Wednesday, September 23, 2009

The Global Green Solution for Global Economic and Ecological Crisis at the G-20 Pittsburgh Summit in USA

Global Strategic Enterprises, Inc for Peace and Prosperity-

Ethiopian American Civic Alliance
Belai Habte-Jesus, MD, MPH
Host of Voice of the Patriots and African Renaissance Broadcsts
Member of the Ethiopian American Civic Society Alliance

Press Release

Supporting the African Union Green Innovation Investment Movement at the G20 Summit in Pittsburgh, PA, 24-25 September 2009

We members and associates of the Ethiopian-American Civic Alliance in North America, declare our strong support of the G-20 Summit in Pittsburg with a focus on the Green Innovative Solutions promoted by Prime Minister Meles Zenawi of Ethiopia, the current chair and representative of African Union at the G-20 Summit.
We believe the current Global Ecological and Economic Crises are inter-connected and need synergized win-win green solutions that address both challenges at the same time.

Ethiopia, the Horn of Africa have suffered for over four decades due to ecological crisis, draught and famine that has brought a series of social and economic crisis that has been a scar in the human consciousness.

It is time to address the two inter-connected issues of the ecology and the economy at the same time at this summit in Pittsburgh, PA. USA.

We appreciate the G-20 November 15th Washington Summit focused on the international response to the global financial economic crisis, that tasked the G-20 Finance Ministers to take forward working the five areas of:
 Strengthening transparency and accountability
 Enhancing sound regulations
 Promoting integrity in financial markets
 Reinforcing international cooperation and
 Reforming the international financial institutions.

We believe all the above five priority areas should include Global Ecological Challenges, and include Green Innovative Solutions that is promoted by the African Union Group at this summit

While these working groups are critical in addressing the Global Economic Crisis, it is critical to appreciate that the Global Ecological Crisis has been raging for more than 4 decades, especially in its harshest forms in developing countries in Africa and especially the Horn of Africa.

The Global Economic and Ecological Crisis are inter-connected and the above five working groups and their respective recommendations should address the ecological challenges side by side with the economic crisis.

As such, the African Team headed by Prime Minister Meles Zenawi is encouraging the G-20 Summit nations that appropriate global ecological solutions include Green Innovative solutions that will transform the future economic and energy needs of the future.

The Economic Recovery Plan should include appropriate stimulus and recovery packages that address Green Innovative Solutions to the Ecological and Economic Crisis that is undermining the development and sustainability of all developing countries and especially African Countries.

We therefore request members of the G-20 Summit to look at the experience of Pittsburgh, the host city that has transformed its old industry with Green Innovative solutions that provides win-win solutions to both the Ecological and Economic Challenges faces governments and communities around the world and especially Africa.

As a community that has been negatively impacted by the devastating ecological crisis of the early 1970s that resulted in massive draught, famine and destruction of our families, we believe it is time to listen to the African delegation and seek win-win synergistic solutions that address both the global ecological and economic crisis.

Additional Background Reading and References
G-20 Working groups\

The November 15th Washington Summit, on the international response to the global financial and economic crisis, tasked G-20 Finance Ministers to take forward work in the following five areas:
• Strengthening transparency and accountability
• Enhancing sound regulation
• Promoting integrity in financial markets
• Reinforcing international cooperation
• Reforming the International Financial Institutions

Declaration and action plan from the Washington Summit (PDF 72KB)
As Chair of the G-20 in 2009 the UK, working closely with Brazil and Korea 2008 and 2010 Chairs respectively, has established four working groups to advance this work for the next Leaders Summit on 2 April in London. Each working group is co-chaired by two senior officials from the G-20, one from a developed and one from an emerging market economy. Each G-20 country is represented on each working group. Experts from relevant international financial institutions, standard setting bodies, non G-20 countries, business and academia have also been invited by co-chairs to input into the work of the groups.

