE. His research spans public economics, development economics and political economy. He is President-elect of the Royal Economic Society and has been President of the Econometric Society and the International Economic Association. He is a fellow of the British Academy and a foreign honorary member of the American Academy of Arts and Sciences. He was also a member of the Bank of England Monetary Policy Committee and is a current member of the National Infrastructure Commission. In 2018, he was knighted for services to economics and public policy.

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Nine ideas to strengthen our global firepower against COVID-19 Erik Berglof

Professor,Chief Director, Institute of Global Affairs, London School of Economics Political Science Economist, Asian Infrastructure Investment Bank (AIIB) andand Professor, London School of Economics and Political Science

The two sides of the COVID-19 crisis – the medical emergency and the economic impact – are closely intertwined. Many emerging and developing economies feel the economic impact first. Falling commodity prices, drops in tourism revenues, reduced remittances from citizens abroad, and the rapid outflows of capital are ravaging their economies, even before the virus has taken hold. In turn, the economic devastation will undermine their capacity to respond to the virus and threaten social and political stability in the medium term. The pandemic is exposing the global financial safety net and development finance architecture – of which the IMF and the World Bank are central elements – to the most serious shock since the two institutions emerged out of the ruins of two world wars and the Great Depression. The G20 finance ministers presented a Global Action Plan to fight the COVID-19 crisis ahead of the IMF/ World Bank (virtual) Spring Meeting in April. The Plan is a good first step, but we need far, far more. We must urgently find new and innovative ways of putting global financial muscle, including the private sector, behind our multilateral institutions. This will require the same kind of bold leadership, innovative thinking and institution-building that marked their founding. The initial responses from the IMF and the World Bank, and the regional development banks, have been powerful. But the demands on them will only increase as the crisis accelerates, especially in the emerging and developing world.

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Europe and Asia – is critical in providing liquidity and maintaining financial stability. Yet the IMF’s current firepower is not enough to deal with the magnitude of this crisis. 1. Establish liquidity support lines: Create a liquidity facility to which pre-qualified countries in need could turn. Pre-qualification could avoid the stigma associated with applying for support. Such liquidity lines could be supplemented by IMF intermediating support lines, from systemic central banks to central banks, in well-run emerging economies with liquidity problems.

There have been many ideas for how to strengthen the development finance architecture and the global financial safety net. There have been many ideas for how to strengthen the development finance architecture and the global financial safety net. Several of them were discussed in the final report from the G20 Eminent Persons Group on Global Financial Governance (EPG), presented in October 2018. Here I suggest three measures for each of the global financial safety net, development finance architecture, and the capacity of the core institutions to ‘crowd in’ private and institutional capital. Three ideas on how to strengthen the IMF’s firepower The global financial safety net – with the IMF at the core, complemented by a patchy and incomplete system of regional arrangements mainly in

2. Issue Special Drawing Rights (SDRs): The current arrangements, which rely on the IMF’s existing resources, do not meet the expected liquidity requirements and eventual solvency threats in many countries. The most direct way to provide additional capital to the IMF would be to issue additional Special Drawing Rights, which would both increase firepower and offer a valuable stimulus to the global economy. 3. Transfer unused Special Drawing Rights: Many countries, particularly advanced economies, do not borrow up to their quotas with the IMF. These unused quotas could be transferred to countries with greater needs, either through an arrangement within the IMF or an external vehicle. This could also be part of an issuance of new SDRs to ensure that new resources really go to the countries most in need.

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Three ideas on how to enhance the lending capacity of MDBs The multilateral development banks (MDBs) also need reinforcement. The World Bank has responded with a massive effort to help address both the medical and economic emergencies. It has strong expertise in cash transfer programmes and local community schemes in many countries, which can be used to reach the most vulnerable. As the economic impacts of lockdowns and supply disruptions make themselves felt, financing needs will increase dramatically. While many MDBs were recently recapitalised or have the short-term capacity to respond, the MDBs will run out of “headroom” on the current trajectory, impeding their ability to respond. 1. Establish a liquidity backstop for MDBs: Unlike commercial banks, most multilateral development banks lack automatic access to liquidity support from governments. Rating agencies would upgrade them if a group of central banks came together, possibly intermediated through the IMF, and provided a liquidity facility. 2. Introduce a new form of equity capital: A related proposal would be to provide the development banks with a new form of capital. Rather than paid-in capital or callable capital, it would be useful to have an intermediate form of capital that could be called upon when banks are exposed to a shock like this one. 3. Make a G20 “whatever-it-takes” statement: Even if these two ideas cannot be realised at the moment, the G20 could, with support from other key shareholders, make a “whateverit-takes” statement, promising that additional capital would be forthcoming if the situation deteriorated further. This would inspire innovation and big ideas and reassure governments in the worst -hit emerging and developing economies that resources will be forthcoming. Three ideas on how to leverage the private sector Yet the governments behind both

agreements and generally become more coherent as a system.

the IMF and the development banks are also weakened by the crisis, and domestic needs will be gigantic. New ways must be found to ‘crowd in’ private and institutional capital. The EPG Report pointed to steps that could be taken. 1. Allow the IMF to borrow from the markets: The IMF could be allowed to borrow in the capital markets, potentially using currently unused SDRs as collateral, which could with appropriate safeguards significantly increase IMF firepower. 2. Pool balance sheets to increase MDBs’ borrowing capacity: On the side of the development finance institutions, there should be scope for more pooling of balance sheets. There are limits to what can be achieved through such efforts, but this could prove very important for smaller institutions with concentrated portfolios. As a by-product, the participating institutions would be encouraged to standardise loan

3. ‘Crowd in’ private and institutional capital on country platforms: A core EPG proposal is to establish country platforms where governments can coordinate their collaboration with international financial institutions, including bilateral donors and the entire UN system. These platforms, now being piloted, should be opened up to the private sector and be used to ‘crowd in’ private and institutional capital by using the international financial institutions to mitigate risk for investors. This would also ensure that agreed governance standards are enforced, and debt sustainability requirements respected. When the EPG was first set up, some questioned why the group should deal with both development finance architecture and the global financial safety net in the same report. The COVID-19 crisis has proven how intimately linked they are. These nine ideas would bring together the global financial safety net, the development finance architecture and the private sector to create a powerful global response. ◆ This post represents the views of the author and not those of the COVID-19 blog, nor LSE. A longer version of this blog was published as an article by the World Economic Forum.

Erik Berglof is the Director of the Institute of Global Affairs (IGA) and its Global Policy Lab at the London School of Economics and Political Science (LSE). He has published widely in top journals on economic and political transition, corporate governance, financial development and EU reform. He was a member of the Secretariat for the G20 Eminent Persons Group on Global Financial Governance (2017-18) Erik Berglof is the inaugural Chief Economist and subsequently a member of the High-Level at the Asian Infrastructure Investment Bank. Wise Persons Group on European Development Before joining AIIB, he was Director of the Finance Architecture (2018-2019). Prior to Institute of Global Affairs at the LSE School joining LSE, Professor Berglof was the Chief of Public Policy and Chief Economist of the Economist and Special Adviser to the President European Bank for Reconstruction and of the European Bank for Reconstruction Development. Professor has published and Development (EBRD)Berglof and Director of the widely in top journals economicEconomics and political Stockholm Institute of on Transition transition, corporate at governance, financial (SITE) and Professor the Stockholm School development, EUalso reform. He was a member of Economics.and He is a Non-Resident Fellow of the the Brookings Secretariat Institution, for the G20 aEminent Persons at Research Fellow Group on Global EU of the Centre for Financial Economic Governance, Policy Research Wise Persons GroupFellow on European Development (CEPR) and Senior of the European Finance for Architecture, and the WorldIn Economic Council Foreign Affairs (ECFR). 2013, Forum Futures Council on the he was Global awarded the Leontief Medal forFinancial his and Monetary to Systems. contributions economic reform.

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How can emerging economies deal with the debt crisis? Insights from the LSE Maryam Forum Ricardo Reis Arthur Williams Phillips Professor of Economics, Department of Economics, London School of Economics and Political Science

Jintao Zhu Student BSc in Philosophy, Politics and Economics, London School of Economics and Political Science Private and public debt has soared as a result of lockdowns and policies to address the COVID-19 health emergency. As part of the LSE Maryam Forum, Ricardo Reis (LSE) chaired a panel discussion on the debt problem, which is key to financing the global response to COVID-19. Reis and Jintao Zhu (LSE) report on the insights. How should we handle corporate debt? Cynthia Balloch (LSE) discussed the challenges of handling corporate debt using the bankruptcy system. The credit market was weak even before the pandemic, with corporate debt at a historical high. The dramatic fall in revenue caused by the pandemic created an additional need for borrowing. Globally, companies borrowed 60% more in the first half of this year relative to the same period in 2019. Despite massive government support, we are likely to see companies in multiple sectors having difficulty in servicing their existing debts. Typically, the bankruptcy procedure â&#x20AC;&#x201C; which allows companies to reorganise and renegotiate their obligations so that they can continue to operate â&#x20AC;&#x201C; would ease this burden. However, using bankruptcy to deal with corporate debt in this pandemic presents three challenges. Firstly, bankruptcy courts do not work well for all firms, particularly SMEs. Secondly, they struggle when they become inundated with cases, as is happening now. For example, in the US, only 350 judges are available to

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handle all corporate bankruptcy cases. Thirdly, bankruptcy proceedings require continuous financing to be available during the process. With a large number of firms defaulting, this financing is far from guaranteed. More needs to be done to encourage firms and lenders to restructure private debt, reduce administrative costs, and improve their bankruptcy procedures. Governments should focus on understanding where the pandemic may lead to the widespread loss of organisational capital invested in established firms. They should provide financial incentives for restructuring where it is likely to prevent this loss. However, we also want to avoid keeping doomed firms alive. After all, the aim is to maintain growth while preventing widespread liquidations. How can we support lower-income countries? Patrick Bolton (Columbia Business School) discussed the global effort to support developing countries over the debt issue. In March, there was a sudden and huge capital outflow from emerging markets when the pandemic hit rich countries. Today, while

developing countries are still mainly preoccupied by health and economic crises, the financial crisis is unfolding. Many countries face the dilemma of using their scarce financial capability to pay for debts, or covering health expenses. Since March, over a hundred middleand low-income countries have turned to the IMF for financial support. The G20 has initiated the DSSI (Debts Service Suspension Initiative). The G20, together with the Paris Club, agreed to suspend interest payments for International Development Association countries during 2020. So far, 41 of the 73 eligible countries have filed a request for DSSI. Of these, 32 of the 41 have approached the Paris Club for some kind of debt relief. However, this initiative only covers interest payments for official debts, which is only a fraction of overall payments. To further alleviate the debt burden, the G20 attempted to bring in private sector creditors to join debt relief efforts. However, until now the private sector has been standing on the sidelines. It justifies its inaction by the sudden reversed capital flow into emerging markets in the last few months. But it is not clear whether returning capital in the market can substantially alleviate the heavy financial burden these countries face. In brief, despite some efforts and hard work, the debt problem has not had enough attention. We lack accurate pricing of the credit risk issues for both sovereign and corporate debt. How we deal with this will be a major challenge.

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An ambulance at Hospital 28 de Agosto in Manaus, Brazil. Photo: Amazonia Real via a CC BY NC 2.0 licence

A case study in the cost of financing debt: Brazil Carlos Viana de Carvalho (Asset 1 and PUC-Rio) discussed the challenges faced by an emerging economy, using the case study of Brazil. Brazil had started various economic reforms before the pandemic. Beginning in 2016, it had conducted a series of structural reforms which were just starting to pay off. Many other emerging markets had made similar progress. The pandemic shock hit every country, but the consequences have been very different because countries were at different starting points. Emerging markets like Brazil do not have the fiscal space for necessary spending. They had been trying to consolidate public finances and bring public debt down. The pandemic forced the state to postpone these efforts and to start emergency spending in order to save lives, prevent corporate bankruptcies and maintain social stability. The challenge of financing the response to the pandemic is larger for emerging markets like Brazil. They face limits to the demand for their assets

and public debts. When countries with solid institutions and a long history of stability issue reserve currency, there is plenty of demand for their â&#x20AC;&#x153;safe assetsâ&#x20AC;?. When the pandemic shock hit, the demand for these safer assets went up. Interest rates went down and so did the cost of financing. However, for countries like Brazil, whose assets are perceived as risky, the risk premium goes up when the shock arrives. The cost of financing becomes more expensive. Advice for governments? Convince the market you have a long-term plan to rein in spending At this stage, governments in emerging markets should be cautious about policy decisions. While a temporary increase in public debt is unavoidable, they should make decisions that will convince society and investors that the government is still able to go back to a sustainable level of debts in the long run. If market confidence is established, the country will be able to enjoy low financing costs. However, if the government ends up increasing expenditure permanently, it will not be able to go back to a sustainable path

The pandemic shock hit every country, but the consequences have been very different because countries were at different starting points. for public finance. Current financing efforts will be expensive. Long-term reform efforts can be overthrown thanks to COVID-19 and, although the global market seems to have become increasingly optimistic, emerging countries will still be very susceptible to volatile global financial conditions. â&#x2014;&#x2020; Ricardo Reis is the A.W. Phillips Professor of Economics at LSE. Recent honours include the 2016 Bernacer prize for best European economist under the age of 40 working in macroeconomics and finance, and the 2017 Banque de France / Toulouse School of Economics junior prize. Professor Reis is an academic consultant at the Bank of England and the Federal Reserve system. He directs the ESRC Centre for Macroeconomics in the UK d is a recipient of an ERC grant from the EU. Jintao Zhu is a fourth year LSE student studying for a BSc in Philosophy, Politics and Economics.

