US election puts UN community on edge

The road to a new more equitable global financial order, in which low-income countries can compete on a level playing field, is facing two immediate speed bumps at the United Nations: one is Russian, the other American. In the weeks since world leaders adopted the U.N. Pact for the Future — which proposes revamping the international financial system, among other things — foreign delegates have been expressing unease about potential Russian obstruction of the reforms, as well as the uncertainty surrounding the U.S. election, particularly the prospect of a return to power by Donald Trump. “November 5 is actually a consequential debate for this discussion because it will impact the willingness, or the trajectory, of the engagement of the United States,” Bob Rae, Canada’s U.N. ambassador and this year’s president of the U.N. Economic and Social Council, told Devex in an interview. “We have made a lot of progress with the Biden administration in terms of their willingness to engage and really discuss the sorts of reforms that are possible.” In the end, Rae said, “the American public will make up their own mind as to what they are going to do. So what we think is not really relevant to the outcome.” “Are people concerned? Of course they’re concerned,” he added. “I mean, I would sound like a bit of an idiot if I said nobody’s talking about it.” The ‘unreliability factor’ During his presidency, Trump withdrew U.S. participation in several U.N. entities and other international agreements, including the Paris Agreement, the U.N. Human Rights Council, the U.N. Educational, Scientific and Cultural Organization, and the Iran nuclear deal. The Trump administration also announced the intent to withdraw from the World Health Organization, and unilaterally imposed a ceiling on U.S. peacekeeping dues, which have driven up Washington’s arrears to more than $1 billion, and contributed to a perennial U.N. cash crunch. Under Trump, White House efforts to impose draconian cuts on the U.N. budget and foreign assistance programs were routinely blocked by Congress. It is unclear whether a new Congress under a second Trump administration would be more inclined to preserve such programs. But money isn't the only challenge, Rae noted, citing the “unreliability factor” inherent in a Trump return to power. “Everyone needs to understand that if America withdraws from certain institutions because they are unhappy with something, the way Trump did with the WHO, other countries will fill that gap very quickly.” Nature abhors a vacuum China’s rise poses a new challenge as it has the financial resources, and the ambition, to compete with the West. “If you are absent in this arena, you know nature abhors a vacuum, someone else will fill the vacuum as happened during the pandemic years and the Trump years,” a senior Asian diplomat told Devex. “It’s incumbent upon the U.S. to come and persuade people here as to why your vision is superior and your system is superior. I think the Chinese are very savvy at playing this, you know, projecting sympathy, empathy, understanding, solidarity.” The same can’t be said for Russia, which sought to block agreement on the future pact, and has vowed to relitigate the terms of the future pact in U.N. meetings. In September, Russia sought to sharply water down the agreement on the future pact, claiming it crossed a series of Russian red lines — including provisions to strengthen the promotion of human rights, accelerate nuclear disarmament, and enhance the role of civil society in U.N. deliberations. The Russian gambit was blocked by a coalition of African countries, leaving Moscow politically isolated. In the end, Russia’s deputy foreign minister Sergey Vershinin agreed to let the pact through, though it made clear it did not want to associate itself with the consensus, and that it would subject efforts to implement the pact to “painstaking consideration … and agreement” by all member states. Russia, Rae said, is just a “disruptor.” “They are not even a significant lender,” he added. “They’re not a major economic power. They are just interested in being disruptive. And that is the Russian contribution to the world order.” Money is tight Rae, a former Ontario premier and former interim leader of Canada’s Liberal Party, is serving a year-long stint as the president of the U.N. Economic and Social Council. In that post, he will seek to translate the future pact into reality, promoting new avenues for development financing, advancing gender equality, and exploring ways that emerging technologies, including artificial intelligence, can help implement the U.N. development goals. Translating the future pact’s high-minded goals into reality is going to be “a tough, tough grind,” Rae said. The U.N., he noted, is facing its own liquidity crisis, the result of chronically late dues payments by wealthy donors, including China and the United States, the world’s largest donor. But even more troubling is Washington’s