Working Group 1 - Enhancing sound regulation and strengthening transparency
This group will monitor implementation of actions already identified and make further recommendations to strengthen international standards in the areas of accounting and disclosure, prudential oversight and risk management. It will also develop policy recommendations to dampen cyclical forces in the financial system and to address issues around the scope and consistency of regulatory regimes.
Co-chairs: Rakesh Mohan, Deputy Governor of the Reserve Bank of India, and Tiff Macklem, Associate Deputy Minister, Canadian Ministry of Finance
Working Group 2 - Reinforcing international co-operation and promoting integrity in financial markets

This working group will monitor actions and develop proposals to enhance international co-operation in the regulation and oversight of international institutions and financial markets, strengthen the management and resolution of cross-border financial crises, protect the global financial system from illicit activities and non-co-operative jurisdictions, strengthen collaboration between international bodies, and monitor expansion of their membership.
Co-chairs: Alejandro Werner, Deputy Minister of Finance Mexican Ministry of Finance, and Jorg Asmussen, State Secretary in the German Federal Ministry of Finance
Working Group 3 - Reforming the IMF

This working group will look at the role, governance and resource requirements of the IMF. It will review the appropriateness of the IMFs lending instruments and the effectiveness of its surveillance function, and will consider the sufficiency of its resources, and its general arrangements and accountability; and will look at the issue of reform of the governance structure so that it more adequately reflect changing economic weights in the world economy.
Co-chairs: Lesetja Kganyago, Director General of the South African National Treasury, and Mike Callaghan, Special Envoy International Economy, Australian Treasury.

Working Group 4 - The World Bank and other multilateral development banks (MDBs)
This group will consider the mandates, governance, resourcing and policy instruments of the MDBs in light of the needs of their members and the pressures resulting from the impact of the downturn on developing countries. It will also look at the issue of reform of the governance structures so that they more adequately reflect changing economic weights in the world economy.

Co-chairs: Anggito Abimanyu, Head of Fiscal Policy at the Indonesian Ministry of Finance, and Benoit Coeure, Head of Multilateral Affairs and Development Policy at the French Ministry of Finance

The Working Groups will report to Finance Ministers and Central Bank Governors when they meet on 14th March in the UK.

In addition, G-20 Finance Ministry and Central Bank Deputies have agreed to take forward the work of establishing closer macroeconomic cooperation to restore growth in a broad range of countries, while avoiding negative spillovers.


Meeting of Finance Ministers and Central Bank Governors, London, 4-5 September 2009

We, the G20 Finance Ministers and Central Bank Governors, met ahead of the Pittsburgh Summit to assess our progress in delivering the Global Plan for Recovery and Reform and agree further actions to ensure sustainable growth and build a stronger international financial system.

1. We reiterated the need for swift and full implementation of all the commitments made at the Washington and London Summits and have agreed the further necessary steps to strengthen the financial system, as set out in the accompanying declaration.

2. Our unprecedented, decisive and concerted policy action has helped to arrest the decline and boost global demand. Financial markets are stabilizing and the global economy is improving, but we remain cautious about the outlook for growth and jobs, and are particularly concerned about the impact on many low income countries. We will continue to implement decisively our necessary financial support measures and expansionary monetary and fiscal policies, consistent with price stability and long-term fiscal sustainability, until recovery is secured.

3. We must build on what we have already achieved and tackle the significant challenges that lie ahead. It is vital for growth that we act to support lending, including dealing with impaired assets and conducting robust stress tests where necessary. We must promote employment through structural policies, active labour market policies, and training and education. We will work to address excessive commodity price volatility by improving the functioning and transparency of
physical and financial markets and promoting a closer dialogue between producer and consumer countries. We welcome the swift implementation of the $250 billion trade finance initiative and reaffirm our commitment to fight all forms of protectionism and to reach an ambitious and balanced conclusion to the Doha Development Round.

4. We agreed the need for a transparent and credible process for withdrawing our extraordinary fiscal, monetary and financial sector support as recovery becomes firmly secured. Working with the IMF and the FSB we will develop cooperative and coordinated exit strategies, recognizing that the scale, timing and sequencing of actions will vary across countries and across the types of policy

5. We will work to achieve high, stable and sustainable growth, which will require orderly rebalancing in global demand, removal of domestic barriers and promotion of the efficient functioning of global markets. The need to combat climate change is urgent, and we will work towards a successful outcome in Copenhagen.