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The quiet revolution of emerging market central banks1 Piroska Nagy-Mohacsi Interim Director, Institute of Global Affairs, London School of Economics and Political Science

Central banking in emerging markets (EMs) has undergone a quiet revolution during the COVID pandemic. Unlike in the past, EM central banks have been able to mimic what advance country central banks are doing: counter-cyclical policies with quantitative easing (QE), asset purchases in local currency, lowering interest rates and monetising government deficits in support of their government’s crisis response. In the past such policies would have invariably led to inflation and exchange rate pressures. But not this time. Except for a few central banks in trouble already before the pandemic, EM central banks have managed to do QE, thereby increasing their countries’ policy room to flight the pandemic. The main reason for this is advance country central bank policy: spillovers from the ongoing massive advance country QEs and the expansion of currency swap arrangements. However, EMs are more vulnerable in the areas of financial stability and governance. What has enabled QE in emerging markets? The credibility of emerging market central banks is certainly an important factor. However, in the past credibility alone never allowed EM central banks to pursue sustainable QE. The real reason for EM QE are the policies of advanced country central banks: • Positive spillovers from advanced country central bank QE; • Enlargement of currency swaps and foreign exchange repurchase (repo) operations by a few key central banks, which we can call the globally systemic central banks (GSCB): the US Federal Reserve, the European Central Bank (ECB) and the People’s Bank of China (PBoC).

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Advance country interest rate cuts and huge liquidity injections have spilled over to emerging markets in search of yield. After an initial market stumble in March 2020, capital flows returned to EMs. EMs could reduce their interest rates too. At the same time, EM central banks have started purchasing local currency denominated assets in markets where the market for such issuance is sufficiently large (Arslan et al, 2020). Exchange rate pressures have been eased by the expansion of currency swaps by key central banks. Currency swap lines act as safety nets to avoid foreign currency shortages in local domestic markets. Facing the pandemic, the US Federal Reserve first reactivated currency swap arrangements with its most trusted five advance country central banks and extended the maturity of those swaps; then also extended the swaps to several, mainly advanced country, central banks.

We have seen such measures during the global financial crisis a decade ago. But this time the Fed has gone far beyond what it did then by offering a new additional temporary repo facility for foreign and international monetary authorities (FIMAs) at the end of March 2020. This allows central banks and monetary public institutions around the world to use their existing stock of U.S. treasury bills to get access to U.S. dollar liquidity with the help of the Fed. Although repos are not a genuine currency swaps – i.e., swaps between the dollar and a local currency — because the FIMAs must have U.S. dollar denominated assets as collateral to get U.S. dollar liquidity, these are still powerful for market confidence. Repos do not need to be used actually: they serve as safety nets and their mere availability can be enough to reassure markets. Moreover, repos can also be a precursor to true currency swap arrangements, as the example of ECB repo operations with Poland and Hungary showed in 2009. The ECB and the PBoC have also expanded swaps lines and repos in their respective monetary sphere of influence since the start of the COVID crisis. Exchange rate risks in EMs have been effectively slashed as a result. As Boris Vujcic, the Governor of the Croatian National Bank recently noted, the ECB’s generous currency swap line has helped Croatia manage and then avoid foreign exchange market volatility – market participants do not wish to go against the ECB, the CNB’s proxy. In the face of the world-wide COVID shock, the GSCBs, for the first time, have acted in crisis in a way that is commensurate with their global systemic role in international liquidity. The Fed’s monetary policy has created

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global dollar financial cycles as Helene Rey pointed out already in 2013. The ECB also has its own euro “mini” financial cycles in emerging Europe. The PBoC’s share in international reserves and transactions is much smaller, but its global impact comes from the financial arrangements around China’s mammoth Belt and Road Initiative (BRI), its lending to developing countries, and its large number of currency swaps – more than 40 - with developing and EM central banks. The objective of the latter may differ the from those of the Fed or the ECB, yet it has increased the use of the RMB in bilateral trade between China and its currency swap partners (Bahaj and Reis, 2020). Will Emerging Market QE last? This can last as long as monetary policy remains sufficiently expansionary in advanced economies. The chances for this is quite good for the coming years. Advanced country central banks have not been able, for one reason or another, to exit from QEs they created a decade ago, even after growth and employment had recovered. The Federal reserve has recently changed its mandate that will likely require continued QE for quite some time. Several central banks are formally committed to obtain maximum level of employment, as well as as keeping interest rates very low or even negative, and central bank digital currencies could make this technically relatively easy to implement. All this means that emerging market central banks are likely to continue to enjoy monetary policy spillovers from their advance country peers in the foreseeable future. However, EMs may soon face the unintended consequences in other

In the face of the world-wide COVID shock, the GSCBs, for the first time, have acted in crisis in a way that is commensurate with their global systemic role in international liquidity. The Fed’s monetary policy has created global dollar financial cycles as Helene Rey pointed out already in 2013.

References Arslan, Y, Drehmann, M and Hofmann, B, Central bank bond purchases in emerging market economies, BIS Bulletin No. 20. (2020)

areas: financial stability and governance. QE and prolonged recessions will inevitably hit the balance sheets of companies, households, and eventually of banks. Bankruptcies and non-performing loans will soar. EM countries still have much less fiscal space than their advanced country peers to deal with these problems. Governance issues will also likely surface: asset purchases by central banks beyond government papers raise concerns over the lack of transparency and accountability of the underlying process. These may become issues in advanced countries too, but their fiscal space and institutional arrangements are more robust. EM vulnerabilities are likely show up soon in the areas of domestic financial stability and governance. ◆ Note: this article was published in Project Syndicate, 18 August 2020.

Avdjiev, S and Takats, E, The currency dimension of the bank lending channel in international monetary transmission, BIS Working Papers 600 (2016) Benigno, G, Hartley, N, García-Herrero, Rebucci, A and Ribakova, E, Credible emerging market central banks could embrace quantitative easing to fight COVID-19, VoxEU (June 2020) Bahaj, S and Reis, R, Jumpstarting an international currency, Bank of England Staff Working Paper No. 874 (June 2020) 1. Based on the author’s article in Project Syndicate, August 18, 2020

Piroska Nagy-Mohácsi is a macroeconomist and Interim Director of the Institute of Global Affairs (IGA) and its Global Policy Lab at the School of Public Policy of the London School of Economics and Political Science (LSE). Previously she was Policy Director of the European Bank for Reconstruction and Development (EBRD) overseeing strategic directions in Emerging Europe, Central Asia and North Africa as well as major policy initiatives (2008-2015); and beforehand worked in senior positions for the International Monetary Fund (IMF) (1986-2008).

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What are the smart COVID-19 containment options for developing countries? Adnan Q. Khan Professor in Practice, School of Public Policy, LSE

What are the smart COVID-19 containment options for developing countries? Adnan Q. Khan (LSE) writes that the pandemic has pushed policymakers there into an environment of great uncertainty. Not surprisingly, many governments have been emulating the policies of other countries before them. However, while continuing with blanket enforcement of lockdown measures may temporarily stop the spread of the virus, it could quickly generate a new kind of crisis in the form of a rise in non-COVID diseases, deprivation, and hunger, especially in the developing world. Following the herd is often perceived as less politically costly rather than announcing an independent response, though it may be seen as signalling competence and control. However, many governments have discovered that uniform policy responses are not delivering and, in fact, generate unintended consequences and resentment. Furthermore, they have realised that their hands are tied since they neither have the fiscal space, nor the state capacity to undertake grand, expensive plans that the developed countries have been able to undertake. This is all the more reason why developing countries should adopt policies that tailored to different local contexts, and that are effective yet feasible. The pandemic has forced leaders to confront two untenable options – lockdown and risk livelihoods, or open up and spread the disease. With many already living on the edge of subsistence, and with a range of pre-existing health issues, the likelihood of adverse health consequences as a result of the response to the pandemic may

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be comparable to the pandemic’s morbidity itself. The trade-off for developing countries is not just lives vs the economy, but lives versus lives. We argue the choice when it comes to containment does not have to be all or nothing. We propose a ‘smart’ containment approach for developing countries that is underpinned by active learning and a data-responsive graded response that tailors policy responses to different local contexts within countries with policy flexibility but it will have to be supported through the intense use of data in policy design and implementation. Within a framework of active learning, even governments with limited capacity can develop localised smart containment policies. Once operationalised, these plans will help generate further evidence for policymakers to learn from, and lead to better contextualised and sustained policy responses. This is how we can escape the curse of a binary choice between lockdown and no lockdown.

A ‘smart’ containment strategy First and foremost, a smart containment strategy should be underpinned by data. Most countries do have existing administrative data that can be drawn upon to help determine initial estimates of different health and risk profiles. This needs to be bolstered by regularly collecting data on health outcomes – both COVID prevalence, as well as health morbidity due to lockdowns – and socioeconomic outcomes to provide a powerful evidence base to support decision-making in uncertain times. Second, this data can be used to better understand prevalence and risk across different geographies, sectors or even age cohorts and thus employ targeted, graded approaches. This allows for flexibility and the ability to tailor the containment response to the needs of a locality. Furthermore, operationalising such an approach is far less economically costly as unaffected sections of the economy can continue working. And for those affected sectors, data should be used inform the lifting of lockdowns as soon as the risk profile has changed. Finally, it is important to recognise that each policy response will generate new data and learnings. Responding to this evidence by continuously evaluating the need to impose and lift measures in specific places is core to a smart containment policy. This process of active learning, involving the adaptation of strategies, is key to ensure any containment measures mitigate the economic consequences whilst still prioritising health considerations. To operationalise more graded and localised policies, clear, transparent, and regular communication will be

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First and foremost, a smart containment strategy should be underpinned by data. Most countries do have existing administrative data that can be drawn upon to help determine initial estimates of different health and risk profiles.

needed to coordinate actions among different actors and to leverage the agency and self-efficacy of citizens. Effective community messaging and compassionate enforcement are critical to ensure voluntary compliance among citizens. As the positive outcomes are realised, this will further increase trust in authorities, popular understanding, and support. Continued blanket enforcement of lockdown measures may temporarily stop the spread of the virus, but could quickly generate a new kind of crisis in the form of a rise in non-COVID diseases, deprivation, and hunger. A functioning economy, especially in highly vulnerable communities, is crucial to population health. As we move forward in the next few months, it is critical that containment options are tailored to local conditions. This is not easy but can be done by exercising adaptive leadership, by bringing expertise from different disciplines, by empowering local actors and communities, and by trusting citizens. If developing countries are to succeed, they should learn from others but importantly, chart their own way based on data and evidence.

To operationalise more graded and localised policies, clear, transparent, and regular communication will be needed to coordinate actions among different actors and to leverage the agency and self-efficacy of citizens.

This post represents the views of the author and not those of the COVID-19 blog or LSE. It is based on policy proposals described in more detail in the following documents – “Policymaking in uncertain times” and “Smart containment with active learning”. ◆

Adnan Khan is Professor in Practice at the School of Public Policy at LSE. He is an Affiliate of the Poverty Action Lab (J-PAL) at MIT and an Affiliate with the Building State Capability Program at Harvard University’s Center for International Development (CID). He is a founder board member of Centre for Economic Research in Pakistan (CERP), co-leader of Reducing State Fragilities Initiative at the International Growth Centre, an Affiliate with Yale University’s Research Initiative on Innovation and Scale (Y-RISE), and with Precision Agriculture for Development (PAD). Earlier, he had served as Research and Policy Director at the International Growth Centre at the LSE. He was also a Visiting Lecturer of Public Policy at the Harvard Kennedy School during 2018-19. He spent more than 15 years in the policy world, and more than 10 years in the research world as an instructor, researcher and as a catalyser of research in Africa and Asia. He works on public policy, state capacity and political economy.

