Ramesh Jaura, moderator of the morning roundtable on the post-G20 efforts to counter the effects of the crisis, began by underlining the social and economic impact of the crisis on developing countries. He then gave the floor to Simona Bovha Padilla, Economic Adviser at the Bureau of European Policy Analysis (BEPA) of the European Commission, who gave a brief overview of the priorities set by the plan for action set forth by the Commission.

She outlined the need to address the following topics as priorities: (i) crisis impact: the crisis has hit developing countries harder than according to the forecast. Central and Eastern Europe was hit especially hard. (ii) the risk of instability that could stem from the crisis. (iii) On Aid, with remittances drying up there is a renewed need for ODA. (iv) On poverty, the Commission devised new instruments, including the Vulnerability FLEX that aims to act counter cyclically to support countries in need. (v) She outlined the urgent need to boost the real economy by investing in interregional infrastructure, and to support green growth. (vi) Efficiency gains need to be made. EUR 7 billion could be saved by thoroughly implementing the Accra Agenda for Action.

In conclusion she outlined that the crisis is a turning point for global governance. She emphasized that the EU plays a leading role in promoting stability, and providing technical assistance as well as ODA.

Jean Louis Arcand, Professor at the Department of International Economics, IHEID, made a strong case for efficiency and incentives as real drivers against the crisis. He underlined that over optimism (voeux pieux) and money alone are not enough in the face of this crisis and pointed out that ODA was seldom devised as to differentiate transient from chronic poverty. Mr. Arcand criticized the central planning or ‘burn rate’ mentality of big donors in which success is measured not in terms of aid effectiveness but of aid volume.  This, he continued, is only made worse by poor results in evaluating programmes on the ground, especially in terms of lessons drawn by past mistakes and inefficiencies.

He concluded by saying that development actors across the board, institutions, governmental agencies as well as NGOs need to engage in serious reflection on quality assessment and effectiveness if they aim at countering the effects of the crisis.

Vicente Yu, Programme Coordinator of the South Centre's Global Governance for Development Programme, reacted to Mr. Arcand’s presentation by saying that aid is indeed an industry, with some inbuilt mechanisms that do not encourage effectiveness. He linked Mr. Arcand’s and Ms. Evans’ interventions by saying that rethinking global governance is the necessary first step towards better aid practices.

Mr. Yu explored the urgent need for representativeness and true North-South collaboration in the face of the crisis. He expressed skepticism at the USD 1.1 trillion figure pledged at the G20 meeting, seeing business as usual rather than a game changer. Mr. Yu outlined 6 priorities for action set by the South Centre: (i) regulatory deficit of global finance must be addressed, (ii) avoidance of collateral damage to the South in the Northern response to the crisis (iii) IMF reform is required (iv) expansionary fiscal and credit policies should be adopted (v) an international independent debt court should created (vi) more reliance on regional institutions should be promoted.

Mr. Yu also warned of the rising threat of protectionism and advocated a central role for the UN in the future of global governance.  He also called the EU to focus on coherence in its own policies, on good governance in the North and to act swiftly on the 6 priorities for action advanced by the South Centre. 

Ramesh Jaura thanked Vicente Yu for outlining the complex issue of North-South cooperation and then took questions from the floor. Questioners focused on green growth and global governance and concrete steps for action, underlining weakness in the EU drive for reforms at the IMF level. The question of aid was also raised.

Vicente Yu replied that the concept of aid is to be reexamined and that more focus should be put on a more equal world in representation. Simona Bovha Padilla stressed that the EU does engage in promoting IMF reform, although she conceded the process to be slow. Asked to give concrete proposals to address the effectiveness issue, Jean Louis Arcand underlined the need to devise self financing insurance schemes for the poor to help support developing countries as a way out of the crisis and out of the ‘burn rate’ mentality of donors. Alison Evans said that while solutions do already exist, in the form of microfinance and remittances, the need for political coherence and solid global governance is direr. The crisis, she said, provides us with an opportunity to act, on the European and global level, for more coherence. She stressed that the upcoming Copenhagen conference would put the world community to the test.

Opening the session to the Forum’s participants, Mr. Jaura gave the floor to Klaus Rudischhauser, Director for General Affairs, Directorate General for Development (European Commission) who thanked the speakers for their appraisals of the 28 pledges set forth by the European Commission, a process in which he was directly involved. Mr. Rudischhauser pointed out the uniqueness of the Communication, as the only political document addressing the point of helping developing countries in respect to the global crisis. While the G20 meeting addressed for the most part middle income countries, the state of the poorest countries was not addressed. The European Commission, he said, took the initiative to address this gap. The point of this Communication is to underline that ODA is no panacea and that development must rely on a broad spectrum of instruments. To answer criticism made by the speakers, he said that budget support and vulnerability instruments were vital tools in preventing developing countries from cutting social spending. He emphasized that long term solutions are to be encouraged, and admitted some shortsightedness in EDF budget support. But he also pointed out that reaching long term targets, and thus sustainability, was temporarily less important than mitigating the most dire short term effects of the crisis.

After Mr Jaura asked the panel to react to Mr. Rudischhauser’s intervention, Dirk Willem te Velde emphasized that the poorest countries can stimulate the global economy as they are the most liquidity constrained and that developing and developed countries are linked both ways. San Bilal, echoing previous interventions, replied that the need for sound global institutions in which North and South could deal with global together was most urgent.

Ramesh Jaura thanked the speakers and participants for a lively discussion and concluded that across the board speakers agreed that the silver lining in this time of crisis was a much heightened sense of interdependency. He added that questions of inclusiveness in global governance, as well as reform, need to be at the top of political agendas in Europe and beyond.

Report written by Aurélien Lafon, EADI.

Download the report on the EDC2020 Policy Forum.