6. We have made significant progress in strengthening the IFIs, but more needs to be done. We are close to completing the delivery of $850 billion of additional resources agreed in April, including an expanded, more flexible New Arrangement to Borrow; and $50 billion to support social protection and safety nets, boost trade and safeguard development in low income countries. We welcome the overhaul of the IMF’s lending facilities. We encourage the Multilateral Development Banks to make
full use of their balance sheets and reaffirm our commitment to ensure they have appropriate capital, recognising that they are fully on track to deliver $100 billion of additional lending. In the period ahead we need to focus on providing resources to low income countries to support structural reforms and infrastructure development.

7. We look forward to prompt implementation of the 2008 IFI governance reforms, and will complete World Bank reforms by Spring 2010 and the next IMF quota review by January 2011. We recognise that the IMF should remain a quota-based organisation; and as part of the reforms, the voice and representation of emerging and developing economies, including the poorest, must be significantly increased to reflect changes in the world economy.

To achieve this we look forward to
substantial progress in Pittsburgh. We also reaffirm our commitment to increase accountability, strengthen the involvement of Fund Governors in strategic oversight, and agree to move to an open, transparent and merit-based selection of IFI management. To improve the role and effectiveness of the Fund in supporting stronger cooperation and ensuring a more sustainable global economy and international financial system, candid, even-handed, and independent
surveillance will be vital. We call on the IMF, working with other international institutions, to continue assessing our actions to secure a sustainable recovery.

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I would like to thank Ben Ford, Mark Sewell and Gordon de Brouwer for their assistance in preparing this

Thank you for the opportunity to be with you today. It’s always a pleasure to speak at an
ABE luncheon.

In 10 days, Treasurer Peter Costello will host the annual meeting of the Group of Twenty
(G-20) Finance Ministers and Central Bank Governors in Melbourne. It will be the most
significant economic and financial forum ever held in Australia and the culmination of
Australia’s year as chair of the G-20.

Under the overarching theme of ‘Building and Sustaining Prosperity’, the G-20 will
discuss key challenges facing the global economy.

Today I will focus on three of these challenges: reform of the IMF and the World Bank,
collectively known as the Bretton Woods Institutions (BWI); demographic change; and
resource security.

The G-20 is a relatively new grouping yet it is driving a quiet revolution in international
policy cooperation. So to set the scene I will briefly outline what the G-20 is, where it fits
in, and why it is important for Australia.


The formation of the G-20 in 19991 was recognition of the rapid and widespread changes
that have been occurring in the balance of global economic activity in recent decades.
While industrialised countries remain economically important, emerging market
economies (EMEs) have become significant players in the world economy. China and
India together, for example, have more than tripled their share of global output in
purchasing power parity (PPP) terms over the past 25 years (Chart 1). That is a prodigious

feat made even more impressive given the global economy is now almost 5 times larger
than it was in 1980 (also in PPP terms).
1 The group was established in 1999 in response to the financial crises of the late 1990s, with a broad
mandate to address international, financial and development issues.
The Treasury

Chart 1: Changing global economy
(Purchasing power parity valuation of country GDP)
Source: IMF.
Rest of world
India 3%
of World
Total GDP =$12,868.3 billion Total GDP =$61,027.5 billion
At the same time, the world has become more integrated. There has been a rapid
expansion in cross-border economic activity in the last several decades – reflecting
growing trade and investment, broad liberalisation and deregulation of domestic markets
and institutions, growth of multinational enterprises and increasing mobility of people.
The growth in international flows of goods and services and financial integration can be
seen in Chart 2.
The Treasury

Chart 2: Increasing global links
Source: IMF.
1970 1974 1978 1982 1986 1990 1994 1998 2002
Industrial Countries
Emerging Market Countries
Ratio to GDP Ratio to GDP
World Trade
(Ratio of goods and services imports plus exports to GDP)
Global Financial Integration
(Ratio of foreign assets plus liabilities to GDP)
1980 1983 1986 1989 1992 1995 1998 2001 2004
Per cent of World GDP 60
In an increasingly interdependent world, the distinction between domestic and
international economic challenges is blurring, reinforcing the importance of international
economic cooperation, especially between emerging and established economic players.
Indeed, it is hard to think of a global economic issue that can be successfully addressed
with national policies alone, or without the involvement of both industrialised and
emerging market economies – think climate change as an example.
This is important.

History reveals that a multilateral rules-based system reduces the ability of major powers
to pursue their interests without regard to the interests of others in the broader
international community. A rules-based multilateral system provides greater certainty
about the terms of engagement between nations.