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A renewed chance to address climate change and the ocean Torsten Thiele Senior Visiting Fellow of the Institute of Global Affairs at the School of Public Policy, LSE

The wholesale integration of climate, biodiversity and ocean issues into the global financial architecture to align with nature and sustainability is long overdue. Disruptions caused by COVID-19, along with increased awareness of both the climate and the biodiversity threat to the ocean and human livelihoods, must now urgently be translated into urgent effective action. 2021 provides the opportunity for this critical realignment, particularly as climate change is back on the agenda of all major governments.

international ocean and create conditions for sustainable marine development; • The Green Climate Fund and the International Development Finance Club have formed a strategic alliance to help realise the potential of public development banks in financing the green and climate-resilient transition; • The recent T20 Communique clearly identifies critical pathways for a circular economy and in proposal 24 calls on the G20 to protect, conserve, and restore biodiversity

We have been seeing a number of hopeful signs in recent weeks: • Major economies, governments, subnational actors and corporations have committed to net zero 2050 goals and are developing credible de-carbonization strategies; • UNFCCC COP 21 looks set to deliver a solid global implementation framework, with the U.S. likely to rejoin the Paris Agreement; • The EU, the UK and others are targeting their COVID recovery funding with a clear “greening vision”; • Regulators are clarifying common approaches to climate risk, with specific guidelines and a roadmap to mandatory disclosures for companies by the Task Force on Climate Related Financial Disclosures (TCFD); • The Federal Reserve, the world’s global central bank, is moving closer to joining the Network of Central Banks and Supervisors for Greening the Financial System (NGFS), which can help shape global financial markets’ behaviour; • The European taxonomy of environmentally sustainable economic activities – a set of technical screening criteria for economic activities that can make

The G20 countries are the key international group that can provide leadership in this area, with 85% of global GDP and some 80% of the global greenhouse gas emissions. By supporting the international UN climate process with complementary political, economic and technological ambition to rapidly decarbonise and reduce emissions to net zero by 2050, there is still a chance to halt global temperature increases. This is provided that the world’s nations fully take account of the climate-biodiversityocean nexus as they transition to circular and sustainable economies. Total infrastructure capital around the world is expected to double in the next 15 years, so the format through which investment takes place will have a profound influence on “global commons”, such as the climate and the ocean. The international financial institutions have a critical role to play in ensuring the quality and sustainability of that investment. Multilateral development banks are well positioned to crowd in the required private resources. They need to develop contingent public finance facilities, launch support operations and system-wide

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a substantial contribution to climate change mitigation or adaptation, while avoiding significant harm to the four other environmental objectives – provide a comprehensive framing to align investment strategies and capital markets to deliver sustainable finance; • The planned adoption of a post2020 global biodiversity framework by the Conference of the Parties to the Convention on Biological Diversity in 2021, together with adequate resource mobilisation, can offer a pathway to more effective support towards key measures that seek to safeguard nature and the human livelihoods that depend on it; • Private sector actors are increasingly taking the lead on climate and biodiversity commitments; • The commitment by the negotiators to conclude a workable UN Agreement on Biodiversity Beyond National Jurisdiction under United Nations Convention of the Law of the Sea in 2021 will deliver the opportunity to protect the

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insurance instruments to facilitate fast disbursement, effective implementation and solid impact assessment. The natural capital of the ocean is significant but not well quantified. Ocean ecosystem services are under threat from climate change, pollution and other stressors. The concept of ocean risk puts an economic perspective on these changes and can help develop viable approaches to protect the blue natural capital. This includes new funds to protect coastal and marine systems, such as coral reefs and mangroves. The UN Sustainable Development Goal (SDG 14) expressly aims to “conserve oceans and seas”. Moreover, the Paris Agreement’s Preamble notes the importance of ensuring the integrity of all ecosystems, including the ocean, with the proposed funding mechanisms for mitigation and adaptation applying to ocean and coastal solutions. Ultimately, public and blended finance is required to deliver investment into nature-based solutions. The development of a blue economy framework can provide the necessary tools to identify sustainable ocean activities and facilitate their financing. A better understanding of concentrations of ocean-related assets and exposure to risk facilitates informed capital allocation, better decision-making and encourages forward-looking information provision to owners, other stakeholders and regulators. The blue natural capital approach such as applied by the International Union for Conservation of Nature (IUCN) draws on nature-based solutions, which are then integrated into investment streams that support clean energy and water, plus data and

The development of a blue economy framework can be used to provide the tools to identify sustainable ocean activities and facilitate their financing.

communications services and local financing opportunities. New ocean financing tools such as blue bonds can help to deliver the financial resources required. In order for innovative finance mechanisms needed for coastal habitat protection to emerge at scale, they need to be consistent with the wider efforts on sustainable finance. The Sustainable Blue Economy Finance Principles, now hosted at UNEP-FI and the Climate Bond Initiative’s Adaptation and Resilience Principles, can provide specific guidance to funders on which projects and assets are compatible with a climate resilient economy. Marine habitats such as mangroves, salt marshes and seagrasses are relevant carbon sinks and opportunities exist to update blue carbon accounting based on science such as by adding macro algae, deep-water seagrasses and addressing carbon cycling in blue carbon ecosystems. Biodiversity is the foundation of life and of sustainable development. The G20 countries must promote ocean

science and technology, operationalise effective marine protected areas, mainstream ecosystem-based adaptation and nature-based solutions for climate change mitigation, and facilitate the economic valuation of blue carbon under the UNFCCC. G20 countries must take regulatory and fiscal measures in order to rapidly reduce industrial and agricultural sources of pollution, including safe use of plastics and chemicals. Furthermore, bio-based alternatives and circular business models require research and funding support. A possible G20 Oceans Fund or an Ocean Sustainability Bank with the ability to issue blue bonds could therefore accelerate urgently needed cooperation to preserve marine biodiversity, ocean and human health. ◆

Torsten Thiele is a Visiting Fellow in the Institute of Global Affairs at the London School of Economics. His research areas are ocean governance and blue finance. Founder of the Global Ocean Trust and Senior Research Associate at lASS, Torsten Thiele had a long career in infrastructure finance in the City of London, where he was Head of Telecom Project Finance for Investec Bank plc till 2013. He holds graduate degrees in economics and in law from Bonn University, an MPhil from the University of Cambridge and an MPA from the Harvard Kennedy School. He returned to Harvard University as a 2014 Advanced Leadership Fellow. Torsten Thiele is also active on a number of advisory boards, including DOSI and EU ocean projects SOPHIE and iAtlantic.

LSE GLOBAL POLICY LAB

The case for a COVID-19 carbon tax John van Reenen Ronald Coase School Professor, LSE and Gordon Billard Professor, Massachusetts Institute for Technology

Ralf Martin

Associate Professor of Economics, Imperial College Business School and Director, Growth Research Programme, Centre for Economic Performance, LSE Ralf Martin and John Van Reenen (LSE) explain how a carbon tax could both help pay for the enormous costs of the pandemic and encourage ‘clean’ investment. Crucially, it should be levied in a few years’ time, when the UK economy has begun to recover. Life on earth has changed fundamentally over the last three months. While in the short run the immediate response to the COVID-19 crisis is paramount, many have started to ask about the impact of the pandemic on the looming climate emergency. Optimists hoped that the shock of the pandemic coupled with the experience of lockdown translates into a new momentum for the transition to a clean economy. Attitudes towards scientific advice might have changed, new – less pollution intensive – ways of working remotely might have been learned. Governments might embark on stimulus spending with a strong emphasis on investments in clean infrastructure and innovation. However, our big concern is that, despite good intentions, governments and business will be severely constrained in their spending once the immediate crisis is over, due to the extraordinary financial burden of the lockdown. Hence, far from an increase, this could lead to reductions in investments needed for the transition to a clean net zero carbon economy. In this situation, a moderate carbon tax (of say £50/€56 per tonne of CO2, as proposed by the Grantham Institute) announced now, but imposed only at some point well into the

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recovery period (say around 2025) could solve several problems simultaneously. First, it would help governments to bolster the public finances. For example, the UK government put together a package of around £400 billion to help the COVID-19-stricken economy. If the UK reaches its net zero carbon goal by 2050 the total remaining revenue from a £50 carbon tax starting in 2025 would amount to something on the order of £150 billion, recovering a large chunk of the government’s COVID-19 spending. Secondly, it will send the right signals to businesses and households to invest in reducing carbon emissions. It will also safeguard against the potential threat to ‘clean’ investments due the low cost of fossil fuels in response to the COVID-19 fallout (i.e. negative oil prices). At same time, it will not have cash flow implications for businesses struggling with the fallout from the crisis, as no actual tax will be levied immediately. Thirdly, it will help promote growth. In our research, we have identified that carbon and fuel price increases spur clean innovation and deter dirty innovation with a net positive impact. Furthermore, we have evidence that

clean innovation also raises productivity elsewhere in the economy. Moreover, some of the revenues raised by the tax can be used to subsidise green technologies. Since innovation is the key driver of sustained economic growth, a carbon tax is therefore likely to lead to more economic growth, which is exactly what is needed to recover post-lockdown. Fourthly, while the efficiencyimproving elements of a carbon tax or other forms of carbon pricing have long been stressed by economists, political opposition has hampered their widespread adoption. However, if done carefully, the post pandemic economic and political landscape might prove an opportune environment for carbon pricing. People realise that the crisis spending must be recouped in the long run, so some revenue raising will be inevitable. In this case, why not do it in a way that helps tackle the climate crisis? Success will in part depend on how fairly the carbon tax is implemented as well as how it is communicated. For fairness, we must address the distributional impact of carbon pricing to avoid the poor being hit harder than the rich. This can be accomplished by paying back some of the revenue in the form of an allowance to lowerincome households. This provides also an opportunity for making a carbon tax popular – as the recent experience of British Columbia seems to indicate. Our efforts must also be sensitive to existing carbon-pricing schemes. Even though in terms of impact on the climate it does not matter how a given unit of a greenhouse gas is emitted, existing regulations treat different

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Yur big concern is that, despite good despite good intentions, intentions, governments and governments and business business will be be severely severely constrained will constrained in their their spending spending once in once the the immediate crisis immediate crisis is is over, over, due due to the the extraordinary extraordinary financial to financial burden of burden of the the lockdown. lockdown.

emitters (and even different more expensive than it needsemissions to be. from the same emitter) vastly A COVID-19-related general increase differently. This makes in carbon pricing couldcarbon be used to regulation inefficient therefore rectify some of these and differences. more expensive than it needs to be. To successfully implement this policy A COVID-19-related general increase in the future will need a cross-party in carbon pricing be in used consensus. This iscould feasible theto UK rectify some of these differences. as the Conservatives have recently To successfully this policy committed to theimplement net zero carbon in the future will need a cross-party target by 2050 and Labour has been consensus. This is feasible in the UK championing climate change action as the Conservatives have recently over recent decades. committed to the the net government’s zero carbon Is paying down target by 2050 and Labour has been COVID-19 debt the best use for the championing climate change action carbon tax revenue? We think so, as over recent decades. this could be part of a new “Marshall Is paying down the government’s Plan for Growth” after the pandemic, COVID-19 debt the best use for the one that is tilted towards the green carbon tax revenue? We think so, as transition. By providing an additional this could be part of a new “Marshall form of tax revenue, this opens fiscal Plan for Growth” after the pandemic, space for governments to rise to one that is tilted towards the green the challenge of rebuilding our transition. By providing an additional shattered economy. ◆ form of tax revenue, this opens fiscal space for governments to rise to the challenge of rebuilding our This post represents the views of the authors shattered economy. ◆

and not those of the COVID-19 blog, nor LSE.

Success Success will willin inpart partdepend depend on on how how fairly fairlythe thecarbon carbontax tax is is implemented implementedas aswell wellas as how how it it is is communicated. communicated.For For fairness, fairness, we wemust mustaddress addressthe the distributional distributionalimpact impactof ofcarbon carbon pricing pricing to to avoid avoidthe thepoor poorbeing being hit hit harder harderthan thanthe therich. rich.

This post represents the views of the authors and not those of the COVID-19 blog, nor LSE.

John JohnVan VanReenen ReenenisisRonald RonaldCoase CoaseSchool School Professor Professorat atthe theLondon LondonSchool SchoolofofEconomics Economics and andthe theGordon GordonBillard BillardProfessor Professoratatthe the Massachusetts MassachusettsInstitute Institutefor forTechnology Technology(jointly (jointly in the MIT Economics Department and in the MIT Economics Department andSloan Sloan Management ManagementSchool). School). He Hehas haspublished publishedover over aahundred hundredpapers paperson onmany manyareas areasin ineconomics economics with a particular focus on firm performance with a particular focus on firm performance and the causes and consequences of innovation. and the causes and consequences of innovation. He was the 2009 winner of the Yrjö Jahnsson He was the 2009 winner of the Yrjö Jahnsson Award (the European equivalent of the Clark Award (the European equivalent of the Clark Medal); the Arrow Prize (2011); the European Medal); the Arrow Prize (2011); the European Investment Bank Prize (2014), and the Investment Bank Prize (2014), and the HBR-McKinsey Award (2018). He is a fellow of HBR-McKinsey Award (2018). He is a fellow of the British Academy, the Econometric Society, the British Academy, the Econometric Society, the NBER, CEPR and the Society of Labor the NBER, CEPR and the Society of Labor Economists. In 2017, he was awarded an OBE Economists. In 2017, he was awarded an OBE for “services to public policy and economics” for “services to public policy and economics” by the Queen. by the Queen. Ralf Martin is an Associate Professor of Ralf Martin is an Associate Professor of Economics at Imperial College Business Economics at Imperial College Business School and the Director of the Growth School and the Director of the Growth Research Programme at the Centre for Research Programme at the Centre for Economic Performance of the London School Economic Performance of the London School of Economics. His research - which has of Economics. His research - which has appeared in leading economic journals - focuses appeared in leading economic journals - focuses on the relationship between firm performance, on the relationship between firm performance, economic growth and our impact on the natural economic growth and our impact on the natural environment. In 2015 he was the joint winner environment. In 2015 he was the joint winner of the Erik Kempe Award for the best paper in of the Erik Kempe Award for the best paper in Environmental and Resource Economics. Environmental and Resource Economics.

