G20

Seoul Summit 2010

The authoritative magazine for VIP’s, delegates and diplomats

SEOUL KOREA NOVEMBER 2010

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 “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

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 Publisher’s Note
Publisher
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
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Schneider and Andrew Jacuzzi at Verso Paper.
Without their support this magazine would not be President of Sales
Mike Nyborg
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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 Scribd.com
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- intro60.com
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
Copyright©2010 The G8/G20 Summit Magazine Company Ltd. and The Cat Company Inc.
Publisher and Founder All rights reserved. No part of this publication can be reproduced without written con-
The CAT Company Inc. sent of the publisher. All trademarks that appear in this publication are the property of
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Summit 2010 Paper provided by

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 EDITORIAL
EDITOR-IN-CHIEF
Ana Carcani Rold

EXECUTIVE EDITORS
Kirk L. Jowers
Courtney H. McBeth

MANAGING EDITOR
Rochelle M. Parker

CONTRIBUTORS

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

ART & GRAPHICS DIRECTOR

Henri de Baritault

PHOTOGRAPHERS

Sebastian Rich
Senior Contributing Photographer, Diplomatic Courier

Bradley Ferreira, Carly Young

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

LEGAL
The G20 Summit magazine is a publication independent of political affiliations or agendas published by The CAT Company
Inc. The articles in the G20 Summit Magazine represent the views of their authors and do not necessarily reflect those of the
editors and the publishers. While the editors assume responsibility for the selection of the articles, the authors are responsible
for the facts and interpretations of their articles. Authors retain all legal and copy rights to their articles. None of the articles
can be reproduced without the permission of the editors and the authors. For permissions you may contact the editors at
editors@diplomaticourier.org.

G20
Summit 2010

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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

Editor-in-Chief

G20
Summit 2010

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 Table of Contents
Welcome message from President Lee Myung-bak 10
President, Republic of Korea
Welcome message from Prime Minister Harper 12
Prime Minister of Canada
Publisher’s Note 14
Editorial 16
Editor’s Note 17
Table of Contents 18
Hyundai Unveils All-New Sub-Compact ‘Solaris’ in Russia 20
Grand Opening Ceremony at Hyundai Motor Manufacturing
Rus (HMMR) plant in St. Petersburg, Russia 22
Global Health and Business: A Long Term Sustainability Strategy 24
SPECIAL FOCUS
The Global Economic Security Significance of Sovereign
Wealth Funds 26
An Interview with Dr. Alexander Mirtchev
FEATURES
From Korea to France: Continuing the Global Agenda
for Economic Recovery 34
By Ambassador Pierre Vimont
The Seoul Agenda: On Course to Securing Growth and Stability 36
By Ambassador Klaus Scharioth
Recipe for Global Economic Recovery 38
By Monique Danziger
Living Responsibility 42
By Rainer Wend
The G20 Business Summit: Will Business Advocate Free Markets
and Innovation to an Attentive G20? 46
By Ambassador James P. Cain
Globalization and the Modernization of Financial Executives 48
By Marie Hollein
The Beginning of History? 50
By Uddipan Mukherjee
G20
Summit 2010
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The Mother of All Ponzi Schemes 54
By Rami Turayhi
Tackling the Jobs Crisis: The Role of Coordinated
Fiscal and Incomes’ Policies of G20 Countries 56
By Raymond Torres and Rudiger von Arnim 
Back to the Future? China’s Sea of Foreign
Exchange Reserves is Not New 58
By David Schneider
Dollar Diplomacy Revisited 60
By Ken Weisbrode
A Curious Camaraderie:
Beijing’s Abiding “Friendship” With Pyongyang 62
By Paul Nash
Why the World Needs to Engage With Iran Again 66
By Arash Aramesh
Sustainability ‘From Below’ Or, Why We Shouldn’t
Take Cities for Granted 68
By Michele Acuto
Investing in the Human Security of Afghanistan 70
By Suraya Dalil and Ashraf Haidari 
Include Cancer: Why the Global Cancer Movement
Needs the Support of the G20 Group of Nations 72
By Ambassador Nancy G. Brinker
Déjà Vu? World Food Price Hikes Raise Concerns 74
By Daniela Carcani
Injecting Life Into the World Economy 76
By Orin Levine and Ciro A. de Quadros
Social Work’s Contribution to Global Development:
The Western Lens Impact on Universalism and
Opportunity for Collaboration 78
By Ruth Gerritsen-McKane and Courtney H. McBeth
Causes, Conditions and Reform of African Economic Neocolonies 80
By Brian Corry
G20 Seoul Summit – Ripe with Opportunities 110
Reaching the World’s Most Vulnerable 114
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Summit 2010

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 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
St. Petersburg, Sep. 21, 2010
– Hyundai Motor Company, South
Korea’s largest automaker, today
unveiled a new sub-compact four-
door sedan Solaris. The first model
to start its production in January next
year at Hyundai Motor Manufactur-
ing Rus (HMMR), the company’s
sixth overseas manufacturing base
located in St. Petersburg, Russia, is
expected to shake up the country’s
biggest C1-segment sedan market
with its daring design and features
tailored to meet local needs.
THE NAME, SOLARIS
Hyundai held a national car
naming contest in the early summer
of this year to celebrate the first new
car of its first manufacturing plant in
Russia and “Solaris” has been se-
lected as the winner among more
than 27,000 entries from all over the
country. The word Solaris is derived
from a Latin word for sun, Sol, and
implies Hyundai Motor’s strong will
to expand its business in the Rus-
sian Federation with its new car.
DESIGN CONCEPT
As intimation was given in the
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Summit 2010
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Concept RB that was displayed at
2010 Moscow International Motor
Show (MIMS), the Solaris continues
Hyundai Motor’s ‘Fluidic Sculpture’
design philosophy that injects so-
phistication and dynamic angles as
well as elegant lines resembling a
calligrapher’s “orchid strokes” into
the shape of a vehicle. Like any time-
less work of art, the fluidic essence
that characterizes molding design of
Hyundai’s latest models is inspired
by nature, realizing the harmonic co-
existence of all things created.
Having roots in the Fluidic Sculp-
ture design philosophy, Hyundai de-
signers put their efforts to reflect the
design concept key words “Sleek on
Average Fuel Economy
1.4 Gamma
5 M/T 4 A/T
5.9 L/100km 6.4 L/100km
(16.9 km/L) (15.6 km/L)
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
symmetry gives a sense of stability.
Furthermore, high-glossy black and
metallic colors used in the center
fascia add more futuristic and high-
tech looks to the interior of the So-
laris.
POWERTRAIN
Solaris will be powered by the
modern Gamma engine, 1.6L or 1.4L
DOHC in-line four cylinder gasoline
engines that feature multiport fuel
injection with CVVT (Continuously
Variable Valve Timing). By replacing
the old Alpha engine of its predeces-
sor with Gamma, the sedan prom-
ises more power and torque, as well
as improved fuel economy, in keep-
ing with Hyundai’s pledge to be the
1.6 Gamma
5 M/T 4 A/T
6.0 L/100km 6.5 L/100km
(16.7 km/L) (15.4 km/L)

