Does the planet need a new Bretton Woods Agreement and can Canada help?

The late February G20 Working Group meetings in India seem to augur well for the next G20 summit to be hosted by Prime Minister Narendra Modhi in September. Although the criminal actions of Russia in Ukraine will no doubt continue to redirect public attention away from the existential threat posed by global warming, the Indian government’s theme of “One Earth, One Family, One Future” does affirm that we are indeed at a critical inflection point in the evolution of our planet. It also signals that India—whether one is an admirer of Modhi or not—intends to play a leading role in setting the agenda and policy solutions that need to be adopted both globally and nationally in addressing the unprecedented threat from planetary warming. Last month’s nomination of Ajay Banga, an Indian-born Sikh of American nationality, to be president of the World Bank also highlights the growing prominence of India’s geo-political significance—notwithstanding Russia’s disingenuous threat to oppose his nomination. It also reflects the critical need to transform the Bank and its sister institution, the International Monetary Fund (IMF), so that they are rendered fit-for-purpose in the 21st century. The world is a very different place from when these two institutions were created in the mid-1940s at Bretton Woods, N.H., and both the role and operational instruments they deploy must be modernized and transformed to be effective in addressing today’s very different challenges. Indeed, in nominating Banga—who is not only a product of an Indian childhood, but also a 30-year veteran as CEO of Mastercard and investment banking—U.S. President Joe Biden is signalling that he wants the Bank to simultaneously address both climate change and poverty alleviation. He is making it clear that we can’t have one without the other. On one hand, a recent report published by India’s Observer Research Foundation, ranking G20 member countries in their actions to mitigate the impact of warming gave highest marks to India and Italy, adds to the optics of this potentially transformational nomination. On the other hand, the fact that the three worst performers were Saudi Arabia, Canada, and the U.S. also reveals the stark contrast between the lofty rhetoric and goals set by some governments, and their subsequent actions. In the case of Canada, not only does this disconnect exist with respect to climate mitigation, but also with respect to development assistance. The current Liberal government has done little to reverse the Conservative Harper government cuts to Canada’s development assistance program (in the process emasculating the former Canadian International Development Agency and eliminating what was the world’s leading development policy think tank, the North-South Institute), leaving it (as a percentage of gross national income) amongst the stingiest of aid donors from among the 38 member governments of the Organisation for Economic Co-operation and Development. Is it any wonder that neither the Trudeau nor the Harper governments were able to secure a United Nations Security Council seat? The disconnect also suggests that the current government fails to appreciate the critical interdependence between development and global climate goals. Rather than seeming to address development assistance and climate mitigation on two distinct and different tracks, Canada should be providing substantially increased assistance for sustainable, inclusive, and resilient growth. In addition to transforming today’s image of Canada as a risk-averse, policy laggard with respect to development and climate change, such actions would enhance its credibility internationally, and restore to its policy toolbox an important instrument of soft power that had historically allowed it to punch above its weight with a certain moral authority. It would also allow it to play a leading role in encouraging the incoming World Bank president and its other shareholders to radically restructure the institution and, by extension, other multilateral development banks. Specifically, Canada could encourage the Bank to: advocate for and itself utilize a new broader growth paradigm that would no longer use GDP as the principal metric for measuring economic progress; play a leading role in establishing parameters for energy and carbon pricing (including the pricing of negative externalities); develop instruments that would allow for lending regionally so as to be able to address cross-border challenges including warming, climate-induced catastrophes, and pandemics; strengthen Bank surveillance and supervision practices, while more readily invoking the Bank’s legal remedies so as to minimize the corrupt use of Bank financial support by kleptocratic borrowing governments; and change the Bank’s incentive system so that career advancement is not based preponderantly on the volume and quantity of operations submitted by staff for board approval. If done while simultaneously reaffirming the values that the Bretton Woods institutions seek to uphold through their lending programs—namely the rule of law and human rights as reflected in the “sustainable development goals” and in the UN Declaration on Human Rights—these actions could facilitate the Bank’s efforts to leverage the unprecedented volumes of private funding that its borrowing members will need before 2030 from both the world’s private capital markets as well as from its current shareholders, without jeopardizing its critically important AAA rating. Canada could be at the forefront of this “Beyond Bretton Woods Initiative” in recommending that the G20 create a small secretariat of representative experts to revisit the raison d’etre of the Bretton Woods institutions in light of today’s changed global circumstances, and recommend how they should be remade so as to be fit-for-purpose in this 21st century. Joseph Ingram is a former World Bank special representative to the United Nations and the World Trade Organization, and is currently an expert adviser to the Growth Dialogue and a fellow of the Canadian Global Affairs Institute. The Hill Times

Does the planet need a new Bretton Woods Agreement and can Canada help?

The world is a very different place from when the World Bank and International Monetary Fund were created in the mid-1940s at Bretton Woods, N.H., and both the role and operational instruments they deploy must be modernized to address today’s very different challenges.

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Does the planet need a new Bretton Woods Agreement and can Canada help?

The world is a very different place from when the World Bank and International Monetary Fund were created in the mid-1940s at Bretton Woods, N.H., and both the role and operational instruments they deploy must be modernized to address today’s very different challenges.

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