It also facilitates the integration of emerging economies into the global system – helping
embed rules-based systems domestically and providing certainty to emerging powers
about how the incumbents will respond to their growth and development.
For mid-sized countries like Australia this is of critical importance. It makes predictable
the behaviour of existing major powers and provides a role model for emerging ones.
Experience highlights the importance of basing rules – whether domestic or international –

on market principles. The effective operation of price signals for goods, services, capital
and labour is the surest mechanism to achieve an efficient use of scarce resources, and to
deliver rising prosperity and sustained economic and social development.

Sustained economic growth built on open, global markets has paid dividends – raising
living standards and delivering permanent reductions in poverty. While the fight against
poverty is far from over, globalisation has helped halve the proportion of people in the
world living on less than US$1 a day2.

To make further progress on poverty we need to provide more economic opportunities for
the world’s poor. As Kofi Annan has said, in referring to the poor, “Personally, I do not
2 The share of the world's population living on less than US$1 a day fell from 40.4% in 1981 to
19.4% in 2002 (Source: World Development Indicators 2006, World Bank).

believe that those people are victims of globalisation. Their problem is not that they are
included in the global market but, in most cases, that they are excluded from it.” 3
One of the challenges for the G-20 is to find ways to help more of the world benefit from

In contrast to many of the longer established international fora, the G-20 is highly
representative, bringing together the key global economic players of the 21st century. It
comprises the world’s 19 ‘systemically significant’ industrial and emerging market
economies plus the European Union (EU). It includes the G7 countries (US, Canada, UK,
France, Germany, Japan and Italy) and key emerging economies such as China, India,
Brazil, Russia, Mexico, South Africa and Indonesia.

The G-20 – which represents around 85 per cent of global GDP (in PPP terms) and around
two-thirds of the global population (see Charts 3 and 4) – is structured to encourage open
and effective policy dialogue. Its key institutional features are membership diversity, open
and informal interaction, breadth of experience and national perspectives, and discussions
framed with a robust economic perspective.
The Treasury

Chart 3: G-20 share of world GDP
0 5 10 15 20 25 30
South Africa
Saudi Arabia
United Kingdom
Other EU
United States
Per cent
0 5 10 15 20 25 30
Saudi Arabia
South Africa
United Kingdom
Other EU
United States
Per cent
Source: IMF.
Market exchange rates Purchasing power parity
G-20 share = 90 per cent G-20 share = 85 per cent
3 “Companies must take lead to ensure globalisation benefits many”, Financial Times, 4 February
The Treasury

Chart 4: G-20 share of world population
Source: United Nations.
0 5 10 15 20 25
Saudi Arabia
South Africa
South Korea
United Kingdom
Other EU
United States
Per cent
G-20 share = 66 per cent

The G-20 work program is overseen by a management “troika” of the past, present and
future chairs – in 2006, China, Australia and South Africa. The agenda is advanced
through workshops (up to three per year), where some of the best thinkers from around the world address important global economic issues, and two deputies’ meetings, which refine the policy issues to be discussed by Ministers and Governors. A further institutional
strength of the G-20 is its medium-term focus, with issues often discussed over several
years and from different angles. This means that Ministers and Governors are able to
consider contemporary developments in a broader context, and delve into issues from a
variety of perspectives, which better informs their consideration of policy challenges and
possible responses.

These features mean that the G-20 is well-suited to the emerging shape of the global
economy. In particular, the G-20 has an inherent legitimacy, giving a genuine voice and
influence to emerging market countries while maintaining the engagement of the more
established global players.

The overarching theme of “building and sustaining prosperity” recognises the world’s
substantial economic progress of recent years at the same time as reminding us that

durable economic growth and development requires sound policies and a long-term

To give substance to this, in Melbourne the G-20 will address the three key challenges
already mentioned.

The IMF is one of the cornerstones of the international financial architecture. Yet, as
Treasurer Costello has argued, the G-20 is focused on IMF reform because the failure of
Fund governance arrangements to keep pace with the changes in the world economy has
eroded its authority and effectiveness.

While people often talk as if the Fund’s key role is that of lending, with its associated
conditionality (which exists to promote adjustment and safeguard Fund resources), this
misses the point. The IMF’s key role is to safeguard the integrity of the international
monetary system, which it should do through surveillance and policy advising.