industry’s eco-leader. The power
and torque of 1.6 Gamma are re-
spectively 123ps and 155 N.m while
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.
SAFETY INNOVATIONS
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
airbags.
RUSSIAN CUSTOMIZATION
As a result of Russian automo-
tive market researches carried out
by Hyundai engineers and market-
ers for a couple of years, the Solaris
is equipped with many specialized
features that suit the local weather,
road conditions and driving hab-
its. For long and bitterly cold Rus-
sian winter, rear heating duct, 4.0L
washer fluid reservoir with a fluid lev-
el sensor that warns the driver when
a refill is necessary and 60Ah battery
for higher cold start performance
are offered as standard. The wiper
deicer, front seat warmers and heat-
ed outside mirrors are also available.
Furthermore, in consideration of lo-
cal road conditions and driving hab-
its, standard long-lifespan (1,500
hr) lamps as Russian drivers tend
to drive with lights on even during
day time, standard front/rear mud
guards that prevent the car from
being contaminated by such car-
unfriendly elements like dry calcium
chloride for snow removal as well
as optional Emergency Stop Signal
(ESS) which automatically triggers
the emergency hazard lights in the
event of a panic stop to reduce the
risk of rear end crashes are offered.
SALES
Hyundai Motor plans to sell
85,000 units of Solaris annually in
Russia starting 2011 including the
five-door hatchback model which
will join the line-up later that year.
Hyundai is confident that the new
sub-compact sedan, with trendy
and stylish design as well as vastly
improved features, will attract and
satisfy young Russian aspirants.
ADVERTORIAL
Established in 1967, Hyun-
dai Motor Co. has grown into the
Hyundai-Kia Automotive Group
which was ranked as the world’s
fifth-largest automaker since 2007
and includes over two dozen auto-
related subsidiaries and affiliates.
Employing over 75,000 people
worldwide, Hyundai Motor sold
approximately 3.1 million vehicles
globally in 2009, posting sales of
US$41.8 billion (including overseas
plants, using the average currency
exchange rate of 1,276 won per US
dollar). Hyundai vehicles are sold in
193 countries through some 6,000
dealerships and showrooms. Fur-
ther information about Hyundai Mo-
tor and its products are available at
www.hyundai.com.
G20
Summit 2010
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 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
unrest.

The fall of the Ming to Manchu

China opens its economy, ac-
cumulates massive surpluses and
immense stores of hard currency
reserves. Western powers push
for further opening and reform to
reduce global imbalances as they
begin to affect other major econo-
mies. Trade friction builds…The
year 2010? No, 1793, the year King
George III sent Lord George Ma-
cartney as an envoy to the Qianlong
Emperor to request normal diplo-
matic and trade relations.
In many ways the main features
of China’s growth and rise are not
new. The massive accumulation of
silver in the Ming and Qing dynas-
ties appears to be re-emerging with
Beijing’s present accumulation of
foreign exchange reserves, primar-
ily U.S. Treasury bonds. The trade
practices that led to these global
imbalances are different in form,
but quite similar in their underlying
meaning and result.
China’s modern economic his-
tory begins with the collapse of
Mongol power and the restoration of
native Chinese rule under the Ming
G20
Summit 2010
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-
dynasty in 1368. Long-developing teenth century.
economic patterns resumed, es-
pecially along China’s eastern and China subsequently dropped
southern coasts. Chinese manufac- out of the world economy as it
turers specialized in the production became engulfed in civil wars and
of tea, porcelain and silk textiles for
export through Arab and later Euro-
pean traders in exchange for silver
mined in Latin America.
As the souther n economy
boomed, the autocratic Ming
moved to bring it under government
control. International exchange was
now conducted only at designated
ports through official state trad-
ing companies and strictly regu-
lated. Exports were promoted and
imports discouraged. This led to
a massive flow of silver out of the
Western economies into China, and
increasing monetization of the Ming
economy.
A silver-based, money economy
now possible, the Ming government
began to collect taxes in coin rath-
er than in kind. This was good for
trading provinces with international
connections but bad for the inland
agricultural economy. The result