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LSE GLOBAL POLICY LAB

The ECB’s pandemic emergency programme is huge – use it to support the green transition Insights from the LSE Maryam Forum John Gordon Student MSc Economics, London School of Economics and Political Science The European Central Bank’s PEPP will purchase vast amounts of assets in an effort to support Eurozone economies. John Gordon (LSE) says it should take the opportunity to ‘green’ its balance sheet and avoid investing in polluting industries. The COVID-19 pandemic has unexpectedly reversed the European Central Bank’s (ECB) policies. While the Bank was planning to slowly phase out its asset purchases, it has now announced a EUR1.35 trillion Pandemic Emergency Purchase Program (PEPP) to support the Eurozone economies. But one policy it should not reverse is its increasing commitment to fighting climate change. With the crisis, greenhouse gas emissions could drop by up to 7% this year – the same reduction necessary year-on-year if we are to meet the objectives set out in the Paris Agreement. Clearly, this is not a sustainable way to do it. Instead, the ECB should heed calls to ‘build back better’ and use the PEPP to enable the transition towards a green economy. The ECB has a mandate for green quantitative easing The debate around ‘Green QE’ isn’t new. Ever since the post-2008 asset purchases, campaigners and politicians have appealed for QE to also fulfil social and environmental goals – particularly through the preferential purchase of green bonds. This has always been met with resistance in Frankfurt. Social and environmental goals are, of course, not part of the ECB’s mandate. For an institution that can only function on trust and credibility, any venture into the political domain is very risky indeed. But last year, things changed. In her confirmation hearing, Christine Lagarde announced she wanted to make climate change “mission-

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failure. Actively recognising their impact is therefore no longer a controversial or political decision; it aligns with the ECB’s primary objective of price stability. One person’s price distortion is another’s price correction.

critical”, opening the door to more affirmative policies. This was not without controversy. Jens Weidmann, the head of the Bundesbank, immediately cautioned the newly-appointed president. He would be reacting “very critically” to any inclusion of climate goals within the ECB’s strategy. Yet, in January, he declared that the ECB should start accounting for “the financial risks that result from climate change”. On the surface, this does not recognise the fight against climate change as an ECB objective. But in substance, it means it could favour green bonds and avoid the most polluting assets, which are highly exposed to environmental risks. His reversal is not entirely surprising. The financial sector has become increasingly aware of the variety of risks resulting from climate change. These range from the physical risks of a changing environment to transition risks affecting economic activity that could be displaced by a greener economy. The fact that they are not fully accounted for in financial markets can be seen as a market

Increase the supply of green bonds An important barrier to a preferential purchase of green bonds is their availability. Although the market was growing healthily at 51% last year, the monthly issuance averaged EUR17.5 billion. Any substantial share of the PEPP’s EUR1.35 trillion would dwarf these amounts. In fact, it could nearly buy up the entire market twice over – and the pandemic hasn’t helped. In March, the issuance totalled a meagre EUR2.5 billion, the lowest volume since December 2015. As French central banker François Villeroy de Galhau pointed out, any substantive intervention could “seriously distort the market”, well beyond any reasonable price correction to account for environmental risks. It is therefore up to investors, development banks and most importantly governments to push forward the issuance of green bonds. In this, they can build on expanding notions of sustainable finance. Blue Finance, and the issuance of Blue Bonds, were pioneered in 2018 by the government of Seychelles. These were developed in response to the issue of ‘Ocean risk‘, which emerged in recent years and has given a literal meaning to the idea of stranded assets. The projects that those bonds finance help prepare for future disasters, transition to sustainable economies and boost growth. In a post-COVID world, all these appear indispensable. A striking example is that of blue infrastructure,

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The development of a blue economy framework can be used to provide the tools to identify sustainable ocean activities and facilitate their financing.

The Seychelles has pioneered ‘Blue Bonds’. Photo: dronepicr via a CC BY 2.0 licence

which integrates nature-based solutions in the multi-trillion infrastructure market: it helps builds coastal resilience, protects the Ocean’s biodiversity and creates jobs. These are the types of projects the PEPP could and should support. The need for a ‘just transition’ towards a green economy has also led to calls for the issuance of sovereign ‘just transition bonds’. These build on the idea of sustainability bonds and are a mix of social and green bonds. They would not only include green projects but also socially and economically beneficial activities for those displaced by the transition. Although strict guidelines would be needed to prevent greenwashing, this idea has enormous potential to increase the stock of sustainable bonds. Out with the old, in with the new The limited availability of sustainable bonds does not mean the ECB should wait for others before it acts. Avoiding the purchase of carbonintensive bonds would in itself

represent progress. On this, the ECB’s actions have been less than laudable. Between March and May, EUR7.6 billion of the EUR30 billion corporate purchases went to fossil fuel companies. This isn’t surprising. In 2017, Sini Matikainen, Emanuele Campiglio and Dimitri Zenghelis showed that ECB asset purchases were skewed towards high-carbon sectors. This is linked to the myth of market neutrality. In short, in trying to avoid any distortion in the price of financial assets, the ECB actually encourages continuity and the persistence of current economic choices. When it comes to the climate crisis, this means supporting rather than displacing the polluting industries which dominate our economy. This is not to say that the ECB is inactive on the issue. It has launched the second monetary policy strategy review in its 20-year history, which will outline how it can help combat the climate crisis. It has also released a draft proposal on the inclusion of environmental risks and launched a public consultation which is due

to end in September. But all of these initiatives may be too little, too late for the PEPP. With a programme of this scale, it is vital that these initiatives are applied to the pandemic response. Wherever possible, the ECB should bring this agenda forward. In the meantime, greener asset purchases are not the only policy option for central banks to help build back better. In their recent briefing note, Simon Dickau, Nick Robins and Ulrich Volz outline nine possible instruments for a sustainable crisis response from central banks. At the top of the list is a readjustment of collateral frameworks to better account for environmental risks and impose haircuts on heavily exposed assets. Not only would this encourage divestment from high-carbon industries, it could boost the issuance of green bonds. As Kjell Nyborg remarked, “if central bank money is only available against igloos, or igloo-backed securities, igloos will be built” . There is still time for the ECB to limit its purchase of brown assets and explore the numerous ways to tackle the climate crisis. The PEPP could be a great enabler of the transition towards sustainable economies, but for that to happen the ECB needs to move fast – and do ‘whatever it takes’. ◆ The author thanks Professor Sam Fankhauser, Torsten Thiele and Dr Simon Dikau for valuable feedback.

LSE GLOBAL POLICY LAB

Message to World Leaders from LSE Maryam Forum Student Leaders We divide history into two parts, the one we like to remember, and the one we seek to actively forget. With an effective distribution of a vaccine still far off, it is important to think about how we will remember COVID-19. The pandemic has been a watershed for all of us. It has shaken us to the core, challenged our innate sense of invulnerability, and forced us to question everything, from our healthcare systems to the legitimacy of our governments. We, the next generation of leaders, have expected a lot from our current leaders. The COVID challenge is enormous. It can be overcome only if the world is able to unite, drawing on our diversity and power of collective wisdom. Yet what we have seen too often is distrust and division. Many leaders have failed us by not acting quickly and disregarding/abandoning global cooperation; others have even profited from corruption in the face of a global emergency. We have suffered enormously from this unspoken collective trauma. We now suggest radical changes to ensure that lessons are learnt from this crisis. As the young citizens of nations, we respectfully demand a shift in perspective to find a new momentum:

• We demand that our leaders ensure transparency, trust and national unity along with robust economic measures. Leaders that stand in solidarity are especially valuable now that we have come to terms with how fragile we are as a human race. • We need our leaders to build resilient governments that can effectively manage crises, with the wellbeing and protection of their citizens at the forefront of policy decisions. • We demand the leaders of developed countries that have a comparative advantage in the production and distribution of vaccines to join hands and build partnerships across the world, by combining their capacities in making testing mechanisms, vaccines and treatments accessible to everyone, regardless their age, gender or socioeconomic status. In our global world we are protected only if all of humanity is protected. • We request that countries which have been more resilient support developing countries to deal with the economic impact of COVID-19 and to tackle job losses and economic and financial instability. • We ask leaders of the developing world to adapt “smart” targeted

policies in which lockdowns do not disproportionately affect the most vulnerable. • We ask leaders to design policies for recovery and post-COVID growth that help reduce poverty and inequality. We suggest inclusive recovery strategies that do not leave anybody behind and ensure communities such as migrants and refugees also get access to medical services. • We strongly support ”build back better” policies from the pandemic to confront the climate crisis and change global attitudes and intentions. Climate change is a looming emergency where we expect our leaders to take action and preserve what is truly important: the planet. Our leaders must ensure governments and industries are active defenders of the planet. Therefore, we expect strong green and blue recovery packages. • We demand more representation by young citizens in tax reforms and social benefits policy. As our economic systems are under tremendous stress, much of the burden will be intergenerational. We seek to actively participate and shape economies to build

Doménica Avila, Human Mobility work stream

Hassan Gali, Global Emergencies & Responses

John Gordon, Rethinking Global Finance and the Global Financial Architecture

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back better, with green-minded investments and decent jobs. • We demand leaders and governments devise strategies that effectively tackle disinformation. In an era of massive disinformation with devastating real-world impacts, we want healthy democracies with competing ideas instead of struggling democracies flooded by strategic misinformation and fake news/propaganda. We reject information that seeks to divide our societies and dismantle vital institutions. • We ask our leaders to look beyond winning elections and redirect their focus and politics towards good governance. The leaders of today need to ask what kind of legacy they want to leave behind, and what kind of world their children and grandchildren will inherit. • Finally, we ask our leaders to hear the fresh perspectives, the digital nativism, and the activism from young people in every corner of the world, in every debate and every policy design. We need policymaking to be inclusive, with representation of the young generation from around the world. We need you to please trust us

This is why, as young citizens from around the world, we are joining platforms where our voices can be heard. This is why we have joined the Maryam Forum, where we work with policy-makers, business leaders and academics to seize the moment and rise beyond the COVID crisis. ◆

Mahima Andrew, Maryam Forum Secretariat

Ben Grazda, Democracy & Disinformation

Karina Rodriguez, Climate Change & the Ocean

Jintao Zhu, Innovation & Inclusive Growth

We, the next generation of leaders, have expected a lot from our current leaders. The COVID challenge is enormous. It can be overcome only if the world is able to unite, drawing on our diversity and power of collective wisdom. Yet what we have seen too often is distrust and division. Many leaders have failed us by not acting quickly and scuttled global cooperation; others have even profited from corruption in the face of a global emergency.

and listen to us. We are eager to contribute with ideas and creativity to frame recovery strategies and shape the future of the next generation.

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Separate and Unequal Won’t Suffice to Channel Investment to Address Racial Inequity An over-reliance on Community Development Financial Institutions (CDFIs) could represent a dangerous segregation of investment as companies seek to right past wrongs and address current inequities. By Megan Kashner, Northwestern University

On the face of it... the news is exciting. The past several months have seen many headlines about major investments targeting underrepresented minority business leaders and their enterprises. We’ve seen Bank of America announce a $1B commitment to “Advance Racial Equality and Economic Opportunity” over the coming four years. Facebook announced a similar commitment of $200M, and Netflix pledged to move over $100M in deposits to black-owned banks. Globally, announcements from Cargill and Mondelez have focused on support for minority- and women-owned businesses and supply chain partners, with Mondelez pledging $1B toward such enterprises by 2024. Some of these announcements and investments have been in the works for years; others were spurred by the waves of protest about and focus on racial justice in the U.S. and beyond, which kicked into high gear in reaction to the killing of George Floyd at the hands of police in May. While these and other similar news items represent an important movement to support underrepresented communities and individuals often subject to longtime institutionalized bias, they mask an underlying inequity: much of the capital in question will be deployed through local Community Development Financial Institutions, or CDFIs, using debt. These nonprofit institutions were developed specifically to serve underserved populations and, thus, overreliance on them for socialjustice-driven investment actually represents perpetuation of a “separate and unequal” mentality that must be recognized and addressed sooner rather than later. The Rise of CDFIs It turns out not all corporate pledges of capital for under-represented minority communities and businesses are the same, not by any stretch. While the headlines focus on big-name corporations and the dollar amounts committed to racial-justice and socialequity-focused pledges, the vehicles by which they will deploy the capital vary widely. Among the predominant

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approaches are corporate philanthropy, deployment of deposits, debt and equity investments, and supply chain engagement. Again, while these varying strategies tend to be aggregated under the broad umbrella of “commitments to address inequality,” there are important differences to understand, with large implications for stakeholders across this critical investment ecosystem. Here, we focus on the specific deployment of capital through local Community Development Financial Institutions, or CDFIs. CDFIs are a long-standing mechanism in the U.S., described as financial institutions that “focus primarily on personal lending and business development efforts in poorer local communities requiring revitalization.” Thus these organizations were developed to serve those who have been traditionally underserved by the traditional banking sectors. As such, CDFIs, typically operating as nonprofits, have the ability to receive funding from the US Department of the Treasury, as well as from private sources including large banks and others. There are over 1000 certified CDFIs in the US, including banks, credit unions, and loan funds. Bank of America provides perhaps the most classic example of investment in the underrepresented through CDFI. Their September 2020 announcement in (noted above), for example, pledged $200M to “minority entrepreneurs” in the form of growth capital. That announcement, upon further inspection, appears to be an elaboration of their May and June announcements, shedding further light on how they will deploy capital. The September announcement suggests the funding doesn’t reflect equity, angel, PE, or VC-level investment—only funding through CDFIs. Asking the Tough Questions On the surface, there’s nothing wrong with the concept of deploying investment to underrepresented minority-led enterprises by partnering with CDFIs. They fill an important need in the impact investment space, by both reflecting a commitment to serving the underserved financially and deploying capital in communities desperately

needing it. The problem is in the disproportionate use of CDFIs by major financial institutions purporting to invest in underrepresented communities and individuals. Indeed, this practice is not limited to our example of Bank of America. We see many major U.S. financial institutions following a similar path. What does it mean, then, that large banks heralding their investments in businesses led by underrepresented minorities deploy that capital not through their major-market mechanisms, but through institutions designed to make up for the shortcomings of institutions like their own? In fact, this approach follows a long-standing global tradition of deploying capital for return to underrepresented populations largely through a community or economic development approach, even when the target population is not defined by being low-income. That’s a problem. Specifically, the poor access to majormarket capital for underrepresented business leaders and their small or medium enterprises (SMEs) is so significant that in 2015 the OECD engaged research that ultimately highlighted the need for a broad range of financing approaches for this community. The researchers encouraged the engagement of PE, VC, and hybrid financing approaches, among others beyond CDFIs. Why rely mostly on these alternative financial institutions, then, for deployment of this capital? Why almost exclusively CDFIs? Why only debt? Can these investments reach a broad range of minority-led enterprises only through institutions built to serve low-income and under-resourced communities? In the bigger picture, what does it mean that in the year 2020, we believe, explicitly, that an effective business leader and founder might not be white, and, implicitly, that that leader and business should be reachable and servable mainly through these community finance institutions, with debt? These are the tough questions I found myself asking as I delved into the details behind the cascading announcements from companies and