It is a shared understanding of the importance of this role that, in September, brought
industrial and emerging market economies together with low-income countries to support
a package of reforms to IMF governance. This package consists of a first stage of quota
increases for the most significantly underrepresented economies, followed by a second
stage to deliver, among other things, a new quota formula designed to reflect members’
economic weight and an increase in basic votes to strengthen the voice of low-income
countries. This new formula will comprise the first major change in the way quotas are
calculated since the 1960s.

The fact that there was an agreement at all in Singapore owes much to the G-20’s
sustained advocacy of IMF reform and, in some key ways, to Australia’s leadership within
the G-204. Notwithstanding the years of repeated failure of the IMF members to reform
the Fund, working within the G-20 we helped build political momentum for reform,
articulated the two-stage approach that was adopted by the IMF5, contributed to the
4 A fact recognized by our invitation to discuss IMF reform with G-7 finance ministers and central bank
governors at their summit meeting in Washington in April 2006.

5 A framework for a review of the IMF and World Bank was set out in an Australian Treasury background
paper published in October 2005. This is available at

refinement of the proposals, and worked hard to build support for reform among other
countries both inside and outside the G-20.

But more remains to be done if the IMF is to become better equipped to prevent and
resolve future crises.

The already-agreed first-stage reforms – the limited ad-hoc quota increase for China,
Korea, Mexico and Turkey – are simply a down-payment, a sign of good faith. If the
process stops here the IMF will be consigned to a future of rising irrelevancy for the bulk
of the world – it will become an instrument of lending alone (to just a few regions around
the globe), and one increasingly focused on poorly performing low-income countries.
The key lies with the second stage of governance reforms – with the development and
implementation of a new quota formula that captures countries’ changing relative
economic importance now and into the future. If we can deliver on this – and our
Ministers have given us a deadline of September 2008, but preferably by this time next
year – a dynamic will be unleashed that will see a regular finetuning of voting shares and
representation that will dramatically alter the Fund over the decades ahead.

But even this needs to be complemented with further work on key mandate issues,
including policies and instruments of the Fund and the World Bank, and how the
institutions fit together. Attention is also now turning to governance reform at the World

All these issues will be discussed in Melbourne. The G-20’s interest in IMF and World
Bank reform – of both governance and their key policies and instruments – reflects the
importance it attaches to the institutions’ key roles in the context of the multilateral
rules-based system I referred to earlier. To carry out these roles effectively, the Fund and
Bank must have the necessary legitimacy and authority, and they must ensure their key
policies and instruments reflect members’ changing needs.

Let me turn now to demographic change.

Like many other industrialised countries, Australia will experience major demographic
change in the coming decades. Significant analytical and policy work has already been
done on the domestically-driven implications of demographic change, including through
the Intergenerational Report6. As a result, Australia has been able to contribute
substantially to the G-20’s consideration of these issues.
Interestingly, it has been suggested that demography is not a priority issue for a group
with ambitions to be among the pre-eminent international economic fora, because this is a
“domestic”, rather than “international”, issue.

I don’t agree with this assessment.

Surely a key part of international policy cooperation is to share experience in order to
develop better domestic policies in all member countries? Why else was the Treasurer
invited to participate in the G-8 summit in St Petersburg, and to discuss Australia’s
experience with fiscal reform and governance?

Moreover, as the G-20 discussed last year, a large part of the impact on any individual
country of demographic change will come about as a result of developments, and policy
responses, in other countries. That is, spillovers will be important7. Recognition of this
has shaped the G-20’s work, with a focus on the likely impact on global and domestic
growth, and on the extent to which labour mobility might be able to be part of a suite of
policy responses.

Our focus this year is on the implications of demographic change for financial markets,
institutions and systems. This recognises the potential for changes in the population
structure to affect saving behaviour, capital accumulation, asset returns, international
capital flows and the relative demand for different types of financial instruments.
At a Lowy Institute/Monash University seminar a few weeks ago I suggested that the
G-20’s on-going consideration of demographic change reflects the international
dimensions of the issue and the diversity of demographic experience across the group.
And I noted that, contrary to popular perception, demographic change is not solely about
6 IGR2 is currently in preparation.

