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Seoul Summit 2010

The authoritative magazine for VIP’s, delegates and diplomats


Summit 2010

Summit 2010

Summit 2010

Summit 2010

Summit 2010

Summit 2010

Summit 2010

Summit 2010

“The Republic of Korea, as this year’s chair and host of the November

2010 G20 Summit, will do its utmost to ensure that the global economy is

placed on a path of recovery so that we achieve strong, sustainable and

balanced growth. The G20, the premier international economic forum for

the developed and developing countries, will lead this effort. The Korean

government and its people will do its best to ensure a successful G20 Sum-

mit in Seoul.

This unprecedented global crisis still presents challenges but the world

has also been presented with a unique and historic opportunity. What we do

today and how we overcome this crisis will determine our future success.

The 2010 G20 will help us fulfill our promise of a brighter tomorrow.”

Thank you.

President of the Republic of Korea, Lee Myung-bak

Summit 2010

Summit 2010

Publisher’s Note
The CAT Company Inc
G8/G20 Summit Magazine Company Ltd
The CAT Company Inc
President and Publisher
Chris Atkins

Chris Atkins Editor in Chief

Ana Carcani Rold

Advisory Board
Dear G20 Readers, Peter Atkins
Chris Atkins
Jennifer Latchman
I would like to take this opportunity to thank
all those involved for their dedication in helping Graphic Design and Art Direction
make this a successful publication, especially Rick Henri de Baritault
Schneider and Andrew Jacuzzi at Verso Paper.
Without their support this magazine would not be President of Sales
Mike Nyborg
Sales Executives
Chris Atkins
The CAT Company is the only publishing com- John Armeni
pany that has been involved with the past fourteen Guy Furl
G8 Summits and is now happy to publish the second Mike Nyborg
issue of the G20 Summit magazine, continuing the Ray Baker
Chad Hatch
tradition and continuing to get great recognition as Doug Lambert
the Summit’s foremost publisher.
Hinckley Institute of Politics - University of Utah
The CAT Company continues to increase the ex- Kirk Jowers, Director
Courtney McBeth, Assistant Director
posure of the magazine with help from the massive Rochelle M. Parker, Communication and Outreach Coordinator
growth of digital technology, using
Thanks to:
The Diplomatic Courier
And to add to many other “firsts” this year, we are Hinckley Institute of Politics
again the first company to launch the first G20 maga-
zine app for the iPhone and the Android Utopia Wellness Clinic
Special Thanks to:
I hope you enjoy our magazine and we look for- Prime Minister Stephen Harper’s Office
ward to seeing you in France for the 2011 Summit. President Lee Myung-Bak’s Office
Rick Schneider and Andrew Jacuzzi, Verso Paper

Yours Sincerely

Chris Atkins
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Summit 2010 Paper provided by

Ana Carcani Rold

Kirk L. Jowers
Courtney H. McBeth

Rochelle M. Parker


Michele Acuto, Diplomatic Courier Contributing Editor

Arash Aramesh, Researcher, The Century Foundation
Rudiger von Arnim, Assistant Professor of Economics, University of Utah
Ambassador Nancy G. Brinker, Founder and CEO of Susan G. Komen for the Cure
Ambassador James P. Cain, Former U.S. Ambassador to Denmark, Partner, Kilpatrick Stockton
Daniela Carcani, George Washington University
Brian Corry, Scholar, Hinckley Institute of Politics
Dr. Suraya Dalil, Acting Minister of Public Health, Afghanistan
Monique Danziger, Communications Director, Global Financial Integrity
Ashraf Haidari, Chargé d’Affaires, Embassy of Afghanistan in Washington, DC
Marie Hollein, President and CEO, Financial Executives International
Orin Levine, Executive Director, Johns Hopkins Bloomberg School of Public Health
Ruth Gerritsen-McKane, Assistant Professor of Social Work, University of Utah
Courtney H. McBeth, Assistant Director and Scholar, Hinckley Institute of Politics
Dr. Alexander Mirtchev, President, Krull Corp.
Uddipan Mukherjee, Diplomatic Courier Contributor
Paul Nash, Diplomatic Courier Contributor
Ciro A. de Quadros, Executive Vice President, Sabin Vaccine Institute
His Excellency Klaus Scharioth, Ambassador of the Federal Republic of Germany to the United States
David Schneider, Professor of Chinese Studies, University of Massachusetts, Amherst
Raymond Torres, Director of the International Institute for Labour Studies
Rami Turayhi, Diplomatic Courier Contributor
His Excellency Pierre Vimont, Ambassador of France to the United States
Ken Weisbrode, Diplomatic Courier Contributor


Henri de Baritault


Sebastian Rich
Senior Contributing Photographer, Diplomatic Courier

Bradley Ferreira, Carly Young

Oliver Young, Jeevan Moses, Jeff Combe
Hinckley Institute of Politics

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Summit 2010

The Evolution of the G20
All together, the 20 states represented at the G20 Summit account for more than three quarters of the world’s
economic output. This is a large representation. But the issues on the table are even larger. Assurances on trade
relations; end to overseas tax shelters; billions in dollars committed; promises for stricter bank regulation; and, last
year, even suggestion of a new world currency. These have been just few of the issues this group’s leaders are
seeking to tackle.

It is easy to question the expense this kind of a meeting can cause to the host country—especially during the
economic downturn. But no expense can be spared when it comes to security. It is hard to ignore the fanfare that
comes with hosting world leaders all in one place. But it’s hard to imagine what it would be like if these world lead-
ers did not meet.

The G20 is a relatively new venue. But is it the right venue to solve the world’s biggest problems? The forerunner
of the G20, the G7, was somewhat effective when in 1985 the group’s leaders successfully devalued the dollar. But
the G20 is not the G7 and the world and the current crisis have evolved. They have become certainly larger. So has
the Group.

The intent of the G6—the original of these groups—was to create a forum for an informal meeting devoted to
the discussion of economic issues between the world’s donor countries. As the group evolved, first into the G7,
then the G8, the agenda grew exponentially to include other pertinent issues of the time such as weapons prolif-
eration, terrorism, and climate change. The scope changed as well. The summit became a grand affair, which now
hosts over 4,000 members of the media during the deliberations. With such media fanfare, little opportunity exists
for real negotiations. In fact, much of the talks leading to the final communiqué happen in meetings preceding the
big summit, between Sherpas and other special representatives and diplomats appointed by the leaders.

In 2009 the debate concentrated on whether the exclusive G8 would be replaced eventually by the more inclu-
sive G20. Could these two groups co-exist? This past June, Canada hosted both summits back-to-back hinting for
the first time since the debate started that the G8 is here to stay and will not be replaced by the G20. In fact, there
has been no clear consensus in the foreign policy community about whether the two G summits complement each
other or whether they compete with each other, indicating strongly, that for the time being (that time being at least
the next five years) the two summits will continue to exist side-by-side.

That brings us to the significance of the G20 Summit in Korea this November. Korea is the first Asian nation to
host the G20 and in doing so it has set a very ambitious agenda that other subsequent summits should look to as
a model. The Seoul Summit will be challenged to resolve the currency dispute, push for reform of the IMF and the
World Bank, mediate the stimulus-austerity debate, and at the same time respond to crises outside of the agenda,
such as North Korea and the European debt.

Of all these issues, a currency dispute over currency valuations will prove to be the most challenging of all.
Seoul’s foremost goal should be to prevent this from happening so as the process is not compromised.

It has proven difficult for the G20 Summit to maintain momentum since the leaders first responded to the 2008
economic downturn with the first of this series of meetings in Washington, DC. But what we can take away from
the Korean Summit is a sense that a template for success exists. From the several pre-Summit meetings between
Sherpas and Economic Ministers to the C20 Business Summit—a meeting between CEOs of major global compa-
nies preceding the G20—Seoul is providing a template for future summits to follow.

Ana Carcani Rold


Summit 2010

Table of Contents
Welcome message from President Lee Myung-bak 10 The Mother of All Ponzi Schemes 54
President, Republic of Korea By Rami Turayhi

Welcome message from Prime Minister Harper 12 Tackling the Jobs Crisis: The Role of Coordinated
Prime Minister of Canada Fiscal and Incomes’ Policies of G20 Countries 56
By Raymond Torres and Rudiger von Arnim 
Publisher’s Note 14
Back to the Future? China’s Sea of Foreign
Exchange Reserves is Not New 58
Editorial 16 By David Schneider

Editor’s Note 17
Dollar Diplomacy Revisited 60

Table of Contents 18 By Ken Weisbrode

Hyundai Unveils All-New Sub-Compact ‘Solaris’ in Russia 20 A Curious Camaraderie:

Beijing’s Abiding “Friendship” With Pyongyang 62
Grand Opening Ceremony at Hyundai Motor Manufacturing By Paul Nash
Rus (HMMR) plant in St. Petersburg, Russia 22
Why the World Needs to Engage With Iran Again 66
Global Health and Business: A Long Term Sustainability Strategy 24
By Arash Aramesh

SPECIAL FOCUS Sustainability ‘From Below’ Or, Why We Shouldn’t

Take Cities for Granted 68
The Global Economic Security Significance of Sovereign By Michele Acuto
Wealth Funds 26
An Interview with Dr. Alexander Mirtchev Investing in the Human Security of Afghanistan 70
By Suraya Dalil and Ashraf Haidari 
Include Cancer: Why the Global Cancer Movement
From Korea to France: Continuing the Global Agenda Needs the Support of the G20 Group of Nations 72
for Economic Recovery 34 By Ambassador Nancy G. Brinker
By Ambassador Pierre Vimont
Déjà Vu? World Food Price Hikes Raise Concerns 74
The Seoul Agenda: On Course to Securing Growth and Stability 36 By Daniela Carcani
By Ambassador Klaus Scharioth
Injecting Life Into the World Economy 76
Recipe for Global Economic Recovery 38 By Orin Levine and Ciro A. de Quadros
By Monique Danziger
Social Work’s Contribution to Global Development:
Living Responsibility 42 The Western Lens Impact on Universalism and
By Rainer Wend Opportunity for Collaboration 78
By Ruth Gerritsen-McKane and Courtney H. McBeth
The G20 Business Summit: Will Business Advocate Free Markets
and Innovation to an Attentive G20? 46 Causes, Conditions and Reform of African Economic Neocolonies 80

By Ambassador James P. Cain By Brian Corry

Globalization and the Modernization of Financial Executives 48 G20 Seoul Summit – Ripe with Opportunities 110

By Marie Hollein
Reaching the World’s Most Vulnerable 114
The Beginning of History? 50
By Uddipan Mukherjee

Summit 2010

Summit 2010

Hyundai Unveils All-New Sub-Compact
‘Solaris’ in Russia
- All-new Solaris is Hyundai’s 1st model to be produced at Hyundai Motor Manufacturing Rus (HMMR)
- New Solaris offers many specialized features tailored to meet local needs

Dynamic” in both exterior and inte-

rior of the new sub-compact sedan.
With a coupe-like profile found in the
company’s latest models like the all-
new Sonata, the Solaris’ outer de-
sign is highlighted by dynamic and
sophisticated graphic elements like
eagle-eye looking two-tone bezel
headlamps, unique L-shaped fog
lamps and the large hexagonal front
grille. Its refined and stately image is
completed by continuous character
lines that start from right above the
front fog lamps and extend out to
the rear combination lamps.

Inside the cabin where the char-

acter lines flow continuously, a Y-
shaped crash pad showing bilateral
St. Petersburg, Sep. 21, 2010 Concept RB that was displayed at symmetry gives a sense of stability.
– Hyundai Motor Company, South 2010 Moscow International Motor Furthermore, high-glossy black and
Korea’s largest automaker, today Show (MIMS), the Solaris continues metallic colors used in the center
unveiled a new sub-compact four- Hyundai Motor’s ‘Fluidic Sculpture’ fascia add more futuristic and high-
door sedan Solaris. The first model design philosophy that injects so- tech looks to the interior of the So-
to start its production in January next phistication and dynamic angles as laris.
year at Hyundai Motor Manufactur- well as elegant lines resembling a
ing Rus (HMMR), the company’s calligrapher’s “orchid strokes” into POWERTRAIN
sixth overseas manufacturing base the shape of a vehicle. Like any time- Solaris will be powered by the
located in St. Petersburg, Russia, is less work of art, the fluidic essence modern Gamma engine, 1.6L or 1.4L
expected to shake up the country’s that characterizes molding design of DOHC in-line four cylinder gasoline
biggest C1-segment sedan market Hyundai’s latest models is inspired engines that feature multiport fuel
with its daring design and features by nature, realizing the harmonic co- injection with CVVT (Continuously
tailored to meet local needs. existence of all things created. Variable Valve Timing). By replacing
the old Alpha engine of its predeces-
THE NAME, SOLARIS Having roots in the Fluidic Sculp- sor with Gamma, the sedan prom-
Hyundai held a national car ture design philosophy, Hyundai de- ises more power and torque, as well
naming contest in the early summer signers put their efforts to reflect the as improved fuel economy, in keep-
of this year to celebrate the first new design concept key words “Sleek on ing with Hyundai’s pledge to be the
car of its first manufacturing plant in
Russia and “Solaris” has been se-
lected as the winner among more Average Fuel Economy
than 27,000 entries from all over the
country. The word Solaris is derived 1.4 Gamma 1.6 Gamma
from a Latin word for sun, Sol, and
implies Hyundai Motor’s strong will 5 M/T 4 A/T 5 M/T 4 A/T
to expand its business in the Rus-
sian Federation with its new car. 5.9 L/100km 6.4 L/100km 6.0 L/100km 6.5 L/100km
(16.9 km/L) (15.6 km/L) (16.7 km/L) (15.4 km/L)
As intimation was given in the
Summit 2010


industry’s eco-leader. The power for higher cold start performance Established in 1967, Hyun-
and torque of 1.6 Gamma are re- are offered as standard. The wiper dai Motor Co. has grown into the
spectively 123ps and 155 N.m while deicer, front seat warmers and heat- Hyundai-Kia Automotive Group
ed outside mirrors are also available. which was ranked as the world’s
Furthermore, in consideration of lo- fifth-largest automaker since 2007
cal road conditions and driving hab- and includes over two dozen auto-
its, standard long-lifespan (1,500 related subsidiaries and affiliates.
hr) lamps as Russian drivers tend Employing over 75,000 people
to drive with lights on even during worldwide, Hyundai Motor sold
day time, standard front/rear mud approximately 3.1 million vehicles
guards that prevent the car from globally in 2009, posting sales of
being contaminated by such car- US$41.8 billion (including overseas
unfriendly elements like dry calcium plants, using the average currency
chloride for snow removal as well exchange rate of 1,276 won per US
as optional Emergency Stop Signal dollar). Hyundai vehicles are sold in
(ESS) which automatically triggers 193 countries through some 6,000
the emergency hazard lights in the dealerships and showrooms. Fur-
event of a panic stop to reduce the ther information about Hyundai Mo-
risk of rear end crashes are offered. tor and its products are available at

those of 1.4 Gamma are 107ps and

135 N.m. The powerful and fuel-ef-
ficient Gamma engine will be mated
to a four-speed automatic transmis-
sion or a standard five-speed man-
ual transaxle.

To meet the most stringent au-
tomotive safety and crash require-
ments, the Solaris is built with hot-
stamped ultra high-strength steel. In
addition, Hyundai offers Electronic
Stability Program (optional) fur-
ther upgrading safety. The top trim
model will also feature standard six

As a result of Russian automo- SALES
tive market researches carried out Hyundai Motor plans to sell
by Hyundai engineers and market- 85,000 units of Solaris annually in
ers for a couple of years, the Solaris Russia starting 2011 including the
is equipped with many specialized five-door hatchback model which
features that suit the local weather, will join the line-up later that year.
road conditions and driving hab- Hyundai is confident that the new
its. For long and bitterly cold Rus- sub-compact sedan, with trendy
sian winter, rear heating duct, 4.0L and stylish design as well as vastly
washer fluid reservoir with a fluid lev- improved features, will attract and
el sensor that warns the driver when satisfy young Russian aspirants.
a refill is necessary and 60Ah battery

Summit 2010

Grand Opening Ceremony at Hyundai
Motor Manufacturing Rus (HMMR) plant
in St. Petersburg, Russia
- 150,000 units per year and 5,300 jobs by 2012
- HMMR is Russia’s 1st full-cycle car production facility of a foreign automaker
- The 1st car to be produced at the plant is the all-new 4-door sub-compact sedan Solaris

was a sharp and growing diver-

gence of interest between the two,
creating a bifurcated economy sus-
ceptible to frequent bouts of social

The fall of the Ming to Manchu

conquerors, who established the
Qing dynasty in 1644, did not alter
these patterns, which, by the time
Lord Macartney arrived in Beijing,
had become a serious problem in
global international relations. The
ensuing clash between the British
and Chinese empires led eventually
to the Opium Wars of the mid-nine-
China opens its economy, ac- dynasty in 1368. Long-developing teenth century.
cumulates massive surpluses and economic patterns resumed, es-
immense stores of hard currency pecially along China’s eastern and China subsequently dropped
reserves. Western powers push southern coasts. Chinese manufac- out of the world economy as it
for further opening and reform to turers specialized in the production became engulfed in civil wars and
reduce global imbalances as they of tea, porcelain and silk textiles for
begin to affect other major econo- export through Arab and later Euro-
mies. Trade friction builds…The pean traders in exchange for silver
year 2010? No, 1793, the year King mined in Latin America.
George III sent Lord George Ma-
cartney as an envoy to the Qianlong As the souther n economy
Emperor to request normal diplo- boomed, the autocratic Ming
matic and trade relations. moved to bring it under government
control. International exchange was
In many ways the main features now conducted only at designated
of China’s growth and rise are not ports through official state trad-
new. The massive accumulation of ing companies and strictly regu-
silver in the Ming and Qing dynas- lated. Exports were promoted and
ties appears to be re-emerging with imports discouraged. This led to
Beijing’s present accumulation of a massive flow of silver out of the
foreign exchange reserves, primar- Western economies into China, and
ily U.S. Treasury bonds. The trade increasing monetization of the Ming
practices that led to these global economy.
imbalances are different in form,
but quite similar in their underlying A silver-based, money economy
meaning and result. now possible, the Ming government
began to collect taxes in coin rath-
China’s modern economic his- er than in kind. This was good for
tory begins with the collapse of trading provinces with international
Mongol power and the restoration of connections but bad for the inland
native Chinese rule under the Ming agricultural economy. The result
Summit 2010


invasions by foreign powers, end- administrative liberalization. In-

ing only with the establishment of dustrial enterprises were allowed
the People’s Republic of China in to do more types of business with
1949. The Communist government less government involvement, and
immediately reoriented the Chi- could retain a portion of their for-
nese economy toward the Soviet eign exchange earnings, and many
Union, and in another radical shift more SEZs were opened.
Mao Zedong pulled the country into
near autarky beginning in 1958. It Administrative reform was only
was yet another twenty years be- one part of the program, however.
fore China would again open to the As China moved toward full mem-
world. tional connectivity. And in a mod- bership in the World Trade Organi-
ern permutation of the open trading zation (WTO), Beijing instituted vast
In the 1980s Deng Xiaoping ports of imperial times, interna- market-based macroeconomic and
moved to integrate China’s dynam- tional capital was invited into China financial reforms designed to har-
ic export potential into global trade as foreign direct investment, but monize the economy
and financial markets. Foreign ex- constrained initially to only three
change earnings from light industry Special Economic Zones (SEZs)
exports were used to import tech- opened between 1980 and 1984
nology and equipment for invest- in the southern province of Guang-
ment in further up-market export dong.
and heavy industrial capacity.
But this was only the beginning
As in the Ming and Qing, trade of a phased program that evolved
was conducted through only a with experience. Bureaucratic man-
handful of state companies, which agement of trade and investment
served to insulate China from the did not interface well with global
global economy while at the same markets. The early reforms were
time reaping the gains from interna- followed by successive rounds of

Summit 2010

Global Health and Business:
A Long Term Sustainability Strategy

gies, sharing of best practices, training of profession-

als in the field and monitoring and evaluation of health
systems, developing countries will be able to meet the
Millennium Development Goals (MDGs) for health.

The benchmark for different businesses to assess

their partnerships, investments and projects must be the
Paris Declaration. This standard proposes harmonizing
and managing results, with monitoring of health sys-
tems’ processes and indicators in different economies.
It is necessary to have strategic health planning that is
effective and aligned with public sector processes.

The private sector can take the opportunity to

change its trajectory in terms of its involvement with
health in developing economies, generating significant
positive impacts for access to health.

The private sector has different opportunities for in-

volvement in strengthening health systems in developing
countries, to support the fulfillment of Millennium Devel-
opment Goals (MDGs). These include direct investment
in already-established funding mechanisms, aligned with
other stakeholders that have a platform for strengthen-
ing health systems; technology transfer between the
private sector and health systems in management, lo-
The long-term sustainability of the private sector de- gistics, procurement, strategic planning, monitoring,
pends on many variables, including the strengthening evaluation and financial management; and the identifi-
of health systems – the combination of people, infra- cation of opportunities to bring other stakeholders into
structure and institutions responsible for providing basic the public arena and to create multilateral structures to
health services. make health care provision more effective.

As the second largest diversified mining company Health plays an important role in economic growth.
in the world and the largest private company in Latin To maintain sustainable growth over the coming years,
America, with operations in both developed and de- global health must be a permanent fixture of the agen-
veloping economies in over 35 countries, Vale partici- das of major global discussion forums, such as G20
pates in initiatives designed to strengthen health sys- summits. The private sector must stimulate and rein-
tems, firstly in Brazil and gradually also in other locations force its commitment to the public and non-profit sec-
where it operates. tors, with a strategy for global health to help strengthen
health systems at country level, both in developing and
Improvements in global health are fundamental developed countries.
to the sustainability agenda. In Vale’s view, this con-
cept mainly refers to investment in people’s lives, and
it means that the private sector must be committed
to preserving the environment and supporting global
health. It is necessary to maintain international support
for combating endemic diseases that continue to af-
fect the world’s people, such as HIV/AIDS, tuberculosis
and malaria. Sustainable improvements in the health of
people, workers and their families will only be achieved
through the systematic and strategic strengthening of
G20 health systems. By means of innovation, new technolo-
Summit 2010

The Global Economic Security Significance
of Sovereign Wealth Funds
An Interview with Dr. Alexander Mirtchev

A year ago, in a discussion with Dr. economies, at a time when the term “rapidly developing
Mirtchev on the global economy, the topic economies” was not in use. More recently, the investment
of Sovereign Wealth Funds was brought up. horizon of SWFs has broadened, ranging from “trophy
At the time, we had just produced the G8 assets” such as Citibank and Merrill Lynch to real “fron-
Summit magazine for the l’Aquila summit tier” projects, such as, for example the Sinopec/CNOOC
in Italy. One of our articles discussed how buyout of the stake of Marathon Oil in Angola’s offshore
Sovereign Wealth Funds could be the un- deepwater Block 32 for US$1.3bn or CIC’s $500mln
likely saviors of renewable energy. Behind investment in SouthGobi Energy Resources’ mining op-
the scenes, SWFs have become a great erations in Mongolia.
topic of significance in the ongoing quest
for global economic recovery. We are ex- In the final analysis, SWFs are all unique–they repre-
tremely fortunate to have Dr. Alexander Mirtchev pro- sent different countries with different economic strate-
vide insights in this important and strategic sector of the gies, resources and proclivities. At the same time, they
global economy. Dr. Mirtchev is President of Krull Corp. do have common features that provide a basis for com-
USA, a global strategic solutions provider, with a focus parison and a framework within which it is possible to
on new economic trends and emerging policy challeng- understand what their future strategies may be.
es. He is also a Vice-President of the Royal United Ser-
vices Institute for Defence and Security Studies, Council What lessons did the SWFs learn from
Member of the Kissinger Institute on China and the Unit- the global financial and economic crisis?
ed States at the Woodrow Wilson International Center
for Scholars and a Board Director of the Atlantic Council The first lesson learned by the SWFs in the present
of the United States. He serves as independent direc- financial crisis is a new type of prudence and the end
tor of a sovereign wealth fund, has served as chairman of growth and intensified “glamour cherry-picking”. This
and director of multi-billion dollar international industrial would not be prudence in the traditional sense, but rath-
enterprises and has had distinguished public office and er prudence on a global scale, with a view to strategic
academic career. long-term positioning. Before the crisis, prominent SWFs
became notorious for their big-name acquisitions, in
What role do sovereign wealth funds particular in the financial sector. Now they are sitting on
(SWFs) play in the modern global econo- the paper losses from their investments, but with the
my? full understanding that name recognition, past perfor-
mance of the targeted corporation, etc., are important,
To begin with, SWFs are a modern iteration of eco- but should hardly be the determining factors. For ex-
nomic power projection by states on the international ample, Temasek invested 8.3 billion US dollars into Mer-
scene. In one form or another, vehicles resembling rill Lynch, which was later acquired by Bank of America
SWFs have been around for a long time. Similar entities in an all-stock deal worth 50 billion dollars, while Gov-
investing state funds, generated from reserves or trade ernment of Singapore Investment Corp (GIC) invested
surpluses (such as from natural resources), or utilizing billions into Citigroup and Swiss bank UBS. The state-
substantial state support or privilege, could very well in- owned Kuwait Investment Authority injected a total of
clude conglomerates such as VOC (the Dutch East India 5.0 billion dollars in Citigroup and Merrill Lynch in Janu-
Company) or the British East India Company. Another ary 2008. The Abu Dhabi Investment Authority, con-
thing they appear to have in common with modern SWFs trolled by the largest member of the United Arab Emir-
is that they were the pioneers in frontier markets, often ates, poured 7.52 billion dollars into Citigroup in late
creating regional trade beyond what the local govern- 2007. Now, more than ever, they could be considered to
ments and businesses were able to create. It should not be risk-averse investors.
be forgotten, however, that SWFs are often perceived
to be driven by political, rather than economic, consid- Secondly, SWFs will have learned the hard way that
erations. At the end of the day, they often are, which even though they are in many ways “special”, the market
is only natural, as their shareholders are governments. is the market, and they should bargain down deals–like
Thus, the story is much more complex. any other market player, rather than being the “elephant
in the room”. The present lower values in the market
In modern times, the first investments by SWFs were and the fact that cash is in short supply will put them in
G20 predominantly in “frontier markets”–their own. Both Ku- a good position to realize that they do not have to “save
Summit 2010 wait Investment Authority (established 1953) and Singa- face” by paying over the top for assets.
pore’s Temasek fund (1974) made investments in their own