22

invasions by foreign powers, end-
ing only with the establishment of
the People’s Republic of China in
1949. The Communist government
immediately reoriented the Chi-
nese economy toward the Soviet
Union, and in another radical shift
Mao Zedong pulled the country into
near autarky beginning in 1958. It
was yet another twenty years be-
fore China would again open to the
world.
In the 1980s Deng Xiaoping
moved to integrate China’s dynam-
ic export potential into global trade
and financial markets. Foreign ex-
change earnings from light industry
exports were used to import tech-
nology and equipment for invest-
ment 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 mod-
ern permutation of the open trading
ports of imperial times, interna-
tional capital 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 Guang-
dong.
But this was only the beginning
of a phased program that evolved
with experience. Bureaucratic man-
agement of trade and investment
did not interface well with global
markets. The early reforms were
followed by successive rounds of
ADVERTORIAL
administrative liberalization. In-
dustrial enterprises were allowed
to do more types of business with
less government involvement, and
could retain a portion of their for-
eign exchange earnings, and many
more SEZs were opened.
Administrative reform was only
one part of the program, however.
As China moved toward full mem-
bership in the World Trade Organi-
zation (WTO), Beijing instituted vast
market-based macroeconomic and
financial reforms designed to har-
monize the economy
G20
Summit 2010
23
 Global Health and Business:
A Long Term Sustainability Strategy
The long-term sustainability of the private sector de-
pends on many variables, including the strengthening
of health systems – the combination of people, infra-
structure and institutions responsible for providing basic
health services.
As the second largest diversified mining company
in the world and the largest private company in Latin
America, with operations in both developed and de-
veloping economies in over 35 countries, Vale partici-
pates in initiatives designed to strengthen health sys-
tems, firstly in Brazil and gradually also in other locations
where it operates.
Improvements in global health are fundamental
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
24
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-
gistics, procurement, strategic planning, monitoring,
evaluation and financial management; and the identifi-
cation of opportunities to bring other stakeholders into
the public arena and to create multilateral structures to
make health care provision more effective.
Health plays an important role in economic growth.
To maintain sustainable growth over the coming years,
global health must be a permanent fixture of the agen-
das of major global discussion forums, such as G20
summits. The private sector must stimulate and rein-
force its commitment to the public and non-profit sec-
tors, with a strategy for global health to help strengthen
health systems at country level, both in developing and
developed countries.
ADVERTORIAL
 The Global Economic Security Significance
of Sovereign Wealth Funds
An Interview with Dr. Alexander Mirtchev
A year ago, in a discussion with Dr.
Mirtchev on the global economy, the topic
of Sovereign Wealth Funds was brought up.
At the time, we had just produced the G8
Summit magazine for the l’Aquila summit
in Italy. One of our articles discussed how
Sovereign Wealth Funds could be the un-
likely saviors of renewable energy. Behind
the scenes, SWFs have become a great
topic of significance in the ongoing quest
for global economic recovery. We are ex-
tremely fortunate to have Dr. Alexander Mirtchev pro-
vide insights in this important and strategic sector of the
global economy. Dr. Mirtchev is President of Krull Corp.
USA, a global strategic solutions provider, with a focus
on new economic trends and emerging policy challeng-
es. He is also a Vice-President of the Royal United Ser-
vices Institute for Defence and Security Studies, Council
Member of the Kissinger Institute on China and the Unit-
ed States at the Woodrow Wilson International Center
for Scholars and a Board Director of the Atlantic Council
of the United States. He serves as independent direc-
tor of a sovereign wealth fund, has served as chairman
and director of multi-billion dollar international industrial
enterprises and has had distinguished public office and
academic career.
What role do sovereign wealth funds
(SWFs) play in the modern global econo-
my?
To begin with, SWFs are a modern iteration of eco-
nomic power projection by states on the international
scene. In one form or another, vehicles resembling
SWFs have been around for a long time. Similar entities
investing state funds, generated from reserves or trade
surpluses (such as from natural resources), or utilizing
substantial state support or privilege, could very well in-
clude conglomerates such as VOC (the Dutch East India
Company) or the British East India Company. Another
thing they appear to have in common with modern SWFs
is that they were the pioneers in frontier markets, often
creating regional trade beyond what the local govern-
ments and businesses were able to create. It should not
be forgotten, however, that SWFs are often perceived
to be driven by political, rather than economic, consid-
erations. At the end of the day, they often are, which
is only natural, as their shareholders are governments.
Thus, the story is much more complex.
In modern times, the first investments by SWFs were
G20 predominantly in “frontier markets”–their own. Both Ku-
Summit 2010 wait Investment Authority (established 1953) and Singa-
pore’s Temasek fund (1974) made investments in their own
26
economies, at a time when the term “rapidly developing
economies” was not in use. More recently, the investment
horizon of SWFs has broadened, ranging from “trophy
assets” such as Citibank and Merrill Lynch to real “fron-
tier” projects, such as, for example the Sinopec/CNOOC
buyout of the stake of Marathon Oil in Angola’s offshore
deepwater Block 32 for US$1.3bn or CIC’s $500mln
investment in SouthGobi Energy Resources’ mining op-
erations in Mongolia.
In the final analysis, SWFs are all unique–they repre-
sent different countries with different economic strate-
gies, resources and proclivities. At the same time, they
do have common features that provide a basis for com-
parison and a framework within which it is possible to
understand what their future strategies may be.
What lessons did the SWFs learn from
the global financial and economic crisis?
The first lesson learned by the SWFs in the present
financial crisis is a new type of prudence and the end
of growth and intensified “glamour cherry-picking”. This
would not be prudence in the traditional sense, but rath-
er prudence on a global scale, with a view to strategic
long-term positioning. Before the crisis, prominent SWFs
became notorious for their big-name acquisitions, in
particular in the financial sector. Now they are sitting on
the paper losses from their investments, but with the
full understanding that name recognition, past perfor-
mance of the targeted corporation, etc., are important,
but should hardly be the determining factors. For ex-
ample, Temasek invested 8.3 billion US dollars into Mer-
rill Lynch, which was later acquired by Bank of America
in an all-stock deal worth 50 billion dollars, while Gov-
ernment of Singapore Investment Corp (GIC) invested
billions into Citigroup and Swiss bank UBS. The state-
owned Kuwait Investment Authority injected a total of
5.0 billion dollars in Citigroup and Merrill Lynch in Janu-
ary 2008. The Abu Dhabi Investment Authority, con-
trolled by the largest member of the United Arab Emir-
ates, poured 7.52 billion dollars into Citigroup in late
2007. Now, more than ever, they could be considered to
be risk-averse investors.
Secondly, SWFs will have learned the hard way that
even though they are in many ways “special”, the market
is the market, and they should bargain down deals–like
any other market player, rather than being the “elephant
in the room”. The present lower values in the market
and the fact that cash is in short supply will put them in
a good position to realize that they do not have to “save
face” by paying over the top for assets.