It turns out not all corporate pledges of capital for underrepresented minority communities and businesses are the same, not by any stretch. investors about their commitments to address racial injustice through deployment of capital. These are the questions that ultimately led me to conclude that overreliance on CDFIs and debt capital as investment vehicles is problematic. The Problem of “Separate and Unequal” The core problem with over-reliance on CDFIs is that it reinforces an established paucity of equity investment in minority-led enterprises, as noted above. By several measures, only 1% of venture-backed founders in the US are Black, and only 1.9% Latinx. It is generally understood that early-stage capital, typically sourced from friends and family or close contacts by white entrepreneurs, is less accessible to underrepresented minority founders as a result of centuries of structural inequity. Look no further than household wealth trends: Black wealth in the U.S. is trending toward an average of zero dollars per household, while white wealth grows, even after economic downturns. Indeed, structural inequity is at the core of this issue. When we relegate Black and other minority-led businesses to community financial institutions like CDFIs, rather than serving them in mainstream markets, it begins to look a great deal like the redlining and economic exclusions of decades past. When Black families were prevented from taking out mortgages for home purchase, alternate financing cropped up. With Black youth were excluded from university education, HBCUs launched. These institutions and offerings, of course, signify something truly positive. HBCUs, for example, are critical institutions in the education landscape. → 81

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→ Similarly, CDFIs are vital institutions that provide financial infrastructure and capital access in essential ways in thousands of communities in need. Still, if we’re looking for instances of “separate and unequal,” we don’t have to look far when it comes to use of CDFIs. The headlines make clear the deployment of millions of dollars heralded as investment in minorityowned business are actually to be distributed in a limited manner (debt only) and through institutions intended to serve those impacted by poverty and community economic stagnation. This is where the danger lies. Our bias is showing. Our centuriesold instinct that investment in underrepresented minority must, by definition, sit in a separate space, a different institution, belies the inherent biases of our financial systems and their accessibility. From this perspective, that underrepresented borrowers are relegated to enage within the confines of CDFIs, rather than participating in the broader system of accessible capital, the approach doesn’t look much different from segregated housing or schools. I’m not alone in this view. Recently, social science researcher Isabel Wilkerson published a fascinating book comparing treatment of Black people in the U.S. to use of a caste system. She reflects on the Indian caste system and describes the many areas in which Black people have been and continue to be, relegated to different processes and systems. When we relegate investment to alternate institutions, we follow well-worn paths of systemic differentiation. Importantly, this is not unique to the U.S. We see alternative financing approaches in India, across African countries, in Latin America, and beyond. We see alternate routes for capital flow, governed by different assessments of risk, control, and access. We see these routes develop for altruistic reasons and for usurious ones. CDFIs were recently described as a “low-risk way” to invest in minority entrepreneurs. This may sound familiar to those of us who were listening to the chatter about the “low-risk” nature of microfinance a decade ago. After years as the go-to method for investors GROUPOFNATIONS.COM

to deploy capital for the economic improvement of impoverished communities, microfinance has fallen out of favor, failing to deliver families and communities out of poverty as hoped, and failing to convince many that its practices are not usurious. We must be cautious not to allow CDFIs to follow that same path. Where to Start It’s time for us to learn. Time to respect the reality many live in and stretch our thinking. Time to address the underlying assumptions and inequities inherent to financial realities, including not only deployment paths for capital, but lending practices, wage and supply chain practices, and perhaps even reparations-esque movements of dollars, lobbying, and political capital. We can see hints of such a shift in thinking in the language of last week’s Citi announcement that it would deploy $1B to address the racial wealth gap and take steps to become “an antiracist institution.” The stakes couldn’t be higher. Research from McKinsey demonstrates that action that truly closes the wealth gap for Black Americans could serve to increase U.S. GDP by 4 to 6%. That means outsize growth in opportunity for those who need it most, and broader financial benefit for all. So how do we get there? I’ve recently become interested in a framework called “Targeted Universalism.” This brilliantly simple approach encourages us to set universal targets in key social-impact domains. While not without its limitations and flaws, this intellectual categorization and action framework serves well here. In this case, we can consider universal targets for family economic resources and stability. Targeted universalism then instructs us to determine which

groups are at what level of progress toward that goal, and to intentionally deploy resources to address the gaps in progress and readiness to achieve the common goal for specific communities—whether policies, investments, philanthropy, or programming. Not surprisingly, many targeted universalism approaches are founded in problems that impact certain communities disproportionately, to promote greater equality. So, in the case of companies like Citi, those seeking to deploy capital to address and remediate racial injustice, my guidance would be to look not for broad, low-risk strokes like debt investment through CDFIs, but for more nuanced approaches that take into account various target-community deficits, particularly those rooted in longstanding inequities. They should consider as well the assets and capacities of the company, institution, or individual seeking to make a difference, and the underlying inequities and gaps that would have to be filled for any investment to succeed. In this case, racial injustice has resulted in lack of access to capital, lack of upfront investment, limited paths to VC and PE financing, and more. These gaps and barriers stem from historical biases in lending and corporate practice. As an initial step, I encourage all of us engaged in the work of finance to digest and adopt the “Investor Statement of Solidarity to Address Systemic Racism and Call to Action” published by Racial Justice Investing. Here, we are challenged to, among other things, commit to embedding a racial equity and justice lens into our organizations and to invest in “old and new vehicles to support Black employment, ownership, and wealth-creation.” We must start where inequity was born, thrives, and is reinforced over generations. We must start where it’s uncomfortable, and commit to the hard work. That’s the only way to a more equitable future. ◆

About the author MEGAN KASHNER, clinical assistant professor at The Kellogg School of Management, Northwestern University. She is also the director of social impact at Kellogg School.

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G L O B A L B R I E F I N G R E P O RT ILICIT TRADE G 2 0 _ F E AT U R E

The Negative Impact of Illicit Trade on Financing the UN Sustainable Development Goals By Jeffrey Hardy

In 2015, G7 leaders joined more than 150 other world leaders to formally adopt the 2030 Agenda for Sustainable Development and its 17 Sustainable Development Goals (SDGs). The SDGs have emerged as the blueprint for achieving sustainable development and cover everything from poverty eradication and zero hunger to clean water, decent jobs and peace. Since coming into effect in January 2016, governments, private sector and civil society have rallied around the SDGs to guide policy, implement investment strategies and allocate funding. But while the 2030 Agenda is clear in recognizing that trade will be an important means to achieving the SDGs, little attention has been given to the illicit side of the trade ledger. This is a crucial oversight because illicit trade significantly compromises achievement of the SDGs by crowding out legitimate economic activity, depriving governments of revenues for investment in vital public services, dislocating hundreds of thousands of legitimate jobs and causing irreversible damage to ecosystems and human lives. These alarming consequences are especially evident in developing countries, holding back progress, increasing costs and pushing achievement of the goals further away. With regard to challenge of financing development, the economic leakages across the sectors susceptible to illicit

trade create an annual drain on the global economy of US$2.2 trillion,1 and present a triple threat to financing the investment needed to reach achieve the SDGs2. In short, illicit trade: • Widens the financing gap by increasing the costs of achieving the SDGs; • Robs the collection of tax revenues that are critical for investment in social goods, services, and infrastructure; and • Blocks investment by inflows by eroding rule of law and weakening country credit ratings. This is especially important in the light of the 2019 Financing for Sustainable Development Report, which warns that mobilizing sufficient financing remains a major challenge in implementing the 2030 Agenda and investments that are critical to achieving SDGs remain underfunded.3 Mapping illicit trade against the SDGs The 2030 Agenda obligates member states—not the UN—to take steps to implement the SDGs and report on progress. As such, the UN itself will not be “implementing the SDGs”. Instead, the UN’s role is to help governments implement, report on progress, and share data. In order to help governments better understand how their efforts to achieve sustainable development must account

With regard to challenge of financing development, the economic leakages across the sectors susceptible to illicit trade create an annual drain on the global economy of US$2.2 trillion. GROUPOFNATIONS.COM

for the negative forces of illicit trade, the Transnational Alliance to Combat Illicit Trade (TRACIT) prepared a study that maps the 17 UN SDGs against the following sectors: agri-foods, alcohol, fisheries, forestry, petroleum, pharmaceuticals, precious metals and gemstones, pesticides, tobacco, wildlife and all forms of counterfeiting and piracy. These sectors were chosen because they participate significantly in international trade and they are particularly vulnerable to illicit trade. Trafficking in persons is also examined as a particularly abhorrent phenomenon affecting supply chains and basic human rights as well as contributing to illicit trade practices. Key findings from TRACIT study The TRACIT study demonstrates that illicit trade is a significant deterrent to achieving all 17 of the SDGs. There are notable “macro” impacts where illicit trade cuts deeply across many of the SDGs, undermining achievement of the economic goals for poverty reduction, decent jobs and economic growth (SDGs 1, 2, 3, 4 & 8), and robbing governments of taxable income that can be invested in public services (SDGs 9 & 17). When it generates revenue for organized criminal and terrorist groups, illicit trade undermines goals for peace and stability (SDG 16). Most forms of illicit trade plunder natural resources (SDGs 6, 14 & 15), abuse supply chains and ultimately expose consumers to fake and potentially harmful products (SDG 12). In all cases, illicit trades pushes achievement of the goals further away. While findings show that illicit trade poses a threat to all 17 SDGs, nowhere is the nexus as evident than in SDG 16 (Peace, Justice and Strong Institutions) and SDG 8 (Decent Work and Economic Growth). Across the board, these two goals are negatively impacted by all types of illicit trade examined in the study. In many ways, achieving SDG 16 is prerequisite for achieving all the goals, as it aims to deliver peaceful and inclusive societies with effective governance based on rule-of-law principles. Illicit trade–in all its forms– stands in direct juxtaposition to this goal and threatens SDG 16 and its underlying targets: Feeding violence (16.1), exploiting women and children

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(16.2), undermining trust in institutions and the rule of law (16.3), generating enormous illicit financial flows (16.4), breeding corruption (16.5), and financing terrorism (16A). Moreover, the links between illicit trade and organized crime are well established, from human trafficking networks and tobacco smuggling, to fuel theft by drug cartels and the involvement of the mafia and organized criminal groups in the trade of counterfeit goods. Communities and economies are further destabilized when billions of dollars of criminal profits are reinvested into other illicit activities. Perhaps most frightening are links to terrorist financing that heighten threats to national and global security. In addition to holding back progress, increasing costs and pushing the attainment of the goals further away, all types of illicit trade threaten inclusive economic growth and significantly hinder achievement of SDG 8 (Decent Work and Economic Growth). Lost taxes of all kinds— corporate, sales, personal income, excise and value-added—rob governments of revenues intended for schools, infrastructure and other public services. Illegal and unfair competition reduces sales and dampens the ability of legitimate companies to create lasting and dignified job opportunities. The specter of criminality and associated instabilities erodes the rule-of-law that underpins investment and weakens a country’s credit ratings, which are needed to secure financing and attract investment. Emerging UN Priority Recognizing the importance of this issue, TRACIT collaborated with the UN Conference on Trade and Development (UNCTAD) to hold the first Illicit Trade Forum on 3-4 February 2020 at UNCTAD Headquarters in Geneva. More than 55 Member States participated in the two-day forum, which was designed to help governments understand the challenge of illicit trade and to consider policy measures that account for the negative impacts of illicit trade on the SDGs. In the words of UNCTAD Secretary General Kituyi, “We can’t achieve agenda 2030 without addressing illicit trade. → 85

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→ The impacts are too overwhelming to be ignored. We need a shared agenda.” It was widely agreed that the sweeping, negative impacts of illicit trade call for institutional leadership to address the overlapping problems relating to multiple forms of illicit trade, link existing initiatives available across the UN and streamline the guidance and capacity support to Member States. In addition, Member States called for UNCTAD to take up work on illicit trade and to include illicit trade as a priority work area when Ministers meet to renew UNCTAD’s mandate at the UNCTAD 15 Ministerial in October 2020.

Implications for G7 The sweeping, negative impacts of illicit trade on the SDGs point to a wide range of challenges for both governments and business. To remain on track towards the SDGs, countries must prioritize efforts to combat illicit trade and plug the fiscal leakages associated with it. The Group of Seven (G7) countries represent seven of the largest and most industrialized economies in the world and collectively hold roughly 58% of the world’s wealth. Given the G7’s recurring commitment to the 2030 Agenda, it is incumbent on the group to amplify its attention to the problem and to press for implementation and enforcement of all its standing declarations against illicit trade. As global leaders in trade and development, their commitment to address the threat of illicit trade on the SDGs would raise awareness and drive action on a global scale.