7 This issue is explored in further detail in a paper presented to the G-20 Workshop on Demographic
Challenges and Migration in Sydney in August 2005: W.J. McKibbin, The global macroeconomic
consequences of a demographic transition.

the fiscal or growth pressures associated with population ageing in industrialised

The fact is that different countries are experiencing very different types of demographic
transitions. The clearest expression of this difference is the expected sharp rise in the
old-age dependency ratio – the ratio of retirement age people to those of working age – in
industrialised countries. In many advanced economies, working-age populations are
barely growing and in some they are already declining. But, in many developing and
emerging market countries working-age populations are likely to continue to grow for
some time, in some cases quite rapidly. (Chart 5)
The Treasury

Chart 5: Old-age dependency ratios
(Ratio of 65+ year olds to 15-64 year olds)
1950 1975 2000 2025 2050
Per cent Per cent
Source: United Nations 2004 Population Revision Database, medium variant projections.

These differences in the pace of demographic transition present a complex set of
challenges and opportunities for both industrial and emerging market countries.
Countries with relatively young populations may be able to benefit from their increasing
working-age populations. However, the ability of these countries to harness this
demographic dividend depends heavily on the domestic macroeconomic and policy
environment. Australia’s own experience shows that repeated macroeconomic instability
and restrictive labour market arrangements curtail the creation of the employment
opportunities required to absorb a rapidly growing labour force.

The G-20, through the Accord for Sustained Growth, can help these countries determine
appropriate policies and warn them of the consequences of the policies that industrialised
economies are now attempting to unwind, for example, the fiscal and workforce
participation consequences of different pension and welfare systems.
The Accord has, surprisingly, received little attention since it was released in 2004. Yet it
is a striking document, epitomising the agreed view of the G-20 members about the
critical policy foundations required to deliver growth. It reflects the experience of
emerging global powers such as China, Brazil, Korea and South Africa as well as that of
the current industrialised economies – all of whom emphasise the importance of robust
domestic institutions, good governance, sound structural policies and stable
macroeconomic frameworks.

For all countries, the policy response to population ageing has international dimensions.
With countries ageing at different speeds, cross-border capital flows have the potential to
moderate the impact of ageing by allowing funds to flow to countries with relatively
younger populations.

This is because emerging economies with young and rapidly growing populations are
typically expected to have more investment opportunities than domestic saving, while
mature developed economies with older, aging populations might be expected to have the
reverse. As a result, in the long run, capital would be expected to flow from the ageing
developed economies to the young developing ones—the opposite of what has been seen
in recent years.

There is, as yet, no consensus on how to best manage the global economy in order to
facilitate the sorts of shifts required. But it is clear that part of the response will need to
address both the significant barriers to cross-border capital and labour flows apparent in
many countries, and encourage financial market development in many developing
economies. Since the G-20 brings all the major financial markets and population centres
to the table, it can play a crucial role in highlighting how to improve the policy
environment and in ensuring that policies are in place to facilitate, at least cost, the
economic adjustment required by demographic change.

The Melbourne meeting will also address the issue of energy and mineral market
developments and resource security, a topic ideally suited to the G-20, comprising as it
does the key global producers such as Australia, Brazil, Canada, Saudi Arabia, South
Africa and Russia, and key consumers, including the growth consumers, such as the US,
EU, China, Japan and India.

The G-20’s focus on resource security is intertwined with the economic changes
highlighted earlier. Rapid industrialisation and urbanization in China, India and other
emerging market economies, combined with strong growth in industrial economies, has
boosted demand for a range of energy and mineral commodities, squeezing spare
production capacity and raising prices.