Thirdly, it is likely that SWFs would place much the new governance arrangements surrounding the IMF
higher value and give more precedence to the “produc- and the World Bank. How far these concessions would
tion” side–they would be focusing even more not only be accepted by the governments that control the SWFs’
on the acquisitions of natural resources, technologies activities is still a subject to debate, as SWFs and their
or capacities that their economies lack, but also on the governments may decide to take a “proactive” role in
prospective and targeted growth of their own national the global market on their own, rather than via the
and regional markets. For example, the Chinese oil gi- established structures of the IMF and the World Bank,
ant Cnooc was persistent, and despite failing to buy as the rules of that game may not be fully to their liking.
Unocal, it was able to acquire Norway’s Awilco Offshore SWFs were already “bottom fishing” for distressed
ASA. Countries like China will look for more natural re- assets that could be attractive in the long term already
sources that they lack. Sinosteel Corp. completed a full when the crisis was still in full swing. In the wake of
takeover and delisting of Australian iron-ore concern the global crisis, SWFs have become more active. They
Midwest Corp. The oil producing countries’ SWFs will have intensified the search for investment projects, and
concentrate on diversification away from oil into equip- the period of “withdraw and regroup” could be consid-
ment manufacturing, hi-tech, telecoms and other value- ered at an end. SWFs would be more tempted to forego
added activities. immediate returns for potential growth in the mid-term,
relying on acquisitions that provide synergies and econ-
Fourthly, the temptation to “make it big” would be omies of scale with assets and production facilities that
reduced– SWFs would reduce their penchant for “dra- they already own.
matic deals” and be under pressure to stick to their core
purpose. Thus, facilitating the economic strategy of their What current challenges do SWFs face?
governments and economies will likely come to the fore.
One of the biggest challenges for SWFs is likely to
Last, but not least, due to the financial crisis there is be the uncertainty surrounding the intended policies of
likely to be increased sensitivity, in the developed coun- the developed economies towards SWFs. There is little
tries in particular, about the activities of SWFs, and the doubt that SWFs are going to face attempts to impose
funds would not only try to “play by the rules”, but would certain curbs on their operations, imposed by the cur-
direct their actions to be widely seen to “play by the rent and prospective market regulators, putting them
rules”. This tendency would result in the SWFs becom- under increased regulatory scrutiny, in line with the
ing more “accommodating” to the economies they deal tightening global financial regulations. Even though host
with. This may also lead to SWFs creating a parallel sys- governments would welcome long-term investments
tem and “arrangements”, including financial. from SWFs, there is a growing popular feeling and politi-
cal pressure to codify and regulate the global financial
What is the current economic benefit system, enhance its surveillance and the interventionist
of SWF activity? powers of governments. This will inevitably affect how
SWFs operate in the developed economies–would their
Before the financial crisis the SWFs were predomi- governments be happy to have their activities regulated
nantly welcomed as an alternative source of large-scale and maybe virtually controlled by foreign states?
equity financing that was cheaper and easier to obtain
than to go through an IPO. Now they look more and An additional factor that remains, despite the chang-
more as the only source of available financing for a ing market conditions, is the overall distrusts towards
cash-starved international financial system. SWFs among the governments of the developed econ-
omies, and in particular the fact that any major SWF
Increased government scrutiny, regulation and par- investment can be viewed through the prism of national
ticipation in the financial system is not likely to be con- security. A range of developed country’s governments
sidered an investment incentive by the SWFs in general. have expressed implicit and sometimes explicit concern
On the contrary, due to the fact that SWFs have not only over the activities of SWFs, in particular those of China.
business rationale to their activities but also a strategic The concerns raised range around protection of local
and geopolitical underpinning, they would be loath to assets of strategic significance and the growing influ-
be restrained by what they may consider unfair “regula- ence of the countries, projected via the activities of their
tory shackles”. The SWFs would try to fit in the new SWFs. According to Natsuko Waki from Reuters, deal
global regulatory regime that is likely to emerge, but at participation by SWFs stirs “jitters that foreign govern-
the same time would want to be able to dictate, to a ments may take control of assets that are important for
certain extent, the terms and conditions under which national security and strategic reasons”.
they operate in the global economy.
These concerns will channel more narrowly the abil-
The new role of SWFs as financing sources has already ity of SWFs to undertake the projects in the developed G20
been acknowledged by the G20 and is to be reflected in economies that their new strategy will dictate. They may Summit 2010

also bring forth considerations that SWFs will be turned out any red flags being raised and without appropriate
away from the developed economies and would con- scrutiny. The response to these concerns is that they
centrate on the emerging markets to look for what they stem from more of a “protectionist” mindset than a valid
consider strategic investments. It is likely that we will political concern, and that recent examples of SWFs
see SWFs taking key industries in relatively small emerg- working together are much more commercially oriented
ing markets. than having any political imperative.

What are the concerns of states about Are SWFs a responsible market player?
SWF activity?
Sovereign wealth funds in general behave like any
From the times when kings invested in building other investor, and bear the same level of responsibility.
pyramids, raising armies and bankrolling explorers, sov-
ereign wealth has attracted political controversy. And Despite being inherently different from each other,
when sovereigns band together, woe on the free world! as they reflect their countries’ economies, etc., there is
Fortunately, the sovereigns have changed with times an increasing tendency for cooperation between SWFs
and represent internationally legitimate public authori- in international investments. It could be considered that
ties. such cooperation is a sign of their maturity as inves-
tors, who are more aware of the market principles and
SWFs tend to be viewed in a manner, different from are seeking to offset any limitations or inefficiencies that
private equity funds or other private investors. This is they may have in respect of specific projects by combin-
due to the perception that SWFs have a different out- ing with others that may have access to better “invest-
look on risk, investment periods and other “traditional” ment tools”. It could be argued that SWFs cooperating
investment considerations. Notably, the frontier is part in different projects represents a sign of their maturity as
of the DNA of SWFs, and this “frontier” make up to a investors, who have become more aware of the market
large extent determines their competitive advantages, opportunities. On certain occasions, such joint activi-
as well as, in some cases, the problems that SWFs ties could help them become market leaders in specific
sometimes face. sectors.

With the end of the global crisis in sight, SWFs could One example of such cooperation is the joining of
become unwelcome guests, even if they contributed to forces by China’s CIC, Singapore’s GIC and the Korean
the recovery of a specific economy. They provided an Investment Authority to support the Blackrock acquisition
alternative source of financing for cash-strapped econo- of Barclays Global Investors. This was deal-specific co-
mies, but when “currency wars” are on the front burner operation with specific prerequisites and repercussions
the issue of protectionism is making its presence known that signified the new power of SWFs. Another type
in a forceful way across the globe. of cooperation is the recent general agreement of the
Korean Investment Company, Malaysia’s Khazanah Na-
The concerns raised in some quarters about SWFs sional Berhad and Australia’s QIC. This is more of a
belie the reality of their operation: the funds report their general “cooperation” agreement, which is a framework
activities to the public authorities of home countries arrangement that is to provide the basis for potential fu-
which are at least as transparent as a private equity firm ture joint transactions, but does not entail specific com-
would be. Prior to the crisis, a few private equity firms mitments in its own right.
in fact voiced objections to the funds on the grounds
of unfair competition based on cheap money, but soon One area, where SWFs have already made certain
found them good investors and attractive clients. advances, is to increase transparency by joining forces
in specific investments, irrespective of political consid-
Taking into account that the major SWFs, with a few erations that may be in place. The cooperation of sov-
exceptions, are from countries that are not considered ereign wealth funds today implies that the international
among the “developed” economies, there are also con- investment advisers, typically form tightly regulated
cerns that SWFs represent disguised foreign policy ve- markets, see synergies in bringing a number of funds
hicles. This could be of particular importance when the together for a transaction.
SWF in question is from a country that is considered
significant from a national security standpoint, and its in- The immediate consequence of such cooperation
vestments in a target market, such as the US or the EU is that at least several parties to the transaction have to
can generate perceptions of “encroachment” on mat- open books to each other, negotiate agreement that all
ters that are deemed “strategic interests” for the target parties are comfortable with, and overall increase the
market, as was the case with Dubai Ports. level of transparency about the application of the sover-
eign wealth. Every time one fund manager reaches out
The most loudly expressed political concerns are to his peers, market gets a bit more information about
G20 that joint activities by several SWFs could result in them both and regulators are immediately aware of the intent
Summit 2010 “banding together” to achieve political objectives with- of the deal. Among others, this would also allow SWFs
Summit 2010

to introduce elements of comparatively independent reward calculation. As a result, the process of SWFs
supplementary financing mechanisms in their transac- investing in frontier markets would gradually become
tions, a phenomenon that could actually evolve into an more and more transparent, in view of their increasing
additional layer of the global financial system. integration in the financial system and their partnerships
with international institutions, such as the World Bank
In addition, the increasing tendency of SWFs to or IFC. SWFs are continuously maturing and realising
“team up” with Western private, institutional and state- the advantages that international partnerships could
owned investors for joint investments abroad is provid- bring, in particular in developing markets, and they are
ing an additional impetus towards transparency and often “brought in” by Western private equity groups or
accountability that actually benefits Western investors – by industry-sector players. This increasing accountabil-
such as, for instance, the case of the discussions about ity and transparency will not be something that happens
joint Indian-US exploration of offshore areas off the U.S. overnight, but is already a discernible process.
East Coast and in the Gulf of Mexico (which may be
under threat as a consequence of the Gulf of Mexico What are the advantages SWFs can
oil spill). bring to the development of the Third
How can SWFs promote growth in de-
veloping and emerging markets? SWFs are just like any other investor – they are not
a charity, and are interested in returns, reduction of risk
There are a number of reasons why SWFs are draw- and capital growth. Sometimes, however, the long-term
ing disproportionate attention, mainly growing from the or broader view on returns and risks that they take is cre-
perception that SWFs are “atypical” investor. This per- ating the impression of an agenda, different from that of
ception has a certain level of validity, which is actually other investment vehicles and organizations. Yet, at the
self-perpetuating–the more SWFs are considered as a end of the day, the investment decisions and abilities of
separate breed, the more their actions are viewed from SWFs depend on the specifics, nature and size of their
this angle. On that basis, their importance alters, in line holdings in particular regions. Some assets are deemed
with, among others, the following: strategic, others–temporary, or a building block in a
long-term approach.
• They are established as significant market players
– they may not be crucial but need to be taken into ac- In addition, SWFs have a broader take on invest-
count. The perception is that they have access to vast ment risks, due to their more long term vision and ap-
resources that can be applied to investments under a proach, and are gradually becoming more focused
completely different level of manoeuvrability, can react on realising new opportunities in asset-backed or
much quicker and can affect markets. more traditional sectors in less developed markets,
such as the example of recent mining investments by
• In certain cases, SWFs are viewed as an extension SWFs in Zambia, Uganda and Liberia, or, at the oth-
of states and perceived within the framework of certain er end of the spectrum, the recent investment by Diar
state policies. (Qatar) in a resort in the Seychelles. As evidenced
by the recent agreement of the SWFs of countries
• They are seen, rightly or wrongly, due to their spe- like South Korea, Netherlands and Saudi Arabia to
cifics, as having a more long-term strategy than other invest $600 million in a World Bank-sponsored equity
investors, and are seen as sometimes going “out-of- fund for less-developed countries or the recent co-in-
step” with prevailing market sentiments at a given time. vestment by IFC and Chinese funds in the development
of a 14-story office block in Dar es Salaam, Tanzania,
• Sometimes, SWFs have an accumulation of funds there is also an attraction and added prestige in working
that are relatively “liquid” which is a consideration, as together with multilateral organisations in frontier mar-
well as the perception that they have better access to kets.
financing. It is fair to say that their risk calculations could
sometimes be considered atypical. This view is rein- In what way can global economic se-
forced by the perception that SWFs have in their arsenal curity benefit from intensified activities by
“deeper pockets” or certain unquantifiable guarantees. SWFs?

• They could be a market-maker (or the elephant in As long-term investors, sovereign wealth funds could
the room), in particular in relatively smaller economies. have the potential to stabilize companies they invest
in since these funds do not live by quarterly returns.
The modern markets are complex, and as complex- In a way, the ultimate sovereign wealth fund is the Inter-
ities carry both opportunities and risks, investors are national Monetary Fund which combines transparency
trying to utilise the complexities to the extent that they and long-term perspective with agreed-upon stabiliza-
G20 can bear the risks involved, and from CITIC to the Gov- tion goals.
Summit 2010 ernment Pension Fund of Norway, it is an issue of risk-
G-8 Business Declaration

Summit 2010

However, they have already moved beyond the to maximize return for their shareholders, where gov-
“withdraw and regroup” stage brought about by the cri- ernments are often less patient than private investors.
sis, not to mention the time of the “glamour investment”, However, as indicated by Andrew Rozanov of Permal
which is over. This comes with the need for SWFs to pri- Group, who is credited with having coined the term
oritize their portfolios and focus on new areas of growth, “sovereign wealth funds”, the priorities and mandates
which underlies the rationale for joining forces on an ad of SWFs can bring forth a number of inherent contra-
hoc basis. dictions, due to the divergence of their targets. These
targets, which focus on stabilization, long-term savings
Firstly, SWFs have demonstrated increasing aware- and economic development at the same time, “push
ness that their level of expertise is not universal, and find in opposite directions”. In turn, this implies that these
that obtaining additional expertise via cooperation is a priorities may sometimes be in opposition and work at
viable option for them. Secondly, this allows them to cross purposes, which could affect the performance of
share risk and enable access to welcome co-financing, SWFs.
another major consideration. Thirdly, in the crisis and Those funds that invested in producing assets be-
post-crisis environment, such co-operation allows them yond oil will be able to enjoy whatever spurt of growth
to achieve a new level of legitimacy in markets where other industrial sectors enjoy, or they will be able to
they have not operated before. minimize the negative effect of the oil price on their
funding via diversification of their investments. Another
In the process of cooperation, SWFs appear to be point that needs to be taken into account is the fact that
seeking to offset any limitations or inefficiencies that they SWFs would more and more make their investments
may have in respect of specific projects by combining with a more long-term strategy than private equity firms
with others that may have access to better “investment – the government of China for example will eventually
tools”. It should also not be ruled out that SWFs would benefit from the acquisition of oil producing assets even
also join forces like other traditional market players in if the price is low, because that would provide them with
order to achieve better transaction returns. sufficient flexibility to satisfy their own energy demand in
boom times and sell the surplus on the market in “lean
Significantly, SWFs could expand their contribution times”. And the revenue of the government from the
to global economic security and stability by contributing products which the country was able to produce using
their long-term outlook. According to Ashby Monk of the extra oil supplies will eventually find its way to the
the Oxford SWF Project, “these funds... have intergen- SWFs.
erational time horizons that grant them a unique ability
to consider risk factors not priced in today’s short-term What are the potential pitfalls to SWFs’
markets (but which will no doubt be priced in the long- future role in the global economy?
SWFs are part of the market, and the market will
Down the line, SWF partnerships can enable state- inevitably have its say. As pointed out by Edwin Truman
owned funds to optimize local knowledge, leverage cap- of the Peterson Institute for International Economics,
ital, spread investment risks and maximize returns. They whose work inspired the Santiago Principles governing
could also create a bigger, more diverse and transpar- SWF conduct, sovereign funds are not immune to or be-
ent entity, whose long-term investments—often holding yond the effects of global economic cycles, such as the
assets for years—might help stabilize global markets. worldwide financial and economic crisis. Irrespective of
whether or not the shareholders are private individu-
What are the future prospects for SWFs? als, institutions or governments—the balances are the
same, so are the requirements of creditors. In practice,
Growth for SWFs would predominantly depend on the notion that SWFs are “more patient” than private in-
two things—the support of their governments and their vestors does not really hold water. SWFs often face the
own investment strategies (and how successful they same horizon as other market players, and are subject
are). The SWFs that are largely dependent on their gov- to the same exigencies—they need to maximize return
ernment financing their activities (for example, from oil for their shareholders, and governments could be even
or other natural resources revenues) will experience a less patient than private investors.
reduction in new capital inflows, but that effect will not Where a difference may arise is in that SWFs tend
be fully translated from the price of oil to the growth of to be in a stronger position than other investment com-
the funds. panies to withstand the pressure of market fluctuations
and “stick” with a specific investment. Size and sov-
SWFs, as can be seen by the competition between ereign support can get you only so far, and the market
India’s ONGC and CNOOC in Uganda, face the same pressure will eventually tell, so success for SWFs would
risks as any other market players—both systemic mar- often depend on whether or not they are aware of the
ket risk, and non-systemic political, legal, commercial market trends and comply with market realities.
G20 and other forms of risk, and are subject to the need
Summit 2010

Summit 2010

From Korea to France:
Continuing the
Global Agenda for
Economic Recovery
By Ambassador Pierre Vimont

On November 12, France will take over the

G20 presidency for one year, and on January 1,
that of the G8. We want to use these weighty responsibilities
to make a collective difference on a number of issues at a time
when questions are being asked about the vocation of both of
these bodies.
Created in the Fall 2008 at the United States and France’s behest, the G20 represents 80 percent of the planet’s
wealth. It enabled the main economic powers to successfully weather the most severe economic and financial
crisis since the 1930s, through close economic policy coordination, bold action to increase the financial markets’
transparency and enhance the stabilizing tools of the IMF, and a clear refusal of any form of protectionism. It also
engaged in a long term dialogue to resolve the dangerous imbalances that plague the global economy, that took
shape with the establishment of a framework for strong, sustainable, and balanced growth at the Pittsburgh Sum-

All in all, the “crisis version” of the G20 has done an unprecedented job. Today, now that relative calm has
returned, there is a temptation to limit the G20’s ambitions to the implementation of already taken decisions, sup-
plementing them in 2011 by several useful measures: expanding regulation in areas where it remains insufficient;
verifying the implementation of agreements on the exchange of tax information signed since the London summit;
adopting strong measures to fight corruption; strengthening the mandate of the Financial Stability Forum; and more
broadly, reexamining the prudential framework of banking institutions to avoid a repetition of the crisis we just ex-
perienced. Specific proposals are on the table for all these subjects—first, to best prepare the Seoul Summit, then
to expand results in 2011.

France is committed to carry out this agenda and complete this work.

But we also think the G20 needs to be the venue for addressing other pressing global challenges. This is why
President Sarkozy expressed the will to use France’s presidency of this still new forum to engage on the following
debates with our partners.

The first debate is the reform of the international monetary system. It is becoming increasingly clear that the
instability in currency exchange rates is a substantial threat to world growth and this issue will be raised for the first
time in a G20 format in Seoul. We want to deepen and “operationalize” this debate, focusing on strengthening
our common crisis management mechanisms, examining the concept of an international reserve asset, and better
coordinating the economic and monetary policies of the major economic zones. Of course, we know it is a sensi-
tive issue that needs consensus and a lot of thorough thinking , and no one is talking about returning to a fixed
exchange-rate system. But the evolution of the main currencies exchange rates these last few weeks show us that
it is time to have this discussion.

Summit 2010

The second debate is the volatility in the prices of raw materials, which we are currently witnessing with the
sudden rise of wheat or corn prices. The G20 can tackle this issue with pragmatism, by looking at a better regu-
lation of derivative markets in raw materials (market transparency, storage policies, new tools enabling importing
countries to protect themselves against exchange rate volatility). On energy, the Pittsburgh summit gave France a
mandate to propose measures for Seoul and for the 2011 summit to curb price volatility. We will come with pro-
posals to increase transparency on energy commodities markets and an enhanced dialogue between producers
and consumers.

The third issue that the G20 leaders need to reflect on is global governance reform. The G20 decided it would
be the “main global forum” for economic and financial issues. But it must still give itself the means to work more
effectively. Should we create a G20 Secretariat to monitor the implementation of decisions? Should the G20 also
deal with new subjects, such as development or climate change? Beyond the G20, we will also suggest a broader
debate on world governance. The G20 gave a decisive impetus to World Bank and IMF governance reform. Now
is a good time to think about the articulation between G20 and the UN, and other International Organizations like
the WTO.

Regarding the G8, there is a still ongoing debate on whether we should keep this format, between those who
think it is condemned and those who think it still has a contribution to offer if it refocuses on common challenges,
security issues and its partnership with Africa. As President Sarkozy said in a recent speech, “the future will de-
cide”, and France intends to prepare this summit carefully.

We are at a crucial point for the global economy. We have not yet fully resumed the path of solid and sustain-
able growth, and the G20 must prove that it has the determination to pursue the necessary reforms. New actors
have joined the recognized powers to save the world economy, calling for their rights to be recognized, but also
accepting the duties and responsibilities that come along. The main stake of our presidency of the G8 and the G20
will be to keep this spirit alive and stabilize a new cooperative pattern for global governance.

Ambassador Pierre Vimont was appointed Ambassador of France to the United States by President Nicolas
Sarkozy on August 1, 2007. Prior to his present appointment, Mr. Vimont was Chief of Staff to the Minister of For-
eign Affairs, a position he had held since 2002.

Summit 2010

The Seoul Agenda:
On Course to Securing
Growth and Stability
By Ambassador Klaus Scharioth

The G20 Summit in Korea is taking place at a time when indicators are
increasingly pointing to a global economic recovery. The IMF is expecting
a global economic growth rate of approximately 4.8 percent for 2010. This
positive development is largely due to decisive and far-reaching support
measures taken by policy makers worldwide. Yet the challenge of making
the global economy more robust and the financial markets more secure
remains great. Chancellor Angela Merkel is a driving force in moving the
G20 process forward.

Strategies and timing for exiting the exceptional crisis measures are important elements in attaining sustainable
growth. Especially in light of growing government debt, countries must strengthen confidence in the credibility and
long-term sustainability of their public finances. That is why consolidating public budgets is consistent with a cred-
ible strategy for the mid-term.

Germany is well positioned in this context. The German economy recorded strong growth in the first half of
2010. Growth of 3.3 percent is anticipated for 2010, the highest among the G7 nations, and at least 2 percent in
2011. Today, the number of people employed exceeds pre-crisis levels. Another especially positive trend is that
the German economy is growing increasingly broad-based, relying not only on high exports but also on growing
domestic demand, in particular private consumption and capital investments. A sharper rise in imports also shows
that Germany is contributing to the growth and rebalancing of the global economy. Thus, the German strategy of,
among other things, creating more confidence through financial consolidation and thereby strengthening the po-
tential for growth is beginning to bear fruit. Here, it is important to note that Germany is still supporting economic
development through its stimulus program in 2010.

Turning to the financial markets, we see that while conditions have improved, they are still fragile. We must
therefore successfully conclude the ongoing efforts to repair the financial sector and create a stable regulatory
framework. In particular, the G20 action plan agreed in Washington and the decisions taken at the London and
Pittsburgh G20 summits must be implemented entirely and without delay. The most recent agreement on Basel
III – and I expect its endorsement by the G20 in Seoul – is an important step towards making the banking sector
more sound and stable.

As the main institution of global economic governance, the IMF has played a major role in overcoming the cur-
rent economic and financial crisis. Comprehensive reform of its own governance will further strengthen this well-
functioning and efficient institution and increase its legitimacy.

Already considerable progress has been made in revising the IMF mandate, including its surveillance function
and lending practices. Germany fully and completely stands by the overarching goal of IMF quota and governance
reform. Fair representation and equal treatment of all countries is vital to the legitimacy of the IMF. All components
of the reform, including revision of quotas, should be handled as one package and within the same timeframe. To
this end, the European side already submitted concrete proposals in Washington in October. That notwithstanding,
all member states must be willing to compromise to be able to meet the agreed timetable.

When the G20 member states meet in Seoul in November, they will look to the challenges ahead. Full in the
awareness of our recent accomplishments, we must continue to work together to achieve the common goals of
growth, rebalancing, and reform.

Dr. Klaus Scharioth has served as German Ambassador to the United States since March 2006. Immediately
prior to his posting in Washington, DC, Dr. Scharioth was State Secretary in the Federal Foreign Office, the highest
ranking civil servant. A native of Essen, he has been with the Foreign Office since 1976.
Summit 2010

Summit 2010

Recipe for Global Economic Recovery
By Monique Danziger

There is a disconnect in the current dialogue about tutions and Western nations are essential to the illicit
economic development and poverty alleviation. For de- capital flight process. Nigerian anti-corruption crusader,
cades the paradigm of development work has been to Nuhu Ribadu, once remarked that a plane never takes
send aid money. Despite the global financial crisis, Of- off without a place to land. Such is the case with these
ficial Development Assistance has continued to grow hundreds of billions in dirty money.
with 2009 ODA levels being the highest to date. De-
velopment achievements, on the other hand, have been The proof of the cooperation is indefatigable, de-
below expectations with many countries pushed into spite the shadowy and furtive nature of the game. A
worse poverty as a result of the economic crisis. recent Global Witness report found that several High
Street banks in London, including Barclays PLC, HSBC
The answer to this is nothing mysterious or com- Bank PLC, Royal Bank of Scotland, NatWest (owned
plex. Every year the developing world loses $1 tril- since 2000 by RBS) and UBS AG had allowed two Nige-
lion—ten times the amount that goes in as development rian state governors, Diepreye Alamieyeseigha of Bay-
aid—to corruption, trade mispricing, and tax evasion. elsa State and Joshua Dariye of Plateau State, to open
This money flows abroad into the global financial sys- accounts and deposit illicit funds from 1999 to 2005.
tem ending up in Swiss bank accounts, Western nations
like the U.S. and UK, and sometimes even makes head- Leading up to Seoul, a coalition of civil society
lines when used to buy exorbitant, flashy luxury goods groups including ONE, Oxfam America, Global Financial
like mansions in Malibu or fleets of Bugatti sport cars in Integrity, and Global Witness conducted high-level meet-
Paris. ings and collected signatures to advocate for a strong
United States position on ending the era of banking
Looking more closely at some of the nations and secrecy and pushing for greater transparency and ac-
regions involved has yielded stark and highly-compelling countability in global finance.
ratios of diminishing returns:
The coalition recommended specific measures, in-
Analysis of data from 1970 through 2008 found that cluding formally recognizing the links between illicit out-
Africa had lost $854 billion in cumulative capital flight— flows of capital from developing countries, absorption
enough to wipe out the region’s total outstanding debt of those resources by tax havens and financial institutions
but leave $600 billion for poverty alleviation and growth. in international financial centers, and the adverse impact
those flows have on poverty alleviation and economic
In the case of Nigeria, this has the dubious distinc- development.
tion of leading other African nations in terms of total illicit
capital loss at $240 billion from 1970 to 2008. ODA Establishing these links will help lead to bigger-pic-
to Nigeria from 1970 to 2008 was a tenth of what the ture thinking and holistic policies that will fit the systemic
country lost; $26 billion in aid compared to $240 billion nature of the problem. A global financial system that
siphoned out. is transparent and accountable would cut the flow of
illicit funds off at the knees. Measures to this end in-
A forthcoming Global Financial Integrity (GFI) report clude requiring disclosure of beneficial ownership of all
on India finds that illicit capital flight totaled $125 billion companies, trusts, foundations and charities, country-
from 2000 to 2008. The report finds that “hidden ac- by-country reporting of profits earned and taxes paid by
cumulation of wealth” was one of the primary drivers of multinational corporations, and harmonizing predicate
India’s illicit capital flight, with much of the money ending offenses for money laundering.
up in offshore financial centers.
In terms of fostering sustained and robust global eco-
Recognition of the problem of illicit capital flight is nomic recovery, the health and wealth of the developing
slowly but surely growing. The G20 has pledged to world is a critical factor. Creating economic growth and
tackle illicit financial flows; the World Bank and OECD improving governance in the developing world is essen-
have noted the crucial nature of finding solutions to the tial to a stable and healthy global economy.
problem. Key to success in this area will be connecting
the dots. This is not rocket science, it is a matter of political
will. There is perhaps no better multinational body to
While flashy, Bugatti-driving kleoptocrats and narco carry forward the endeavor to create a global financial
kingpins tend to garner most of the blame for moving system that is transparent and accountable than the
G20 dirty money. But complicit international financial insti- G20 nations.
Summit 2010

Summit 2010

Living Responsibility
By Rainer Wend

ering tomorrow—customer needs in 2020 and beyond”

and show that climate change will be the key driver for
a revolution in new products and services. Eco-friend-
liness and conscientious consumption will increasingly
determine purchasing behavior. The study also shows
that the logistics industry is likely to set trends and es-
tablish new standards for cooperative efforts and envi-
ronmentally friendlier business. The results are already
part of Deutsche Post DHL’s long-term business strat-
egy and CR strategy. We want to take a leading role in
green activities, in humanitarian actions, as well as in
education, taking advantage of our expertise and our
worldwide presence. The Group’s commitment is there-
fore focused on environmental protection, disaster man-
agement and education in the form of three programs
called: GoGreen, GoHelp and GoTeach.