Notably, illicit trade is not a problem confined to any single country or region; every country suffers from this menace, all that varies is the magnitude of the problem. The negative impacts also extend well beyond national borders, with extensive ripple effects across global markets. Hence, it will be expedient for G7 countries to attend and support the capabilities of other countries to better defend against illicit trade, especially developing countries who are already hard-pressed to monetize resources, commercialize innovation, attract investment, establish lasting job opportunities and create genuine, long-term economic growth. Without concurrent efforts to combat all forms of illicit trade – and the associated corruption and organized crime – the global community will not be able to achieve the overarching sustainable development goals to end poverty, protect the planet, and ensure that all people enjoy peace and prosperity. G7 Summit Now more than ever, we believe that the 46th G7 Summit presents a timely opportunity for Leaders to elevate priority attention to illicit trade, given its correlation to higher poverty, reduced peace and security, and income, health and gender inequality. The SDGs are integrated and indivisible in nature with significant inter-linkages across the goals and targets. Ending poverty, for example, must go hand-in-hand with strategies that build economic growth and address a range of social needs

including education, health, social protection, job opportunities and environmental stewardship. By the same token, a holistic approach is needed to address the significant number of interdependencies and overlapping problems relating to multiple forms of illicit trade. The urgent need for a strong international policy framework to combat illicit trade is further underscored by the COVID-19 pandemic. Worldwide reports indicate a surge in the availability and type of fake, falsified and fraudulent medical products intended to exploit the fears of consumers. Similarly, there are signs that ongoing restrictions in the availability and production of legitimate goods are driving production, trade and consumption of illicit goods, including illicit alcohol, leading to harmful health outcomes at a time when health systems are already under significant strain. Now more than ever G7 governments need to prioritize consumer protection, allocate resources to blocking distribution of fakes, warn consumers about the risks of fake and fraudulent products, especially online sales, and impose immediate sanctions on the manufacture and sale of fraudulent medical products. The impacts of illicit trade cannot be examined effectively in isolation of other sectors, nor can they be addressed in isolation of the SDGs. Fighting illicit trade must therefore be seen not only as a global responsibility of G7 leaders, but also recognized as a prerequisite to achieve the UN SDGs. ◆

About TRACIT Public and private actors can play an important role in determining a responsive, evidence-based work program for addressing illicit trade, including delineation of best practices, and, where applicable, development of regulatory standards. In this regard, the Transnational Alliance to Combat Illicit Trade (TRACIT) provides a platform for business and governments to collaborate holistically to mitigate the incumbrance of illicit trade on the SDGs. Mapping the impacts of illicit trade on the UN Sustainable Development Goals is part of TRACIT’s contribution to the partnership approach embodied in SDG 17 and a means by which business, the public sector and civil society—working in partnership—can more effectively achieve the goals. GROUPOFNATIONS.COM

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G L O B A L B R I E F I N G R E P O RT G L O B A L H E A LT H G 2 0 _ F E AT U R E

Think 20 Summit: COVID-19, East Asia, and the Global Response By Alan Donnelly

Two important events are taking place today. The first is the reconvened World Health Assembly, hosted by the WHO. The WHO have, in regions and countries around the world, as well as from their headquarters in Geneva have shown incredible leadership in the face of this highly contagious and fast spreading novel corona virus. There have of course been critics of the WHO but we should remember this is a member state organisation with a tight mandate and a totally inadequate budget. Itâ&#x20AC;&#x2122;s worth remembering that the amount spent in one day on tobacco products around the world, is greater than the annual budget of the WHO. It is most welcome that President

elect Biden has said he will sign an executive order to rejoin the WHO. While that in itself is a major step, it is not sufficient to meet the requirements of a World Health Organisation and a strengthened global health security framework to meet the new and growing health challenges. The second event today was the launch of the EUâ&#x20AC;&#x2122;s European Health Union Plan. The EU hangs its case on the economic cost the pandemic has taken, arguing that more coordination will strengthen the EUâ&#x20AC;&#x2122;s internal market and improve resilience in relation to health and environmental emergencies. There is to be new legislation to improve pandemic preparedness, Monitoring disease, addressing

drug shortages, strengthened test and trace and better risk assessment capacity. The reason why I highlight these two events today, is because it is the long overdue start to overhauling the global health security framework. It is a sign that countries and regions including East Asia make their national and regional health systems fit for purpose. Some countries in East Asia are global health exemplars. A testament to the care and investment in their pandemic preparedness, their commitment to test and trace, and providing honest scientific advice to their citizens on actions that must be taken to protect the population and the economy.

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I strongly believe that all countries must review their pandemic preparedness plans annually, and that regions like East Asia must act with urgency to develop a model, of much deeper regional cooperation. We have a silent pandemic spreading across the world, Anti microbial resistance. All countries as part of their national and regional planning must learn the lesson from Covid-19 and understand this threat of AMR that is with us, and cannot be neglected. We cannot address the challenges of resource mobilisation when we have a health emergency through reactive pledging conferences as we have seen with Covid-19. This type of mechanism is helpful in tackling natural disasters like an

earthquake, but as we have seen, is inadequate to help the world be prepared for the spread of a new pathogen that threatens the human race. Iâ&#x20AC;&#x2122;m pleased that we are joined today by President Asakawa of the ADB, because we need to change the narrative when it comes to health system strengthening. This is not a debate only for clinicians and scientists. Itâ&#x20AC;&#x2122;s a debate also for finance minsters and central bank governors. Because of our lack of preparedness, our failure to have invested in health system resilience, the financial cost to the world economy has been massive. Now that a vaccine is on the horizon, we cannot allow there to be a collective sigh of relief and gradually we return to business and usual in relation to health. For example, we need the IMF to build into its article 4 surveillance procedure the resilience of health systems in countries and regions. I discussed this with the head of the IMF some months ago and she is sympathetic to have an element of climate change and health system resilience reflected in the work the IMF does in assessing the strength of national and regional economies, but it needs to be piloted somewhere, perhaps in the EU or perhaps in East Asia. This would keep health investment on the agenda of finance ministers and central bank governors for the long term. Finally, I want to mention the need to launch new innovative and blended finance initiatives to help fund the research product development and innovation needed to improve resilience. The G20 should be mandated to examine, as has been done with green finance, to create a regulatory environment within which government or private sector health bonds can be scaled up.

Financial institutions and investors must be encouraged to share the burden of providing the investments necessary to ensure we continue to develop new diagnostics, therapeutics and vaccines to protect humanity. In East Asian countries there are already some excellent innovative and blended finance initiatives, like Japans GHIT fund, the Korean government support for blended R & D finance initiatives, and JICA have been ground breaking in their health system financing initiatives for health system strengthening in LMICâ&#x20AC;&#x2122;s. These need replicating and scaling up significantly. This in my view is a manageable path forward, and with so much of the innovation we benefit from in our daily lives today coming from, the creativity and entrepreneurship of East Asia - I invite you - indeed I urge you to work together regionally, and use your influence in multilateral fora like the G20, so that out of this terrible tragedy that is COVID-19, we create a global health security framework that keeps our citizens safe and healthy. Thank you

The G20 should be mandated to examine, as has been done with green finance, to create a regulatory environment within which government or private sector health bonds can be scaled up. 89

G L O B A L B R I E F I N G R E P O RT WOMEN’S ECONOMIC EMPOWERMENT G 2 0 _ F E AT U R E

The Story Behind the Establishment of the W20 Since its establishment in 2016, the W20 has succeeded in establishing strong cooperation with the World Bank, the IMF, UN Women, OECD and thinktanks that prioritize women policies to be developed and support the W20 recommendations. By Gulden Turktan

This year is the fifth anniversary of the Women 20 - W20 since its establishment in 2015 during the time of the Turkish presidency. The W20 stands out for governments to get their act together on inclusive women as the policies on women’s inclusion brings prosperity and sustainability to the respective economies that adhere to the women’s inclusion. The good news is that since its establishment the W20 has succeeded to establish strong cooperation with all the relevant international institutions like the World Bank, IMF, UN Women, OECD and as well as think-tanks that prioritize women policies to be developed and support the W20 recommendations. Another good news is every year the G20 presidency is touring around the world and it leaves a quite positive effect on the country of the presidency as well as in their neighboring countries - if not globally - on the women policies and acknowledgement of women’s positive effect when they participate in the economy. Establishing something new is never an easy task. As the founding chair of the W20 the most frequent word I had heard was “you can’t do it!” To me this alternatively meant that we can or you many actually do it, but we dislike the idea of something new! And if you try to do it but fail, we have the chance to say we told you and if you happen to succeed, do not expect any support from us! Further, there was another phrase “there is no need for the W20, don’t create new things and new costs!”. This was unacceptable, when you suggest something new, as everybody likes the status quo so much that people would GROUPOFNATIONS.COM

usually suggest “don’t start something new”. I have heard this many times when you listen to successful women entrepreneurs when they were telling their own stories that they were told “don’t start anything!” so many times during the establishment stage of their enterprises. They here and received support of course but the usual story always started with a discouragement. Further, another most frequently heard phase was “there is no need for establishing the W20!” This sounded like a phase that everything is so well established around gender equality and it is such a good order and there needs to be no further global action about it. It sounds like everything in the respective G20 economies are so well established and under control and their economies are so well performing that they do not need to investigate alternative ways of doing business. The support or contribution of women or an alternative way of looking at the things is not necessary, and all the women can go and party, since all the economies are doing so well. “There is no need!...” The truth was just the opposite. Meanwhile, all the recent research suggested the women in the world make a serious majority of the consumption decisions and therefore they should be included in the decision making; when women are in the boards of the companies, the financial results are better than those companies that have no women on their boards. Similarly, when women are in the driving seats of corporations that corporation becomes better environment friendly, better human resources friendly, better in the financial accuracy of their financial reporting and so on. In short research had started supporting inclusion

Establishing something new is never an easy task. As the founding chair of the W20 the most frequent word I had heard was “you can’t do it!” more and more. Apart from the equal rights issue, I could see that there was a need issue arising from many of the recent academic papers. Women’s contribution at the board level, at the C-level, their keen interest in detail, the fact tha they perform better or they are relatively more talented in communication, as well as their sincere concern for better management and fairness and ethics started to surface. All these developments aroused a positive value attachment to the value of women’s inclusion. There was a need

G L O B A L B R I E F I N G R E P O RT GENDER EQUALITY

for more women in the economy. When women are a part of the economy, when they earn income, they invest this income in their own or in their family’s education and their health and if any is left they save. And when they save the investments in the economy prosper and sustainable growth occurs. While it was terrible to hear the premise of “what shall women do in the G20, the G20’s is government business?” was heard many times, and the general picture supported this premise with the G20 family photos everywhere. In the family photo, except for Chancellor Merkel and of Germany and Christine Lagarde of the IMF, usually all the members were male. Still, these photos were indicating that some step forward was needed. At the same time, there was a new trend that had started among the leaders where they declared themselves as feminists! Actually, this was the real trend. There was a real and outstanding invitation for women and hence for the W20 from the part of the G20.

In 2013, in New Mexico, the G20 countries signed for women’s social and economic participation. In 2104, in St Petersburg the G20 signed for women’s financial inclusion. In 2014, in Australia, the G20 Declaration of Brisbane explicitly reflected that the G20 government wish to see that the gap in the inclusion of men and women in the economy needs to be closed by 25%, in each of respective countries, until the year 2025. They believed that this is a just and an attainable target for every country. The existence of vast research that indicates that when women are included in the economy, sustainable growth for the country will be more likely to be attained. This target duly signed target of the G20 was in short called 25 by 25. This was the G20’s signature that asked for women’s participation in 2014. There was a clear invitation to women or a demand for the establishment of outreach group Women 20 - W20. So, rather than push for the right there was a pull based on the need and the value.

