What Could the UN Summit of the Future Mean for Global Economic Governance?
In late January, the United Nations released the zero draft of the Pact for the Future, the outcome document of the Summit of the Future. The Summit of the Future is scheduled for September 22-23, 2024, ahead of the high-level General Debate of the 79th Session of the United Nations General Assembly. The United Nations has positioned the Summit as “a once-in-a-generation opportunity to enhance cooperation on critical challenges and address gaps in global governance, reaffirm existing commitments including to the Sustainable Development Goals (SDGs) and the United Nations Charter, and move towards a reinvigorated multilateral system that is better positioned to positively impact people’s lives.”
The release of the zero draft offers insight on what is on the agenda for the Summit, what isn’t but should be, and what the Summit could mean for global economic governance.
The Summit of the Future comes at the right moment
The last few years have not boded well for the ability of multilateralism to address the myriad global challenges facing the international community. Advanced economies responded to COVID-19 by racing to buy up vaccines and other health products, neither ensuring an equitable distribution of existing supply nor taking adequate steps to ensure intellectual property rules did not get in the way of expanding supply. The lack of solidarity in response to that global crisis has further eroded trust that countries will come together to equitably respond to climate change, where the world is falling behind on Paris Agreement goals and providing far less finance to emerging market and developing economies than needed. Rising interest rates and food prices have also hit the Global South hardest, while ongoing geopolitical turmoil has further fractured the multilateral order.
This year is a welcome moment for a reset of a struggling multilateral order. Convening the Summit of the Future this year provides an opportunity to develop strategies to get back on track to meet the SDGs and other climate targets in sufficient time before 2030 deadline. This year also marks the 80th anniversary of the Bretton Woods Conference, a moment when countries came together amid global crisis to enact changes to the multilateral order that would endure far into the future.
As a particularly inclusive and democratic international organization, the UN is a well-positioned forum to have a gathering focused on international cooperation and the future. The world has changed significantly since the creation of the Bretton Woods Institutions and the UN, which emerged at a time when much of the world was colonized. While some movement has been made toward reform, such as the ongoing World Bank Evolution Roadmap, some of these institutions have yet to demonstrate a wholesale readiness to evolve, despite rhetoric to the contrary.
What’s in the zero draft?
The zero draft of the Pact for the Future is organized around five priorities: 1) sustainable development and financing for development, 2) international peace and security, 3) science, technology and innovation and digital cooperation, 4) youth and future generations, and 5) transforming global governance. Provisions related to global economic governance are concentrated in the first and fifth sections.
While the first section largely restates commitments to the SDGs and UN climate agreements and notes the importance of scaling up funding to meet these goals, the fifth section includes a larger number of specific and noteworthy provisions. Paragraph 156 states, “We believe that the international financial architecture urgently needs to be modernized and strengthened to better respond to the challenges of our time and to reflect the reality of today’s world,” and the zero draft proposes a number of measures that would achieve this goal.
Paragraph 140 notes the importance of multilateral development banks (MDBs) in “providing affordable access to long-term capital and accelerating investment in the SDGs,” and the draft both calls for MDBs to go further in leveraging their existing capital and for “the boards of the banks to pursue general capital increases.” Paragraph 141 calls for “the undertaking of a comprehensive review of the sovereign debt architecture, with a view to making concrete recommendations for reform to the fourth International Conference on Financing for Development in 2025,” a welcome proposal given the shortcomings of the existing sovereign debt architecture, particularly the Group of 20 (G20) Common Framework. In paragraph 142, the draft also notes the importance of Special Drawing Rights (SDRs), both welcoming the rechanneling of existing SDRs and “encourag[ing] the development of proposals for standing instruments to accelerate the issuance and the re-allocation SDRs in response to global crises.”
It is important that issues as important to the future as MDBs, debt and SDRs remain in the Pact for the Future. Debates about interest rates, finance and investment are, at their heart, questions about how the international community values the future and builds it. (It is not for nothing that a recent book about MDBs’ financial model is titled “Financing the Future.”) Right now, the multilateral system is not adequately investing in the future, and the Summit of the Future is an important opportunity to reverse that tide.
What should be added to future drafts?
Compared to expectations, the zero draft is somewhat unambitious. Particularly in the domain of reforming the governance of global institutions, the draft leans on general encouragement more than specific proposals—for example, “reiterat[ing] the need to broaden and strengthen the voice and participation of developing countries in international economic decision-making, norm-setting and global economic governance” and “commit[ing] to a vision of a multilateral system that is more effective and capable of delivering on its promises.” This measured approach may be a recognition of the challenges of establishing a text that is agreeable to member states with widely varying opinions, and it may also stem from a belief that the UN should not overstretch its mandate and interfere excessively in the governance of other institutions.
Still, while the UN should be mindful of its constraints, the Summit of the Future can do more to advance global governance that is fit-for-purpose. The Pact for the Future could explicitly call for the rebalancing of voting rights at the International Monetary Fund (IMF) and MDBs so that they are not so heavily skewed towards the countries of the Global North. Rather than a vague mention of the importance of “open” and “merit-based” leadership selection in international institutions, it could call for an end to the “gentlemen’s agreement” that sees an American citizen head the World Bank and a European head the IMF. Drafters could also consider setting quantitative targets for financing goals rather than general encouragements that so often go unheeded.
The Summit of the Future cannot transform global economic governance all at once, but it can serve as an important reset point. There is a need for a globally inclusive, system-wide look at how to reshape multilateralism for the future, and this Summit has a unique opportunity to do so.
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