refusal to pay its full peacekeeping arrears, which have swelled to more than $1 billion since the Trump administration unilaterally imposed a ceiling on U.S. contributions. “Things have improved over the last few years with the U.S., but there’s no guarantee that will continue,” he said. “Money is tight,” he added. “How much progress can we make on financing for development? How much progress can we make on the broader issues is a real challenge, and there’s no point in pretending that it’s not.” “There has to be bargain” struck between high- and low-income countries, he said “There needs to be more cash both from donor countries, and from private investors, and private investors don’t go where they are told to go. They go where they want to go. And they will want to go if they think they can make money,” he said. But “it's not just about money.” It's about the willingness of aid recipients to make changes in their governance policies, and to exhibit a willingness to deal “with issues like corruption and illicit financial flows, among other issues. Are they willing to use their own resources? Are they willing to raise their own taxes?” Hearts and minds Historically, the U.N. has been a minor player on the international development financing stage. Most of the critical decisions on development financing are made in Washington at the International Monetary Fund and the World Bank, which is struggling to raise a target of at least $100 billion through the bank’s International Development Association before the end of the year. But the U.N. — the most representative world organization with 193 member states, many of them without a voice at the bank and IMF — has been pressing for a broader say in decision-making. “It is very clear that the present system is biased,” António Guterres, the U.N.’s secretary-general, said last year. “The system was conceived by a group of rich countries and naturally it basically benefits rich countries." The failure to address those concerns can sour discussions over other issues, complicating U.S. and European efforts to win diplomatic support for their own priorities, including Ukraine’s war against Russia. “If the United States is engaged in a battle, say with Russia on the one hand and China on the other, then it has every interest to bring with it as many countries as possible,” said one senior Asian diplomat. “And so the U.S. has to be savvy about winning the hearts and minds of people there to its vision of the world.” The future pact, according to some observers, gives the U.N. a louder voice in the discussion on financial reforms. “It creates more political pressure for change,” Elizabeth Cousens, president of the United Nations Foundation, told Devex. For all of the drama surrounding the negotiations, the non-binding final future pact includes “some surprisingly strong commitments,” including on debt relief, recommitting world leaders to a transition away from reliance on fossil fuels, and reforming the international development financing system. For some time, the U.S. policymakers have “dragged their heels” on critical U.N. reform issues but that it is becoming “a little bit harder to resist.” The U.S., she argued, has been slow to recognize that America’s superpower status is being challenged by a range of emerging powers, and that the U.S. needs to invest in broadening its diplomatic relations beyond its key post-war allies. “I think you really need a wider spectrum of friends, and you can’t afford to coast on the ones you had eighty years ago,” she said. The debate on implementing the future pact is playing out against a background of grim evidence of backsliding. The World Bank, which hosted its annual board meeting last week, has warned that half a century of advances in reducing extreme poverty has come to a halt. Gender equality has also stalled in the years following the pandemic, with some 2 billion women lacking any form of social protection, according to a report by UN Women. The bank has been exploring ways to ramp up financing for key development initiatives — including a recent decision to free up $30 billion in new lending capacity over the next decade by taking on more risk by lowering its equity-to-lending ratio by 1 percentage point. But economic headwinds in key donor states, including Britain, France, and Germany, are constraining efforts to expand financing options. The U.S. election, meanwhile, threatens to upend financing. “After decades of progress, the world is experiencing serious setbacks in the fight against global poverty, a result of intersecting challenges that include slow economic growth, the pandemic, high debt, conflict and fragility, and climate shocks,” Axel van Trotsenburg, the World Bank senior managing director, said in an Oct. 15 statement. “Amid these overlapping crises, a business-as-usual approach will no longer work. We need a fundamentally new development playbook if we are to truly improve people’s lives and livelihoods and protect our planet.”