When G20 Countries had signed the G20 Declaration of 2014 in Brisbane Australia, I was the President of the Board of KAGIDER - the Women Entrepreneurs Association of Turkey. During my presidency we were in search of global indicators to measure if we are going forward in our efforts for women’s inclusion in the economy and the lack of indicators unfortunately did not shed much light to our work. When the economy is good, men enter into the workforce and women usually leave. When the economy is not so good, men leave the work force and this time women start to enter. This cyclical path does not reflect a true performance indicator or a progress for the efforts of the women entrepreneurs since the macroeconomic trend overshadows and affects women’s inclusion in the economy. Measuring the gap however proves to be a better indicator. We applauded it loud. As the President of the Women Entrepreneurs Association and as an executive of an international electrical engineering company for 20 years → 91

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→ with a total of 110 year of board experience, I could see that a different outlook exists between women and men. Very visibly enterprises that are owned by women tend to be smaller and more conservative than their male counterparts. The existence of gender related risk behavior affects economic growth positively, at large. During the times of turbulence or slow down, smaller enterprises can hold their breath better and the collapse will be less in the overall economy. Whereas larger enterprises have better financial accumulation, and they can hold their breath better at enduring slowdowns. At the outset, the economy needs both the small and large enterprises and similarly both women and men. This presents the essence of sustainable growth. After we decided to lobby for establishment of the W20, we had truly little knowledge of the G20 structure. To our positive surprise, we understood that the G20 Sherpas who all had exceptionally good knowledge of the academic work and knowing the best road to progress and prosperity were sincerely supporting the establishment of the W20. We owe a lot to their sincere work. After intensely lobbying for the establishment of the W20, when I heard the sentence “Why do you need to do anything? Why the effort? You already have several chairs already, why would you need another chair? Yet, we can even offer you another chair. Forget about this W20!” To me this meant that we should continue with the lobbying efforts and we are probably more than halfway at the establishment of the W20. My guess turned out to be correct. The W20 was established with the unanimous vote of the G20 countries in April 2015 and launched in September 2015 and issued its first W20 declaration in November 2014 just before the G20 declaration of 2015. Since then the W20 has become the get together for better government policies and better business policies as women’s contributions matter in the policy making of the governments. As the Founding Chair of the very first W20 conference and Communique in 2015, I am immensely proud of the performance achieved since then. All GROUPOFNATIONS.COM

Value proposition of women’s participation or what the women shall bring value into the respective economies needs to be carved into stone, so that it should not be easy to ease it! the presidencies in a row have made great contributions! I must say that I am immensely proud about the progress and enthusiasm around the progress of the W20 work. I believe vey country was indeed remarkably successful in their respective efforts. In 2015, in the W20 Istanbul Communique, we had a list of actions needed to include women in the economy which include childcare and elderly care as well as an equal opportunity model as well as many other recommendations. In 2016, China W20 has successfully added digital inclusion into the to do recommendation list of the W20. In 2017, in Berlin, Germany, where they have quite powerful women as well as Counselor Merkel. She visited the W20 on three different occasions and invited quite influential women like her highness Queen Maxima of the Netherlands, Christina Lagarde, Executive Director of the IMF, and

many high-level government officials to attend the conference. I believe there was a conscious move for the visibility of the W20. Furthermore, the W20 list of to do’s were given a page in the G20 declaration of the year. Another successful launch for the W20 came from Buenos Aires, Argentina, in 2018, where in addition to all sets of the W20 recommendations, value add of rural women and indigenous were very well presented and put in front of everybody. In 2019 in Tokyo, Japan, in the W20 meeting all the W20 recommendations were discussed and artificial intelligence and its effect on gender impartiality as well as governance issues were added to the W20 Communiqué. In 2020 in Riyadh, Saudi Arabia this year was the half term measuring time of the 2014 Brisbane, Australia target of 25 by 25. The OECD in cooperation with the W20 Saudi Arabia presented the progress in a report. The W20 of Saudi Arabia did a great job in compiling what has been achieved and further infiltrated into the other G20 outreach groups on all women matters as well as quite positive lobbying efforts. The W20 communiqué will soon be issued. The year 2020 has been a stagnating year for reaching the Brisbane target of 25 by 25 due to the prevailing pandemic all around the world and hitting developed as well as developing countries simultaneously. All the G20 countries have 5 more years to reach the Brisbane target. And as it has been 5 years since the establishment of the W20 there are 15 more countries to go in front of us and the W20 leaves a positive effect and encouragement for their policy making to include women. Value proposition of women’s participation or what the women shall bring value into the respective economies needs to be carved into stone, so that it should not be easy to ease it! The G20 countries represent 85% of the global economy and the rest of the world wholeheartedly follow what is new in the G20 world that they can proudly copy for the prosperity of their own countries. The positive impact of the G20 declarations will make the world a better place to live. ◆

Helping businesses navigate climate change

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G L O B A L B R I E F I N G R E P O RT TREND MICRO A D V E RT O R I A L

Securing Cloud Journeys in the Middle East and Africa to Foster Economic Growth and Recovery By Dr. Moataz Binali, Vice President, Trend Micro Middle East and North Africa

The global economic downturn has pushed many regional enterprises into unfamiliar territory. While prior to the pandemic they were occupied with thriving in a hypercompetitive space, now they must look for ways to keep employees safe, manage hybrid work environments and reinvent their business from the ground up to accommodate market conditions and navigate the new normal. Organizations across the Middle East and Africa are now trying to accelerate their recovery with cloud computing, as they move from response to innovation. The cloud is indeed an attractive catalyst for growth. It offers business agility, so enterprises can expand or contract their technology toolset at will. It is home to a plethora

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of AI capabilities that allow cost effective, quicker deployment of everything from autonomous customer-service bots to data-driven IoT services. And it offers a reduction in complexity in favor of internal IT staff, who then need to spend less time on mundane admin activities. Though the power of digital transformation to engage customers, empower employees, optimize operations and transform products or services is undeniable, it is imperative to protect digital estates more than ever for those building their futures in the cloud. As companies migrate from exclusively on-premises architecture to a hybrid-cloud environment (the most common choice), legacy multivendor security systems can disrupt

the simplicity of the new ecosystem. An ESG research shows that 55% of organizations use more than 25 individual cybersecurity technologies; despite this, attacks are increasing and bypassing existing controls. And this complexity is exacerbated by a growing skills gap across MEA when it comes to trained security professionals. Comprehensive and unified security drives agility Meanwhile, regional governments intent on becoming economic pacesetters are becoming stricter in enforcing the implementation of best practices. The pursuit of privacy and data security have driven MEA regulators to impose new rules, while international standards such as the

EU’s GDPR have migrated to regional shores. As if all these challenges were not enough for CISOs trying to secure their new clouds, the current climate requires even more rapid responses to changing customer needs. From a CX standpoint, this calls for DevOps. But to ensure these dynamic teams can freely deploy upgrades and new features at a moment’s notice, their workloads pipeline must be secure. CISOs that want to be in control of their environment rather than be constantly wrestling with it must acquire a solution that offers a single point of visibility over all these painpoints which delivers comprehensive, unified security through a single solution across physical, virtual, cloud and container environments. Automate to innovate in peace At a time of unprecedented encounters, regional security leaders can gain peace of mind and address key business challenges with a solution that provides automated protection, offers developer-friendly tools, and covers the broadest compliance standards At its core, this helps create

a reliable buffer for organizations to meet the challenges of their operating markets and wider economies without having to constantly look over their shoulder for bad actors. Physical servers, virtual machines, cloud environments, or software containers – whatever the color and shape of your architecture, the right security solution helps monitor, protect, analyze, and mitigate threats against cloud workloads. And with a rich set of application-programming interfaces (APIs), organizations automate security based on their own unique needs. With continued pressure on DevOps teams to meet stringent project deadlines, baking security into their build pipelines can help ensure a slick, agile and responsive release cycle. And built-in automation, automated discovery, quick-start templates, can secure the environment to allow regional development teams to ensure compliance with all standards, existing or emerging. DevOps teams can leverage security as code by integrating security into the application development pipeline – a function that is offered by Trend Micro Cloud One – Workload Security reducing the friction that comes with applying security in rapidly changing and evolving infrastructures. And having been established as in synch with several local, regional, and international regulatory frameworks, including GDPR, PCI DSS, HIPAA, NIST and FedRAMP – it accelerates compliance across all environments. The disparity of legacy security suites is swept aside to make way for a single platform that knows your cloud inside and out, and has the breadth, depth, and intelligence to effectively manage it in the background while you innovate in the foreground. Workload Security provides advanced runtime protection for software containers, through a layered approach that sees off attacks on hosts, platforms (Docker), orchestrators (Kubernetes), containers themselves, and even containerized applications. Knowledge is power When building security in the cloud, it is essential to ensure its optimized

and integrates well with all cloud providers and environments. Cloud One – Workload Security works seamlessly, leveraging automated discovery across providers such as AWS, Microsoft Azure, and Google Cloud. Our 15 global research centers and 450 veteran researchers provide unrivaled visibility into the regional and global threat landscape, allowing us to continually strengthen protections for your cloud and cloud-native applications against all kinds of threats, from malware and ransomware to APTs and zeroday exploits. As defined by global analyst firm IDC, Cloud One – Workload Security’s ability to provide consistent protection has led Trend Micro to capture triple the market share of its closest competitor in the Software-Defined Compute Workload Security and Firewall Fabric solutions segment. If you are changing with the world, the cloud is the natural new home for your technology stack. But do not forget to change the locks on your doors. Malicious attackers are out there to disrupt your recovery. Don’t let them. ◆

With continued pressure on DevOps teams to meet stringent project deadlines, baking security into their build pipelines can help ensure a slick, agile and responsive release cycle. 95

G L O B A L B R I E F I N G R E P O RT P R I VAT A I R S A U D I A R A B I A A D V E RT O R I A L

Exceptional Service, Quality, Flexibility and Efficiency PASA (Privat Air Saudi Arabia) is a premier executive aviation company based in Jeddah, Kingdom of Saudi Arabia catering for heads of states, VVIPs, business leaders or select elite individuals that seek exceptional level of service, efficiency and flexibility. Beyond VIP private jet charter, PASA offers a diverse range of exclusive aviation services such as aircraft and helicopter management. Above all PASA gives the foremost importance to uncompromising operational safety and service quality. PASA belongs to the Asyad Group, a leading, successful international conglomerate headquartered in Jeddah, with a strong track record in industrial, real estate, aviation and first-class hospitality developments in Saudi Arabia and around the world. It is licensed by the Saudi General Authority of Civil Aviation (GACA) under Air Operator license Part 121 ‘’Special Unscheduled’’ to conduct charter operations in the kingdom and around the world, with frequent flights to Asia, Europe or America. › Uncompromising Safety and Compliance PASA abides by strict regulations to ensure the highest standards of safety for the clients. › Unsurpassed Service Quality We are dedicated to e delivering impeccable service with great attention to detail and unfailing commitment.

Aircraft Charter Choose from our premium fleet enabling you to fly around the globe in luxury, style, and discretion. Our executive jet charter offer is perfectly suited for VVIPs, heads of states, business leaders or individuals seeking more than just a private jet. With a focus on long-range VIP airliners fitted with stylish facilities, including private bedrooms for total privacy, VIP lounges, as well as stateof-the-art business amenities we will find the best solution suited to your needs! In addition to our own fleet, we can provide any other aircraft type including helicopters through our carefully selected partners worldwide.

Aircraft Management Choose from our premium fleet enabling you to fly around the globe in luxury, style, and discretion. Our executive jet charter offer is perfectly suited for VVIPs, heads of states, business leaders or individuals seeking more than just a private jet. With a focus on long-range VIP airliners fitted with unique and stylish facilities, including private bedrooms for total privacy, VIP lounges, as well as state-of-the-art business amenities we will find the best solution suited to your needs! We deliver unique and customized helicopter management programs designed to give you access to the unmatched capabilities offered by helicopter transportation. As the first commercial helicopter operator in Saudi Arabia, we enable our select clientele to access the highest level of comfort and flexibility. Enjoy the total freedom of flying directly from / to your home, airport or any other location. We deliver a full turn-key aircraft/helicopter management solution.

› Impeccable service in seven-star luxury on the ground and in the air › Premium fleet ranging from turboprop, to large-cabin jets and VIP airliners › Access to the most prestigious and exclusive VIP/royal terminals › Refined catering from the best restaurants › Concierge service, limousine/ helicopter transfer

› Crew services › Flight planning & operations 24/7 › 24/7 Maintenance supervision › Regulatory compliance › Accounting & administration › Insurance management › Full transparency (no hidden fees / margins) › State-of-the-art customer portal › Strong focus on cost efficiency › High return on charter sales

› Privacy and Discretion We provide all our clients with maximum discretion and confidentiality in all our services. › Versatility and Flexibility Our operational platform can accommodate VVIP business jets, helicopters as well as special mission or cargo aircraft

Beyond VIP private jet charter, PASA offers a diverse range of exclusive aviation services such as aircraft and helicopter management. Above all PASA gives the foremost importance to uncompromising operational safety and service quality. GROUPOFNATIONS.COM

Flexible Aviation Solution Our team can support you with any aviation operation to and from the Kingdom of Saudi Arabia. From landing permits, flight following, aircraft charter or management, PASA is the solution for all your aviation challenges.

› Maximising Value Thanks to its expertise and unique track record, PASA enables its clients and partners to generate value in aviation. From charter or cargo operation to dedicated special mission aircraft, PASA’s unique operating platform enables access to new markets and unlocks the commercial potential of your assets.