Disaster Management with GoHelp

Deutsche Post DHL is present almost everywhere in
What do customers expect from their service pro- the world. With GoHelp the Group uses its global pres-
vider in the next 10 or 20 years? What are their needs ence and its expertise in logistics. The program focuses
and expectations? Customer behavior changes con- on disaster management and entails a two-fold ap-
stantly and this trend will increase in the years to come proach: disaster response and disaster preparedness.
with climate change, the Internet and ongoing globaliza- In cooperation with the United Nations, two programs
tion as key drivers. In addition, not just customers, but provide support to countries in need free of charge.
employees and investors as well will focus even more When a natural disaster hits our DHL Disaster Re-
on the social behavior of major companies that do busi- sponse Teams (DRTs) are mobilized. Initiated in 2005,
ness around the world, impacting the environment and the disaster response program has proven to be an im-
societies in which they operate. Corporate responsibil- portant support in tackling logistical problems that arise
ity means combining business success with social and at the airports closest to disaster zones. When earth-
environmental responsibility. quakes, cyclones or flooding have devastated a region,
Deutsche Post DHL is the world’s leading mail help usually comes from the international community
and logistics company with some 500,000 employees with international aid workers and relief goods flying into
around the world. For our Group, market leadership regional airports. The regional airports are quickly con-
brings with it a special responsibility to use our core gested by the food, medical supplies and tents arriving
expertise in logistics and our worldwide presence to from all over the world—all of which are urgently needed
benefit society and to continuously minimize the com- in the field. Very often there is no set disaster plan on
pany’s impact on the environment. For Deutsche Post how to manage such situations. This is where the DHL
DHL, corporate responsibility means living responsibility Disaster Response Teams come in to solve the bottle-
and the global player can rely on its employees and their neck, cooperating closely with the UN Office for the Co-
know-how, talents and passion to do just that. “Living ordination of Humanitarian Affairs (OCHA).
Responsibility” is therefore the motto for our corporate The DRTs consist of approximately 200 employee
responsibility strategy. volunteers worldwide who are specially trained to handle
Our corporate responsibility (CR) approach is an the challenges on the ground. The DRT members use
integral component of our long-term business strategy their extensive logistics expertise to help manage the
because we believe that business success and corpo- logistics of disaster relief goods arriving at the airports.
rate responsibility go hand-in-hand. As a global service Together with local authorities and airport staff, they take
provider and one of the biggest employers in the world, care of incoming relief goods, set up and manage pro-
it is very important to know what the expectations of fessional warehousing, including the sorting and inven-
customers and employees are. This is why Deutsche torying of goods. We have three DRTs in place, covering
Post DHL asked customers, experts and scientists last the world’s regions most vulnerable to natural disasters:
year about the major issues of the years to come. The DRT Americas in Panama, DRT Middle East/Africa in
results were published in the 2009 Delphi Study “Deliv- Dubai and DRT Asia Pacific in Singapore. The teams
Summit 2010

are ready for deployment within 72 hours after being
called by OCHA. Each deployment involves about 15-
20 volunteers.
The most recent DRT deployments were in the wake
of the earthquake in Chile and only shortly before that in
Haiti. A total number of 37 DHL volunteers went to Haiti
only a few days after the earthquake hit the island. The
teams helped handle over 2,000 tons of international
relief aid from over 60 aircrafts in a period of 25 days,
and ran an inter-agency warehouse, allowing more than
25 different aid organizations to benefit from our logis-
tics expertise.
The second GoHelp pillar of Deutsche Post DHL is
called GARD (Get Airports Ready for Disaster). GARD
focuses on disaster preparedness. It was launched to- Environmental Protection with GoGreen
gether with the United Nations Development Programme GoHelp is just one pillar of our “Living Responsibility”
(UNDP). Piloted in 2009, the program was built around approach. The GoGreen environmental protection pro-
the need to prepare governments, people and airports gram is a lighthouse example in the logistics industry.
before a disaster strikes. GARD is a supportive initia- It was founded to minimize the environmental impact
tive in making worldwide relief efforts more effective. of the Group’s core business of logistics services and
While the DRTs use the company’s expertise in logistics, transportation (particularly road and air transport). With
GARD is a training program for local airports in potential GoGreen Deutsche Post DHL has set itself ambitious
disaster areas designed to enable local authorities and targets with a focus on CO2 emissions as an important
airport staff to better cope with such situations. DHL environmental factor in the logistics and transportation
trainers work with airport personnel on reviewing airport industry. By 2020 the Group aims to improve the car-
capabilities and capacities, understanding coordination bon efficiency of its own business activities and those
requirements, and helping formulate contingency plans of its subcontractors by 30 percent. In other words, the
and coordination structures. Deutsche Post DHL has al- carbon footprint per item shipped, ton kilometer trans-
ready successfully piloted the program at the Makassar ported or square meter of space used is to be cut by 30
and Palu airports in Indonesia. percent compared to 2007 levels.
Measures were developed to minimize these impacts.
The approach includes optimizing the air and vehicle
fleet, raising energy efficiency in buildings, implementing
innovative technologies, developing green products and
efficient solutions, encouraging the employees to reduce
resource usage and CO2 emissions, and getting cus-
tomers and subcontractors on board. Our employees
play a crucial role in all our attempts to make our busi-
ness as green as possible. Encouraging our 500,000
employees worldwide to join the effort by adopting cli-
mate-friendly practices is just as important as driving
innovations and using alternative energy sources. An
example shows the high commitment of our employees:
With the “save fuel” initiative around 50,000 staff of the
MAIL division have already helped save over 3.5 million
liters of diesel and 3.7 million euros, as well as reducing
CO2 emissions by 11,000 tons. They will save a further
2.9 million liters through net-optimization.

Support Education with GoTeach

The third program, GoTeach was established to re-
inforce the global engagement in the area of education.
Education is a high-value asset and key to children’s fu-
tures. And it is key to the future of the company as well.
As one of the world’s biggest employers Deutsche Post
DHL is always looking for well-trained, capable staff with
Summit 2010

has developed a strategy that meets the balance be-
tween economic, environmental and social interests.
The Group-wide programs are constantly communicat-
ed, transparently implemented and continuously evalu-
ated. All this would be in vain however, without our em-
ployees and customers and without partnerships with
non-profit organizations whose core competencies are
to tackle the ecological and social challenges the world
faces today.

different levels of qualifications. With our GoTeach pro- CR approach at a Glance

gram, we encourage and develop initiatives that sup-
port education and help young individuals expand their GoGreen – Minimizing the impact of the Group’s
personal development and skills. GoTeach also offers activities on the environment with the target to im-
employees the opportunity to volunteer in educational prove CO2 efficiency by 30 percent by 2020.
projects. GoHelp – Using core logistics expertise to pro-
vide effective emergency aid in areas affected by
Long-term Commitment natural disasters in cooperation with the United Na-
For Deutsche Post DHL, corporate responsibility tions.
means handling assets entrusted to the company in a GoTeach – Encouraging and developing initia-
respectful and sustainable manner as well as upholding tives that support people’s education and help ex-
the interests of its employees, customers and investors pand their personal development and skills.
in benefitting the environment and society. The Group

Summit 2010

Summit 2010

The G20 Business Summit:
Will Business Advocate Free Markets
and Innovation to an Attentive G20?
By Ambassador James P. Cain

During the summer of 2008 I visited American and The G20 Business Summit is being organized by a
Danish troops at Camp Bastion in Helmand Province. host committee that includes the major business asso-
Helmand is where the toughest fighting in Afghanistan ciations of the region and will be attended by the chief
is taking place. In the midst of the tension of war I was executives of dozens of the world’s leading companies;
startled to find a teeming bazaar of small businesses from Deutsche Bank and HSBC to ArcelorMittal, Li &
operated by eager entrepreneurs, speaking no English, Fung and Microsoft.
selling everything from camel whips to silk scarves,
hand-made musical instruments to hand-made piz- Given that the G20 has gained stature as a criti-
zas. Through a translator one of them told me: “If all cal forum for policy collaboration in addressing global
of Afghanistan were as open to trade as this Camp is, economic issues, it is appropriate for the business
we could solve most of our own problems.” It was an community to seek to influence G20 gatherings. It is
inspiring reminder of the power of capitalism, fueled by important, however, that business gets this role right. It
entrepreneural innovation, to overcome the diplomatic must view such forums as an opportunity to be force-
and economic crises of the day. ful advocates for innovation and free market principles.
Anything less will lead to such business summits be-
Governments rarely look to the business commu- coming platforms to serve governmental agendas and
nity for guidance to solve economic challenges, more create political photo ops.
often blaming business for those challenges. Hope-
fully, G20 leaders will actively listen to the world’s top What role should the G20 Business Summit under-
business leaders when business gathers for the first take? It should voice the interests of the free market,
ever G20 Business Summit convening in Seoul just provide experience-based guidance on issues under
prior to the official G20 Conference. review by the G20, and illustrate proposed policies’ im-
Summit 2010

pact on business and industry. The Forum should re-
spond to policy agreements emanating from previous
G20 summits which were contrary to free and open
markets. It should measure governmental progress
in freeing markets, and share those findings. Most
importantly, it should advocate for an unleashing of
energetic and entrepreneurial innovation among G20
nations to finally shake off the economic malaise; an
“Entrepreneurial Stimulus Package”, if you will.

Unfortunately, the business advocacy agenda ap-

pears to be modest for the first G20 Business Summit.
Issues that will be on the business leaders’ table seem
to closely parallel the official Seoul G20 agenda: post-
crisis growth, finance, trade, green growth and devel-
opment, and corporate social responsibility. While it is
laudable to be discussing Green markets and corporate
responsibility, the forum should most urgently address
how the G20 can stimulate innovation and investment
to fuel budding entrepreneurs, like the ones I met at
Camp Bastion, by freeing markets, cutting government

on a timetable for cutting deficits and slowing respec-

tive debt burdens, while endorsing a goal of cutting
government deficits in half by 2013, and stabilizing
the ratio of public debt to gross domestic product by
2016. As George Osborne, Britain’s Chancellor of the
Exchequer said earlier this year, ‘’The best thing that
countries with fiscal challenges can do is to show that
they can live within their means.’’ In other words, it is
time for some accountability.

Successful companies know a thing or two about

regulation, eliminating disincentives to investment, and belt-tightening, just as they know what it takes to stim-
reducing taxes, particularly for new businesses. ulate innovation and motivate entrepreneurs. Those
attending the G20 Business Summit should take
In addition, the G20 Business Summit should re- the opportunity to share those experiences. Let’s hope
view the pro-business policies of those governments the elected leaders who arrive in town a few days later
who seem to be moving out of the recession faster will listen.
than others. Canada, which is emerging from the re-
cession much more rapidly than almost every other Ambassador James P. Cain served
G20 member, is a good example. as U.S. Ambassador to Denmark
from 2005 to 2009. Prior to diplomatic
Since the global recession began, Canada has im- service, he served as President
plemented a broad array of free market tax and trade and COO of the NHL Carolina Hur-
policies, eliminating, for example, tariffs on 1,755 dif- ricanes, as a partner in the interna-
ferent types of machinery and equipment and reducing tional Law Firm of Kilpatrick Stock-
its corporate tax rate from 21 percent in 2008 to 15 ton, and founded and Chaired
percent by 2012. Canada’s marginal effective tax rate numerous civic and business en-
is now two points below the OECD average and capital terprises. Named North Carolina’s “Business Leader
is flowing in. of the Year” in 2002, Cain promoted entrepreneurship
and innovation as tools of diplomacy during his overseas
Finally, the G20 Business Summit should specifi- posting. Through Kilpatrick Stockton and Cain Global
cally measure how well G20 participants are progress- Partners, LLC he now provides legal and strategic ad-
ing in meeting the key objective they agreed to at the vice for international firms seeking U.S. expansion and
last G20. In Toronto this past June, the G20 agreed U.S. firms broadening their international operations. G20
Summit 2010

Globalization and the Modernization
of Financial Executives
By Marie Hollein

Global CFOs and treasurers have moved beyond earlier model.Today’s financial executive is equal parts
their financial ”traffic cop” role of the past century to global financial strategist, senior risk manager and in-
become global financial strategists, senior risk manag- tegral partner to the company’s board of directors and
ers and partners to the company board of directors and audit committee.
audit committee. The globalization of business has been
the main driver of this transformation by shifting mar- The globalization of business, particularly over the
ketplaces and financial markets. It’s also spawned chal- past few decades, has been the main driver of the fi-
lenges and complexities with varying accounting stan- nancial executive’s added responsibilities, by shifting
dards, foreign exchange rates, country-specific taxation marketplaces, financial and capital markets and lead-
systems and tax rates. Furthermore, engaging with poli- ership. It’s spawned a raft of challenges, complexities
cymakers, standards setters and regulators worldwide and complications–some of them welcome, and others
has become “business as usual,” since international or- decidedly not.
ganizations are greatly dependent on successfully navi-
gating myriad policies and regulations. High on the list of complexity are the varying
accounting standards, foreign exchange rates, country-
In the early part of the twentieth century–with the specific taxation systems and tax rates that differ dra-
United States then at the doorstep of unprecedented matically from one country to the next.
economic upheaval–company financial leaders were en-
trusted primarily with two basic tasks: accounting and From an accounting standpoint, the U.S. continues
control. to operate through the application of its own generally
accepted accounting principles (GAAP), but American
Nearly eight decades later, with the U.S. and the regulatory authorities and businesses are considering
world having withstood the Great Depression, the great converging with International Financial Reporting Stan-
recession and many smaller but still damaging reces- dards (IFRS). More than 100 countries currently require–
sions, the role of the chief financial officer, corporate or permit–the full or partial use of IFRS and the U.S.
treasurer and company auditor looks nothing like that Securities and Exchange Commission is studying if, how

Summit 2010


and when the global standards might be formally adapt- Besides colleagues, engagement with policymak-
ed for use by U.S.-based corporations. Such a move is ers, regulators, standards setters and legislators world-
unlikely before 2014, at the earliest. wide has become part of “business as usual” for financial
executives, particularly those in multinational organiza-
Some of the managerial and operational changes tions. The success or failure of international business or-
wrought in this era of remarkable global growth and ganizations is greatly dependent on the effect of policies
business integration are well-embedded: the hiring of and regulations and an ability to navigate them.
foreign nationals to run country-based operations, re-
gardless of the headquarters of the particular corpora- As the global financial world has become more
tion, is one. The move from fragmentation to economic complicated, mastering it has become equally difficult.
harmonization (as evidenced by the creation of the Eu- That’s where the expanding responsibility and input of
ropean Union) is another. That’s as much smart busi- the financial function on a global basis is so crucial.
ness as enlightened operating philosophy. Clear, consistent strategic plans, risk management and
financial guidelines must be adapted by internationally-
What this means in terms of the corporate finance operated businesses, whether large or small. The senior
function is still unclear, as that chapter is still unfolding. corporate finance official needs to have the resources
Add to the mix passage of the Sarbanes-Oxley Act of to ensure that finance across country borders and con-
2002–which dramatically changed the American cor- flicting tax and regulatory systems meets standards of
porate accounting function–and recent corrective mea- consistency and operational excellence.
sures imposed in the U.S. and several troubled European
capitals, and it’s clear the position of CFO and corporate Technology has made the world so much smaller
treasurer is undergoing transformative change. and far more interconnected. As financial measurement
tools continue evolving to meet rising international de-
Financial Executives International has been charting mands, global financial officers must keep on top of this
the growth and expansion of the finance function in the new technology and demonstrate a capacity to apply
U.S. and internationally since 1931, when the associa- it effectively and efficiently to growing business needs.
tion was created as the Controllers Institute of America
by 30 senior-level financial executives who stepped up But global financial management isn’t the only con-
to assist the government in trying to help revive the cern of modern financial executives. They must also as-
economy. sert managerial control over the intellectual and human
capital management in an international enterprise. Vary-
It was an unprecedented environment, with high un- ing workplace cultures, conditions and structures make
employment levels, emergency government bank loans, achieving a globally coherent, optimal performance more
rampant business failures and a sense of deep anxiety, challenging. It’s these often intangible assets that will
even paralysis, pervading the capital markets. There are be more complex and more difficult to identify, manage
more than a few similarities to what the world has wit- and make attractive as a business investment to poten-
nessed since 2007. tial shareholders.

The enactment in 1933 of the Glass-Steagall Act For nearly 80 years, FEI has been monitoring the
(legislation widely known at the time as the “Banking global business and financial environment and is com-
Act”), and the 1934 formation of the SEC, more strongly mitted to continuing its vigilance for the next 80 years
regulated American business and built a firewall be- and beyond. To be sure, businesses must create value
tween commercial and investment banking. The recent to draw the capital of investors and keep shareholders
enactment of the most significant legislation since 1934, happy. How the finance and accounting functions adapt
the Dodd-Frank Wall Street Reform and Consumer Pro- to these evolving needs will be critical in determining to
tection Act, adds a plethora of rules and regulations to what heights the global financial executives can aspire.
those already in force.
Marie Hollein is President and
That original small group of 30 is now 15,000 and CEO of Financial Executives
the organization’s name has been changed to Financial International (FEI). Previously,
Executives International, representative of its global con- she was a managing director
stituency and a reflection of the maturation of the role of Financial Risk Management
and influence of the CFO, a title that started to take hold for KPMG, where she led the
in the 1960s. With more counterparts in every corner firm’s treasury practice.
of the globe, members are now engaging–connected
to markets and peers–through networking and dialogue G20
in real time. Summit 2010

The Beginning of History?
By Uddipan Mukherjee

The world is facing a multitude of problems. Chief To add, a more recent Euro Crisis is also directly
among them are the financial crisis and Islamist funda- linked to a ballooning Public Debt. It ultimately paved
mentalism. In this backdrop, a few pertinent questions the way for a bankrupt Greece. Countries like Latvia,
are: Will liberal-democracy remain the only form of po- Lithuania and Estonia, which pegged their currencies
litical economy for the future? Are communism and mili- with the Euro, also suffered significant damages. Now,
tant nationalism totally dead? In the November Summit, interestingly, the U.S. recession is ascribed to a ‘lack of
it becomes imperative for the G20 leaders to follow a prudent intervention’ by the Federal Reserve which led
holistic approach in solving the pressing problems of the to a fragile banking system. On the other hand, seri-
day whereby they can begin history. ous fiscal mismanagement is considered to be a major
reason that exacerbated the crisis in Greece and other
In September, the Washington-based Brookings ‘sick’ countries of Europe.
Institute released a paper on ‘governance studies’ by
William A. Galston and Maya MacGuineas. The authors In any case, it is affirmed by most analysts that rising
expressed concern that the federal budget is on an ‘un- Public Debts, compounded by a huge liquidity are the
sustainable’ trajectory. Public Debt is about 60 percent major financial problems faced by the nations of today.
of the Gross Domestic Product (GDP). According to the
authors, by 2011, the ratio is projected to go up by 1000 Are these features a discernible signature of decay
basis points. of the philosophy of free market and its political acolyte;
the Western liberal democracy? If such a thesis is ac-
And alarmingly, it can skyrocket to 109 percent in ceded to, then what happens to Francis Fukuyama’s by
the 2020s. It is time the U.S. Federal Reserve and the now historical assertion of 1989: “What we may be wit-
policymakers to fasten their seat belts as a Public Debt nessing is not just the end of the Cold War, or the pass-
to GDP ratio beyond 100 percent reminds us of the Sec- ing of a particular period of postwar history, but the end
ond World War. Simply put, the money owed by the of history as such: that is, the end point of mankind’s
federal government of the United States is in dangerous ideological evolution and the universalization of Western
proportions to the net output of the country. liberal democracy as the final form of human govern-
One of the obvious reasons for the aforementioned
scenario has been the recession that the U.S. faced On the flip side, are these financial disruptions mere
since its housing bubble burst. Global interconnected- periodicities of crests and troughs and we are just wit-
ness in a post-1991 world led to a rapid proliferation of nessing a temporary nadir of such a curve? At least,
the same. neo-classical economists would vouch for the latter.

Summit 2010


Naturally, questions which perturb us at this criti- However, by all means, International Relations shall
cal juncture are: In the future, will Western liberal de- find itself in a cobweb of environmental, socio-econom-
mocracy survive as a form of political economy? Will the ic, political and religious problems. Nation-states are
‘newly poor’ of the North be able to keep their hold over likely to keep on facing volatile security issues, both of
the ‘newly rich’ of the South? Will the ‘other’ strands of domestic as well as of transnational nature. The eco-
ideology like that of Communism or Militant Nationalism nomic backbone of organizations like Al Qaeda and
be won over by the equations of supply and demand? Taliban needs to be broken. Otherwise, the challenges
from their side can turn out to be grave.
Nevertheless, at least in the foreseeable future, it
appears unlikely that there shall be a re-emergence of In this light, it becomes imperative to posit a counter-
Communist chauvinism or National Socialism in Inter- argument to Fukuyama that International Relations, as
national Relations. However, that does not necessarily it stands today, is just not preoccupied with only eco-
mean that those ideologies are ‘dead’ as Fukuyama nomics. Politics and strategy have not taken back seats.
may force us to believe. There are internal contradic- Sino-India bilateral relation is a glaring example in this
tions within the liberal-capitalist system and these may regard as a voluminous trade is unable to assuage the
magnify in the form of reactionary regimes or ultra-leftist political climate.
Thus, when the G20 leaders meet in Seoul this No-
Interestingly, even the Developing World would ex- vember; they would have to contemplate on a spectrum
perience such instabilities; both in the political and social of issues ranging from fiscal stimulus to currency ex-
domain. In essence, globalization seems to have im- change rates to carbon trading to international security.
planted a “First” World inside every “Third” World while
the former continues to possess an egotistic worldview. They have the chance to begin history; by a holistic
synthesis of the North with the South. They have to
Strategically speaking, the world shall chart a path engineer adroitness through novel instruments. A peer-
of counterinsurgency for some time to come. There will reviewed format to manage future malfunctions in the
be an inevitable struggle of narratives between a “First” banking system is one such.
World (dominated by the U.S.) and a “Third” World (of
Colombia, Sri Lanka et al). However, that is not likely to The undercurrent of contradictions in the liberal-
suppress any alternative measures adopted by emerg- capitalist system has to be properly evaluated and pre-
ing powers like China in Xinjiang, India in its ‘red corri- ventive measures ratified. A blind adherence to the ide-
dor’ or a re-emerging Russia in the Caucasus. ology of end of history may be ahistorical.

That an economic turmoil has strategic repercussions Uddipan Mukherjee has a doctoral degree from the
cannot simply be discredited as facetious. However, the Tata Institute of Fundamental Research, under the De-
world is definitely not exhibiting yet another apocalyptic partment of Atomic Energy, India. He writes on strategic
‘power block’ arrangement so as to engender a war. issues concerning international security and is a regular
Rather, we are more accepting of the premise of non-state contributor for the Diplomatic Courier magazine.
actor led insurgencies. And the pathology may be rem-
edied by the troika of Diplomacy, Strategy and Tactics.

In 1979, Kenneth Waltz talked about neo-realism

in world politics. He believed that the very existence
of a ‘superpower’ over and above the emerging pow-
ers, shall curtail the latter’s ambitions of waging a war
against each other. If that is the case, then in a unipolar
world of today, wars are far-fetched. At the same time,
admittedly, the world is yet not completely free of the
inherent possibilities of a conventional war.