Thirdly, it is likely that SWFs would place much
higher value and give more precedence to the “produc-
tion” side–they would be focusing even more not only
on the acquisitions of natural resources, technologies
or capacities that their economies lack, but also on the
prospective and targeted growth of their own national
and regional markets. For example, the Chinese oil gi-
ant Cnooc was persistent, and despite failing to buy
Unocal, it was able to acquire Norway’s Awilco Offshore
ASA. Countries like China will look for more natural re-
sources that they lack. Sinosteel Corp. completed a full
takeover and delisting of Australian iron-ore concern
Midwest Corp. The oil producing countries’ SWFs will
concentrate on diversification away from oil into equip-
ment manufacturing, hi-tech, telecoms and other value-
added activities.
Fourthly, the temptation to “make it big” would be
reduced– SWFs would reduce their penchant for “dra-
matic deals” and be under pressure to stick to their core
purpose. Thus, facilitating the economic strategy of their
governments and economies will likely come to the fore.
Last, but not least, due to the financial crisis there is
likely to be increased sensitivity, in the developed coun-
tries in particular, about the activities of SWFs, and the
funds would not only try to “play by the rules”, but would
direct their actions to be widely seen to “play by the
rules”. This tendency would result in the SWFs becom-
ing more “accommodating” to the economies they deal
with. This may also lead to SWFs creating a parallel sys-
tem and “arrangements”, including financial.
What is the current economic benefit
of SWF activity?
Before the financial crisis the SWFs were predomi-
nantly welcomed as an alternative source of large-scale
equity financing that was cheaper and easier to obtain
than to go through an IPO. Now they look more and
more as the only source of available financing for a
cash-starved international financial system.
Increased government scrutiny, regulation and par-
ticipation in the financial system is not likely to be con-
sidered an investment incentive by the SWFs in general.
On the contrary, due to the fact that SWFs have not only
business rationale to their activities but also a strategic
and geopolitical underpinning, they would be loath to
be restrained by what they may consider unfair “regula-
tory shackles”. The SWFs would try to fit in the new
global regulatory regime that is likely to emerge, but at
the same time would want to be able to dictate, to a
certain extent, the terms and conditions under which
they operate in the global economy.
The new role of SWFs as financing sources has already
been acknowledged by the G20 and is to be reflected in
SPECIAL FOCUS
the new governance arrangements surrounding the IMF
and the World Bank. How far these concessions would
be accepted by the governments that control the SWFs’
activities is still a subject to debate, as SWFs and their
governments may decide to take a “proactive” role in
the global market on their own, rather than via the
established structures of the IMF and the World Bank,
as the rules of that game may not be fully to their liking.
SWFs were already “bottom fishing” for distressed
assets that could be attractive in the long term already
when the crisis was still in full swing. In the wake of
the global crisis, SWFs have become more active. They
have intensified the search for investment projects, and
the period of “withdraw and regroup” could be consid-
ered at an end. SWFs would be more tempted to forego
immediate returns for potential growth in the mid-term,
relying on acquisitions that provide synergies and econ-
omies of scale with assets and production facilities that
they already own.
What current challenges do SWFs face?
One of the biggest challenges for SWFs is likely to
be the uncertainty surrounding the intended policies of
the developed economies towards SWFs. There is little
doubt that SWFs are going to face attempts to impose
certain curbs on their operations, imposed by the cur-
rent and prospective market regulators, putting them
under increased regulatory scrutiny, in line with the
tightening global financial regulations. Even though host
governments would welcome long-term investments
from SWFs, there is a growing popular feeling and politi-
cal pressure to codify and regulate the global financial
system, enhance its surveillance and the interventionist
powers of governments. This will inevitably affect how
SWFs operate in the developed economies–would their
governments be happy to have their activities regulated
and maybe virtually controlled by foreign states?
An additional factor that remains, despite the chang-
ing market conditions, is the overall distrusts towards
SWFs among the governments of the developed econ-
omies, and in particular the fact that any major SWF
investment can be viewed through the prism of national
security. A range of developed country’s governments
have expressed implicit and sometimes explicit concern
over the activities of SWFs, in particular those of China.
The concerns raised range around protection of local
assets of strategic significance and the growing influ-
ence of the countries, projected via the activities of their
SWFs. According to Natsuko Waki from Reuters, deal
participation by SWFs stirs “jitters that foreign govern-
ments may take control of assets that are important for
national security and strategic reasons”.
These concerns will channel more narrowly the abil-
ity of SWFs to undertake the projects in the developed G20
economies that their new strategy will dictate. They may Summit 2010
27
 also bring forth considerations that SWFs will be turned
away from the developed economies and would con-
centrate on the emerging markets to look for what they
consider strategic investments. It is likely that we will
see SWFs taking key industries in relatively small emerg-
ing markets.
What are the concerns of states about
SWF activity?
From the times when kings invested in building
pyramids, raising armies and bankrolling explorers, sov-
ereign wealth has attracted political controversy. And
when sovereigns band together, woe on the free world!
Fortunately, the sovereigns have changed with times
and represent internationally legitimate public authori-
ties.
SWFs tend to be viewed in a manner, different from
private equity funds or other private investors. This is
due to the perception that SWFs have a different out-
look on risk, investment periods and other “traditional”
investment considerations. Notably, the frontier is part
of the DNA of SWFs, and this “frontier” make up to a
large extent determines their competitive advantages,
as well as, in some cases, the problems that SWFs
sometimes face.
With the end of the global crisis in sight, SWFs could
become unwelcome guests, even if they contributed to
the recovery of a specific economy. They provided an
alternative source of financing for cash-strapped econo-
mies, but when “currency wars” are on the front burner
the issue of protectionism is making its presence known
in a forceful way across the globe.
The concerns raised in some quarters about SWFs
belie the reality of their operation: the funds report their
activities to the public authorities of home countries
which are at least as transparent as a private equity firm
would be. Prior to the crisis, a few private equity firms
in fact voiced objections to the funds on the grounds
of unfair competition based on cheap money, but soon
found them good investors and attractive clients.
Taking into account that the major SWFs, with a few
exceptions, are from countries that are not considered
among the “developed” economies, there are also con-
cerns that SWFs represent disguised foreign policy ve-
hicles. This could be of particular importance when the
SWF in question is from a country that is considered
significant from a national security standpoint, and its in-
vestments in a target market, such as the US or the EU
can generate perceptions of “encroachment” on mat-
ters that are deemed “strategic interests” for the target
market, as was the case with Dubai Ports.
The most loudly expressed political concerns are
G20 that joint activities by several SWFs could result in them
Summit 2010 “banding together” to achieve political objectives with-
28
out any red flags being raised and without appropriate
scrutiny. The response to these concerns is that they
stem from more of a “protectionist” mindset than a valid
political concern, and that recent examples of SWFs
working together are much more commercially oriented
than having any political imperative.
Are SWFs a responsible market player?
Sovereign wealth funds in general behave like any
other investor, and bear the same level of responsibility.
Despite being inherently different from each other,
as they reflect their countries’ economies, etc., there is
an increasing tendency for cooperation between SWFs
in international investments. It could be considered that
such cooperation is a sign of their maturity as inves-
tors, who are more aware of the market principles and
are seeking to offset any limitations or inefficiencies that
they may have in respect of specific projects by combin-
ing with others that may have access to better “invest-
ment tools”. It could be argued that SWFs cooperating
in different projects represents a sign of their maturity as
investors, who have become more aware of the market
opportunities. On certain occasions, such joint activi-
ties could help them become market leaders in specific
sectors.
One example of such cooperation is the joining of
forces by China’s CIC, Singapore’s GIC and the Korean
Investment Authority to support the Blackrock acquisition
of Barclays Global Investors. This was deal-specific co-
operation with specific prerequisites and repercussions
that signified the new power of SWFs. Another type
of cooperation is the recent general agreement of the
Korean Investment Company, Malaysia’s Khazanah Na-
sional Berhad and Australia’s QIC. This is more of a
general “cooperation” agreement, which is a framework
arrangement that is to provide the basis for potential fu-
ture joint transactions, but does not entail specific com-
mitments in its own right.
One area, where SWFs have already made certain
advances, is to increase transparency by joining forces
in specific investments, irrespective of political consid-
erations that may be in place. The cooperation of sov-
ereign wealth funds today implies that the international
investment advisers, typically form tightly regulated
markets, see synergies in bringing a number of funds
together for a transaction.
The immediate consequence of such cooperation
is that at least several parties to the transaction have to
open books to each other, negotiate agreement that all
parties are comfortable with, and overall increase the
level of transparency about the application of the sover-
eign wealth. Every time one fund manager reaches out
to his peers, market gets a bit more information about
both and regulators are immediately aware of the intent
of the deal. Among others, this would also allow SWFs
 G20
Summit 2010

