STATEMENT OF THE 21st CENTURY COUNCIL
Nicolas Berggruen Institute
Paris, October 27, 2011
21st Century Council of the Nicolas Berggruen Institute
Shaukat Aziz, former Prime Minister of Pakistan
Nicolas Berggruen, Chairman Nicolas Berggruen Institute
Gordon Brown, former Prime Minister of the United Kingdom
Fernando Henrique Cardoso, former President of Brazil
Juan Luis Cebrián, Chairman of PRISA
Jack Dorsey, Founder of Twitter
Mohamed El Erian, CEO of PIMCO
Jendayi Frazer, Senior Advisor Nicolas Berggruen Institute
John Gray, Professor Emeritus, London School of Economics
Reid Hoffman, Founder of LinkedIn
Chad Hurley, Founder of YouTube
Francis Fukuyama, Professor Stanford University
Felipe Gonzalez, former Premier of Spain
Fred Hu, Founder and Chairman of Primavera Capital
Arianna Huffington, Founder of Huffington Post
Mohamed Ibrahim, Founder of Celtel International
Pascal Lamy, Director General of World Trade Organization
Eric X. Li, Founder Chengwei Capital
Alain Minc, Author and President of A.M. Conseil
Kishore Mabhubani, former Permanent UN rep from Singapore
Festus Mogae, former President of Bostwana
Elon Musk, Founder of PayPal
Dambisa Moyo, Author Economist
Rodrigo de Rato, former Managing Director of the International Monetary Fund
Pierre Omidyar, Founder of eBay
Nouriel Roubini, Co-Founder and Chairman Roubini Global Economics
Gerhard Schröder, former Chancellor of Germany
Peter Schwartz, Strategist, Futurist
Eric Schmidt, Chairman of Google
Amartya Sen, Nobel Laureate
Michael Spence, Nobel Laureate
Joseph Stiglitz, Nobel Laureate
George Yeo, former Foreign Minister of Singapore
Fareed Zakaria, Jounalist and Foreign Policy Advisor
Ernesto Zedillo, former President of Mexico
Ahmed Zewail, Nobel Laureate
Bijian Zheng, Director of the Academic Committee of China Central Party School
The ambition of this group is to build a consensus, though not each of us agrees with every element of this statement.
PARIS — Once again the world economy is on the brink. Only three years ago America was the epicenter of crisis. Today it is Europe. An enormous insecurity about the future has gripped ordinary citizens and investors around the world. Frustration and anger are spilling into the streets.
Once again the G-20 must act to prevent a devastating slide into a deep contraction, if not depression, and avoid a damaging retreat into protectionism and competitive devaluation.
At the Cannes Summit, the G-20 countries must recognize once and for all that, in today’s tightly linked global economy, no single country or bloc of countries is immune to spreading fragility and volatility. The advanced and emerging economies alike are highly vulnerable to economic and financial turmoil beyond their borders.
The only answer to this challenge is for each to work with the others, make the requisite adjustments and reach a common balance to the benefit of all. We must acknowledge this convergence of interests as the heart of the G-20 process so we can begin to build a sustainable community of interests at Cannes and beyond.
G-20 SHOULD FULFILL COMMITMENTS.
It must refresh its declaration from the London summit to strengthen the independent surveillance capacity of the IMF, enhance its quotas and reform governance so it reflects the new weight of the emerging economies. There is all the more reason to effect this shift in the near term since the emerging economies are being called upon to participate in the financial stabilization of Europe.
To become an effective institution of global governance and build a community of interests over the long run the G-20 should consider establishing an Executive Committee with a permanent secretariat so there is continuity of policies and decisions across the succession of summits. As with the UN Security Council, the Executive Committee should have permanent members representing all regions, with rotating temporary members.
Further, at this critical moment when protectionist temptations are re-emerging, the G-20 should reaffirm its commitment to open trade and investment globally by completing the Doha trade round and delivering new concrete steps that benefit developing countries.
The G-20 has proven itself once in managing a great rupture that resulted from an unsustainable imbalance in the global economy. It must do so again at Cannes to avoid another rupture. To wait for crisis to act is to invite crisis itself.
——————————————————————————————————————–
AFTER THE ARAB SPRING.
Unless there is an anchor of hope for the future, economies navigating historic revolutions will drag inadvertently drag countries backward.
Emerging countries, including the BRICS, should take an active role in stabilizing the Middle East through joining the wealthier Arab states and the West in investing the region in education, science and technology upon which broad long-term growth must be based.
THE DEVELOPING WORLD.
As importantly, the G-20 must insist on strengthening anti-corruption measures, transparency and good governance in the private sector and with respect to international trade.
One key area the G-20 must address in the future that goes hand in hand with these initiatives is fulfilling its pledge to meet the Millennium Development Goals, with the goal on education an urgent economic necessity no less than a moral imperative. To that end, we propose that the Mexican presidency in 2012 highlight this issue on its agenda.
CLIMATE CHANGE.
The G-20 cannot ignore the encroaching realities of climate change which are becoming ever more menacing. The opportunities for economic growth and job creation in developing clean energy are enormous at a time when there is massive joblessness. Since the G-20 encompasses over 80% of global GDP, its role is central. Here too the convergence of interests is apparent. Future G-20 meetings must not fail to focus on this matter through actions, including low-carbon growth strategies, on its own as well as within the United Nations context. President Sarkozy’s initiatives on “food security” and innovative finance for development — so that the poorest and most vulnerable among us don’t suffer most from the present instability — could not be more critical at this moment. As a matter of geopolitical and energy security, it is in the interests of all G-20 countries to support stability in the Middle East. The G-20 should agree on a coordinated, if not common, approach to fostering rapid economic development in the region. If the G-20 wants to remain credible in this second round of global turmoil, it should fulfill all the commitments it took at previous meetings. We therefore urge President Sarkozy to press the G-20 countries to develop a credible global growth and employment strategy that aims at inclusive growth by narrowing the income gap within countries and across national boundaries. and fairly sharing the burden across countries.
INCLUSIVE GROWTH.
Today Europe is the urgent priority. We certainly welcome the Brussels agreement on Greece’s sovereign debt and the more realistic “haircut” for bondholders, an increase in the firepower of the EFSF to 1 trillion euros and bank recapitalization as decisive, necessary and major steps forward.
But Europe’s fiscal, banking and political crisis must also be resolved in a way that does not hamper growth prospects in the short term while putting into place credible long-term policies to reduce deficits. If everyone pursues austerity today there is no way out for those with unhealthy balance sheets. Where deficits and interest rates are too high, governments have no choice but to consolidate. Where balance sheets are healthy and interest rates low, there is more room to support growth.
Greece can have no credible strategy to return to growth without supportive Eurozone action of some kind. It cannot do it alone without the exchange rate or inflation as tools.
As other central banks have realized, easing credit restraint is a necessary condition for growth. That is no less true for Europe.
Without such complementary and coordinated policies, Europe’s sovereign debt – as well as America’s mortgage debt — will continue to weigh us all down and impede any return to global growth. Inevitably, we must accept orderly restructuring as necessary for some with a greatly enhanced European Financial Stability Fund that walls off others from contagion.
Even as Europe seeks outside help from lenders, including from the more resilient emerging economies, the European Central Bank must stand as the lender of last resort.
As everyone should by now realize, Europe’s leaders must further commit to far greater integration though a fiscal union, deeper economic coordination and move toward political union or face the collapse of the Euro.