Summit 2010

Summit 2010

Summit 2010

The Mother of All Ponzi Schemes
By Rami Turayhi

Have we been duped? As a layman and relative In theory, none of this was a bad thing. Wall Street
Wall Street outsider, the more I read about the opaque had “discovered” a (sort of) new, profitable venture, and
financial world in New York City and in other major in- those lucky enough to have the expertise and resources
ternational financial centers, the less convinced I am to devote to this field were to become the overnight fi-
that much of what Wall Street does today has any real nancial beneficiaries of their good fortune. There was,
meaningful macroeconomic purpose. A bird’s eye view however, one problem: corn-based ethanol had little fu-
from Main Street might lead an outside observer to call ture potential in the marketplace, and anybody with half
some of what made Wall Street titans fabulously wealthy a brain knew it.
over the past decade a “Ponzi scheme”: the majority
of Americans have been robbed blind, with the United Indeed, after making some quick, back-of-the-en-
States and the rest of the world hardly better off than at velope calculations that pitted the amount of corn pro-
the turn of the century. duced in the United States against what was presumed
to be the minimum demand requirements for this gaso-
Capitalism. Efficiency. Productivity. These are line additive and potential gasoline substitute to take off
prized words in American culture, and I am a firm believer economically, I was startled to find out that–even putting
in all of them. A quick trip to any U.S. Post Office–which aside the negative life-cycle energy and water conse-
often ends up being anything but quick–always serves quences of producing corn and the various costly do-
to reinforce my devotion to the principles of market ef- mestic subsidies that sustain the crop–there was simply
ficacy and incentivized productivity. Despite this, there no way that corn-based ethanol would have any lasting
comes a point at which one wonders whether unbridled positive impact on the gasoline market. Stunned by this
capitalism has an all-too-nasty side-effect: productivity simple deduction, I took the information to my boss, a
becomes a codeword for greedy, self-interested gain of Vice-President at my bank and the man spearheading
the “part” at the expense of the “whole.” the ethanol charge for our group. Rather than hear an
explanation from my elder as to why my numbers were
Perhaps a short story will help to explain my am- wrong or how I had overlooked a crucial element, his
bivalence about 21st century capitalism in the financial blunt answer–which I have paraphrased here for de-
world. Back in 2006, when I was a first-year invest- monstrative purposes–nearly took the wind out of me:
ment banker at a major Wall Street bank, I was the ju- “Yeah, I know that already.”
nior member of what I believed to be a cutting-edge
investment banking team devoted to alternative energy After pressing my boss to explain himself, he went
companies and products. At the time, we were heavily on (again paraphrasing for demonstrative effect): “Look,
focused on companies that produced corn-based etha- I know that corn-based ethanol is ridiculous and has no
nol. With the stock market in full, bull-market swing and real future, but get this. I am going to make a ton of
with energy prices on the rise, bankers up and down money IPOing these Midwest farmers’ companies, and
Wall Street were jetting off to rural farmsteads across the when they go bankrupt, I’ll make more money selling
Midwest and Great Plains, hoping to pitch their big-city them off to other investors and funds and merging what-
ideas of easy money and quick profits to farmers and ever companies remain.”
rural cooperatives.
I quit investment banking that summer. I wish I could
say that I left solely on principle, but it was a confluence
of factors that led me to abandon this high-flying world
of easy money for the rigors of a law school education.
That said, this episode–which, I stress, is by no means
unique to this particular bank–led me to come to a num-
ber of conclusions about Wall Street, most of which have
been reinforced by events over the past couple of years.

First and foremost, there is no accountability for

much of what Wall Street does. While this is at the heart
of the capitalist model, the problem is that a very crucial
piece of that model is missing: effective oversight and
the balancing of varied interests. So, few people–includ-

Summit 2010


ing most shareholders, many fund managers, or even

credit agencies–truly understand a lot of what banks do
day-to-day to make money in the world of 21st-century
finance, so the effective marketplace check on bankers’
and traders’ actions does not always occur. This would
be akin to an executive and legislative branch function-
ing without a competent judiciary; abuse of power is a
near certainty.

Second, much of what Wall Street was primarily de-

signed to do–i.e. allocating capital more efficiently across
the American economy, providing services and capital
to businesses large and small, and helping to correct in-
efficiencies in the marketplace–is no longer at the heart
of what 21st-century investment banks actually focus
on in their quest for increased profits. My example above
is one of just many areas where bankers or traders have
little incentive to “do the right thing,” because doing
the wrong thing–which is almost always legal in fact, if
not ethical in spirit–makes so much more money. The
effect of this mindset, whether in the world of complex
derivatives or with regard to simple allocations of capi-
tal, has been to effectively realize gains today at the ex-
pense of future generations of Americans; hence, the
“Ponzi scheme” analogy.

Finally, the much-touted “moral hazard” dilem-

ma plays a major role in all of this, as banks over the
past decade engaged in practices that oftentimes had
such enormous potential downside risk that there was
no way to let them fail without putting the entire financial
system in peril: the so-called domino effect. “Too big
to fail” banks are the end product of a capitalist system
without effective checks and balances on its financial that they are indicative of the general crux of the dilem-
sector. ma: how to allow Wall Street to effectively and efficiently
allocate capital to American businesses and create a
The solution, however, is not merely more regula- more vibrant marketplace without strangling the innova-
tion, but rather a better set of effective legal tools that tive rigor and capital flows that set the United States
allow regulators to oversee and stop activity that is apart from many other nations. The key appears to be
harmful to American society on a net basis. In other effective, not necessarily more, regulation, in conjunc-
words, regulators need to be granted authority to as- tion with a common sense that sorts out the systemi-
sess where the risks heavily outweigh the potential in- cally hazardous from the merely risky. While greed and
cremental individual gains in the banking industry, while self-interest are inherent to the human condition, U.S.
leaving certain activity–for instance, much of the trading policymakers ought to be smart enough to find ways
that small- and medium-sized hedge funds do–to the to inhibit the worst kinds of excesses in order to let the
rigors of the free market to sort out: a so-called “com- creative, productive elements of American society flour-
mon sense” approach to regulation. It also wouldn’t ish. Rather than act as a giant casino or Ponzi scheme,
hurt to pay vital actors in government regulatory bod- it is high-time that Wall Street function as the more far-
ies a more reasonable salary; it is quite difficult to retain sighted, compassionate, and generous uncle of innova-
top talent when the incentives are so heavily skewed tion. The future of America–and much of the rest of the
towards joining the “regulated” rather than the “regula- world–depends on it.
Rami Turayhi is a graduate of Columbia Law School
The aforementioned are but a few of the problems and a former investment banker at a major Wall Street
and solutions that plague Wall Street today, but I believe bank.

Summit 2010

Tackling the Jobs Crisis: The Role of Coordinated
Fiscal and Incomes’ Policies of G20 Countries
By Raymond Torres and Rudiger von Arnim

This past September, the U.S. National Bureau of improves not because of higher exports, but largely be-
Economic Research (NBER) announced that, in techni- cause of lower imports. The demand contraction affects
cal terms, the recession provoked by the financial crisis other economies, particularly NAFTA-partners. There
had ended in June 2009. To many American people, are simply no benefits to public deficit reduction in the
however, the crisis is far from over. Unemployment re- midst of a fragile recovery.
mains stubbornly high, a sense of job precariousness
is spreading and income inequalities are on the rise. In- The second policy plank involves a combination of
deed, the crisis will not be overcome until these imbal- higher wages and stronger currencies in surplus coun-
ances are tackled. tries. An appreciation of Asian currencies like the Chi-
nese Yuan would make U.S. products more competitive
To achieve this, it is crucial to avoid rapid cuts in in these markets, and shift production toward the hard-
government spending, and, more fundamentally, to hit manufacturing sector. In Asia, production would shift
boost domestic demand in surplus countries like China toward domestic goods and services, further deepening
and Germany. This article shows how it can be done and national markets and regional economic linkages. Why
provides estimates of the benefits of such sustainable is this not happening? The IILS study suggests that over
exit strategies. the next year, a nominal exchange rate revaluation in
China would lead to a significant increase in unemploy-
The first remedy–fiscal stimulus–is motivated by the ment of about one and a half percentage points. While
fact that the private sector has not acquired sufficient it can be expected that improved competitiveness will
dynamism yet. In the face of high unemployment, the help rebalancing over a few years, and will have positive
private sector across several large advanced economies effects both on the U.S. and surplus Asia, it is a diffi-
continues to withdraw spending. Sustained resumption cult political option to pursue. What else can the region
of growth therefore requires further fiscal support, rather do to aid global rebalancing without endangering
than immediate reduction of fiscal deficits. recovery? Higher wages and higher social spending
can have two immediate positive effects. First, it would
True, U.S. government deficits increased substan- provide a direct stimulus to the domestic economy.
tially, primarily due to “automatic stabilizers,” such as Such spending increases the share of nontraded activity
reduced tax revenues and increased social insurance and hence aids rebalancing. Second, increased spend-
payments following the contraction of GDP. The political ing on social services reduces precautionary savings of
pressure to reduce the deficit–$1.6 trillion in absolute low- and middle-income households. Likewise, policies
terms and almost 11 percent relative to GDP in the sec- to support labor incomes can support domestic growth
ond quarter of 2010–is immense, even in the face of an and help rebalancing.
unprecedented increase in both the level and duration
of unemployment. Further, it is often said that the U.S.’s There is a time dimension as well. Further fiscal
profligate ways have to change, that saving rates need support is necessary to buffer the short-term negative
to increase. Otherwise, the argument goes, the external impact of private sector deleveraging on output and
deficit cannot be corrected. Reducing government defi- employment. The emphasis on sustainable industrial re-
cits is one way to address the twin public and external lations, labor income growth and improved social safety
deficits. nets will provide a longer-lasting effect on demand, out-
put and jobs. Indeed, a degree of international policy
However, the build-up of the U.S.’s external deficit coordination is necessary, notably through the G20, to
largely coincided with increased private indebtedness. avoid free riding and improve overall outcomes. How-
The private sector is, of course, frantically trying to lower ever, experience with the bank bailouts at the start of
its debt levels, so that without increased net exports or the crisis shows that such coordination is possible. Ac-
higher public borrowing, unemployment will continue to tion is all the more needed because what is at stake is
rise. A recent study–discussed in more detail in this year’s the well-being of many people and, beyond that, social
World of Work Report of the ILO’s International Institute cohesion itself.
for Labour Studies (IILS)–confirms these insights. Cur-
tailing U.S. public borrowing relative to GDP by two per- Raymond Torres is Director of the International Insti-
centage points reduces the external deficit. But it does so tute for Labour Studies, ILO in Geneva, Switzerland. Ru-
at a substantial cost. The unemployment rate increases diger von Arnim is Assistant Professor of Economics at
G20 by three percentage points. Moreover, the trade deficit the University of Utah, in Salt Lake City.
Summit 2010

Back to the Future? China’s Sea of Foreign
Exchange Reserves is Not New
By David Schneider

China’s modern economic history begins with the

collapse of Mongol power and the restoration of native
Chinese rule under the Ming dynasty in 1368. Long-
developing economic patterns resumed, especially
along China’s eastern and southern coasts. Chinese
manufacturers specialized in the production of tea,
porcelain and silk textiles for export through Arab and
later European traders in exchange for silver mined in
Latin America.

As the southern economy boomed, the autocratic

Ming moved to bring it under government control. In-
ternational exchange was now conducted only at des-
ignated ports through official state trading companies
and strictly regulated. Exports were promoted and im-
ports discouraged. This led to a massive flow of silver
out of the Western economies into China, and increas-
ing monetization of the Ming economy.

A silver-based economy now possible, the Ming

government began to collect taxes in coin rather than
in kind. This was good for trading provinces with in-
ternational connections but bad for the inland agricul-
tural economy. The result was a sharp and growing
divergence of interest between the two, creating a
bifurcated economy susceptible to frequent bouts of
social unrest.

The fall of the Ming to Manchu conquerors, who es-

China opens its economy, accumulates massive tablished the Qing dynasty in 1644, did not alter these
surpluses and immense stores of hard currency re- patterns, which, by the time Lord Macartney arrived in
serves. Western powers push for further opening and Beijing, had become a serious problem in global inter-
reform to reduce global imbalances as they begin to national relations. The ensuing clash between the Brit-
affect other major economies. Trade friction builds… ish and Chinese empires led eventually to the Opium
The year 2010? No, 1793, the year King George III sent Wars of the mid-nineteenth century.
Lord George Macartney as an envoy to the Qianlong
Emperor to request normal diplomatic and trade rela- China subsequently dropped out of the world
tions. economy as it became engulfed in civil wars and inva-
sions by foreign powers, ending only with the establish-
In many ways the main features of China’s growth ment of the People’s Republic of China in 1949. The
and rise are not new. The massive accumulation of sil- Communist government immediately reoriented the
ver in the Ming and Qing dynasties appears to be re- Chinese economy toward the Soviet Union, and in
emerging with Beijing’s present accumulation of foreign another radical shift Mao Zedong pulled the country
exchange reserves, primarily U.S. Treasury bonds. The into near autarky beginning in 1958. It was yet another
trade practices that led to these global imbalances are twenty years before China would again open to the
different in form, but quite similar in their underlying world.
meaning and result.
In the 1980s Deng Xiaoping moved to integrate
China’s dynamic export potential into global trade and

Summit 2010


financial markets. Foreign exchange earnings from light

industry exports were used to import technology and
equipment for investment in further up-market export
and heavy industrial capacity.

As in the Ming and Qing, trade was conducted

through only a handful of state companies, which
served to insulate China from the global economy
while at the same time reaping the gains from interna-
tional connectivity. And in a modern permutation of the
open trading ports of imperial times, international capi-
tal was invited into China as foreign direct investment,
but constrained initially to only three Special Economic
Zones (SEZs) opened between 1980 and 1984 in the
southern province of Guangdong.

But this was only the beginning of a phased pro-

gram that evolved with experience. Bureaucratic
management of trade and investment did not inter-
face well with global markets. The early reforms were
followed by successive rounds of administrative liberal-
ization. Industrial enterprises were allowed to do more
types of business with less government involvement,
and could retain a portion of their foreign exchange
earnings, and many more SEZs were opened. and southern coasts have been the major beneficiaries
of the reforms, leaving the inland provinces increasing-
Administrative reform was only one part of the pro- ly behind, and rather prone to bouts of social unrest.
gram, however. As China moved toward full member-
ship in the World Trade Organization (WTO), Beijing No matter whether it uses traditional administra-
instituted vast market-based macroeconomic and fi- tive regulations or modern market mechanisms China
nancial reforms designed to harmonize the economy tends toward over dependence on export-led growth,
with global norms. large surpluses that result from shielding the domestic
economy from world markets, and uneven development
The results were nothing short of spectacular— between the coast and the inland areas. This is not
thirty years of average 9 percent GDP growth. This simply a matter of economic policy; it is as much a
year China overtook Japan as the world’s second larg- matter of civilization and political culture, both much
est economy. And since the 2008 global financial cri- harder to change.
sis, China has been a primary engine of world recovery.
Any lasting solution to the problem of Chinese im-
Yet, the unbalanced character of China’s develop- balances will require more than a struggle for momen-
ment cleaves rather closely to old imperial patterns. tary diplomatic agreements. The G20 would be wise
Modern macro-economic, controls, combined with to move robustly toward a major multilateral effort to
continuing strong state guidance, have succeeded in strengthen the global free trade and financial system.
creating a highly successful coastal economy that pro- This is the only way to shape the long-term conditions
motes exports, now primarily by means of an under- in which Chinese civilization and political culture could
valued exchange rate, and massive trade and foreign evolve to the point where it would be possible to re-
currency surpluses. dress these imbalances through full compliance with
WTO norms and eventual full international convertibility
Powerful government emphasis on industrial in- of the yuan.
vestment directs capital toward large-scale industry,
still the main urban employer, and away from invest- David K. Schneider, formerly a U.S. Foreign Com-
ment in the consumer economy, which occupies only mercial Service officer with posts to Beijing and St. Pe-
about a third of Chinese GDP, the lowest of any major tersburg, is a professor of Chinese studies at the Univer-
world economy. The provinces on or near the eastern sity of Massachusetts, Amherst

Summit 2010

Dollar Diplomacy Revisited
By Ken Weisbrode

American proponents of this theory at the turn of

the last century coined the phrase “dollar diplomacy” to
describe it. This was distinct from the diplomacy of the
dollar—that is, the international role of the U.S. econo-
my. Rather, it meant that dollar, or peaceful, commercial
diplomacy could supplant what was then known as gun-
boat diplomacy, better known then and since as power

Alas, the first half of the 20th century disappointed

many such optimists. But the second half renewed their
faith. Western Europe led the way in demonstrating that
economic cooperation from the bottom up could under-
gird peace. Free trade—a liberal mantra that survived
from the 19th century—became the ruling doctrine of
the latter 20th. The General Agreement on Tariffs and
Trade evolved into the World Trade Organization. A
large number of bilateral and regional trade agreements
crisscross the globe.

But trade does not give the full picture. By the mid-
1970s, international economic relations—particularly
monetary relations—had reached a point of crisis with
the collapse of the Bretton Woods Institutions and the
gold pegged dollar. It was at this moment that the lead-
ing economies of the West joined forces to remake the
basis of what we now call global governance.

The effort began humbly—as informal talks in the

library of the White House, hence its original name,
“the Library Group”—but was since resuscitated and
reinvented as the G6, and later G7 “summits” of industri-
Commercial diplomacy is as old as diplomacy itself. alized nations. Later this became the G8 and now there
Some of the first treaties dealt with trade; some of the first is the G20.
“overseas” settlements were trading entryports; some
of the greatest empires began as commercial enter- The agenda of these gatherings is now so broad,
prises. and the numbers of attendees so large, that it is a won-
der anything meaningful can be accomplished there.
It is customary to consider commercial diplomacy Certainly the meetings bear little resemblance to their
as subordinate to “great power” relations, and to grand 1970s predecessors, although even by the end of that
narratives of war and peace. But throughout most of decade the summits required professional “sherpas” to
human history, commerce was the normal interaction guide them.
among people from different places. The interpenetration
of goods, markets and the whole variety of commercial It is on this lower level of interaction—sherpas and
activity is a long standing historical fact. deputies and their non-governmental counterparts—
that global governance, or what used to be called world
Today’s global economy, like its predecessors, is not order, is hammered out and negotiated on a more or
self-governing. Norms, institutions, laws and treaties less permanent basis. The work can be tedious. But
give it structure and standards. This has been true to the alternative—to dollar diplomacy, and to peace—is in
such an extent that some optimists have argued on oc- nobody’s best interest.
casion—since the 18th century, in fact—that commerce
can buttress peace. Trade is usually said to follow the The author is a historian at the European University
G20 flag, but it also happens the other way around. So too Institute in Fiesole, Italy and the author of The Atlantic
Summit 2010 with peace. Century (Da Capo).
Summit 2010

A Curious Camaraderie:
Beijing’s Abiding “Friendship” With Pyongyang
By Paul Nash

In Jilin Yuwen Middle School, under the protective In 1945 Stalin sent Kim back to Soviet-controlled
shadow of Beishan Mountain in north-eastern China, Pyongyang, installing him at the head of a provisional
155 miles from the North Korean border, there are two government that would become the Democratic Peo-
curious relics that symbolize China’s enigmatic relation- ple’s Republic of Korea (DPRK) in 1948. He ruled the
ship with North Korea. North for nearly 50 years, promoting a blend of Stalinism
and Juche, a political philosophy of Korean self-reliance,
under a personality cult that named him “Great Leader”.
His son, Kim Jong-il (“Dear Leader”), who was born in
Russia in 1941, took over after his father’s death from
heart failure in 1994.

Although the Korean Workers Party (WPK) has ide-

ological roots similar to the Chinese Communist Party
(CPC), the two have developed along divergent paths.
Early Soviet influence and protection ingrained in the
WPK Stalinist tendencies that the party’s Chinese coun-
terpart has long shed. China’s Maoist ideology was nec-
essarily more pragmatic to begin with, as Mao’s struggle
to build a socialist democracy had to include support
from non-communist elements.

The CPC drifted further away from orthodox Marx-

ism-Leninism after the Sino-Soviet rift in the 1960s, and
An old wooden chair and a student’s desk are care- since the 1970s it has altered its core policies to jibe
fully preserved within the dreary grey walls. They have with a series of successful market-style economic re-
been kept there for more than 80 years, ever since Kim forms initiated by Deng Xiaoping. China has embraced
Il-sung, the first leader of North Korea’s communist re- greater openness, economically as well as politically, to
gime, used them from 1927 to 1929. the point where some cadres wonder if it is beginning,
in effect, to abandon its communist agenda altogether.
In 1925, Kim Il-sung crossed the Yalu River from Ko-
rea into Manchuria with his parents at the age of 13, North Korea’s political philosophy, by contrast, has
fleeing famine and Japanese occupation forces. He en- remained stagnant, progressively isolating its regime
rolled in the school in 1927 and there, under the tute- from the international community while plunging the
lage of the Chinese historian Yan Dan, studied Marxism- country into catastrophic famines and economic back-
Leninism. wardness.

Before his first year was out, Kim had joined an un- If the Jilin Yuwen Middle School represents a shared
derground Marxist organization. The next year he led revolutionary tradition and the cradle of the modern Si-
demonstrations against “reactionary” teachers, as well no-DPRK “friendship”, it has become a curiously am-
as anti-Japanese protests that led to his imprisonment biguous one. It was to this school that the 69-year-old
in the autumn of 1929. Kim Jong-il made a secretive trip in August 2010.

After his release the following year, he went to Met by Hu Jintao, China’s president and general
Changchun, the capital of Jilin province, to continue secretary of the CPC’s central committee, a slighter and
his revolutionary work. He later won fame as a guer- greyer Kim, aged by the effects of a stroke he suffered
rilla fighter against the Japanese in north-eastern China. in 2008, arrived in Changchun in an armoured train from
When the Japanese closed in on him in 1940, he es- Pyongyang.
caped to Khabarovsk in Russia, where he enlisted in the
Soviet Red Army, rising in rank to captain during World
War II.

Summit 2010


After a state banquet, he went on to Jilin to revisit Kim reportedly told Hu that he hoped for an early
his father’s alma mater, inspecting his unspoilt relics and resumption of the six-party talks on ending his country’s
laying a floral basket before his statue. He also paid nuclear weapons program, which last convened in De-
his respects at the burial site of anti-Japanese indepen- cember 2008. North Korea walked away from the talks
dence fighters. after international condemnation of a long-range rocket
test, and its prospets of returning were put in question
As Kim walked in these “footprints of revolution”, when it torpedoed a South Korean warship in March.
“overcome with deep emotion”, former U.S. president
Jimmy Carter was kept waiting in Pyongyang.

Carter had come to North Korea on a private hu-

manitarian mission, sanctioned by the U.S. State De-
partment and National Security Council, to negotiate
the release of an American arrested for illegally crossing
over into North Korean territory.

Kim’s absence from Pyongyang sent a clear mes-

sage. China came first. Although official media reports
in China and North Korea made no mention of it, it was
widely believed that Kim’s third and youngest son, Kim
Jong-un, was accompanying his father. In only a few
weeks Jong-un, in his late 20s, would be elevated to a
four-star general and made vice chairman of the WPK’s
central millitary commission, key promotions inteneded
to position him to assume the country’s leadership.
Kim was then taken on a wirlwind tour of Jilin and
China was crucial to establishing the son’s credibil- Heilongjiang provinces, visiting a chemical fiber plant,
ity as successor. A pilgrimage to Yuwen signified that an agricultural expo, a Catholic church under construc-
Jong-un, who attended high school in Switzerland, was tion and various food-processing and electrical utility
inheriting his grandfather’s revolutionary spirit. More im- firms. The tour showcased models of China’s economic
portantly, though, an endorsement from North Korea’s reform and opening up.
chief ally and benefactor would be essential to cement-
ing Jong-un’s diplomatic credentials in Pyongyang. It remains to be seen what effects these invit-
ing glimpses and preasure from the CPC will have on
Hu expressed Beijing’s desire to carry the two coun- Pyongyang, if any. North Korea’s ministry of foreign af-
tries’ relationship “forward through generations” and as- fairs, however, has since dispatched its top negotiator
signed China’s vice president and future leader, Xi Jin- to Beijing to discuss restarting the six-party talks.
ping, to escort him during his visit.
Systemic economic changes will necessarily take
China, concerned over North Korea’s deepening more time. They may have to wait for the era of Jong-
isolation and economic degradation, sought to leverage un, but very little seems to be known about him, apart
its support for Jong-un’s succession to press Kim for from reports that as a teenager he had a penchant for
change. basketball and James Bond films. His older brother,
who has fallen out of favor with his father, now lives
The composition of the Chinese welcoming party mainly in Beijing and Maccau and publicly decries the
was telling. There to greet Kim were China’s ministers hereditary transfer of power taking place within a sup-
of foreign affairs, commerce and the national develop- posedly communist state.
ment and reform commission. In exchange for giving
its blessing to Jong-un, in addition to continued aid
packages, it was clear that China would be asking for
Kim’s cooperation on matters of regional security and
economic development in the DPRK.

Summit 2010

European Chambers’ recommen-
dations to the Seoul G20
- To steer the global economy business skills and training.
to sustainable growth while consoli-
dating public finances and bringing - For European Chambers,
forward financial sector reforms aid and trade are inextricably linked
which ensure the stability and sus- to any serious reflection around de-
tainability of the financial system velopment. If well managed, trade
through an international framework can be a silver bullet for poverty
for reform based on a principle- alleviation. Aid for Trade remains
based global financial supervision the main instrument to support de-
framework. Priority should be given veloping countries to expand trade
to ensuring adequate financial sec- and to promote growth. In order to
tor capital and liquidity requirements maximise outcomes, however, the
and to developing an efficient sur- way SMEs engage with trade also
veillance and early warning system. requires particular attention.