29
 to introduce elements of comparatively independent
supplementary financing mechanisms in their transac-
tions, a phenomenon that could actually evolve into an
additional layer of the global financial system.
In addition, the increasing tendency of SWFs to
“team up” with Western private, institutional and state-
owned investors for joint investments abroad is provid-
ing an additional impetus towards transparency and
accountability that actually benefits Western investors –
such as, for instance, the case of the discussions about
joint Indian-US exploration of offshore areas off the U.S.
East Coast and in the Gulf of Mexico (which may be
under threat as a consequence of the Gulf of Mexico
oil spill).
How can SWFs promote growth in de-
veloping and emerging markets?
There are a number of reasons why SWFs are draw-
ing disproportionate attention, mainly growing from the
perception that SWFs are “atypical” investor. This per-
ception has a certain level of validity, which is actually
self-perpetuating–the more SWFs are considered as a
separate breed, the more their actions are viewed from
this angle. On that basis, their importance alters, in line
with, among others, the following:
• They are established as significant market players
– they may not be crucial but need to be taken into ac-
count. The perception is that they have access to vast
resources that can be applied to investments under a
completely different level of manoeuvrability, can react
much quicker and can affect markets.
• In certain cases, SWFs are viewed as an extension
of states and perceived within the framework of certain
state policies.
• They are seen, rightly or wrongly, due to their spe-
cifics, as having a more long-term strategy than other
investors, and are seen as sometimes going “out-of-
step” with prevailing market sentiments at a given time.
• Sometimes, SWFs have an accumulation of funds
that are relatively “liquid” which is a consideration, as
well as the perception that they have better access to
financing. It is fair to say that their risk calculations could
sometimes be considered atypical. This view is rein-
forced by the perception that SWFs have in their arsenal
“deeper pockets” or certain unquantifiable guarantees.
• They could be a market-maker (or the elephant in
the room), in particular in relatively smaller economies.
The modern markets are complex, and as complex-
ities carry both opportunities and risks, investors are
trying to utilise the complexities to the extent that they
G20 can bear the risks involved, and from CITIC to the Gov-
Summit 2010 ernment Pension Fund of Norway, it is an issue of risk-
30
reward calculation. As a result, the process of SWFs
investing in frontier markets would gradually become
more and more transparent, in view of their increasing
integration in the financial system and their partnerships
with international institutions, such as the World Bank
or IFC. SWFs are continuously maturing and realising
the advantages that international partnerships could
bring, in particular in developing markets, and they are
often “brought in” by Western private equity groups or
by industry-sector players. This increasing accountabil-
ity and transparency will not be something that happens
overnight, but is already a discernible process.
What are the advantages SWFs can
bring to the development of the Third
World?
SWFs are just like any other investor – they are not
a charity, and are interested in returns, reduction of risk
and capital growth. Sometimes, however, the long-term
or broader view on returns and risks that they take is cre-
ating the impression of an agenda, different from that of
other investment vehicles and organizations. Yet, at the
end of the day, the investment decisions and abilities of
SWFs depend on the specifics, nature and size of their
holdings in particular regions. Some assets are deemed
strategic, others–temporary, or a building block in a
long-term approach.
In addition, SWFs have a broader take on invest-
ment risks, due to their more long term vision and ap-
proach, and are gradually becoming more focused
on realising new opportunities in asset-backed or
more traditional sectors in less developed markets,
such as the example of recent mining investments by
SWFs in Zambia, Uganda and Liberia, or, at the oth-
er end of the spectrum, the recent investment by Diar
(Qatar) in a resort in the Seychelles. As evidenced
by the recent agreement of the SWFs of countries
like South Korea, Netherlands and Saudi Arabia to
invest $600 million in a World Bank-sponsored equity
fund for less-developed countries or the recent co-in-
vestment by IFC and Chinese funds in the development
of a 14-story office block in Dar es Salaam, Tanzania,
there is also an attraction and added prestige in working
together with multilateral organisations in frontier mar-
kets.
In what way can global economic se-
curity benefit from intensified activities by
SWFs?
As long-term investors, sovereign wealth funds could
have the potential to stabilize companies they invest
in since these funds do not live by quarterly returns.
In a way, the ultimate sovereign wealth fund is the Inter-
national Monetary Fund which combines transparency
and long-term perspective with agreed-upon stabiliza-
tion goals.
G-8 Business Declaration

