Opinion: Global leaders need vision and pragmatism for 2023 polycrisis

We look back at a 2022 that we would like to forget. Yet for us, the underlying message we must recognize is that the world is paying the price for underinvestment in our future that long precedes the last year. Our current predicament is more than the outcome of a pandemic or a war in Europe. There is a “polycrisis,” not just because of Russia’s war on Ukraine, but because a generation of world leaders have hidden their heads in populist sands at home — and not raised their sights, let alone their actions, to address the Big Abroad. The crises of inflation, rise in fuel and food prices, and sovereign debt, which the International Monetary Fund estimates grips up to 60% of the lower-income countries, need to be addressed with ambition and scale. There is loose talk of raising the current billions of support for development and climate to trillions. There is active discussion at present of allowing the World Bank to lend more and enabling IMF to make more flexible use of its emergency funding, but these are changes at the margin. Until a year ago many international and domestic businesses reported strong profit growth and interest rates were remarkably low. Wages never followed, investment — outside a few big tech firms — remained weak, and productivity disturbingly low. A group of us were asked by Chatham House and The Rockefeller Foundation to look at how the world might address the growing, economic, financial, and political deficit. We produced a list of immediately possible steps together with more ambitious changes that the world needs. Increase health investment The pandemic has made the vast gaps in coverage for our health systems more evident still. So, first, an immediate step is to encourage more preventive illness health investments. This includes persuading IMF to adjust its surveillance process to include assessments on health systems as part of its country due diligence. IMF already includes climate and is moving to include gender in its due diligence process. Health belongs there too. By making health a criterion of a nation’s financial and economic resilience, it enables health to become an investment — not a cost to an economy. We need to replace a post-colonial architecture of donor and recipient with one of cooperative partnership. --— Increase private and grant finance Second, the recent Indonesian-based G-20 pushed for a more thoughtful partnership with private finance. It is a key step to raising the amounts now needed to address the green energy transition as well as strengthening health and other sectors. The Indonesian presidency of the Group of 20 leading economies took forward the concept of blended finance, public and private paired investments flows — where risk is shared. But private flows, whether in the form of investments or loans, may add volume but cannot replace the ethical and practical needs for enhanced amounts of grant finance too. Too often, private sector timelines and demands for returns do not fit the requirements of public infrastructure investment. Rethink capital requirements Third, the World Bank and other multilateral development banks must lift their capital adequacy requirements. The World Bank has now circulated initial proposals on this to its board. Member states will need to push it to go further. The continued failure to deliver on the pledge made at the 15th U.N. Climate Change Conference in Copenhagen to provide $100 billion each year to low- and middle-income countries for climate mitigation is an open wound in North-South relations. We can’t afford to do the same with the agreement to establish a “loss and damage” fund agreed upon at last year’s COP 27 as a means to provide funds to compensate for climate damage. A united outlook A number of proposals, of which the Bridgetown Agenda is best known, have called for an expansion of multilateral lending to governments and suspending debt and interest payments for the already debt-distressed countries. These changes ideally require a united world when, in fact, it is more divided. The China-Russia axis has challenged traditional Western leadership of international development. Low-income countries don’t want to take sides: They want economic support from all sources. Whether the United States and China and their allies can put aside their other differences to cooperate on at least this agenda — where both have an equal stake in global prosperity and stability — seems, however desirable, unlikely. There are one or two positive signs, such as the recent Chinese-expressed interest in a new international debt roundtable; but China, and its Western counterparts, need to be more open-minded to make progress. Separately, we need to replace a post-colonial architecture of donor and recipient with one of cooperative partnership. The enormity of the crises we face requires that solutions transcend both the current geopolitical disruptions and the deep-seated lack of trust between the global north and south. But there must be tough principles of accountability and transparency that can ensure these enhanced financial flows are treated as an investment in a shared global future not subject to the distortions and corruption that, even up until today, have characterized the old aid model. Success requires that our policymakers and politicians truly commit to the task and re-imagine what our collective future might be from a place of trust and co-creation. And we need to move now, boldly from where we are, and not where we might want to be. The world cannot wait.