Alessandro Barberis, - To halt the start of exchange

President of EUROCHAMBRES rates’ tensions. 3) TRADE

For the fifth consecutive time, - To achieve private sector- European Chambers are con-
the European Members of the ‘C20 led growth by ensuring that busi- vinced that international trade flows
Group’ (see separate box) have nesses, particularly SMEs, have can play a crucial role in supporting
agreed on a common position for adequate and efficient access to fi- the nascent global economic recov-
the official G20 Summit. nancing, both from banks and capi- ery. This recovery must be sustained
tal markets. Employment needs to by trade and investment facilitation
Below are the main recommen- be fostered decisively through struc- actions and policies, bringing eco-
dations from European Chambers tural reforms and active labour mar- nomic growth and jobs. European
to political leaders meeting in Seoul, ket policies. Chambers call for national govern-
based on the three key items that ments to:
appear on the official agenda of the
Summit. 2) DEVELOPMENT - Speed up the negotiations
towards closing the Doha Round of
European Chambers ask the multilateral trade talks.
1) ECONOMICS AND FINANCE G20 governments in general and the
G20 working group on development - Stop now the moderate, yet
European Chambers recognise in particular, to take into account the persistent, trend in the introduction
the importance of ensuring sustain- following: of trade restrictive measures, which
able world growth in the short-to- now total almost 300 worldwide.
medium term. At the same time, - SME development and en- But more importantly, to remove the
they recognise that this can be only trepreneurship are crucial areas in ones which were introduced at the
achieved by consolidating public fi- improving economic development beginning of the global economic
nances, ensuring adequate financ- and implementing government pro- crisis.
ing of the real economy and bringing poor policies successfully, as well
forward balanced financial sector as achieving the UN Millennium De- - Start exploring the possibili-
reforms. velopment Goals (MDGs) and the ties of harmonising the existing rules
gradual integration of developing of origin of the bilateral and/or re-
As one of the main messages, economies into the global economy. gional free trade agreements signed
European Chambers call on G20 so far, for the benefit of businesses
governments: - That Chambers have a and especially SMEs.
crucial role in improving economic
- To ensure that the imple- performance especially by putting - Include the issue of raw ma-
mentation of the new Basel III reg- in practice instruments to tackle a terials in international trade agree-
ulations is global and rules are im- myriad of constraints to business- ments.
plemented everywhere across the es. Among others, tools aiming at
G20 world, not only in Europe but also stimulating transparent and effective
Summit 2010 particularly in the US and Asia. regulatory frameworks, promoting

About the C20 Group

As the G20 Summit has been gaining in importance as the premier forum for international economic coopera-
tion, Chambers of Commerce from across the globe have joined their forces in late 2009 and announced the
creation of the “C20” group – the business counterpart of the G20 conformed by the Chambers of Commerce
of the countries belonging to the official Group of 20.

The ambition of this group is to represent the views of enterprises – particularly small and medium-sized ones
– from the G20 countries and make an impact on economic and financial policies discussed at G20 level.

The C20 group is not a formal institution, nor focuses itself as a Secretariat for organising multiple meetings.
Instead, its main goal is to support G20 leaders in elaborating solutions to restore economic stability and sus-
tainable growth globally through the development of common positions, the exchange of opinions among the
C20 Chambers, and common lobby initiatives.

Alessandro Barberis, President of EUROCHAMBRES said: “As the G20 grows in importance in addressing the
world’s economic challenges, it is crucial that they can rely on a ‘mirror’ business group that will provide the
real economy’s perspective. We wish to establish a regular exchange of information and consultation mecha-
nisms between the G20 and the C20, which should lead to solutions beneficial to businesses worldwide.”

C20 members
1. Argentina – The Argentinean Chamber of Commerce
2. Australia – The Australian Chamber of Commerce and Industry
3. Brazil – The National Confederation of Industry
4. Canada – The Canadian Chamber of Commerce
5. China – China Chamber of International Commerce – China Council for the Promotion of International Trade
6. France – The Assembly of French Chambers of Commerce and Industry
7. Germany – The Association of German Chambers of Industry and Commerce
8. India – the Federation of Indian Chambers of Commerce and Industry
9. Indonesia – The Indonesian Chamber of Commerce and Industry
10. Italy – The Union of Italian Chambers of Commerce, Industry, Crafts and Agriculture
11. Japan – The Japan Chamber of Commerce and Industry
12. Mexico – Confederation of National Chambers of Commerce, Services and Tourism of Mexico
13. Russia – Chamber of Commerce and Industry of the Russian Federation
14. Saudi Arabia – The Council of Saudi Chambers
15. South Africa – Business Unity South Africa
16. South Korea – The Korea Chamber of Commerce & Industry
17. Turkey – The Union of Chambers and Commodity Exchanges of Turkey
18. United Kingdom – The British Chambers of Commerce
19. United States – The US Chamber of Commerce
20. European Union – EUROCHAMBRES

The Netherlands – The Netherlands Chamber of Commerce
Spain – The High Council of Chambers of Commerce, Industry and Navigation of Spain

Summit 2010

International Security:
Why the World Needs to Engage With Iran Again
By Arash Aramesh

President Barack opposition to a degree

Obama has in many that would dwarf the
ways told the Iranian brutality it displayed
leadership that the in the aftermath of the
United States is open June 12 presidential
to holding talks with election. History has
Iran on important is- already shown this to
sues including Iran’s be the case.
controversial nuclear
program and the Thirty years ago, the
possibility of utilizing Islamic Republic, faced
Iranian assistance to with growing domestic
combat the Taliban in tensions and various
Afghanistan. potent political opposi-
tion groups, was hand-
Iran’s Supreme ed a most timely gift by
Leader Ali Khamenei the ruling Baath Party
responded on August 18 that negotiating with America in Baghdad when Iraq’s Saddam Hussein invaded Iran.
was possible provided that the United States does not This provided the regime with the best opportunity to
behave in an aggressive and hostile manner. rally the crowds around the flag, decimate the opposi-
tion through execution and incarceration, and consoli-
But then came President Mahmoud Ahmadinejad’s date power.
speech at the UN General Assembly in September, call-
ing for an investigation into possible U.S. involvement in The first decade in the life of the Islamic Republic
the attacks of September 11, 2001. The West needs to was defined by a war that allowed the government to
ignore the empty rhetoric of Ahmadinejad and instead resort to the most brutal measures, including the mass
work on developing a long-term strategy in dealing with executions of political prisoners in summer of 1988, all
Iran. The first step begins by directly engaging the Ira- in the name of retaining the power necessary to fight for
nian government. victory.

Despite the anti-American rhetoric coming from the With the war’s end, a new era called “Reconstruction”
Islamic Republic, it appears that Tehran and Washington was born during which the government of former Presi-
have publicly declared willingness for talks. It is neces- dent Akbar Hashemi-Rafsanjani focused on rebuilding a
sary to point out the many benefits that could result from country ruined by eight years of a bloody war. Political
such dialogue, before another opportunity is lost. First reconstruction, however, did not commence until almost
and foremost, despite what has been touted as con- two decades after Saddam first attacked Iran. Reform-
ventional wisdom in Washington, engaging the Islamic ist President Mohammad Khatami’s election in 1997 was
Republic and helping the opposition are not mutually viewed as the beginning of an era of political moderniza-
exclusive. tion. Khatami’s domestic and international supporters
were quickly disillusioned, however, once they realized
As long as there is no dialogue with Iran, the threat that long-lasting effects of the Iran-Iraq war, were still
of a possible military strike against Iran’s nuclear facilities very much present in Iranian society and had a direct
looms large. With each passing day, Israel is growing impact on the political equations of the Khatami era.
more worried about Iran’s nuclear capabilities and the The reform that so many had been anticipating was ex-
5+1 permanent members of the UN Security Council cruciatingly slow as the war—a war that many in the
have not reached groundbreaking success in a deal with West had supported hoping Saddam would check Iran’s
Tehran. An attack by Israel, or any other country for that insurrectionary brand of Islamic revolution—had set the
matter, would thwart any progress with pro-democracy, clock back on Iran’s political modernization for three de-
pro-peace, and pro-human rights aspirations. cades.

Once attacked, the Islamic Republic would treat dis- The effects of the Iran-Iraq war are still felt in Iranian
G20 sidents as enemies of the state and would quash the society. Today, any military strike against Iran would be
Summit 2010


savi and Karroubi have urged Iran’s leaders to tone down

their rhetoric and minimize the possibility of an attack
against Iran. It is evident that leaders of the opposition
inside Iran see no benefit in a military attack; instead,
they are worried about its horrendous consequences.

The effectiveness of any attack is also questionable

and cannot possibly justify the costs. Israeli bombings
of Iran’s nuclear facilities, if successful, would at the very
best slow down Iran’s enrichment efforts—not stop it.
This would mean that Iran’s program would go under-
ground and there would no longer be any international
inspections whatsoever. Inside the country, no one
would dare oppose the government. A large number
of dissidents would not criticize the government out of a
feeling of nationalism and patriotic duty and many more
would simply be too afraid of the repressions to do so.

The Iranian opposition would be dealt such a violent

blow by the government that it would take years, if not
decades, for any reasonably strong popular movement
viewed as a great opportunity for hardliners to once and to take root again.
for all do away with the opposition and its leaders that
have been such a thorn in the government’s side. This Some might conclude that possible U.S. negotia-
is one of the primary reasons that de-facto opposition tions with Iran could legitimize the government of Presi-
leaders Mir Hossein Moussavi and Mehdi Karroubi have dent Mahmoud Ahmadinejad, whose election in 2009
been so vocal in their opposition to any sort of military is highly disputed. That is certainly an undesirable out-
strikes. come for the Iranian opposition. But the alternative is
much more grim. Preventing a military strike against
Although no empirical data exists, such as reliable Iran promises to best serve the long-term interests of
opinion polls, regarding whether Iranians would wel- the opposition Green Movement and Iran’s pro-democ-
come a military attack, opposition leaders have strongly racy, pro-human rights, and pro-peace movements.
expressed their views of the likely damage to their long-
term goal of positive political change. Kaleme, Moussavi’s Arash Aramesh is researcher at The Century Founda-
official website, wrote, “The Green Movement will react tion and He has published in the Diplo-
to any foreign threat while maintaining its boundaries matic Courier magazine, the International Herald Tribune,
with hardliners.” Moussavi asserted, “All of us will de- the New York Times online and the Huffington Post,
fend our country’s national interests very clearly.” Mous- among other publications.

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Summit 2010

Sustainability ‘From Below’
Or, Why We Shouldn’t Take Cities for Granted
By Michele Acuto

As this year’s world-wide attention for the negotia- governance potential in most of these security, develop-
tions in Copenhagen can bear witness, what might be mental and environmental concerns, and how they do
called a “climate change agenda” has now rapidly crept not solely represent partners but agenda-setters in their
to the forefront of world politics. Prompted by an in- own right.
creasing international interest in green themes, mostly
headed to the center stage of international relations by Metropolises are increasingly less “policy-takers” (as
the more and more pro-active role of transnational ad- Claus Schultze put it in the case of the European Union)
vocacy groups as well as by a growth in the media and subjugated to the pecking order of the state, as they be-
even entertainment industry attentions, this agenda now come more and more “policy-makers” capable of being
lingers in much contemporary diplomacy. The concerns key stakeholders in various arenas of participatory gov-
and debates around environmental issues that now in- ernance beyond the nation-state. As the development
form much of the priorities of the key international fora of transnational city-based coalitions such as the ICLEI
have progressively become the everyday lingo of global Local Governments for Sustainability, the Climate Lead-
governance, and the latest G20 summit is no excep- ership Group or the Sister Cities International coalition
tion. While much of the discussion of the Group remains can testify, cities are more and more present in inter-
focused on finance issues and the post-GFC recovery, national policymaking processes and major sources of
some environmental concerns are deemed to make lobby on international institutions. This is of course not
an appearance in-between growth and developmental just a feature of Westerns metropolises only, as testified
considerations, whether in the more classic ‘Commit- by the World Mayors and Local Governments Climate
ments’ or the ‘New Agenda’ side of the ministerial talks Protection Agreement signed in 2007 and now gather-
in Seoul. ing more than one hundred metropolises worldwide. Ur-
ban settlement have to date set up environmental coop-
Yet, as the G20 might aptly demonstrate, this mount- eration forms that, in structure and competences, might
ing centrality of climate change unveils a broader problé- match state-based institutions, thus making it hard to
matique international politics has only just recently come deny the capacity of local government representatives
to grasp with: the sustainability challenge. Climate is only in undertaking foreign policy activities.
part of a question of endurance that calls for a pairing
of environmental and developmental policies to ensure However, what remains largely unscrutinized is the
the survival of the species. In this view curbing global issue of “sustainability” per se. Few are those who
warming represents only a step in a multifaceted agenda would these days criticize the need for sustainable solu-
targeted towards ensuring that the legacy of the present tions, yet few are also those who look into what is being
generations is one future one will be able to tell. How can made ‘sustainable’ and for whom. This is hardly a new
we support the current exploding demographic rates, concern, as the 1990s calls by urbanists Peter Marcuse
or how can we best manage the declining natural re- and Mike Davis testify, but it has thus far failed to echo
source pools? down the corridors of the highest spheres of global gov-
This, in an age of urbanization where the city rep-
resents a quotidian experience for most of the world’s The internationalization of cities into the broader
population, means that most of these dilemmas bring spheres of global governance is in fact not just a result
us to the unavoidable realization that global gover- of a cosmopolitan drive for the common good: along
nance solutions will necessarily need to ‘go though’ the with the philosophical tenets for the growing presence
urban scale to make a significant impact on the faith of of key globalizing metropolises in environmental politics,
humanity. we need to take into considerations the more pragmatic
and economically determinist reasons that drive most
In this sense, the cities occupy a very peculiar and of this transnational move of City Halls at large. Hence,
certainly pivotal place in contemporary global gover- while much of the pressing questions of sustainability are
nance. To begin with, global issues are increasingly par- often implicitly subsumed, in an antipodean logic, under
alleled, intertwined, if not originated in urban issues–to the debate on climate change (rather than vice-versa),
the extent that the urban has nowadays become an al- the necessary critical inquiry into the basis and underly-
most ever-present factor in public policy. Moreover, cit- ing rationales of sustainability itself is lost in such errone-
ies are gradually demonstrating how they hold strategic ous translation.
Summit 2010

This is all the more problematic because the inter-
nationalization of many metropolises is not a socially-
neutral process free from wicked consequences. The
forces of globalization, coupled with the seductive at-
traction of urbanization and the centralization of ad-
vanced producer services in particular cities, are in this
sense redefining the textures of the world’s central me-
tropolises in a move towards novel spatial orders that,
while not always consistent or affirmed in every city, are
certainly producing complex patterns of spatial division.
Although today’s globalizing metropolises are, as René
Descartes put it, an “inventory of the possible” that
open up the spaces of the global to many thanks to their
transnational interconnectedness, they also constitute a
controversial context of social polarization and growing

The unequal socio-spatial restructurations of 21st

century metropolises described by much of the con-
temporary urban research from David Harvey, to Saskia
Sassen and Manuel Castells are not just a product of
exogenous forces and purely accidental social dynam-
ics. As this literature tells us, today’s post-industrial set-
tlements are seeing a substantial amount of conscious
splintering, which is also mutually-reinforcing as cities
copy each others’ ‘best practice’ models. Inequality can
in fact be the result, if not the goal, of deliberate socio-
spatial strategies. Sustainability initiatives are then often
prompted by the need for these metropolises to com-
pete in attracting capital, tourism and culture and thus,
for instance, progressively driven by the lure of a sprawl-
ing genus of city rankings.

The ‘marketization’ of city public policy and the

commodification of environmental restructruration at
the urban level, in this sense, only prompt further po-
larization and splintering and, in particular, does little to
improve the oft-unequal status quo of the contempo- Nevertheless, the environmental (if not, more broadly,
rary global system. So while on the international politics the political) role of cities should not go unscrutinized.
scale cities contribute to raise awareness and promote To put it simply, we should not take cities for granted.
new green agendas, at the crucial everyday street level ‘Cities’ are, after all, nothing but those inherently politi-
of urban policy the contradictions of the neoliberal sys- cal systems that organize the urban conditions of much
tem that leads to a call for novel governance solutions of humanity in manageable collective entities and, as
at a broader scale are perpetrated with more and more such, they are continually in the making. Problematiz-
dangerous “politics via markets”–to borrow Ronnie Lip- ing the bases, directions and long-term social conse-
schutz’s expression. quences of sustainability initiatives, and thus taking into
account issues of political participation to policy-forma-
This is not to say that a focus on sustainability is the tion mechanisms, is an imperative for practitioners and
wrong way. On the contrary, there is much to gain from analysts at all governance levels. We should guarantee,
the ‘glocalization’ of environmental initiatives at scales as Australian philosopher Clive Hamilton puts it, the “de-
below and above the state, and there is certainly much mocratization of survivability” at all levels, not solely the
to be praised when it comes to today’s metropolitan in- global but chiefly the everyday scale of urban affairs.
novative potential. Indeed, as many of the cross-nation- Indeed, the world’s key metropolises have a pivotal role
al networks of localities are showing us, urban public in the global governance of the environment. Our chal-
policy can demonstrate flexibility and a governance ca- lenge, however, is not assume their active participation
pability that challenge the effectiveness of the machi- without verification – but to ensure the social viability of
nations of traditional global governance alignments. their sustainable evolution.
Investing in the Human Security of Afghanistan
By Suraya Dalil and Ashraf Haidari
Photgraphy by Sebastian Rich

Much of the Afghanistan war reporting is domi- ticularly in Afghanistan with a population of vulnerable
nated by headlines of civilian or military deaths due to groups. Conservatively speaking, more than 60 percent
armed conflict. As tragic as these deaths are, their of insurgents in Afghanistan are rented fighters, or
numbers pale in comparison with the loss of lives due “10-dollar-a-day Taliban” who, for a lack of livelihood to
to other reasons such as maternal deaths and infant support their families, have been recruited by regional
mortality. For example, about 2,000 international terrorist networks.
troops, mostly from the United States, have lost their
But what do we
mean by human se-
curity? Unlike pro-
tective security, hu-
man security is far
more than the ab-
sence of violent con-
flict. It encompasses
human rights, good
governance and ac-
cess to economic
opportunity, educa-
tion and health care.
It is a concept that
comprehensively ad-
dresses both “free-
dom from fear” and
“freedom from want.”

Even though a
lack of “freedom from
lives since 2001 in Af- want” may be forcing some 60 percent of insurgents to
ghanistan. About 3,000 fight for a daily pay, a whopping 80 percent of interna-
civilians have been killed tional aid resources is spent on protective security mea-
in the first six months sures, or “freedom from fear.” Much of the remaining 20
of 2010, while about percent of international aid devoted to civilian assistance
20 Afghan policemen bypasses the Afghan government. A multitude of par-
and soldiers die every allel mechanisms sap some 80 percent of civilian aid
day trying to secure the resources, leaving the Afghan government with only 20
country against a brutal insurgency that is maintained percent. To make matters worse, more than 15 percent
outside our borders. of this is earmarked to be spent on donors’ projects of
In contrast, however, more than 50,000 Afghans die
annually due to a lack of human security. Newly born This immense imbalance between security and de-
babies, children under the age of five and mothers con- velopment, or civilian aid versus military assistance, is
stitute the bulk of these lives that can, and must, be partly why the Afghan government continues to remain
saved. Unfortunately, these silent deaths do not grab weak. In effect, the Afghan government receives a very
Afghan or international headlines. Why is this and what small amount of discretionary funding, which is not even
can be done about it? enough to reform a Ministry. Hence, a proportionally
small amount of civilian aid coupled with ineffective aid
One of the key reasons has to do with the fact that delivery mechanisms has perpetuated weak governance
defense spending continues to outstrip spending on de- and incentivized petty corruption in Afghanistan’s deep-
velopment. In other words, protective security is often ly insecure human environment. Consequently, these
prioritized at the cost of human security, even though the overlooked problems continue bolstering the regional
two types of security are inextricably intertwined, par- and transnational dimensions of instability in the country.
Summit 2010


The international response to underinvestment in mostly mothers and their children, each year. And un-
development came in 2000 when world leaders ad- der NSP, villagers, including women for the first time,
opted the Millennium Development Goals (MDGs)–a have formed community development councils, through
set of 8 development-related goals–to be achieved by which they participate in designing and co-implement-
2015. The MDGs provide a framework for the interna- ing projects that address their acute local needs.
tional community to work together towards a common
aim, ensuring that human security reaches everyone, This past summer on July 20th in the Kabul Con-
everywhere. Because Afghanistan endorsed the Mil- ference, the Afghan government presented to our na-
lennium Declaration in 2004, the deadline for reaching tion-partners a blueprint for true partnership: the donor
its country-specific goals was set at 2020. In addition, community must channel at least 50 percent of all aid
Afghanistan has set security outcome as the 9th, self- resources through Afghan state institutions–including
adopted MDG–a goal that impacts progress toward all
other goals.

Since 2004, Afghanistan has made continued prog-

ress towards its MDGs. We have been able to reduce
child mortality from one in every four children to one in
every six, an important achievement in MDG4. Seven
million more children now attend school, marking un-
precedented success toward MDG2. With one of the
lowest telephone access rates in the world in 2001,
the percentage of cellular subscribers had increased
21 percent of the population by 2006, well on track to
reach the target of 50 percent by 2015.

In spite of Afghanistan’s strong economic progress,

per capita income in the country remains the lowest in
the region. Only 27 percent of Afghans have access to
safe drinking water, 12 percent to adequate sanitation the Ministry of Public Health–and must align their inde-
and just 9 percent to electricity. More than 40 percent pendent aid efforts with the priorities of the Afghanistan
of the Afghan population remains unemployed, and more National Development Strategy.
than half hovers at the brink of poverty. Another 8.5 mil-
lion, or 37 percent of the people, are in the borderline of One of the core objectives of our Strategy is to ad-
food insecurity and thus hunger. dress Afghanistan’s human security needs so that chil-
dren can be better nourished, mothers have skilled as-
Clearly, the security picture is mixed in Afghanistan. sistance in childbirth, and families can have access to
Much has improved, but so much more needs to be electricity, clean water, and education. And when more
done. To have a secure and prosperous Afghanistan, we over 60% of Taliban fighters eventually see that their ba-
must ensure that healthy Afghan mothers give birth to sic human security needs are met, they will disengage
healthy children. Programs must shift from haphazard from violence and choose to lead a peaceful life in the
local projects implemented by various non-state actors society. Indeed, the war in Afghanistan cannot be won
to strategic national programs reaching far and wide militarily alone. We and our partner nations must work
with a long-term vision. together and mobilize our resources to invest at least
50% of all international aid and national revenues to
The Basic Package of Health Services (BPHS), change forever Afghanistan’s dire human security situa-
implemented by the Ministry of Public Health, and the tion. The time to act is now.
National Solidarity Program (NSP), managed by the Min-
istry of Rural Rehabilitation and Development, are the Dr. Suraya Dalil is Afghanistan’s Acting Minister of
prime examples of the Afghan government’s successful Public Health, and Ashraf Haidari is the Chargé d’Affaires
national programs that focus on the basic yet very criti- of the Embassy of Afghanistan in Washington DC.
cal needs of the rural population. The two national pro-
grams cover more than 80 percent of the population in Sebastian Rich is a Senior Contributing Photog-
over 25,000 villages. As a result, access to health care rapher with the Diplomatic Courier magazine. Se-
has increased from less than 5 percent under the Taliban bastian has been a photographer and cameraman
to more than 80 percent now across the country. This for over 30 years. His work can be viewed at: www.
government-led effort is saving more than 50,000 lives,
Summit 2010

Include Cancer: Why the Global Cancer Movement
Needs the Support of the G20 Group of Nations
By Ambassador Nancy G. Brinker

Every 69 seconds a woman dies of breast cancer. healthcare systems, strain national budgets, destroy lo-
The impact of this disease is not just shouldered on the cal economies and devastate families.
women who are battling, but their families and friends
who are supporting them through the treatment and pal- As the World Health Organization’s Goodwill Am-
liative care process. The emotional impact of losing a bassador for Cancer Control, I regularly explain the
wife, mother or daughter to cancer is immeasurable, but importance of including cancer in the global health agen-
the economic impact of premature death by all cancers da. Not only does cancer kill more people globally than
is measurable and it is devastating. A recent study found HIV/AIDS, TB and Malaria combined, we are witnessing
that twenty-five nations are losing more than 2 percent a huge shift in the cancer burden from the developed
of the GDP to deaths and disability caused by cancer. world to middle and low income countries. By 2020, an
These figures are only for the deaths that can be attributed estimated 60 percent of all new cancer cases will occur
directly to cancer, how many deaths each year go unde- in the least developed nations, however, currently only 5
tected, but are ultimately caused by cancer? percent of global resources for cancer are spent there.

Cancer is no longer a “western” or “rich” country dis- With so many pressing problems on the global
ease; it is clearly evolving as a global problem. Cancer agenda, many will argue that fighting cancer is too com-
is the great equalizer: it affects men, women and fami- plicated or too expensive. That the focus should be on
lies; it affects the rich, the poor, the young and the old; cheaper and less complicated problems. They argue
and it burdens rich countries and poor countries alike. that countries with strained national budgets can’t afford
G20 Without comprehensive cancer control plans, the devel- to take on another global health issue. But the world
Summit 2010 oping world is facing a disease tsunami that will overload does not have a choice. The cancer burden will con-

Engaging Global Leaders

Often global leaders and country officials are un-

aware of the size and scope of the cancer burden in
their countries. To ensure that decision makers are well
informed about the impact of cancer on their country,
Komen’s Global Health Alliance has established a series
of high-level roundtables designed to educate and
engage decision-makers about the cancer burden in
their country. The roundtables engage first ladies, health
ministers, ambassadors, corporate and NGO leaders
tinue to grow and so will the economic impact: the total and global health experts in order to educate them about
economic impact of premature death attributed to can- women’s cancers and encourage the development of
cer worldwide is estimated to be $895 billion in 2008. national cancer control plans.
It will take a global movement to help prevent a cancer
crisis in the developing world and this is why the atten- Engaging Local Leaders
tion of global organizations such as the G8 and G20 are
so important. The success of any global health program is adop-
tion by the general public. Recognizing the need to en-
Recognizing the size and scope of the problem, gage local NGO partners and advocates, Komen has
Komen decided to increase its resources in the global offered the Course for the Cure (CFTC) program in 10
battle against cancer. We recently launched the Susan G. countries with close to 900 participants trained, to date.
Komen Global Health Alliance to manage our global The curriculum, which is tailored to each country’s spe-
efforts and develop a strategic vision for including cancer cific needs, is based on our 30 years of experience in
on the global health agenda. In addition to our grassroots breast cancer education, awareness, fundraising, advo-
education efforts and our global races in 11 countries that cacy, and survivor support services. Graduates of the
raise money for education and research programs, the CFTC are empowered to educate their communities,
Alliance has identified four major areas to focus our fundraise for worthy causes, and work with local law-
global efforts: makers.

Attacking the Stigma The Susan G. Komen for the Cure Global Health Al-
liance will continue to work with stakeholders at all lev-
One of the most significant barriers to effective cancer els to address the barriers to high quality screening and
control in many countries is continuing myths associated treatment, battling the stigma of cancer, and educat-
with the cause of cancer and the stigma associated with ing all. We will need the support and leadership of the
admitting one has cancer. In many countries cancer is G8, G20, and other global health organizations as we
synonymous with death, a curse bestowed because of work to prevent a global cancer crisis. After all, where
bad behavior. Even worse, many societies see cancer a woman lives should not determine whether she lives.
as contagious. As a result, cancer patients and survivors
are ostracized from their communities and often avoid Ambassador Nancy G. Brinker is Founder and CEO,
addressing their cancer in order to prevent any negative Susan G. Komen for the Cure® and Ambassador for
stigmas to be bestowed on them or their families. For Cancer Control, World Health Organization, United
a disease like cancer, a disease that is best fought ear- Nations.
ly, avoidance is one of the most debilitating courses of
action, as early detection and information sharing are
some of the most effective ways to battle the disease.