G20
Summit 2010

31
 However, they have already moved beyond the
“withdraw and regroup” stage brought about by the cri-
sis, not to mention the time of the “glamour investment”,
which is over. This comes with the need for SWFs to pri-
oritize their portfolios and focus on new areas of growth,
which underlies the rationale for joining forces on an ad
hoc basis.
Firstly, SWFs have demonstrated increasing aware-
ness that their level of expertise is not universal, and find
that obtaining additional expertise via cooperation is a
viable option for them. Secondly, this allows them to
share risk and enable access to welcome co-financing,
another major consideration. Thirdly, in the crisis and
post-crisis environment, such co-operation allows them
to achieve a new level of legitimacy in markets where
they have not operated before.
In the process of cooperation, SWFs appear to be
seeking to offset any limitations or inefficiencies that they
may have in respect of specific projects by combining
with others that may have access to better “investment
tools”. It should also not be ruled out that SWFs would
also join forces like other traditional market players in
order to achieve better transaction returns.
Significantly, SWFs could expand their contribution
to global economic security and stability by contributing
their long-term outlook. According to Ashby Monk of
the Oxford SWF Project, “these funds... have intergen-
erational time horizons that grant them a unique ability
to consider risk factors not priced in today’s short-term
markets (but which will no doubt be priced in the long-
term)”.
Down the line, SWF partnerships can enable state-
owned funds to optimize local knowledge, leverage cap-
ital, spread investment risks and maximize returns. They
could also create a bigger, more diverse and transpar-
ent entity, whose long-term investments—often holding
assets for years—might help stabilize global markets.
What are the future prospects for SWFs?
Growth for SWFs would predominantly depend on
two things—the support of their governments and their
own investment strategies (and how successful they
are). The SWFs that are largely dependent on their gov-
ernment financing their activities (for example, from oil
or other natural resources revenues) will experience a
reduction in new capital inflows, but that effect will not
be fully translated from the price of oil to the growth of
the funds.
SWFs, as can be seen by the competition between
India’s ONGC and CNOOC in Uganda, face the same
risks as any other market players—both systemic mar-
ket risk, and non-systemic political, legal, commercial
G20 and other forms of risk, and are subject to the need
Summit 2010
32
to maximize return for their shareholders, where gov-
ernments are often less patient than private investors.
However, as indicated by Andrew Rozanov of Permal
Group, who is credited with having coined the term
“sovereign wealth funds”, the priorities and mandates
of SWFs can bring forth a number of inherent contra-
dictions, due to the divergence of their targets. These
targets, which focus on stabilization, long-term savings
and economic development at the same time, “push
in opposite directions”. In turn, this implies that these
priorities may sometimes be in opposition and work at
cross purposes, which could affect the performance of
SWFs.
Those funds that invested in producing assets be-
yond oil will be able to enjoy whatever spurt of growth
other industrial sectors enjoy, or they will be able to
minimize the negative effect of the oil price on their
funding via diversification of their investments. Another
point that needs to be taken into account is the fact that
SWFs would more and more make their investments
with a more long-term strategy than private equity firms
– the government of China for example will eventually
benefit from the acquisition of oil producing assets even
if the price is low, because that would provide them with
sufficient flexibility to satisfy their own energy demand in
boom times and sell the surplus on the market in “lean
times”. And the revenue of the government from the
products which the country was able to produce using
the extra oil supplies will eventually find its way to the
SWFs.
What are the potential pitfalls to SWFs’
future role in the global economy?
SWFs are part of the market, and the market will
inevitably have its say. As pointed out by Edwin Truman
of the Peterson Institute for International Economics,
whose work inspired the Santiago Principles governing
SWF conduct, sovereign funds are not immune to or be-
yond the effects of global economic cycles, such as the
worldwide financial and economic crisis. Irrespective of
whether or not the shareholders are private individu-
als, institutions or governments—the balances are the
same, so are the requirements of creditors. In practice,
the notion that SWFs are “more patient” than private in-
vestors does not really hold water. SWFs often face the
same horizon as other market players, and are subject
to the same exigencies—they need to maximize return
for their shareholders, and governments could be even
less patient than private investors.
Where a difference may arise is in that SWFs tend
to be in a stronger position than other investment com-
panies to withstand the pressure of market fluctuations
and “stick” with a specific investment. Size and sov-
ereign support can get you only so far, and the market
pressure will eventually tell, so success for SWFs would
often depend on whether or not they are aware of the
market trends and comply with market realities.
 G20
Summit 2010

33
 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-
mit.

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.

G20
Summit 2010

34
 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.