It is no secret that developments to date have been important for Australia, particularly
given our significant role in satisfying the growing global demand for energy and

Looking forward, in work commissioned for Melbourne, the International Energy Agency
has suggested around $US 8 trillion of new investment will be needed in the oil and gas
sectors alone over the next 30 years – or around $US 320 billion a year. It is worth
considering carefully whether such investment will be forthcoming on current policies.
Similarly, in a comprehensive long-term analysis of global minerals markets prepared for
the G-20 meeting, the World Bank sees ‘a huge potential for continued growth in
developing country metal demand’, given the low level of use per capita today, large and
growing populations, and the prospect of continued economic growth8.
These developments have some clear macroeconomic implications, including on inflation
and activity, notwithstanding the current and prospective expansions in global supply.
At a deeper level, though, these developments have also generated concerns about
resource security, concerns which have, at times, been expressed or perceived as threats to national interests. This explains why this issue can sometimes be viewed through a
8 Both the IEA and World Bank reports will be released publicly during the G-20 meeting.
narrow strategic prism, which results in policy prescriptions that focus on rushing to lockup and monopolise available energy and mineral resources.
History suggests that such a strategy is neither new, nor likely to be effective. As Keynes
noted9 in the aftermath of World War 1:

If the distribution of the European coal supplies is to be a scramble in which
France is satisfied first, Italy next, and everyone else takes their chance, the
industrial future of Europe is black and the prospects of revolution very good.
Moreover, these narrow strategic policies are influenced by considerations outside the
criteria economics tends to regard as essential, such as efficiency. One consequence is
that commercially-suspect projects can be pursued at the expense of other more sensible

But more important, still, is the recognition that the solution to securing a stable and
predictable supply of energy and minerals need not be a zero-sum strategic game. Open
and well-functioning global markets can deliver resource security and avoid these
problems. This is all the more important when you consider the geographic concentration
of energy and mineral endowments and the need for imports to satisfy countries’ demand.
This will inevitably result in rising trade dependency in the decades ahead.
Trade dependence is expected to be particularly acute for energy. For example, as can be
seen in Chart 6, the International Energy Agency projects oil trade volumes among net
importing nations will rise sharply by 2030. In the G-20, around one-third of members are wholly dependent on imports of oil; and around half rely wholly on imports of some of the main traded minerals10.
9 J. M Keynes, The Economic Consequences of the Peace (1919), p. 60.
10 Iron ore, copper, nickel, zinc, lead and bauxite.
The Treasury
Chart 6: Oil import dependency ratios
(net importing regions/countries)
Per cent Per cent 100
Per cent Per cent 100
Per cent Per cent 100
Per cent Per cent 100
Sources: IEA World Energy Outlook 2004.
OECD Total China
India European Union
2002 2010 2020 2030 2002
2002 2002
2010 2010
2020 2030
2020 2030 2020 2030

One of the key objectives Treasurer Costello is working to achieve in Melbourne is to
secure agreement that market-based approaches are critical to delivering greater resource security. Open and well-functioning global markets allow smooth and timely adjustments to changing economic conditions, complement macroeconomic policies, and support cross-border trade and investment.

As chair, the Treasurer will be focusing the G-20 on ensuring that the necessary standards of market transparency and governance are in place to allow capital and expertise to flow to resource-rich areas, wherever they may be. He also wants to encourage his colleagues to address some of the clear impediments to the operation of global markets, including distortions from various taxes, subsidies and investment restrictions. The Treasurer will encourage his colleagues to consider how to identify and implement the policy principles that support effective global energy and minerals markets, a discussion I expect that South African Finance Minister Trevor Manuel will want to build upon in 2007.

Apart from the three key agenda items already discussed, the G-20 will also review
current developments and risks in the world economy. Without pre-empting that
discussion, I would not be surprised to see active engagement on the risks associated with
macroeconomic policy adjustment in the current global environment. In contrast to
Australia, many G-20 and non-G-20 countries have made only limited progress on fiscal

consolidation in a period where global growth has exceeded its long-term average for
almost four years, and in which global spare capacity has been dramatically eroded. As
such, the risk of macroeconomic policy mistakes is likely to have increased.
Finally, at the Treasurer’s suggestion, the meeting will also discuss the political challenges
of implementing reform. The unique feature of this discussion will be its focus on the
“how” of economic reform rather than the “why”, a distinction which reminds us that
reform is much more than just a technocratic exercise.
To sum up, I believe that Australia’s leadership of the G-20 in 2006 provides an
opportunity to make real progress on a range of challenges facing the global economy.
These challenges have significant international dimensions, principally because the world
economy has changed substantially over the past quarter century. These changes have
seen the emergence of new economic players and increased the links between countries.
In this new economic landscape, the distinction between national and international has
While the “new kid on the block”, the G-20 brings together the key global economic
players of the 21st century and is structured to encourage open and effective policy
dialogue and to deliver practical solutions to global challenges.
It has already been a successful year. Australia and the G-20 have made a substantial
contribution to IMF quota and governance reform through the historic decision taken in
September. In Melbourne we will aim to make further progress toward comprehensive
and effective international solutions to the challenges of demographic change and resource security.