Identifying the Information Gaps

To better understand incidence and mortality rates

for any one country, up-to-date current information is
essential to fighting the disease head on. Many low-
and middle- income countries lack cancer registries and
the necessary data collection techniques needed to as-
sess the burden accurately in order to design effective
cancer control programs.
Summit 2010

Déjà Vu? World Food Price Hikes Raise Concerns
By Daniela Carcani

Food is a basic human need and an essential ingre- 2008, and according to the U.S. Department of Agricul-
dient to a healthy and stable society. In many countries ture, wheat, soybean, corn, and rice prices increased
around the world, food is less of a given, and lack there- by 146 percent, 71 percent, 41 percent, and 29 percent,
of can cause hunger, malnutrition, and even instability respectively.
and conflict. United Nations Secretary-General Ban Ki-
moon has stated that: “Food and nutritional security are In 2007-2008, price hikes were affected by various
the foundations of a decent life, a sound education and supply and demand dynamics including climate-related
the achievement of the Millennium Development Goals.” events in grain-producing nations like droughts, floods,
and environmental degradation, rising oil prices, diver-
Fear of a new global food crisis has lurked around the sions of maize to ethanol production, as well as public
world’s commodity markets as prices for staples such reactions such as hoarding which further exacerbated
as corn, rice and wheat recently mushroomed. This fear price volatility. Oil price increases also caused general
is not new as our memory is still fresh of the dramatic escalations in the costs of fertilizers, food transportation,
increases in world food prices during the years of 2007- and industrial agriculture.
2008, which led to a global food crisis and caused po-
litical and economic instability and social unrest in both These factors were compounded by the increas-
developed and developing nations. The spiraling global ing demand for food worldwide due to a growing world
food prices in 2008 were a threat to global food and population, the growth of the middle class in China and
nutrition security and were particularly devastating for India, and a decline in agricultural investment. The de-
low-income food deficit countries. mand for higher production of biofuels further exacer-
bated the situation. Corn ethanol production in the Unit-
The facts were staggering. According to the Interna- ed States and elsewhere led to increased corn prices.
tional Monetary Fund (IMF), global food prices increased So, are we in for another global food crisis?
G20 an average of 43 percent between March 2007 and March
Summit 2010


The current outlook with regards to price hikes is Preparing for such a situation would only be to our
certainly not as grim as the one leading up to the 2007- advantage. Whether a “New Deal” for food production
2008 crisis. However, recent incidents have raised is the right answer will remain to be seen. However, it
concerns of a replication of the 2007-2008 food crisis. is this kind of thinking outside the box that could arm
Major events that are affecting grain and oilseed crops the international community to respond effectively to an-
this year include the Russian fires, droughts in countries other food crisis.
like Russia and Brazil, and heavy rain in Canada and Eu-
rope. The Financial Times reports that wheat and corn Daniela Carcani is a graduate student at the George
prices rose after Ukraine said it would impose export Washington University. She is studying International Af-
restrictions on agricultural commodities until the end of fairs with a focus in International Security Studies as well
the year after. This was due to a drought this summer as International Law and Organizations. Her expertise
that ruined its cereal crop. includes WMD and nonproliferation.

Many of the factors that led to the 2007-2008 cri-

sis and the incidents that have caused the current price
increases are a result of unforeseen and uncontrollable
forces. However, there are measures we can take to
reduce the magnitude of the problem, and most impor-
tantly in assisting countries to fight hunger.

Subsequent to the 2007-2008 crisis, World Bank

President Robert B. Zoellick called for a “New Deal” to
combat world hunger and malnutrition. This new deal
would entail a combination of emergency aid and long-
term efforts to improve agricultural productivity in devel-
oping countries. Zoellick’s plan called for a shift from
traditional food aid to a broader framework that includes
food and nutrition assistance such as cash or vouchers
that can help build local food markets and farm produc-
tion, and create a “Green Revolution” for Sub-Saharan

Although current price increases are of concern, the

situation is not alarming. However, given the current
state of the global economy, another crisis of 2007-
2008 proportions would be devastating, particularly to
much of the developing world. The consequences of
another crisis would have multiple effects including, hu-
manitarian, socio-economic, developmental, political,
and also security-related. G20
Summit 2010

Injecting Life Into the World Economy
By Orin Levine and Ciro A. de Quadros

As the world looks to South Korea this week, there ment, both for individual countries and for the global
is one vital question that must be posed as G20 leaders economy: Pneumonia.
seek solutions to inject new life into the global economy.
How can we have any hope of achieving and sustaining You may be surprised to learn that pneumonia is the
economic growth without improving the survival rate of world’s leading killer of children, claiming a young life
the next generation? And if tackling the leading killer every 20 seconds. It kills more children annually than
of children is imminently achievable, will save millions AIDS, malaria and measles combined. Yet it can be
of children’s lives each year and promises an impressive treated with antibiotics that cost less than US $1, and
return on investment, isn’t there both a moral and an in many cases prevented entirely with a safe and effec-
economic imperative to do so? tive vaccinenow available to developing countrieson an
unprecedented timeline and at prices their governments
The mutually reinforcing ties between improved can afford.
health outcomes and economic prosperity are well doc-
umented–which is why efforts to solve the latter without Allowing young children to suffer and often die from
a plan to improve the former are self-defeating. Accord- preventable diseases such as pneumonia not only de-
ing to a 2004 paper published by David Bloom in World nies children a fair shot at life, but robs families of their
Development, a 1-year increase in life expectancy im- meager earnings, and redirects community resources
proves labor productivity by four percent. And research away from economic progress. Alternatively, investing
by Hans Rosling at the Karolinksa Institute demonstrates in effective health interventions—particularly the protec-
that decreasing child mortality offers the best hope of tion afforded young children by immunization against
lifting countries out of poverty, and stabilizing population the leading causes of death, including pneumonia—can
growth over the long-term. dramatically improve the economic potential of individu-
als, families and communities in the developing world.
There is a disease for which prevention offers a dra- And it’s easy to see why.
matic and far-reaching opportunity for return on invest-
Summit 2010


A sick child is unable to attend school, help with the Defeating pneumonia will offer a huge step toward
family crops or animals, tend to household chores, or achieving Millennium Development Goal 4—a two-thirds
care for siblings. Her parents will divert their time and reduction in child mortality—and helping to remove one
very limited income to caring for her, undertaking long obstacle for countries desperately struggling to achieve
journeys fortreatment, and purchasing medicines that economic stability.
are beyond their means. Her local health clinic will likely
be overrun with children who also suffer from prevent- Fittingly, the G20 meeting coincides with the second
able infectious diseases. And her parents, knowing she annual World Pneumonia Day. There is an opportunity
and her siblings have a high likelihood of dying before here for those who have the power to make financial
the age of five because children dying in the developing commitments to health infrastructure to prioritize pneu-
world is a fact of life, will continue to bear children in monia prevention, and in doing so, realize long term
hopes that some will survive—all of which perpetuates health and economic development goals. There is no
the same cycle, and keeping families, communities and greater or more far-reaching return on investment than
entire countries mired in poverty. when we rededicate ourselves to every country’s most
important resource: people.
But the cycle can be broken. Brazil, for example,
took lessons and momentum from its successful small- Orin Levine is Executive Director, International Vac-
pox eradication campaign to better coordinate their cine Access Center (IVAC) at the Johns Hopkins Bloom-
broader national health efforts, take on other diseases, berg School of Public Health. Ciro A. de Quadros is Exec-
improve both the life expectancy and the quality of life utive Vice President, Sabin Vaccine Institute. The authors
for their citizens and ultimately grow their economy. are Co-chairs of the Pneumococcal Awareness Council
of Experts (PACE), a project of the Sabin Vaccine Institute
As the world’s most powerful decision makers, world dedicated to the prevention of pneumococcal diseases.
leadershave the power to prioritize efforts to wipe out
the leading—and most preventable—killers of children.
Summit 2010

Social Work’s Contribution to Global Development:
The Western Lens Impact on Universalism and
Opportunity for Collaboration
By Ruth Gerritsen-McKane and Courtney H. McBeth

well-being. Utilizing theories of human behavior and

social systems, social work intervenes at the points
where people interact with their environments. Princi-
ples of human rights and social justice are fundamental
to social work.”

IFSW does include the following footnoted dis-

claimer specific to the above definition: “This interna-
tional definition of the social work profession replaces
the IFSW definition adopted in 1982. It is understood
that social work in the 21st century is dynamic and
evolving, and therefore no definition should be regard-
ed as exhaustive.” Just as the term development as
a whole is complex and changing, international so-
cial work recognizes the dynamisms that globalization
brings to developing countries.

Development across the globe has become a com- The values voiced by both social work organizations
plex and increasingly important issue when considering refer to the fact that social work grew out of humanitar-
the financial and economic crisis in developing coun- ian and democratic ideals. However, it has been argued
tries. International social work, when operating through that the above definition comes from a Western world-
a universalism lens, is an underutilized resource and view, as well as ideals steeped in Christianity, and as
voice in the larger global development conversation. such can undermine the reality of universalism in social
work contributing to global imbalance. Universalism
Social workers in the 21st century are afforded is crucial to the utilization of social work as a key tenet
numerous opportunities that permit collaboration not to development.
only in their own countries, but internationally as well.
Due to modern technology social workers are made Mel Gray, a professor in the School of Social Sci-
aware within moments of global issues that impact hu- ences at the University of Newcastle, Australia, defined
mankind, particularly the issues that impact the most universalism as “trends within social work to find com-
vulnerable among us—those who are subject to “dis- monalities across divergent contexts such that it is
crimination, oppression, poverty and other forms of so- possible to talk about a profession of social work with
cial injustice,” according to the National Association of shared values and goals wherever it is practiced.”
Social Workers Code of Ethics.

Social work as a profession is often not involved in

crucial conversation and policy discussion surround-
ing the vital elements of development. However the
awareness and attention given to the most vulnerable
permits social workers to dialogue, problem solve and
respond to these issues in a unique way.

According to international social work organizations

like the International Federation of Social Workers (IFSW)
and the International Association of Schools of Social
Work (IASSW), “The social work profession promotes so-
cial change, problem solving in human relationships and
the empowerment and liberation of people to enhance
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Universalism specific to social work is not a new results should further practitioners and policy makers’
notion or concern. In 1951, Tashiro stated in refer- relationships at multiple levels of international social
ence to the impact of the post-World War II occupa- work.
tion of Japan by the United States and the effect on
social work, “In social work…it is necessary to re- Exchange of information regarding social work ed-
consider impartially, what occupation has brought, and ucation within the international social work community
then criticisms should be made on the matter without will permit discussions that can address and alleviate
emotionalism or intuitionalism, but calmly, and from a ethnocentric attitudes thus approaching the salient is-
broad and high point of view…I think that there may sues of development with the appropriate cultural lens.
be, or must be, something international or universal in This process will permit a sharing of ideas and models
our ideas, and something that cannot be styled either that honor diversity and hopefully produce a trusting
American or Japanese, but world-wide and having all environment that can facilitate honest academic and
Humanity in view.” political dialogue.

Universalism must be addressed when social If such an environment can be created and main-
workers are involved in collaboration on an internation- tained, social workers can influence the level of under-
al level. By so doing ethnocentric musings that per- standing (for example, understanding of issues such
petuate a one-world view of social work values, ethics as globalization, genocide, oppression and poverty) of
and education that can lead to exclusion of thought future social workers and the way those social workers
and dialogue can be recognized and addressed. Ac- practice, regardless of their country of origin, in ways
knowledging issues surrounding universalism and so- never before achieved. This would thereby lend the
cial work issues will permit a deeper understanding unique perspectives, practical experience, and cultur-
and ability for international collaborations and the de- ally sensitive tenants of social work as a key compo-
velopment of international policy and programs to as- nent in the larger conversation of international devel-
sist developing countries. Strengths and challenges to opment.
such collaborations can be responded to, and the end
Summit 2010

Causes, Conditions and Reform
of African Economic Neocolonies
By Brian Corry

Since European countries have rescinded control In Tanzania, the mining company AngloGold Ashanti
over African nations, a new form of colonization has exported around US$2.9 billion of gold from their min-
taken root. “It seems that independence of former colo- ing operations there from 2002 to 2006. AngloGold
nies has suited the interests of the industrial world for Ashanti paid the Tanzanian government US$17.4 million
bigger profits at less cost,” said Julius Nyerere, the first in royalties, or 0.06 percent of revenue. The tax rates in
president of the independent Tanzania. “Independence
has made it cheaper for them to exploit us. We became

A large portion of the problems in Sub-Saharan

Africa have been caused, either directly or indirectly,
by Western governments, former colonial powers and
multinational corporations. Tanzania is an example of
these forces at work, and the country’s colonial heri-
tage can be traced to both the British and the Germans.
The country has had relatively high-quality leaders, but
many post-colonial African states have inherited regimes
riddled with corruption and oppression. Although there
are several African leaders that have emerged to lead
their countries to prosperity, many have been corrupted
by power or have been pawns of the deposed Europe-
ans or various multinational corporations.

During the last half of the 20th century, although the

African colonies were no longer under European admin-
istration, Europeans still wanted to benefits from African developed countries are many multiples of these rates.
resources. Before leaving, some colonial powers ap- Even more disturbing is that of all the foreign mining in-
pointed sympathetic elites who continued to siphon off dustries operating in Tanzania; as of 2008, AngloGold
Africa’s wealth to the Northern Hemisphere. Pulling out Ashanti was the only company to have paid any corpo-
quickly without properly training the new African leader- rate income tax in the country. This situation is not an
ship created a situation where African leaders and their anomaly; similar cases have been cited in Ghana, Sierra
economies were dependent on Western advice and re- Leone and South Africa, among others.
sources. This dependence created an arrangement of
quasi-sovereignty that continues in various post-colonial As one of the 10 poorest countries in the world, Tan-
countries, in some form, today. There was a shift from zania could have expanded its social services tremen-
bureaucratic colonization to economic colonization. dously with this foregone revenue. Tanzanian Member
of Parliament Zito Kabwe stated, “If all taxes were paid,
As colonial governments withdrew, multinational if no gold was undervalued and if there were no over-
corporations (many of them based in the very coun- declaration of total cost, this year we should get slightly
tries which were leaving) replaced them. Economically more [in revenue from mining] than what the donors give
weak nascent African states, such as Tanzania, de- us.” In other words, if business were conducted fairly
sired investment. They gave favorable terms of taxation in Tanzania, revenue from mining could replace depen-
to these new arrivals with the hopes of greater levels dence on foreign aid. The potential of a self-sufficient
of development. As reported by Third World Network Tanzania can be seen in other countries that have suc-
Africa et al., these tax policies began to further lean cessfully been able to manage mineral extraction tax
in favor of multinational corporations under pressure policy. Botswana and Chile are examples of former
from the World Bank to open up mining to private in- colonies that are now in the top third of the world based
vestors. The result of this opening of investment on GDP per capita, in part because of effective taxa-
has been a funnel of wealth from the Global South tion of multinational corporations operating within their
to the North. borders.
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Nyerere expressed the effects of decolonization and The inability to enact effective policies to create
lost revenues in an interview with Ikaweba Bunting of mutually beneficial relationships with multinational cor-
California State University, Long Beach. When asked porations is an enormous barrier to development in
why Tanzania was failing he explained, “We took over Tanzania. The Tanzanian situation is not unique in its
a country with 85 percent of its adult population illiter- problems and similar examples can be seen in Sub-Sa-
ate. The British ruled us for 43 years. When they left haran Africa and other post-colonial societies through-
there were two trained engineers and 12 doctors.” Tan- out the world. Former colonial governments need to act
zania had been able to overcome these obstacles until responsibly by mitigating the effects of their prior acts of
they were compelled to ascribe to austerity measures greed and carelessness. They can do this by creating a
set forth by the International Monetary Fund and the system that holds multinational corporations that have
World Bank. Once they complied with these measures, operations in former colonies accountable for adhering
school enrollment fell by 63 percent to tax policies in those countries. They can also provide
. training to leaders on legislating more effective taxation
Because many African leaders were poorly equipped policies. This, in the end, will be more beneficial for the
to run their newly independent countries and because former colonizers and colonized by creating greater au-
the democratic process was often immobilized by tonomy and independence from foreign aid through the
political polarization, there was a rash of African dictators cultivation of competent leaders.
and despots such as Uganda’s Idi Amin, Sudan’s Omar
al-Bashir and Liberia’s Charles Taylor came to power.
Although entire blame for the negative impacts of
these and other African leaders cannot be placed
squarely on the shoulders of former colonial powers,
they certainly account for the majority of criticism
lodged against them.
Summit 2010

G8/G20 Members

Canada France Germany Japan

Leader: Leader: Leader: Leader:

Prime Minister President Chancellor Prime Minister

Stephen Harper Nicolas Sarkozy Angela Merkel Naoto Kan

Geographical Geographical Geographical Geographical

information: information: information: information:

Area: 9,970,610 km2 Area: 550,000 km2 Area: 357,021 km2 Area: 377,864 km2
Population: 32.6 million Population: 63.0 million Population: 82.3 million Population: 127.7 million
(2006) (2006) (2006) (2006)
Annual population growth Annual population growth Annual population growth Annual population growth
rate: 1.0% (2006) rate: 0.5% (2006) rate: -0.2% (2006) rate: -0.003% (2006)
Capital: Ottawa Capital: Paris Capital: Berlin Capital: Tokyo
Official languages: Official language: Official language: Language:
English and French French German Japanese

Economic data: Economic data: Economic data: Economic data:

GDP (nominal) 2007 [2] GDP (nominal) 2007 [2] GDP (nominal) 2007 [2] GDP (nominal) 2007 [2]
- Total $1,436 billion - Total $2,593 billion - Total $ 3,321 billion - Total $ 4,382 billion
- Pro capita $43,674 - Pro capita $ 42,033 - Pro capita $ 40,400 - Pro capita $ 34,296
- % World GDP 2.6% [4] - % World GDP 4.8 [4] - % World GDP 6.2 [4] - % World GDP 8.0 [4]

GDP (PPP) 2007 [3] GDP (PPP) 2007 [3] GDP (PPP) 2007 [3] GDP (PPP) 2007 [3]
- Total $ 1,270 billion - Total $ 2,068 billion - Total $ 2,812 billion - Total $ 4,292 billion
- Pro capita $38,617 - Pro capita $ 33,508 - Pro capita $ 34.212 - Pro capita $ 33,596
- % World GDP 2%[4] - % World GDP 3.2 [4] - % World GDP 4.3 [4] - % World GDP 6.6 [4]

Form of government: Form of government: Form of government: Form of government:

Federal parliamentary Presidential republic Parliamentary federal Parliamentary

monarchy republic constitutional monarchy

G-8s held to date: G-8s held to date: G-8s held to date: G-8s held to date:

Kananaskis Summit Evian Summit (2003) Heiligendamm Summit Hokkaido Toyako Summit
(2002) Lyon Summit (1996) (2007) (2008)
Halifax Summit (1995) Summit of the Arch Cologne Summit (1999) Kyushu-Okinawa Summit
Toronto Summit (1988) (1989) Munich Summit (1992) (2000)
Ottawa Summit (1981) Versailles Summit (1982) Bonn Summit (1985) Tokyo Summit (1993)
Rambouillet Summit Bonn Summit (1978) Tokyo Summit (1986)
(1975) Tokyo Summit (1979)

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G8/G20 Members

Italy United Kingdom United States of Ameica Russia

Leader: Leader: Leader: Leader:

Prime Minister Prime Minister President President

Silvio Berlusconi David Cameron Barack Obama Dmitriy Medvedev

Geographical Geographical Geographical Geographical

information: information: information: information:

Area: 301,255 km2 Area: 244,820 km2 Area: 9,629,091 km2 Area: 17,075,200 km2
Population: 58.3 million Population: 60.5 million Population: 299.4 million Population: 142.8 million
(2006) (2006) (2006) (2006)
Annual population growth Annual population growth Annual population growth Annual population growth
rate: 0.3% (2006) rate: 0.5% (2006) rate: 0.9% (2006) rate: -0.5% (2006)
Capital: Rome Capital: London Capital: Washington D.C. Capital: Moscow
Official language: Official language: Official language: Official language:
Italian English English Russian

Economic data: Economic data: Economic data: Economic data:

GDP (nominal) 2007 [2] GDP (nominal) 2007 [3] GDP (nominal) 2007 [2] GDP (nominal) 2007 [2]
- Total $ 2,105 billion - Total $ 2,804 billion - Total $ 13,808 billion - Total $ 1,290 billion
- Pro capita $ 35,745 - Pro capita $ 46,098 - Pro capita $ 45,725 - Pro capita $ 9,074
- % World GDP 3.9 [4] - % World GDP 5.1 [4] - % World GDP 25.3 [4] - % World GDP 2.4 [4]

GDP (PPP) 2007 [3] GDP (PPP) 2007 [2] GDP (PPP) 2007[3] GDP (PPP) 2007 [3]
- Total $ 1,787 billion - Total $ 2,168 billion - Total $ 13,808 billion - Total $ 2,090 billion
- Pro capita $ 30,365 - Pro capita $ 35,634 - Pro capita $ 45,725 - Pro capita $ 14,705
- % World GDP 2.8 [4] - % World GDP 3.3 [4] - % World GDP 21.3 [4] - % World GDP 3.2 [4]

Form of government: Form of government: Form of government: Form of government:

Parliamentary republic Parliamentary constitu- Presidential federal re- Federal Republic

tional monarchy public

G-8s held to date: G-8s held to date: G-8s held to date: G-8s held to date:

Genoa Summit (2001) Gleneagles Summit Sea Island, Georgia Saint Petersburg Summit
Naples Summit (1994) (2005) (2004) (2006)
Venice Summit (1987) Birmingham Summit Denver, Colorado (1997)
Venice Summit (1980) (1998) Houston, Texas (1990)
London Summit (1991) Williamsburg, Virginia
London Summit (1984) (1983)
London Summit (1977)