G20
Summit 2010

35
 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.
G20
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 Recipe for Global Economic Recovery
By Monique Danziger
There is a disconnect in the current dialogue about
economic development and poverty alleviation. For de-
cades the paradigm of development work has been to
send aid money. Despite the global financial crisis, Of-
ficial Development Assistance has continued to grow
with 2009 ODA levels being the highest to date. De-
velopment achievements, on the other hand, have been
below expectations with many countries pushed into
worse poverty as a result of the economic crisis.
The answer to this is nothing mysterious or com-
plex. Every year the developing world loses $1 tril-
lion—ten times the amount that goes in as development
aid—to corruption, trade mispricing, and tax evasion.
This money flows abroad into the global financial sys-
tem ending up in Swiss bank accounts, Western nations
like the U.S. and UK, and sometimes even makes head-
lines when used to buy exorbitant, flashy luxury goods
like mansions in Malibu or fleets of Bugatti sport cars in
Paris.
Looking more closely at some of the nations and
regions involved has yielded stark and highly-compelling
ratios of diminishing returns:
Analysis of data from 1970 through 2008 found that
Africa had lost $854 billion in cumulative capital flight—
enough to wipe out the region’s total outstanding debt
but leave $600 billion for poverty alleviation and growth.
In the case of Nigeria, this has the dubious distinc-
tion of leading other African nations in terms of total illicit
capital loss at $240 billion from 1970 to 2008. ODA
to Nigeria from 1970 to 2008 was a tenth of what the
country lost; $26 billion in aid compared to $240 billion
siphoned out.
A forthcoming Global Financial Integrity (GFI) report
on India finds that illicit capital flight totaled $125 billion
from 2000 to 2008. The report finds that “hidden ac-
cumulation of wealth” was one of the primary drivers of
India’s illicit capital flight, with much of the money ending
up in offshore financial centers.
Recognition of the problem of illicit capital flight is
slowly but surely growing. The G20 has pledged to
tackle illicit financial flows; the World Bank and OECD
have noted the crucial nature of finding solutions to the
problem. Key to success in this area will be connecting
the dots.
While flashy, Bugatti-driving kleoptocrats and narco
kingpins tend to garner most of the blame for moving
G20 dirty money. But complicit international financial insti-
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tutions and Western nations are essential to the illicit
capital flight process. Nigerian anti-corruption crusader,
Nuhu Ribadu, once remarked that a plane never takes
off without a place to land. Such is the case with these
hundreds of billions in dirty money.
The proof of the cooperation is indefatigable, de-
spite the shadowy and furtive nature of the game. A
recent Global Witness report found that several High
Street banks in London, including Barclays PLC, HSBC
Bank PLC, Royal Bank of Scotland, NatWest (owned
since 2000 by RBS) and UBS AG had allowed two Nige-
rian state governors, Diepreye Alamieyeseigha of Bay-
elsa State and Joshua Dariye of Plateau State, to open
accounts and deposit illicit funds from 1999 to 2005.
Leading up to Seoul, a coalition of civil society
groups including ONE, Oxfam America, Global Financial
Integrity, and Global Witness conducted high-level meet-
ings and collected signatures to advocate for a strong
United States position on ending the era of banking
secrecy and pushing for greater transparency and ac-
countability in global finance.
The coalition recommended specific measures, in-
cluding formally recognizing the links between illicit out-
flows of capital from developing countries, absorption
of those resources by tax havens and financial institutions
in international financial centers, and the adverse impact
those flows have on poverty alleviation and economic
development.
Establishing these links will help lead to bigger-pic-
ture thinking and holistic policies that will fit the systemic
nature of the problem. A global financial system that
is transparent and accountable would cut the flow of
illicit funds off at the knees. Measures to this end in-
clude requiring disclosure of beneficial ownership of all
companies, trusts, foundations and charities, country-
by-country reporting of profits earned and taxes paid by
multinational corporations, and harmonizing predicate
offenses for money laundering.
In terms of fostering sustained and robust global eco-
nomic recovery, the health and wealth of the developing
world is a critical factor. Creating economic growth and
improving governance in the developing world is essen-
tial to a stable and healthy global economy.
This is not rocket science, it is a matter of political
will. There is perhaps no better multinational body to
carry forward the endeavor to create a global financial
system that is transparent and accountable than the
G20 nations.
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 Living Responsibility
By Rainer Wend
What do customers expect from their service pro-
vider in the next 10 or 20 years? What are their needs
and expectations? Customer behavior changes con-
stantly and this trend will increase in the years to come
with climate change, the Internet and ongoing globaliza-
tion as key drivers. In addition, not just customers, but
employees and investors as well will focus even more
on the social behavior of major companies that do busi-
ness around the world, impacting the environment and
societies in which they operate. Corporate responsibil-
ity means combining business success with social and
environmental responsibility.
Deutsche Post DHL is the world’s leading mail
and logistics company with some 500,000 employees
around the world. For our Group, market leadership
brings with it a special responsibility to use our core
expertise in logistics and our worldwide presence to
benefit society and to continuously minimize the com-
pany’s impact on the environment. For Deutsche Post
DHL, corporate responsibility means living responsibility
and the global player can rely on its employees and their
know-how, talents and passion to do just that. “Living
Responsibility” is therefore the motto for our corporate
responsibility strategy.
Our corporate responsibility (CR) approach is an
integral component of our long-term business strategy
because we believe that business success and corpo-
rate responsibility go hand-in-hand. As a global service
provider and one of the biggest employers in the world,
it is very important to know what the expectations of
customers and employees are. This is why Deutsche
Post DHL asked customers, experts and scientists last
year about the major issues of the years to come. The
results were published in the 2009 Delphi Study “Deliv-
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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
the world. With GoHelp the Group uses its global pres-
ence and its expertise in logistics. The program focuses
on disaster management and entails a two-fold ap-
proach: disaster response and disaster preparedness.
In cooperation with the United Nations, two programs
provide support to countries in need free of charge.
When a natural disaster hits our DHL Disaster Re-
sponse Teams (DRTs) are mobilized. Initiated in 2005,
the disaster response program has proven to be an im-
portant support in tackling logistical problems that arise
at the airports closest to disaster zones. When earth-
quakes, cyclones or flooding have devastated a region,
help usually comes from the international community
with international aid workers and relief goods flying into
regional airports. The regional airports are quickly con-
gested by the food, medical supplies and tents arriving
from all over the world—all of which are urgently needed
in the field. Very often there is no set disaster plan on
how to manage such situations. This is where the DHL
Disaster Response Teams come in to solve the bottle-
neck, cooperating closely with the UN Office for the Co-
ordination of Humanitarian Affairs (OCHA).
The DRTs consist of approximately 200 employee
volunteers worldwide who are specially trained to handle
the challenges on the ground. The DRT members use
their extensive logistics expertise to help manage the
logistics of disaster relief goods arriving at the airports.
Together with local authorities and airport staff, they take
care of incoming relief goods, set up and manage pro-
fessional warehousing, including the sorting and inven-
torying of goods. We have three DRTs in place, covering
the world’s regions most vulnerable to natural disasters:
DRT Americas in Panama, DRT Middle East/Africa in
Dubai and DRT Asia Pacific in Singapore. The teams
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-
gether with the United Nations Development Programme
(UNDP). Piloted in 2009, the program was built around
the need to prepare governments, people and airports
before a disaster strikes. GARD is a supportive initia-
tive in making worldwide relief efforts more effective.
While the DRTs use the company’s expertise in logistics,
GARD is a training program for local airports in potential
disaster areas designed to enable local authorities and
airport staff to better cope with such situations. DHL
trainers work with airport personnel on reviewing airport
capabilities and capacities, understanding coordination
requirements, and helping formulate contingency plans
and coordination structures. Deutsche Post DHL has al-
ready successfully piloted the program at the Makassar
and Palu airports in Indonesia.
Environmental Protection with GoGreen
GoHelp is just one pillar of our “Living Responsibility”
approach. The GoGreen environmental protection pro-
gram is a lighthouse example in the logistics industry.
It was founded to minimize the environmental impact
of the Group’s core business of logistics services and
transportation (particularly road and air transport). With
GoGreen Deutsche Post DHL has set itself ambitious
targets with a focus on CO2 emissions as an important
environmental factor in the logistics and transportation
industry. By 2020 the Group aims to improve the car-
bon efficiency of its own business activities and those
of its subcontractors by 30 percent. In other words, the
carbon footprint per item shipped, ton kilometer trans-
ported or square meter of space used is to be cut by 30
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
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 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
personal development and skills. GoTeach also offers
employees the opportunity to volunteer in educational
projects.
Long-term Commitment
For Deutsche Post DHL, corporate responsibility
means handling assets entrusted to the company in a
respectful and sustainable manner as well as upholding
the interests of its employees, customers and investors
in benefitting the environment and society. The Group
GoGreen – Minimizing the impact of the Group’s
activities on the environment with the target to im-
prove CO2 efficiency by 30 percent by 2020.
GoHelp – Using core logistics expertise to pro-
vide effective emergency aid in areas affected by
natural disasters in cooperation with the United Na-
tions.
GoTeach – Encouraging and developing initia-
tives that support people’s education and help ex-
pand their personal development and skills.