In 2007, we will welcome South Africa as the G-20 chair. South Africa, like our fellow troika member China, has been a great ally during Australia’s year as G-20 chair. We look forward to working with them over the next 12 months as they bring key issues to the table and we continue our collective efforts to strengthen the role of the G-20.
Thank you.

We members and associates of the Ethiopian American Civil Alliance hereby support the G20 Summit

If world leaders gathering for this week's G20 summit need evidence of the economic importance of trade and global engagement, they need look no further than their host city.

When the bottom fell out of the U.S. steel industry, Pittsburgh suffered one of the most devastating collapses of a major American city. But now, Pittsburgh is in the midst of a renaissance, thanks to a shift toward innovation, 21st Century jobs and an economy that embraces, rather than hides from, the global economy.

A recent article in The Economist tracks Pittsburgh's rise from depressed steel town to innovation center. Jobs in the growing fields of bioscience, electronics and nuclear engineering have replaced manufacturing jobs so effectively that Pittsburgh's unemployment rate is nearly two percentage points lower than the national average.

Pittsburgh's experience offers a road map for American cities adjusting to manufacturing downturns and the new realities of the modern global economy. Pittsburgh experienced its manufacturing collapse sooner and more suddenly than the rest of the country, and has had more time to adapt to the new economic reality and thrive.

What's unclear is whether policymakers today will follow that roadmap - or even acknowledge that it exists. Since the start of the downturn we've witnessed a troubling shift away from global economic engagement and toward isolation and protectionism on Capitol Hill and around the world.

In the United States, free-trade agreements and other measures aimed at promoting innovation and competitiveness have faltered, while bailouts and protectionist policies have thrived.

Policymakers on both sides of the aisle may praise the Pittsburgh example, and encourage other cities to learn from it, but these words ring hollow when the same policymakers are hewing away at the policy framework that makes the Pittsburgh model possible.

How can national leaders urge distressed cities to embrace innovation and competitiveness one moment, and legislate against those very principles the next?
Learning from the Pittsburgh model requires an understanding of what made it possible - and what didn't. Cities emerge as innovation centers by embracing change, not by clinging to unsupportable, outmoded business models and labor practices.
Transforming old manufacturing centers like my family home of Detroit won't be easy under any circumstances. Creating modern innovation centers out of unionized industrial cities won't even be possible if we impose union straitjackets and costs and undercut the ability of innovators to thrive and compete.

Protectionism thwarts innovation. It is a tempting mistress during economic difficulties, but we cannot insulate our way back to economic prosperity. To grow and create jobs for American workers, cities need access to new markets and flexibility to evolve new business models.

The G20 nations set the example for the world to follow. In the run-up to the Pittsburgh meeting G20 leaders have spoken eloquently of the need to resist protectionist measures and ensure a continued commitment to trade, but recent actions have not matched that rhetoric.

New trade barriers continue to emerge around the world, even as the continued global commitment to bailouts and government subsidies compromises effectiveness of international markets.

Here at home and elsewhere in the G20, government budget deficits, reportedly a topic for discussion in Pittsburgh, have skyrocketed. These rising debts heap a mounting burden on our nation and the inevitable higher taxes will chill the very future innovators and entrepreneurs who we expect to create the next great global prosperity.

These issues are all linked, and it is encouraging that they're on the agenda for the G20 meeting, but paying lip service to opening markets and shrinking deficits won't solve the problems that governments are partially responsible for creating.
Constituents need not stand on the sidelines and wring their hands in anticipation of change. If you care about the state of U.S. innovation and entrepreneurship, I encourage you to join the Innovation Movement, a national grassroots campaign with 30,000 members who support public policies that advance innovation, global competitiveness and the future of U.S. jobs.

We can only hope that the leaders gathered in Pittsburgh take a few moments to appreciate the remarkable journey of their host city and make a real commitment to upholding the policy framework that allowed it to take place.
Gary Shapiro is the president and CEO of the Consumer Electronics Association.

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