Summit 2010

Argentina’s Cristina Stock of quasi money: $45.92 billion (31 Dec. 2007)
Fernández de Kirchner Stock of domestic credit: $72.55 billion (31 Dec. 2007)
Household income or consumption by % share:
became president of
1.0%-lowest 10%; 35.0%-highest 10% (Jan.-Mar. 2007)
Argentina on Decem-
Inflation rate
ber 10, 2007, after (consumer prices): 22.0% (2008 est.) [based on non-
winning the general official estimates]
election in October. Investment (gross fixed): 23.2% of GDP (2008 est.)
She replaced herhus- Current account balance: $7.6 billion (latest year, Q4
band, Nestor Kirchner,
Budget: $86.65 billion-revenues; $82.85 billion-expendi-
who was president
tures (2008 est.)
from May 2003 to December 2007. She is Argentina’s Budget balance: -0.8% of GDP (2009 forecast)
second female president, but the first to be elected. Public debt: 48.5% of GDP (Q4 2008) [cumulative debt of
Prior to her current position, she was a senator for all government borrowing]
Beunos Aires province and Santa Cruz province. She Exchange rates (per USD): 3.70 (6 May 2009); 3.18 (6
May 2008)
was 64 first elected to the Senate in 1995, and in
Economic aid-recipient: $99.66 million (2005)
1997 to the Chamber of Deputies. In 2001 she won a
Debt-external: $135.5 billion (31 Dec. 2008 est.)
seat in the Senate again. Born on February 19, 1954, Stock of direct foreign investment: $69.1 billion-at home;
in La Plata, Buenos Aires, she studied law at the $26.81 billion-abroad (2008 est.)
National University of La Plata. She and her husband Market value of publicly traded shares: $52.31 billion
were married in March 1975 and have two children. (31 Dec. 2008)
Distribution of family income-Gini index: 49.0 (Jan-Mar.
Argentina Polity Political party: Frente para la Victoria
Unemployment rate: 7.8% (Sep. 2008)
(FV)/Justicialist Party
Labour force: 16.27 million (2008 est.) [urban areas only]
Head of State: President Cristina Fernandez de Kirchener
38th (world rank, 2008)
Most recent election: 28 Oct 2007
Oil Production: 29th (world rank, 2008)
Government: Lower House — Majority; Upper House —
Oil Consumption: 21st (world rank, 2008)
Natural Gas Production: 18th (world rank, 2008)
Political system: Presidential Legislature: Bicameral,
Natural Gas Consumption: Military 1.3% of GDP; 120th in
elected Chamber of Deputies, elected Senate
world rank (2005)
Capital: Buenos Aires
Military Expenditures: Markets
Official language: Spanish
MERV index: 2,352.760 (10 Jan 2010)
Economy Currency: Peso (P)
% change on 31 Dec. 2008: +30.6 (local currency); +21.8 ($
GDP (official exchange rate): $324.8 billion (2008 est.)
Predicted change: -2.5% (2009); 1.5% (2010)
Trade balance: $13.6 billion (last 12 months, May. 2009)
Composition by sector: 9.2%-agriculture; 34.1%-industry;
Trade to GDP ratio: 45.2 (2006-2008)
56.7%-services (2008 est.)
Exports: $70.02 billion f.o.b. (2008 est.)
Central Bank interest rate: NA
Top export partners: Brazil (18.9%); E.U. (18.8%); China
Official reserve assets: $48,908.23 million (Oct. 2009)
(9.1%); United States (7.9%); Chile (6.7%) (2008)
Foreign currency reserves: $43,752.38 (Oct. 2009) [in
Imports: $54.56 billion f.o.b. (2008 est.)
convertible foreign currencies]
Top import partners: Brazil (31.3%); EU (15.7%); China
Securities: $5,116.79 million (Oct. 2009)
(12.4%); U.S. (12.2%); Paraguay (3.1%) (2008)
IMF reserve position: $0.31 million (Oct. 2009)
69 Special Drawing Rights: $ 3,216.86 million (Oct. 2009)
Gold: $1,829.02 million (Oct. 2009) [including gold deposits
and, if appropriate, gold swapped]
Financial derivatives: $ -54.47 million (Oct. 2009)
Loans to nonbank residents: $130.66 million (Oct. 2009)
Other reserve assets: $33.48 million (Oct. 2009)
(IMF Commercial Bank prime lending rate: 28.00%
(2009, 28 Nov. 2008)
Stock of money: $33.93 billion (31 Dec. 2007)
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China’s Hu Jintao has Stock of quasi money: $4.523 trillion (31 Dec. 2008)
been president of the Stock of domestic credit: $4.653 trillion (31 Dec. 2008)
Household income or consumption by % share:
People’s Republic of
1.6%-lowest 10%; 34.9%-highest 10% (2004)
China since March 15,
Inflation rate (consumer prices): 6.0% (2008 est.)
2003. He replaced Jiang Investment (gross fixed): 40.2% of GDP (2008 est.)
Zemin, who had held the Current account balance: $400.7 billion (latest year, Q2
position since 1989. Hu 2008)
also serves as general Budget: $847.8 billion-revenues; $861.6 billion-expendi-
tures (2008 est.)
secretary of the Com-
Budget balance: -3.5% of GDP (2009)
munist Party of China’s
Public debt: 15.7% of GDP (2008 est.) [cumulative debt of
(CPC) Central Commit- all government borrowing]
tee and chair of the Central Military Commission. Be- 75 Exchange rates (per USD): 6.82 (May 2009); 6.99 (Mar.
fore entering into politics he worked as an engineer. 2008)
He joined the CPC in April 1964, and began working Economic aid-recipient: $1.331 billion (2007) [ODA]
Debt-external: $420.8 billion (31 Dec. 2008 est.)
with the party in 1968. In 1992, he was elected to the
Stock of direct foreign investment: $758.9 billion-at
Standing Committee of the Political Bureau of the CPC
home (2007 est.); $149.33 billion-abroad (2008 est.)
Central Committee and re-elected in 1997. He became Market value of publicly traded shares:
vice-president of China in March 1998 and vice-chair $2.794 trillion (31 Dec. 2008)
of the Central Military Commission in 1999. In Novem- Distribution of family income-Gini index: 47.0 (2007)
ber 2002, Hu was elected general secretary of the CPC Unemployment rate: 4.0% (2008 est.)
Labour force: 807.3 million (2008 est.) 5th (world rank,
Central Committee. He was born in Jiangyan, Jiangsu,
on December 21, 1942. In 1965 he received his engi-
Oil Production: 3rd (world rank, 2008)
neering degree from Tsinghua University. He is married Oil Consumption: 11th (world rank, 2008)
to Lui Yongqing and they have two children. Natural Gas Production: 12th (world rank, 2008)
Natural Gas Consumption: Military
Political party: Communist Party of China 4.3% of GDP; 25th in world rank (2006)
Most recent election: 15 Mar 2008 Military Expenditures: Markets
Government: Single House — Majority SSEA index: 3,397.15 (10 Jan. 2010)
Political system: Presidential % change on 31 Dec. 2008: +42.3 (local currency); +42.4 ($
Legislature: Unicameral, elected National Congress terms)
Capital: Beijing SSEB index ($ terms): 255.75 (10 Jan. 2010)
Official language: Mandarin % change on 31 Dec. 2008: +52.0 (local currency); +52.0 ($
Currency: Yuan (¥) terms)
GDP (real): $4. 327 trillion (2008 est.) Trade balance: $316.9 billion (latest year, Mar. 2009)
Predicted change: 6.1% (Q1 2009); 6.5% (2009) Trade to GDP ratio: 73.4 (2006-2008)
Composition by sector: 11.3%-agriculture; 48.6%-indus- Exports: $1.435 trillion (2008 est.)
try; 40.1%-services (2008 est.) Top export partners: E.U. (20.5%); U.S. (17.7%); Hong
Central Bank interest rate: 5.31% (22 Dec. 2008) Kong, China (13.4%); Japan (8.4%); Japan (8.1%); South
Official reserve assets: NA Korea (5.2%) (2008)
Foreign currency reserves: 1, 953.7 billion (Mar. 2009) Imports: $1.074 trillion (2008 est.)
Securities: NA Top import partners: Japan (13.3%); E.U. (11.7%); South
IMF reserve position: $1,286.78 million (Feb. 2009) Korea (9.9%); Taipei, Chinese (9.1%); China (8.2%) (2008)
Special Drawing Rights: NA
Gold: $14,969.06 million (Nov. 2007)
Financial derivatives: NA
Loans to nonbank residents: NA
Other reserve assets: NA
Commercial Bank prime lending rate: 5.31% (31 Dec.
Stock of money: $2.434 trillion (31 Dec. 2008)

Summit 2010

Brazil’s Luiz Inácio 72 Stock of money: $95.03 billion (31 Dec. 2008)
Lula da Silva first Stock of quasi money: $724.5 billion (31 Dec. 2008)
Stock of domestic credit: $1.249 trillion (31 Dec. 2008)
assumed the office
Household income or consumption by % share: 0.9%-low-
of the president on
est 10%; 44.8%-highest 10% (2004)
January 1, 2003, af- Inflation rate (consumer prices): 5.7% (2008 est.)
ter being successfully Investment (gross fixed): 19% of GDP (2008 est.)
elected in October Current account balance: $-23.0 billion (latest year, Mar.
2002. He was re-elect- 2009)
Budget: NA
ed in October 2006,
Budget balance: -2.0% of GDP (2009 est.)
extending his term until
Public debt: 38.8% of GDP (2008 est.)
January 2011. “Lula” first ran for office in 1982 in the Exchange rates (per USD): 2.12 (6 May 2009); 1.67 (6
state of Sao Paulo, but it was not until 1986 that he May 2008)
was first elected to congress. He did not run for re- Economic aid-recipient: $191.9 million (2005)
election in 1990. Instead, he became more involved in Debt-external: $262.9 billion (31 Dec. 2008 est.)
Stock of direct foreign investment: $294 billion-at home;
the Workers’ Party, where he continued to run for the
$127.5 billion-abroad (2008 est.)
office of the president. He was born in Caetés, Per-
Market value of publicly traded shares: $589.4 billion
nambuco, Brazil, on October 27, 1945. He received no (31 Dec. 2008)
formal education and began working in a copper press- Distribution of family income-Gini index: 56.7 (2005)
ing factory at the age of 14. He became heavily involved Unemployment rate: 8.5% (Feb. 2008)
in the workers unions at a young age. He is married to Labour force: 100.9 million (2008 est.)
Military 2.6% of GDP; 62nd in world rank (2006)
Marisa Letícia and has five children.
Military Expenditures: Markets
BVSP index: 70,262.7031 (10 Jan. 2010)
Political party: Workers’ Party (PT)
% change on 31 Dec. 2008: +37.1 (local currency); +50.7 ($
Head of State: President Luiz Lula de Silva
Most recent election: tenacious 29 Oct 2006
Trade balance: $27.0 billion (latest year, Apr. 2009)
Government: Lower House — Minority; Upper House —
Trade to GDP ratio: 26.2 (2006-2008)
Exports: $197.9 billion f.o.b. (2008 est.)
Political system: Presidential
Top export partners: E.U. (23.5%); U.S. (14%); Argentina
Legislature: Bicameral, elected Chamber of Deputies,
(8.9%); China (8.3%); Japan (3.1%)
elected Senate
Capital: Brasilia
Imports: $173.1 billion f.o.b. (2008 est.)
Official language: Portuguese
Top import partners: E,U, (20.9%); U.S. (14.9%); China
Economy Currency: Real (R)
(11.6%); Argentina (7.7%); Japan (3.9%); (2008)
GDP (official exchange rate): $1.573 trillion (2008 est.)
13th (world rank, 2008)
Predicted change: -13.6% (Q1 2009); -1.5% (2009)
Oil Production: 8th (world rank, 2008)
Composition by sector: 6.7%-agriculture; 28%-industry;
Oil Consumption: 39st (world rank, 2008)
65.3%-services (2008 est.)
Natural Gas Production: 32nd (world rank, 2008)
Central Bank interest rate: 10.25% (29 Apr. 2009)
Natural Gas Consumption:
Official reserve assets: $231,122.62 million (Oct. 2009)
Foreign currency reserves: $220,508.37 million (Oct.
2009) [in convertible foreign currencies]
Securities: $211,853.59 million (Oct. 2009)
IMF reserve position: $645.14 million (Oct. 2009)
Special Drawing Rights: $4,590.38 million (Oct. 2009)
Gold: $1,123.69 million (Oct. 2009) [including gold deposits
and, if appropriate, gold swapped
Financial derivatives: $1.12 million (Oct. 2009)
Loans to nonbank residents: $65.55 million (Oct. 2009)
Other reserve assets: $4,188.38 million (Oct. 2009)
Commercial Bank prime lending rate: 47.25% (31 Dec.
Summit 2010

Summit 2010

Australia’s Julia Gillard Financial derivatives: $ -0.66 million (Oct. 2009)
became prime minister Loans to nonbank residents: $0.00 (Oct. 2009)
Other reserve assets: $371.20 million (Oct. 2009)
of Australia on June 24,
Commercial Bank prime
2010, replacing Kevin
lending rate: 8.91% (31 Dec. 2008)
Rudd, who had held Stock of money: $298.5 billion (31 Dec. 2007)
the position since 2007. Stock of quasi money: $667.2 billion (31 Dec. 2007)
Before entering into Stock of domestic credit: $1.312 trillion (31 Dec. 2007)
politics, Gillard worked Household income or consumption by % share:
0.9%-lowest 10%; 38.2%-highest 10% (2004)
as a lawyer. From 1996
Inflation rate (consumer prices): 4.4% (2008 est.)
to 1998, she served as
Investment (gross fixed): 27.6% of GDP (2008 est.)
chief of staff to Victorian Current account balance: $-44.1 billion (latest year, Q4
opposition leader John 2008)
Brumby. Gillard was first Budget: $350.3 billion-revenues; $332.4 billion-expendi-
elected as a member of tures (2008 est.)
Budget balance: -3.3% of GDP (2009)
the House of Representatives in 1998. Since then she
Public debt: 14.7% of GDP (2008 est.)
has served in various positions including shadow min-
Exchange rates (per USD): 1.34 (6 May. 2009); 1.06 (6
ister for population and immigration, shadow minister May. 2008)
for health and deputy leader of the opposition. From Economic aid-donor: $2.9899 billion (2006-2007 expect-
2007 to 2010, Gillard served as deputy prime minister. ed) [ODA]
She was born in Barry, Vale of Glamorgan, Wales, on Debt-external: $799.8 billion (31 Dec. 2008 est.)
Stock of direct foreign investment: $366.5 billion-at
September 29, 1961. She moved to Australia in 1966.
home; $197.2 billion-abroad (2008 est.)
She earned a bachelor of arts and bachelor of law in
Market value of publicly traded shares: $1.298 trillion
1986 from the Uiversity of Melbourne. She lives with her (31 Dec. 2007)
partner, Tim Mathieson. Distribution of family income-Gini index: 30.5 (2006)
Unemployment rate: 4.2% (Dec. 2008)
Political party: Australian Labour Party Labour force: 11.25 million (2008 est.)
Head of State: Prime Minister Kevin Rudd 71 30th (world rank, 2008)
Most recent election: Oil Production: 21st (world rank, 2008)
24 Nov 2007 Oil Consumption: 20th (world rank, 2008)
Government: Lower House — Majority; Upper House — Natural Gas Production: 26th (world rank, 2008)
Minority Natural Gas Consumption: Military
Political system: Parliamentary 2.4% of GDP; 69th in world rank (2006)
Legislature: Bicameral, elected House of Representatives, Military Expenditures: Markets
elected Senate All Ord. index: 4,981.400 (10 Jan. 2010)
Capital: Canberra % change on 31 Dec. 2008: +4.9 (local currency); +11.2 ($
Official language: English terms)
Economy Currency: Australian dollar (A$) Trade balance: $+5.2 billion (latest year, Mar. 2009)
GDP (official exchange rate): $1.013 trillion (2008 est.) Trade to GDP ratio: 46.1(2006-2008)
Predicted change: -2.1% (Q1 2009); -0.7% (2009) Exports: $189.9 billion (2008 est.)
Composition by sector: 2.5%-agriculture; 26.4%-industry; Top export partners: Japan (22.8%); China (14.6%); E.U.
71.1%-services (2008 est.) (10.5%); Korea, Republic of (8.3%); India (6.1%) (2008)
Central Bank interest rate: 3.00% (7 Apr. 2009) Imports: $194.2 billion (2008 est.)
Official reserve assets: $44,768.56 million (Oct. 2009) Top import partners: E.U (21%); China (15.6%); U.S.
Foreign currency reserves: $39,912.34 (Oct. 2009) [in (12%); Japan (9%); Singapore (7.2%) (2008)
convertible foreign currencies]
Securities: $34,500.12 million (Oct. 2009)
IMF reserve position: $1,143.96 million (Oct. 2009)
Special Drawing Rights: $ 4,680.67 million (Oct. 2009)
Gold: $2,661.04 million (Oct. 2009) [including gold deposits
and, if appropriate, gold swapped]

Summit 2010

South Africa
South Africa’s Jacob Zuma Stock of domestic credit: $214.8 billion (31 Dec. 2008)
became president of South Household income or consumption by % share:
Africa on May 9, 2009, 1.3%-lowest 10%; 44.7%-highest 10% (2000)
succeeding Petrus Kgalema Inflation rate (consumer prices): 11.3% (2008 est.)
Motlanthe, who had held the Investment (gross fixed): 23.2% of GDP (2008 est.)
position since September Current account balance: $-12.0.0 billion (latest year, Q3
2008. Zuma joined the ANC 2009)
in 1958 and started serving Budget: $77.43 billion-revenues; $79.9 billion-expenditures
in the National Executive (2008 est.)
committee of the African Budget balance: -5.0% of GDP (2009)
National Congress (ANC) in Public debt: 31.6% of GDP (2008 est.) [cumulative debt of
1977. In 1994, Zuma was all government borrowing]
elected National Chair of Exchange rates (per USD): 7.33 (7 Jan 2010); 8.47 (May
the ANC and chair of the ANC in KwaZulu-Natal. He was 2009); 7.52 (May 2008)
re-elected to the latter position in 1996 and selected as the Economic aid-recipient: $597.18 million (2007)
deputy president of the ANC in December 1997. Zuma was Debt-external: $71.81 billion (31 Dec. 2008 est.)
appointed executive deputy president of South Africa in Stock of direct foreign investment: $120 billion-at home;
1999. He held that position until 2005 and was elected ANC $63.57 billion-abroad (31 Dec. 2008 est.)
president at the end of 2007. He was born April 12, 1949, in Market value of publicly traded shares: $491.3 billion
Inkandla, KwaZulu-Natal Province. He has three wives and (31 Dec. 2008)
several children. Distribution of family income-Gini index: 65.0 (2005)
Unemployment rate: 24.5% (Sept 2009)
Political party: African National Congress Labour force: 17.79 million (2008 est.) [economically active]
Chief of State: President Jacob Zuma 41st (world rank, 2008)
Head of State: President Jacob Zuma Oil Production: 30th (world rank, 2008)
Most recent election: 22 Apr 2009 Oil Consumption: 53rd (world rank, 2008)
Government: Lower House — Majority; Upper House — Natural Gas Production: 54th (world rank, 2008)
Majority Political system: Parliamentary Natural Gas Consumption: Military 1.7% of GDP; 98th
Legislature: Bicameral, elected National Assembly, elected world rank (2006)
National Council of Provinces Capital: Pretoria Military Expenditure: Markets
Official language: Afrikaans, English 49,052,489; country JSE AS index: 27,998.87 (6 Jan. 2010)
comparison to the world: 24th (July 2009 est.) % change on 31 Dec. 2008: +1.3 (local currency); -10.6 ($
Population: 0.281%; country comparison to the world: terms)
173rd (2009 est.) Trade balance: $-2.5 billion (latest year, Nov. 2009)
Population Growth Rate: NA Trade to GDP ratio: 62.1 (2005-2007)
Economy Currency: Rand (R) Exports: $86.12 billion f.o.b. (2008 est.)
GDP (official exchange rate): $276.8 billion (2008 est.) Top export partners: U.S. (11.1%); Japan (11.1%); Ger-
Predicted change: 1.0% (Q4 2008); -1.8% (2009) many (8.0%); UK (6.8%); China (6.%); Netherlands (5.2%)
89 Composition by sector: 3.3%-agriculture; 33.7%-in- (2008)
dustry; 63.0%-services (2008 est.) 90 Imports: $90.57 billion f.o.b. (2008 est.)
Central Bank interest rate: 7.0% (7 Jan. 2009) Top import partners: Germany (11.2%); China (11.1%);
Official reserve assets: $39,789.00 million (Oct. 2009) U.S. (7.9%); Saudi Arabia (6.2%); Japan (5.5%); UK (4.0%)
Foreign currency reserves: $32, 764.00 million (Oct. (2008)
2009) [in convertible foreign currencies]
Securities: $1,518.00 million (Oct. 2009)
IMF reserve position: $0.00 (Oct. 2009)
Special Drawing Rights: $2,838.20 million (Oct. 2009)
Gold: $4,186.90 million (Oct. 2009) [including gold deposits
and, if appropriate, gold swapped]
Financial derivatives: $0.00 (Oct. 2009)
Loans to nonbank residents: $0.00 (Oct. 2009)
Other reserve assets: $0.00 (Oct. 2009)
Commercial Bank prime lending rate: 15.13% (31 Dec.
Stock of money: $44.66 billion (31 Dec. 2008)
Stock of quasi money: $124.1 billion (31 Dec. 2008)
Summit 2010

India’s Manmohan Singh 79 residents: $0.00 (Oct. 2009)
was re-elected prime Other reserve assets: $0.00 (Oct. 2009)
Commercial Bank prime lending rate: 8.5% (31 Jan.
minister of India in May
2009. He was first elected
Stock of money: $250.9 billion (31 Dec. 2007)
in 2004 when he replaced Stock of quasi money: $647.3 billion (31 Dec. 2007)
Atal Bihari Vajpayee. Be- Stock of domestic credit: $769.3 billion (31 Dec. 2007)
fore entering into politics, Household income or consumption by % share:
Singh worked as an econ- 3.6%-lowest 10%; 31.1%-highest 10% (2004)
Inflation rate (consumer prices): 7.8% (2008 est.)
omist, including for the
Investment (gross fixed): 39% of GDP (2008 est.)
International Monetary
Current account balance: $-37.5 billion (latest year, Q4
Fund. He was governor of 2008)
the Reserve Bank of India Budget: $126.7 billion-revenues; $202.6 billion-expendi-
from 1982 to 1985. Singh was first elected to the upper tures (2008 est.)
house of Indian parliament in 1995. He was re-elected Budget balance: -7.7% of GDP (2009)
Public debt: 78.0% of GDP (2008 est.) [cumulative debt of
in 2001 and 2007 and held cabinet positions includ-
all government borrowing]
ing minister of finance and minister for external affairs.
Exchange rates (per USD): 49.6 (7 May 2009); 41.4 (May.
Singh also served as minister of finance from November 2008)
2008 to January 2009. He was born in Gah, Punjab Economic aid-recipient: $903.19 million (2007)
(now known as Chakwal district, Pakistan), on Septem- Debt-external: $229.3 billion (31 Dec. 2008 est.)
ber 26, 1932. He received his bachelor’s and master’s Stock of direct foreign investment: $144.2 billion-at
home; $61.77 billion-abroad (2008 est.)
degrees from Punjab University in 1952 and 1954.
Market value of publicly traded shares: $650 billion (31
He also received an additional undergraduate degree
Dec. 2008)
from Cambridge University in 1957 and a PhD from Distribution of family income-Gini index: 36.8 (2004)
Oxford University in 1962. He and his wife, Gursharan Unemployment rate: 9.1% (2008 est.)
Kaur, have three children. Labour force: 523.5 million (2008 est.)
23rd (world rank, 2008) Oil Production: 5th (world rank,
Political party: Indian National Congress 2008)
Head of Government: Prime Minister Manmohan Singh Oil Consumption: 26st (world rank, 2008)
Most recent election: July 2007 Natural Gas Production: 19th (world rank, 2008)
Government:Lower House — Majority (coalition); Upper Natural Gas Consumption: Military
House — Majority 2.5% of GDP; 66th in world rank (2006)
Political system: Parliamentary Military Expenditures: Markets
Legislature: Bicameral, elected Assembly, indirectly elected BSE index: 17,672.09 (6 May 2010)
Council of States Capital: Delhi % change on 31 Dec. 2008: +23.9 (local currency); +21.7 ($
Official language: Hindi terms)
Economy Currency: Indian rupee (Rs) Trade
GDP (official exchange rate): $1.207 trillion (2008 est.) Trade balance: $-109.0 billion (latest year, Mar. 2009)
Predicted change: 5.3% (Q4 2008); 5.0% (2009) Trade to GDP ratio: 47.6 (2006-2008)
Composition by sector: 17.2%-agriculture; 29.1%-indus- Exports: $187.9 billion (2008 est.)
try; 53.7%-services (2008 est.) Top export partners: E.U. (21.6%); U.S. (11.8%); UAE
Central Bank interest rate: 4.75% (21 Apr. 2009) (10.5%); China (5.6%); Singapore (4.9%) (2008)
Official reserve assets: $284,391.00 million (Oct. 2009) Imports: $315.1 billion (2008 est.)
Foreign currency reserves: $266,768.00 million (Oct. Top import partners: E.U. (13.9%); China (10.0%); U.S.
2009) [in convertible foreign currencies] (7.8%); Saudi Arabia (7.3%); UAE (6.2%)
Securities: $150,662.00 million (Oct. 2009) (2008)
IMF reserve position: $1,581.00 million (Oct. 2009)
Special Drawing Rights $5,242.00 (Oct. 2009)
Gold: $10,800.00 million (Oct. 2009) [including gold depos-
its and, if appropriate,
gold swapped]
Financial derivatives: $0.00 (Oct. 2009)
G20 Loans to nonbank
Summit 2010

Indonesia’s Susilo Bam- Household income or consumption by % share:
bang Yudhoyono re-elect- 3.0%-lowest 10%; 32.3%-highest 10% (2006)
Inflation rate (consumer prices): 11.1% (2008 est.)
ed president in July 2008.
Investment (gross fixed): 23.6% of GDP (2008 est.)
He first became president
Current account balance: $7.3 billion (latest year, Mar
on October 20, 2004, af- 2009)
ter winning the election in Budget: $92.62 billion-revenues; $98.88 billion-expendi-
September, replacing the tures (2008 est.)
incumbent Megawato Su- Budget balance: -2.9% of GDP (2009)
Public debt: 29.3% of GDP (2008 est.) [cumulative debt of
karnoputri. Before enter-
all government borrowing]
ing into politics, he served
Exchange rates (per USD): 10,410.0 (6 May 2009);
as a lecturer and a military 9,225.0 (May. 2008)
general. His first experi- Economic aid-recipient: $362.09 million (2007 est.) [ODA]
ence in politics came when he was appointed minis- Debt-external: $143.5 billion (31 Dec. 2008 est.)
ter of mines and energy in 1999. He later served as Stock of direct foreign investment: $63.46 billion-at
home; $4.277 billion-abroad (2008 est.)
co-ordinating minister for politics and security. He was
Market value of publicly traded shares: $98.76 billion
born on September 9, 1949, in Pacitan, East Java. He
(31 Dec. 2008)
received his doctorate in agricultural economics from Distribution of family income-Gini index: 39.4 (2005)
the Bogor Institute of Agriculture in 2004. He and his Unemployment rate: 8.4% (Aug. 2008)
wife, Kristiani Herawati, have two children. Labour force: 112.0 million (2008 est.) 22nd (world rank,
Political party: Democratic Party Oil Production: 17th (world rank, 2008)
80 Head of Government: President Susilo Bambang Yud- Oil Consumption: 13th (world rank, 2008)
hoyono Natural Gas Production: Natural Gas Consumption: 24th
Most recent election: 8 July 2009 (world rank, 2008)
Government: Lower House — Minority; Upper House — 81 Military 3% of GDP; 50th in world rank (2005)
Political system: Presidential Military Expenditures: Markets
Legislature: Bicameral, elected House of People’s Repre- JSX index: 2,645.79 (10 Jan. 2010)
sentatives, elected House of Regional Representatives % change on 31 Dec. 2008: +32.7 (local currency); +38.9
Capital: Jakarta ($ terms)
Official language: Indonesian Trade Trade balance: $7.3 billion (latest year, Mar. 2009)
Economy Currency: Rupiah (Rp) GDP (official exchange Trade to GDP ratio: 60.4 (2005-2007)
rate): $511.8 billion (2008 est.) Exports: $139.3 billion f.o.b. (2008 est.)
Predicted change: 5.2% (Q4 2008); -1.4% (2009) Top export partners: Japan (20.2%); E.U. (11.3%); U.S.
Composition by sector: 13.5%-agriculture; 45.6%-indus- (9.5%); Singapore (9.4%); China (8.5%);
try; 40.8%-services (2008 est.) (2008)
Central Bank interest rate: 7.25% (May 2009) Imports: $116 billion f.o.b. (2008 est.)
Official reserve assets: $64,528.45 million (Oct. 2009) Top import partners: Singapore (16.9%); China (11.8%);
Foreign currency reserves: $58,862.90 million (Oct. 2009) Japan (11.7%); E.U. (8.2%); Malaysia (6.9%);
[in convertible foreign currencies] (2008)
Securities: $57,439.61 million (Oct. 2009)
IMF reserve position: $230.90 (Oct. 2009)
Special Drawing Rights: $2,797.78 million (Oct. 2009)
Gold: $2,442.10 million (Oct. 2009) [including gold deposits
and, if appropriate, gold swapped]
Financial derivatives: $0.00 (Oct. 2009)
Loans to nonbank residents: $0.00 (Oct. 2009)
Other reserve assets: $194.77 million (Oct. 2009)
Commercial Bank prime lending rate: 13.6% (31 Dec.
Stock of money: $41.71 billion (31 Dec. 2008)
Stock of quasi money: $131.5 billion (31 Dec. 2008)
Stock of domestic credit: $166.2 billion (31 Dec. 2008)
Summit 2010