› Flexibility and Adaptability Our Part 121 license can accommodate all types of aircraft and helicopters offering our clients access to commercial operations. PASA proposes, arranges and manages tailor-made contractual and operational set-ups designed to maximize profits for our clients. ◆

PASA (Privat Air Saudi Arabia) +966 536 444 555 +961 79 13 55 17 sales@pasa.sa privatairsaudiarabia.com 97

G L O B A L B R I E F I N G R E P O RT SANTOS A D V E RT O R I A L

Australia is a Clean Fuels Powerhouse for the Asian Region

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Safeguarding the planet is one of the key themes of the 2020 G20 summit with climate change one of the most pressing global challenges of the 21st century. Advancing efforts to manage emissions in all sectors of the global economy will be a key focus along with the pursuit of cleaner energy systems. The Australian Government recently announced an investment of $1.9 billion to accelerate the deployment of cleaner energy systems, including carbon capture and storage (CCS), nature-based offsets and hydrogen. Access to cleaner, more sustainable and affordable energy is not only fundamental to managing emissions, but to reducing poverty and promoting economic growth. The G20 will also address energy security and market stability. Australia, and Santos, are frontrunners in the pursuit of these goals in the Asia Pacific region. With 10 LNG projects across the country, Australia’s multiple projects, locations, supply sources from both offshore and onshore, and conventional and unconventional sources, offer buyers diversity of clean fuel supply. Australia’s proximity to key Asian LNG growth markets means shipping costs are two to three times lower than freight costs from other parts of the world. Our multiple LNG shipping routes into Asia do not face the same risks – both geopolitical and logistical – as some other shipping routes, which helps ensure uninterrupted supply. Australia’s stable and established fiscal and regulatory regimes support future LNG investment – in short, Australia is a “safe bet” for secure, low-emissions LNG supply now and into the future. Santos has been safely and reliably supplying LNG to our customers in Asia since 2006. We have significant LNG project experience as a joint venture partner in three LNG projects and as an operator of two – Darwin LNG in Australia’s Northern Territory and GLNG in Queensland. Our interest in the PNG LNG Project is operated by Exxon. The Darwin LNG Project, where we are developing new volumes through backfill, will be one of the world’s

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most competitive new LNG supply sources in the 2020s. Barossa is a lean, dry gas field in the Timor Sea and a proven resource, located close to existing infrastructure and customer demand. The Barossa project to backfill Darwin LNG continues to progress toward being final investment decision-ready by year end, subject to business conditions, joint venture agreements and relevant approvals. Darwin LNG is a modern efficient LNG plant with approval and land secured for two additional trains, potentially making it a 10 million tonne per annum facility in the future. Santos has a strategic vision to continue to deliver value from a high-quality portfolio of low-cost, long-life natural gas assets and LNG infrastructure in the region. Santos’ disciplined approach to cost and our strong resource and infrastructure position is our competitive advantage, along with a track record of safety and reliability, and proximity to Asian markets. Combined with these advantages is Santos’ focus on a net-zero emissions future involving increased use of renewables in our operations, energy efficiency projects, nature-based offsets, CCS and the potential for new clean fuels such as hydrogen. With the world still relying on hydrocarbon fuels for 80 per cent of its primary energy, zero-emissions technologies that make hydrocarbon fuels cleaner are essential to meet the world’s emissions reduction targets. Santos has two nature-based carbon abatement projects that are registered with the Australian Clean Energy Regulator under the Emissions Reduction Fund, a native tree plantation in Queensland and a world-leading savannah burning project in West Arnhem Land in the Northern Territory that employs Indigenous Rangers and is based on traditional Indigenous fire practices combined with modern science. The West Arnhem Land Fire Abatement project involves early dry season burning which has been used for centuries to help prevent bigger, hotter and uncontrolled fires later in the season. Bushfires contribute up to

4 per cent of Australia’s annual greenhouse gas emissions, and in Arnhem Land, uncontrolled fires could wipe out 40 per cent of the area. Since 2006, we have worked in partnership with Traditional Owners, the Northern Land Council and the Northern Territory Government to offset greenhouse gas emissions from our Darwin LNG plant through the West Arnhem project. The United Nations has recognised the project as the best example in the world of Indigenous communities working in the carbon market, inspiring pilot programs in other nations such as Botswana. While nature-based carbon abatement projects have an important role to play, the real game changer will be CCS, which the IEA and the Intergovernmental Panel on Climate Change have identified as a critical technology to achieving the world’s climate goals. Today, CCS projects store around 40 million tonnes per year of carbon dioxide, far short of the more than two billion tonnes of carbon dioxide the IEA forecasts that CCS projects will need to store each year by 2040. In our own region, a recent report of the Asia Pacific Energy Research Centre finds Asia Pacific Economic Cooperation countries are not on track to meet their Paris commitments and therefore “achieving commercial viability of CCS technology for fossil fuel generation by 2030 is paramount.” Australia has a natural competitive advantage in CCS with known highquality, stable geological storage basins capable of injection at a rate of 300 million tonnes per annum for at least 100 years – the same basins that have safely and permanently held oil and gas in place for tens of millions of years. Australia needs low-cost abatement to maintain our position as a leading energy exporter and manufacturer of energy-intensive materials, and to enable new industries like hydrogen. With huge potential for both CCS and nature-based carbon offsets, combined with a strong carbon reporting and accounting framework, and a robust Clean Energy Regulator, →

Jobs now, jobs tomorrow and jobs into the future. That’s what our $1.9 billion investment into the next generation of energy technologies to lower our emissions will deliver. Scott Morrison Prime Minister of Australia

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→ Australia is uniquely placed to offer reliable, zero-emissions energy products to Asian markets where carbon-neutral LNG cargoes are already in demand. In turn Santos is in pole position to develop zero-emissions LNG and hydrogen. These products are already attracting strong interest from Asian customers and investors who are looking to reduce emissions from coal-fired power stations using hydrogen as well as natural gas. Santos’ Moomba CCS project in South Australia’s Cooper Basin, is one of the most globally competitive – it will be the second largest in the world and one of the lowest cost projects at our current estimate of around A$30 per tonne. The Moomba CCS project will initially capture and permanently store 1.7 million tonnes of CO2 per annum GROUPOFNATIONS.COM

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deep underground in the Cooper Basin and has the very real potential to be scaled up enabling both zeroemissions LNG and zero-emissions hydrogen using a combination of natural gas as feedstock and renewables. In October 2020, Santos successfully injected approximately 100 tonnes of carbon dioxide deep underground into depleted gas reservoirs as part of the final field trial for the Moomba CCS project. Ultimately, the Moomba CCS Project has the potential to store up to 20 million tonnes of carbon dioxide per annum. Santos has also commenced a concept study on a hydrogen future for the Cooper Basin. The Cooper Basin hydrogen concept study builds on our progress towards the Moomba CCS project.

CCS is the fastest and most efficient route to a hydrogen economy, decarbonising natural gas at its source and eliminating Scope 3 emissions. With over 65 years of experience in the safe production of natural gas, Santos has the operational knowledge, capability and infrastructure to be a leader in the creation of a hydrogen industry in Australia, with our Asian customer base for LNG also being the hydrogen customers of the future. In January Australia was heralded as the biggest LNG exporter in the world. Equally important is that for every tonne of carbon dioxide emitted when LNG is produced in Australia, our LNG is saving between three and 10 tonnes of emissions when it is used to replace aging coal-fired power generation in Asia, the region accounting for half the world’s total emissions. Not only is Australian LNG reducing

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It was a great privilege to visit The University of Queensland today and meet some of the amazing people working on a #COVID19 vaccine, supported by $5 million from our Medical Research Future Fund. Scott Morrison Prime Minister of Australia

global greenhouse gas emissions, it is reducing urban air pollution and improving human health outcomes in Asia. And it is helping bring the world closer to the promise of universal access to energy and in turn, higher living standards. Over the next one to two decades trade in LNG will continue to grow strongly in response to rising demand from developing economies, led by China. And while the hydrogen economy is incredibly exciting for the globe, for Australia and for Santos, the transition will take time due to the significant investment required in transport, storage and processing infrastructure, and in end user technology. Almost two billion people, around 25 per cent of the world’s population, still live in poverty on less than US$3.20 per day. Just under one

billion still have no electricity and another billion have access to unreliable electricity. Eight million people die every year from outdoor and household air pollution, linked to inefficient energy use in every sector of human activity including coal-fired power plants, industry, agriculture and transport. And it is the poorest people on the planet who have been most impacted by the global pandemic this year, with a rise in poverty levels making electricity unaffordable for more than 100 million people who already had electricity connections. At a time when the scientific evidence highlights the need for more rapid cuts to global greenhouse gas emissions while energy-related emissions are at an all-time high, it is a confronting challenge for policymakers everywhere to reconcile climate change aspirations with

competing human development goals. Despite the welcome growth in renewable energy, the world remains heavily reliant on oil, coal and natural gas and will continue to demand these fuels for at least the next two decades. Therefore, a mature debate about climate change and emissions reduction must address technologies to make these fuels cleaner and eventually “zero emissions”. This is necessary to have any chance of limiting global temperature increase to less than two degrees Celsius by 2100. We are proud of Australia’s high environmental standards and it is part of our compact with the Australian community that we seek to continuously improve our environmental performance and reduce our emissions. Australia’s high environmental standards for the production of energy resources are also increasingly attractive to customer countries who want to buy sustainable energy products as part of their contribution to delivering better global emissions outcomes. Combined with accelerated deployment of renewables, zeroemissions technologies for hydrocarbon fuels and for industries such as power generation, cement and steel, may well provide the fastest, lowest-cost pathway to meet the world’s emissions reduction targets.◆ 103

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Australia’s resources industry tackles the gender gap By Tara Diamond, Director Operations, Australian Resources and Energy Group

Australia’s resources and energy industry remains a key pillar of its economic success, ensuring our nation of 25 million people punches well above its weight in the global marketplace. In FY2020, Australia’s resources and energy export earnings reached a record $290 billion, underpinned by historic highs for iron ore ($97b), coal ($65b) gold ($24b) and copper ($10b). While the sector has not been unaffected by the COVID-19 pandemic, it has fared better than most and presently accounts for around 10.4 per cent of national gross domestic product (GDP) – the largest industry share overall. So too are the benefits of Australia’s strong resources and energy industry shared through employment opportunities. The industry directly employs around 240,000 people in Australia, but when factoring in mining, oil and gas, and all the related service and supply industries, the Reserve Bank of Australia has estimated the true flow-on employment impacts to

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be well over one million jobs. Despite the clear success of the Australian resources and energy industry, there is one area in which the industry continues to lag behind others – female workforce representation. At present women comprise just 16.4% of the Australian resources and energy workforce. This makes the industry the worst in the country in terms of female participation, with construction (18.3%) the only other to fall below 20%. By contrast, 27.3% of jobs in the Australian manufacturing industry and 34.4% of jobs in agriculture, forestry and fishing, are occupied by women. The dismal performance of the resources and energy industry in this area is not unique to Australia – for example both the United States and Canadian resources and energy industries have similar female workforce participation levels as Australia at around 13-15 per cent. The benefits of gender diversity It is also not through lack of recognition or awareness. Increasing female workforce participation across all industries has been recognised for a long time as a global challenge. In 2014, a collective agreement was made at the G20 to reduce the gender employment gap in respective nations by 25% by 2025. In Australia, there is a consensus that this push will add billions of dollars to the country’s economy. Research shows that increasing the number of women in the workforce correlates strongly with increased financial performance, better governance, stronger risk management and increased innovation. For example, a global study of

AMMA’s Bright Future STEM program inspires schoolkids about STEM and how it applies to resources and energy careers.

almost 22,000 companies across 91 countries found those with 30 per cent female executives obtained as much as six percentage points more in profits. In an Australian context, data suggests reducing the gender gap could boost national GDP by 11% and increasing the number of women in leadership positions would increase the level of economic activity in Australia by 20%. Further, it is well known that having a more diverse workforce has a positive impact on organisational culture. A diverse and inclusive workforce can generate tangible benefits, such as increased efficiency, productivity, innovation, creativity and employee engagement. Reversing the workplace trend So why is it, despite the benefits being clear and well accepted, that

resources and energy employers continue to struggle to attract and retain female employees? Longstanding male-dominated workplace cultures that can be offputting and intimidating to women is widely recognised as a key factor. But there are other practical issues also, such as the nature of work often being remote and traditional work design in trade and operator aspects, both being a significant make up of on-site workforce. All this is changing as the industry modernises and changes its cultured, practices and work design. But such change takes time and comes with its own challenges and difficulties. It is these challenges my organisation, the Australian Resources and Energy Group, is committed to facing and overcoming. In 2011 we created the Australian Women in Resources Alliance (AWRA), a national workforce gender diversity initiative, in response to the growing aspirations of our members to increase the representation of women at all

levels in their organisations. Through the AWRA initiative we have been working with government, companies and educational institutions to raise awareness of the benefits of workforce diversity and developing programs and strategies to help resources and energy employers become inclusive. The tools and resources we have developed are highly practical and designed to have immediate impact in our members’ workplaces. These include organisational auditing and benchmarking, diversity-focused organisational development strategies, workplace policy development, female mentoring programs and flexible work practices. Nurturing the talent pipeline More recently AWRA has turned its attention to a longer-term problem – the disproportionately low number of schoolgirls who convert an interest in science, technology, engineering and mathematics (STEM) subjects in the primary school years to higher

studies and eventually careers. We know there is enormous scope to widen the pool of girls interested in STEM. A Women in STEM Professions Survey Report shows that 25% of girls express an interest in a STEM career but can be discouraged by the lack of exposure to STEM activities both in and out of school. →

Supporting medical technology and advanced manufacturing are key planks in our economic recovery plan to create jobs, rebuild our economy and secure Australia’s future. Scott Morrison Prime Minister of Australia

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→ This naturally flows further down the pipeline, with only 16% of STEM graduates (Higher Education and VET) and only 27% of the STEM workforce being women. Additionally, the research shows a strong specific need in Australia to expose young females to the opportunities and jobs that STEM study enables. The outtake of all this research for the resources and energy industry is that to increase the number of potential female employees, the industry must engage girls early and work hard to keep their i nterest in STEM. This is precisely what AWRA is seeking to do with the Bright Future STEM Program. Founded in 2019, the Bright Future STEM Program visits schools across Australia to educate schoolgirls (and also boys), aged 9-to-12 years, on the application of STEM to the resources and energy industry. It gives participants a range of insights into STEM areas of study but also how those studies relate to real-world jobs and scenarios. Utilising hands-on activities and presentations from female industry GROUPOFNATIONS.COM

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role models, the program has been a roaring success having reached over 10,000 schoolchildren in 20192020 despite the challenges of COVID-19. While the road to changing cultures, perceptions and long-term workforce trends is tough, it is a journey that Australia’s resources and energy employers are fully committed and invested in. Despite seeing only small incremental improvements in the statistics, the push for greater female representation in Australia’s resources and energy industry has resulted in a wide number of industry and organisational award-winning initiatives, achieving real results at the ground level. With a laser focus on this crucial area, I am confident that in time the Australian resources and energy industry’s female workforce participation will be as much of a success story as its commercial and economic performance. You can learn more about the Australian resources and energy industry’s gender diversity journey at awra.org.au.

The Australian Women in Resources Alliance (AWRA) is a national workforce gender diversity initiative aimed at increasing the representation of women in the resources and energy sector.

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