Summit 2010

Saudi Arabia
Saudi Arabia’s King Commercial Bank prime lending rate: NA
Abdullah bin Adbul Aziz Al Stock of money: $113.2 billion (31 Dec. 2008)
Stock of quasi money: $134.3 billion (31 Dec. 2008)
Saud has been in power
Stock of domestic credit: $66.94 billion (31 Dec. 2007)
since August 2005. He
Household income or consumption by % share: NA
replaced Fahd bin Abdul Inflation rate (consumer prices): 9.9% (2008 est.)
Aziz Al Saud, who had Investment (gross fixed): 19.4% of GDP (2008 est.)
reigned since June 1982. Current account balance: $134.0 billion (2008 est.)
As crown prince since Budget: $293.7 billion-revenues; $136.0 billion-expendi-
tures (2008 est.)
1987, King Abdullah had
Budget balance: -0.9% of GDP (2009)
previously acted as de
Public debt: 18.9% of GDP (2008 est.) [cumulative debt of
facto regent and thus rul- all government borrowing]
er since January 1, 1996, after Fahd had been debili- 88 Exchange rates (per USD): 3.75 (May 2009); 3.75 (May
tated by a stroke. He was 2008)
formally enthroned on August 3, 2005. He also serves Economic aid: NA
Debt-external: $82.13 billion (31 Dec. 2008 est.)
as prime minister of Saudi Arabia and commander of
Stock of direct foreign investment:
the National Guard. King Abdullah is chair of the su-
$108.5 billion – at home; 18.07 billion – abroad (31 Dec.
preme economic 67 council, president of the High 2008 est.)
Council for Petroleum and Minerals, president of the Market value of publicly traded shares: $246.3 billion
King Abdulaziz Centre for National Dialogue, chair of (31 December 2008)
the Council of Civil Service and head of the Military Ser- Distribution of family income-Gini index: NA
Unemployment rate: 8.8 (local bank estimate 2008; other
vice Council. He was born August 1, 1924, in Riyadh
estimates vary significantly)
and has a number of wives and children.
Labour force: 6.74 million (2008 est.) [about 1/3 of the
population aged 15-64 is non- national] 1st (world rank,
Political party: None 2008)
Chief of State: King and Prime Minister Abdallah bin Abd Oil Production: 9th (world rank, 2008)
al-Aziz Al Saud Oil Consumption: 9th (world rank, 2008)
Head of State: King and Prime Minister Abdallah bin Abd Natural Gas Production: 11th (world rank, 2008)
al-Aziz Al Saud Natural Gas Consumption: Military 10% of GDP; 3rd in
Most recent election: None world rank (2005)
Government: None Military Expenditures: Markets
Political system: Absolute monarchy Tadawul index: 6,260.90 (6 Jan 2010)
Legislature: Monarchy % change on 31 Dec. 2008: +20.8 (local currency); +20.9 ($
Capital: Riyadh terms)
Official language: Arabic 28,686,633; country comparison Trade
to the world: 41st (July 2009 est.) Trade balance: $212.0 billion (latest year, 2008)
Population: 1.848%; country comparison to the world: 69th Trade to GDP ratio: 86.7 (2005-2007)
(2009 est.) Exports: $313.4 billion f.o.b. (2008 est.)
Population Growth Rate: NA Top export partners: U.S. (17.1%); Japan (15.2%); South
Economy Currency: Riyal (SR) Korea (10.1%); China (9.3%); India (7%); Singapore (4.4%)
GDP (official exchange rate ): $469.4 billion (2008 est.) (2008)
Predicted change: 4.2% (2008); -1.0% (2009) Imports: $108.3 billion f.o.b. (2008 est.)
Composition by sector: 3.1%-agriculture; 61.9%-industry; Top import partners: U.S. (12.2%); China (10.5%); Japan
35.0%-services (2008 est.) (7.7%); Germany (7.4%); South Korea (5.1%); Italy (4.8%);
Central Bank interest rate: NA India (4.2%); UK (4.1%) (2008)
Official reserve assets: NA
Foreign currency reserves: NA
Securities: NA
IMF reserve position: SDR 1,136.61 million (Feb. 2009)
Special Drawing Rights: NA
Gold: NA
Financial derivatives: NA
G20 Loans to nonbank residents: NA
Summit 2010 Other reserve assets: NA

Summit 2010

Mexico’s Felipe Calderón Other reserve assets: 637 Million (Mar 2009)
Hinojosa became presi- Commercial Bank prime lending rate: 8.71% (31 Dec.
2008) Stock of money: $92.34 billion (31 Dec. 2008)
dent of Mexico on De-
Stock of quasi money: $147.4 billion (31 Dec. 2008)
cember 1, 2006, replac-
Stock of domestic credit: $287 billion (31 Dec. 2008)
ing Vicente Fox, who held Household income or consumption by % share:
the position from 2000 to 1.8%-lowest 10%; 37.9%-highest 10% (2006)
2006. In his early twenties Inflation rate (consumer prices): 6.2% (2008 est.)
Calderón was president Investment (gross fixed): 22.1% of GDP (2008 est.)
Current account balance: $-11.2 billion (latest year, Q3.
of the youth movement of
the National Action Party.
Budget: $257.1 billion-revenues; $258.1 billion-expendi-
He later served as a local tures (2008 est.)
representative in the leg- Budget balance: -4.0% of GDP (2009)
islative assembly in the federal chamber of deputies. Public debt: 35.8% of GDP (2008 est.) [cumulative debt of
In 1995 he ran for governor of Michaocán. He served all government borrowing]
Exchange rates (per USD): 12.78 (7 Jan 2010);14.2 (Mar.
as secretary of energy from 2003 to 2004. Born in Mo-
2009); 10.7 (Mar. 2008)
relia, Michoacán, on August 18, 1962, he received his
Economic aid-recipient: $78.95 million (2007)
bachelor’s degree in law from Escuela Libre de Derecho Debt-external: $200.4 billion (31 Dec. 2008 est.)
in Mexico City. He later received a master’s degree in Stock of direct foreign investment: $289.8 billion-at
economics from the Instituto Tecnológico Autónomo de home; 45.39 billion-abroad (Dec 31 2008 est.)
México as well as a master’s degree in public admin- Market value of publicly traded shares: $232.6 billion
(31 Dec. 2008)
istration from Harvard University. He and his wife, Mar-
Distribution of family income-Gini index: 47.9 (2006)
garita Zavala, have three children.
Unemployment rate: 5.3% (Nov. 2009 est.)
Labour force: 45.32 million (2008 est.) 7th (world rank,
Political party: National Action Party 2008)
Chief of State: President Felipe Calderon Oil Production: 12th (world rank, 2008)
Head of Government: President Felipe Calderon Oil Consumption: 17th (world rank, 2008)
Most recent election: 2 Jul 2006 Natural Gas Production: 13th (world rank, 2008)
Government: Lower House — Minority; Upper House — Natural Gas Consumption: Military
Minority 0.5% of GDP; 161st in world rank (2006)
Political system: Federal Republic Military Expenditures: Markets
Legislature: Bicameral, elected Federal Chamber of Depu- IPC index: 32,952.82 (5 Jan. 2010)
ties, elected Senate % change on 31 Dec. 2008: +6.8 (local currency); +11.7 ($
Capital: Mexico City terms)
Official language: Spanish Trade balance: $-6.5 billion (latest year, Nov. 2009)
111,211,789; country comparison to the world: 11th (July Trade to GDP ratio: 64.5 (2005-2007)
2009 est.) Exports: $291.3 billion f.o.b. (2008 est.)
Population: 1.13%; country comparison to the world: 120th Top export partners: U.S. (80.2%); Canada (2.4%); Ger-
(2009 est.) many (1.7%) (2008)
Population Growth Rate: Economy Imports: $308.6 billion f.o.b. (2008 est.)
Currency: Mexican peso (PS) Top import partners: U.S. (49.%); China (11.2%); Japan
GDP (official exchange rate ): $1.088 trillion (2008 est.) (5.3%); South Korea (4.4%); Germany (4.1%) (2008)
Predicted change: -1.6% (Q4 2008); -4.4% (2009)
Composition by sector: 3.8%-agriculture; 35.2%-industry;
61%-services (2008 est.)
Central Bank interest rate: 6.0% (Apr. 2009)
Official reserve assets: NA
Foreign currency reserves: $88,867 million (Mar. 2009)
Securities: NA
IMF reserve position: SDR503.06 million (Apr. 2009)
Special Drawing Rights: $496 million (Mar. 2009)
Gold: 175 million (Mar. 2009)
G20 Financial derivatives: NA
Summit 2010 Loans to nonbank residents: NA

Summit 2010

Turkey’s Recep Tayyip Household income or consumption by % share:
Erdoğan became prime 1.9%-lowest 10%; 33.2%-highest 10% (2005) Inflation rate
minister of Turkey on March (consumer prices): 10.2% (2008 est.)
14, 2003, replacing Abdul- Investment (gross fixed): 20.3% of GDP (2008 est.)
lah Gül, who had occupied Current account balance: $-11.4 billion (latest year, Oct.
the office since 2002. Before 2009)
becoming prime minister, Budget: $160.5 billion-revenues; $173.6 billion-expenditures
Erdoğan was mayor of (2008 est.)
Istabul from 1994 to 1998. Budget balance: -6.3% of GDP (2009)
He was born on February Public debt: 40% of GDP (2008 est.) [cumulative debt of all
26, 1954, in Rize, Turkey, government borrowing]
and studied management at Exchange rates (per USD): 1.57 (6 May 2009); 1.25 (May
Marmar University’s faculty 2008)
of economics and administrative sciences. He is married to Economic aid-recipient: $237.45 million (2007)
Emine Erdoğan and has two children. Debt-external: $278.1 billion (31 Dec. 2008 est.)
Stock of direct foreign investment: $128.7 billion-at
Political party: Justice and Development Party (AKP) home; $14.8 billion-abroad (31 Dec 2008 est.)
Chief of State: President Abdullah Gul Market value of publicly traded shares: $117.9 billion
Head of State: Prime Minister Recep Tayyip Erddogan (31 Dec. 2008)
Most recent election: 22 Jul 2007 Distribution of family income-Gini index: 43.6 (2003)
Government: Single House — Majority Unemployment rate: 13.4% (Sept. 2009)
Political system: Parliamentary Labour force: 24.06 million (2008 est.) [about 1.2 million
Legislature: Unicameral, elected Grand National Assembly Turks work abroad]
Capital: Ankara 64th (world rank, 2008)
Official language: Turkish Oil Production: 27th (world rank, 2008)
76,805,524; country comparison to the world: 17th (July Oil Consumption: 63rd (world rank, 2008)
2009 est.) Natural Gas Production: NA
Population: 1.312; country comparison to the world: 102nd Natural Gas Consumption: 23th (world rank, 2008)
(2009 est.) Military 5.3% of GDP; 17th world rank (2005)
Population Growth Rate: Military Expenditures: Markets
Economy Currency: Turkish lira (YTL) ISE index: 68,929.90 (6 Jan 2010) % change on 31 Dec.
GDP (official exchange rate ): $730.0 billion (2008 est.) 2008: +25.5 (local currency); +23.6 ($ terms)
Predicted change: -6.2.% (Q4 2008); -4.4% (2009) Trade balance: $-37.0 billion (latest year, Nov. 2009)
Composition by sector: 8.8%-agriculture; 27.5%-industry; Trade to GDP ratio: 48.5 (2005-2007)
63.8%-services (2008 est.) Exports: $140.7 billion f.o.b. (2008 est.)
Central Bank interest rate: 6.50% (7 Jan 2010) Top export partners: Germany (9.8%); UK (6.2%); Italy
Official reserve assets: $75,905.47 million (Nov. 2009) (5.9%); France (5%); Russia
Foreign currency reserves: $69,750.01 million (Nov. 2009) (4.9%)(2008)
[in convertible foreign currencies] Imports: $193.9 billion f.o.b. (2008 est.)
Securities: $65,330.62 million (Nov. 2009) Top import partners: Russia (15.5%); Germany (9.3%);
IMF reserve position: $181.00 million (Nov. 2009) China (7.8%); U.S. (5.9%) Italy (5.5%); France (4.5%); Iran
Special Drawing Rights: $1,559.00 million (Nov. 2009) (4.1%) (2008)
Gold: $4,415.46 million (Nov. 2009) [including gold deposits
and, if appropriate, gold swapped]
Financial derivatives: $0.00 (Nov. 2009)
Loans to nonbank residents: $0.00 (Nov. 2009)
Other reserve assets: $0.00 (Nov. 2009)
Commercial Bank prime lending rate: NA
Stock of money: $53.25 billion (31 Dec. 2008)
Stock of quasi money: $248.4 billion (31 Dec. 2008)
Stock of domestic credit: $326.4 billion (31 Dec. 2008)

Summit 2010

Summit 2010

South Korea
South Korea’s Lee Myung- Household income or consumption by % share:
bak became president on 2.7%-lowest 10%; 24.2%-highest 10% (2007 est.)
Inflation rate (consumer prices): 4.7% (2008 est.)
February 25, 2008, re-
Investment (gross fixed): 27.1% of GDP (2008 est.)
placing Roh Moo-hyun,
Current account balance: $+41.9 billion (latest year, Nov.
who had occupied the 2009)
position since 2003. Lee Budget: $227.5 billion-revenues; $216.7 billion-expendi-
joined the Hyundai tures (2008 est.)
Construction company Budget balance: -4.5% of GDP (2009)
Public debt: 24.4% of GDP (2008 est.) [cumulative debt of
in 1965 and eventually
all government borrowing]
became chief executive
Exchange rates (per USD): 1,277.0 (May 2009); 1,026
officer of the Hyundai Group before being elected to (May 2008)
the Korean National Assembly in 1992. In 2002 he was Economic aid-donor: $699.06 million (2007) [ODA]
elected mayor of Seoul, a position he held until 2006. Debt-external: $381.1 billion (31 Dec. 2008 est.)
He was born in Kirano, Osaka, Japan on December 19, 91 Stock of direct foreign investment:
$124.2 billion-at home (31 Dec 2008 est.); $74.6 billion-
1941. He received a degree in business administration
abroad (30 June 2008)
from Korea University in 1965. Lee and his wife, Kim
Market value of publicly traded shares: $494.6 billion
Yun-ok, have four children. (31 Dec. 2008)
Distribution of family income-Gini index: 31.3 (2006)
Political party: Grand National Party Unemployment rate: 3.5% (Nov. 2009)
Chief of State: President LEE Myung-bak Labour force: 24.35 million (2008 est.)
Head of State: Prime Minister Chung Un-chan 69th (world rank, 2008)
Most recent election: 9 April 2008 Oil Production: 11th (world rank, 2008)
Government: Single House — Majority Oil Consumption: 68th (world rank, 2008)
Political system: Presidential Natural Gas Production: 25th (world rank, 2008)
Legislature: Unicameral, elected National Assembly Natural Gas Consumption: Military
Capital: Seoul 2.7% of GDP; 58th world rank (2006)
Official language: Korean 48,508,972; country comparison Military Expenditures: Markets
to the world: 25th (July 2008 est.) KOSPI index: 1,705 (6 Jan. 2010)
Population: 0.266%; country comparison to the world: % change on 31 Dec. 2008: +23.9 (local currency); +22.2 ($
178th (2009 est.) terms)
Population Growth Rate: Economy Trade Trade balance: $+41.0 (latest year, Dec. 2009)
Currency: Won (W) Trade to GDP ratio: 85.7 (2005-2007)
GDP (official exchange rate): $929.1 billion (2008 est.) Exports: $433.5 billion f.o.b. (2008 est.)
Predicted change: -4.3% (Q4 2009); -5.9% (2009) Top export partners: China (22.4%); U.S. (10.9%); Japan
Composition by sector: 3%-agriculture; 39.5%-industry; (6.6%); Hong Kong (4.6%) (2008)
57.6%-services (2008 est.) Imports: $427.4 billion f.o.b. (2008 est.)
Central Bank interest rate: 2.0% (7 Jan. 2010) Top import partners: China (17.7%); Japan (14%); U.S.
Official reserve assets: $264,187.00 million (Oct. 2009) (8.9%); Saudi Arabia (7.8%); UAE (4.4%); Australia (4.1%)
Foreign currency reserves: $259,436.00 million (Oct. (2008)
2009) [in convertible foreign currencies]
Securities: $235,776.00million (Oct. 2009)
IMF reserve position: $997.00 million (Oct. 2009)
Special Drawing Rights: $3,791.00 million (Oct. 2009)
Gold: $78.00 million (Oct. 2009) [including gold deposits
and, if appropriate, gold swapped]
Financial derivatives: $0.00 (Oct. 2009)
Loans to nonbank residents: $0.00 (Oct. 2009)
Other reserve assets: $-116.00 million (Oct. 2009)
Commercial Bank prime lending rate: 7.17% (31 Dec.
Stock of money: $80.66 billion (31 Dec. 2008)
Stock of quasi money: $478.0 billion (31 Dec. 2008)
G20 Stock of domestic credit: $937 billion (31 Dec. 2008)
Summit 2010

G20 Seoul Summit – Ripe with Opportunities
Amy Jackson - President changed quite dramatically in the believe that the coordinated re-
American Chamber of last 50-plus, 20 and even 5 years. sponses by the leading economies
Commerce, Korea played a crucial role in preventing a
On the economic front, Korea is deeper global recession. However,
Congratulations already a leader. In 2009, accord- as the recent surge of trade disputes
go to Korea for being ing to the International Monetary show, protectionist sentiments have
selected as host to Fund, Korea ranked as the world’s not completely disappeared. Joint
the November 2010 15th largest economy (by nominal efforts are needed to reduce new
G20 Summit! Clearly GDP) and the ninth largest exporter. forms of trade barriers, and Korea
this summit will fo- Not only do Korean companies such has a key role to play in regard.
cus the attention of as Samsung, LG, Hyundai/Kia and
business and politi- POSCO now dominate in many mar-
cal leaders on many kets around the world, but there is a FTA Leaders and Laggers
key issues of impor- new and growing recognition among
tance to the G20 membership and world consumers that these compa- The number of bilateral and re-
beyond, and there are a wide range nies are South Korean – giving rise gional free trade agreements (FTAs)
of anticipated outcomes. Seoul has to the new South Korean “brand.” has sky-rocketed in recent years.
been busily preparing for this event Korea’s economic success is linked The United States was one of the
for months, and it is very aware of to the country’s focus on promoting quicker countries out of the gate
the myriad of benefits that hosting exports. Exports provided around on FTAs, but we have now fallen
this global event can and will bring 44 percent of Korea’s GDP in 2009. way behind. The U.S. currently has
to South Korea. One of these is to Korea’s strong performance in the
showcase the Korea of 2010 – a export of manufactured goods has
country willing and able to act as a been crucial not only to the coun-
global leader. In addition, Koreans try’s rapid industrial development,
and Americans from the public and but also to Korea’s robust recovery
private sectors are anxiously await- from economic recessions, once in
ing a show of leadership by Presi- 1998 and again in 2008. It has also
dent Barack Obama and President strongly shaped Korea’s pro-free
Lee Myung-bak in the form of an an- trade economic policies.
nouncement that the two countries
are finally ready to move forward Korea – A Leader on Free Trade
with the long-anticipated ratification
of the U.S.-Korea Free Trade Agree- In the face of rising protection-
ment (FTA). ist sentiment around the world, a
key agenda item for the G20 Seoul FTAs in force with 17 countries,
Reintroducing Korea to the Summit is how to ensure free and but is not actively negotiating new
World As a Leader fair global trade. The G20, as to- agreements. On the flip side, Ko-
day’s premier forum for discussing rea was slow to jump on the FTA
Many foreign visitors to Korea global economic issues, has already bandwagon, but is now one of the
express surprise at how modern, played an important role in con- world leaders in terms of number
always “connected,” and bustling taining the spread of protectionism of FTAs (concluded or in the works)
Seoul is. Indeed, there is a distinct during the recent global economic and volume of trade covered by its
lack of knowledge in the United crisis. As a globally-competitive agreements. As the diagram shows,
States and many other countries mid-sized economy that has reaped Korea has completed or is currently
around the world about what really significant benefits from cross-bor- negotiating FTAs with many major
does and does not characterize the der trade and investment, Korea has trading partners. Likewise, Australia
Korea of 2010. Many remember the a fundamental interest in promoting has FTAs with 15 countries, and is
Korea of 50-plus years ago in the free and fair global trade. currently negotiating FTAs with over
aftermath of the devastating Korean 10 countries.
War. Perhaps more still think of Ko- At the G20 summit in Wash-
rea as the insular, command econo- ington D.C. in 2008, President Lee At a time when so many coun-
my it was 20 years ago. As host of Myung-bak took a leading role in tries around the world are moving
the G20 Summit, Korea has a unique advocating free trade, suggesting a forward rapidly to secure preferential
opportunity to “re-introduce” itself to ‘standstill’ on all protectionist mea- access to other markets for their pro-
G20 the world as the modern, free na- sures. This concept was accepted ducers, the absence of the United
Summit 2010 tion Korea is today – one which has by the other participants, and many States in this “race” is quite appar-

But the U.S.-Korea FTA covers

more than just reduction of tariffs.
The agreement has robust provi-
sions in the areas of regulatory
transparency, intellectual property
rights, pharmaceuticals and other
rules, particularly in the area of ser-
vices. This is why it is often referred
to as the “Gold Standard” agree-
ment by trade experts. Consum-
ers and businesses in both coun-
tries stand to gain from the broad
ent. It is disappointing that anti-free policy. President Obama stated that benefits of the agreement, as it will
trade sentiment in the United States eliminate non-tariff market access
has grown to the point that many “It is time that our United States barriers to goods, services and
Americans are openly advocating a Trade Representative work very investment. Moreover, new and
return to protectionism and isola- closely with his counterpart from mutually-beneficial partnerships be-
tionism. Messages as to the very the ROK to make sure that we set tween leading American and Korean
real benefits of free trade seem to a path, a road, so that I can present businesses are expected to flourish
have been drowned out, particularly this FTA to Congress. We are go- in virtually all sectors including future
in the aftermath of the global eco- ing to do it in a methodical fashion. ‘engine of growth’ industries such
nomic recession. But the reality is I want to make sure that everything as energy, green growth and bio-
that the United States is significantly is lined up properly by the time that pharmaceutical sectors.
more open to imports from around I visit Korea in November. And then
the world than many of the countries in the few months that follow that, I The benefits of the U.S.-Korea
where U.S. exports are headed. By intend to present it to Congress. It is FTA to both economies have been
eliminating high tariffs and restrictive the right thing to do for our country. well documented by researchers.
non-tariff barriers to trade, FTAs can It is the right thing to do for Korea. Apart from the economic benefits,
be very effective as a tool to level It will strengthen our commercial the deal will reinforce the strategic
the playing field for American busi- ties and create enormous potential alliance between the U.S. and Ko-
nesses and as a means to increase economic benefits and create jobs rea which remains one of America’s
exports and create jobs. here in the United States, which is closest allies in Asia and a strong
my number one priority.” partner in advancing regional secu-
A study commissioned by the rity. In addition, this FTA will help
U.S. Chamber of Commerce found This was an important message the United States stay an active,
that total trade with the fourteen to Korea and the rest of the world involved leader in the Asia-Pacific
countries with which the U.S. has that the United States is a good ally region.
FTAs boosted GDP by $1.0 trillion that honors its commitments, puts a
and supported 17.7 million Ameri- priority on staying actively engaged We look to the United States
can jobs. Of this total, an estimated in Asia, and plans to continue to be and Korea to demonstrate leader-
5.4 million jobs were supported by a leader in the region on the political ship during the G20 Seoul Sum-
the increase in trade generated by as well as economic front. mit. The opportunities are vast and
the FTAs. Moreover, the study found in today’s economic climate cannot
that U.S. merchandise exports to The U.S.-Korea FTA is the most and should not be squandered. We
these fourteen countries from 1998 comprehensive and large-scale hope that on November 11, the U.S.
to 2008 grew nearly three times as trade agreement the United States and Korean Presidents will stand
fast as did exports to the rest of the has entered into since the North together and make an historic an-
world. American FTA (“NAFTA”) took ef- nouncement on the U.S.-Korea
fect in January 1, 1994. Under the Free Trade Agreement that will dem-
U.S.-KOREA FTA – An Im- agreement, almost 95 percent of onstrate the commitment of both
portant Step Forward bilateral consumer and industrial countries to each other and to mak-
goods trade will become duty-free ing their G20 pledges a reality.
President Obama’s announce- within three years, with almost all re-
ment in June of this year at the maining tariffs on goods eliminated
Toronto G20 summit was a pivotal within ten years. G20
moment for watchers of U.S. trade Summit 2010

Summit 2010

Summit 2010

Reaching the World’s Most Vulnerable

The Lilly MDR-TB Partnership is a public-private ini- Empowering Local Communities

tiative that encompasses global health and relief orga- The Partnership has implemented community-level
nizations, academic institutions and private companies, programmes to raise awareness about MDR-TB, in-
and is led by Eli Lilly and Company. Its mission is to crease access to treatment, ensure correct comple-
address the expanding crisis of multi-drug resistant tu- tion of treatment and empower patients by eliminating
berculosis (MDR-TB). Created in 2003, the Partnership the stigma of the disease. The Partnership also trains
mobilizes more than 20 global healthcare partners on healthcare workers to recognize, treat, monitor and pre-
five continents. vent the spread of MDR-TB.

Lilly is contributing US$ 120 million in cash, medi- A global Approach for Global Results
cines, advocacy tools and technology to focus global Because global change requires a global perspec-
resources on prevention, diagnosis and treatment of pa- tive, the Partnership works with policymakers around
tients with MDR-TB; and an additional US$ 15 million the world to raise awareness about the toll that TB takes
to the Lilly TB Drug Discovery Initiative to accelerate the on the global population and encourages new initiatives
G20 discovery of new drugs to treat TB. that curb the spread of MDR-TB.
Summit 2010

Seven-year old Manisha, diagnosed
with TB in 2008, doing her second
grade homework. After nearly sev-
en months of treatment through a
community-based program, she was
cured of TB in January 2009. The Lilly
MDR-TB Partnership strives to im-
prove care for the world’s most vul-
nerable people, like little Manisha.

Photo: Subhash Sharma

Sustainable Access to Medicines Helping Those in Need

To increase the supply of high-quality, affordable The initiatives of the Lilly MDR-TB Partnership all
medicines, Lilly has partnered with manufacturers in have one thing in common: improved care for some of
countries hardest hit by MDR-TB, providing both knowl- the world’s most vulnerable people, delivered in a sus-
edge and financial assistance to create sustainable, lo- tainable manner that builds capacity within the commu-
cal sources for MDR-TB drugs. nities where it is needed most.

New Drug Discovery Initiative

The Lilly TB Drug Discovery Initiative is a public-pri-
vate partnership that will draw on the global resources
of its partners, including access to chemical libraries
of compounds, to pioneer research on much-needed
faster-acting medicines to treat MDR-TB.

Summit 2010


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