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 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
Danish troops at Camp Bastion in Helmand Province.
Helmand is where the toughest fighting in Afghanistan
is taking place. In the midst of the tension of war I was
startled to find a teeming bazaar of small businesses
operated by eager entrepreneurs, speaking no English,
selling everything from camel whips to silk scarves,
hand-made musical instruments to hand-made piz-
zas. Through a translator one of them told me: “If all
of Afghanistan were as open to trade as this Camp is,
we could solve most of our own problems.” It was an
inspiring reminder of the power of capitalism, fueled by
entrepreneural innovation, to overcome the diplomatic
and economic crises of the day.
Governments rarely look to the business commu-
nity for guidance to solve economic challenges, more
often blaming business for those challenges. Hope-
fully, G20 leaders will actively listen to the world’s top
business leaders when business gathers for the first
ever G20 Business Summit convening in Seoul just
prior to the official G20 Conference.
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The G20 Business Summit is being organized by a
host committee that includes the major business asso-
ciations of the region and will be attended by the chief
executives of dozens of the world’s leading companies;
from Deutsche Bank and HSBC to ArcelorMittal, Li &
Fung and Microsoft.
Given that the G20 has gained stature as a criti-
cal forum for policy collaboration in addressing global
economic issues, it is appropriate for the business
community to seek to influence G20 gatherings. It is
important, however, that business gets this role right. It
must view such forums as an opportunity to be force-
ful advocates for innovation and free market principles.
Anything less will lead to such business summits be-
coming platforms to serve governmental agendas and
create political photo ops.
What role should the G20 Business Summit under-
take? It should voice the interests of the free market,
provide experience-based guidance on issues under
review by the G20, and illustrate proposed policies’ im-
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
regulation, eliminating disincentives to investment, and
reducing taxes, particularly for new businesses.
In addition, the G20 Business Summit should re-
view the pro-business policies of those governments
who seem to be moving out of the recession faster
than others. Canada, which is emerging from the re-
cession much more rapidly than almost every other
G20 member, is a good example.
Since the global recession began, Canada has im-
plemented a broad array of free market tax and trade
policies, eliminating, for example, tariffs on 1,755 dif-
ferent types of machinery and equipment and reducing
its corporate tax rate from 21 percent in 2008 to 15
percent by 2012. Canada’s marginal effective tax rate
is now two points below the OECD average and capital
is flowing in.
Finally, the G20 Business Summit should specifi-
cally measure how well G20 participants are progress-
ing in meeting the key objective they agreed to at the
last G20. In Toronto this past June, the G20 agreed
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
belt-tightening, just as they know what it takes to stim-
ulate innovation and motivate entrepreneurs. Those
attending the G20 Business Summit should take
the opportunity to share those experiences. Let’s hope
the elected leaders who arrive in town a few days later
will listen.
Ambassador James P. Cain served
as U.S. Ambassador to Denmark
from 2005 to 2009. Prior to diplomatic
service, he served as President
and COO of the NHL Carolina Hur-
ricanes, as a partner in the interna-
tional Law Firm of Kilpatrick Stock-
ton, and founded and Chaired
numerous civic and business en-
terprises. Named North Carolina’s “Business Leader
of the Year” in 2002, Cain promoted entrepreneurship
and innovation as tools of diplomacy during his overseas
posting. Through Kilpatrick Stockton and Cain Global
Partners, LLC he now provides legal and strategic ad-
vice for international firms seeking U.S. expansion and
U.S. firms broadening their international operations. G20
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 Globalization and the Modernization
of Financial Executives
By Marie Hollein
Global CFOs and treasurers have moved beyond
their financial ”traffic cop” role of the past century to
become global financial strategists, senior risk manag-
ers and partners to the company board of directors and
audit committee. The globalization of business has been
the main driver of this transformation by shifting mar-
ketplaces and financial markets. It’s also spawned chal-
lenges and complexities with varying accounting stan-
dards, foreign exchange rates, country-specific taxation
systems and tax rates. Furthermore, engaging with poli-
cymakers, standards setters and regulators worldwide
has become “business as usual,” since international or-
ganizations are greatly dependent on successfully navi-
gating myriad policies and regulations.
In the early part of the twentieth century–with the
United States then at the doorstep of unprecedented
economic upheaval–company financial leaders were en-
trusted primarily with two basic tasks: accounting and
control.
Nearly eight decades later, with the U.S. and the
world having withstood the Great Depression, the great
recession and many smaller but still damaging reces-
sions, the role of the chief financial officer, corporate
treasurer and company auditor looks nothing like that
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earlier model.Today’s financial executive is equal parts
global financial strategist, senior risk manager and in-
tegral partner to the company’s board of directors and
audit committee.
The globalization of business, particularly over the
past few decades, has been the main driver of the fi-
nancial executive’s added responsibilities, by shifting
marketplaces, financial and capital markets and lead-
ership. It’s spawned a raft of challenges, complexities
and complications–some of them welcome, and others
decidedly not.
High on the list of complexity are the varying
accounting standards, foreign exchange rates, country-
specific taxation systems and tax rates that differ dra-
matically from one country to the next.
From an accounting standpoint, the U.S. continues
to operate through the application of its own generally
accepted accounting principles (GAAP), but American
regulatory authorities and businesses are considering
converging with International Financial Reporting Stan-
dards (IFRS). More than 100 countries currently require–
or permit–the full or partial use of IFRS and the U.S.
Securities and Exchange Commission is studying if, how

and when the global standards might be formally adapt-
ed for use by U.S.-based corporations. Such a move is
unlikely before 2014, at the earliest.
Some of the managerial and operational changes
wrought in this era of remarkable global growth and
business integration are well-embedded: the hiring of
foreign nationals to run country-based operations, re-
gardless of the headquarters of the particular corpora-
tion, is one. The move from fragmentation to economic
harmonization (as evidenced by the creation of the Eu-
ropean Union) is another. That’s as much smart busi-
ness as enlightened operating philosophy.
What this means in terms of the corporate finance
function is still unclear, as that chapter is still unfolding.
Add to the mix passage of the Sarbanes-Oxley Act of
2002–which dramatically changed the American cor-
porate accounting function–and recent corrective mea-
sures imposed in the U.S. and several troubled European
capitals, and it’s clear the position of CFO and corporate
treasurer is undergoing transformative change.
Financial Executives International has been charting
the growth and expansion of the finance function in the
U.S. and internationally since 1931, when the associa-
tion was created as the Controllers Institute of America
by 30 senior-level financial executives who stepped up
to assist the government in trying to help revive the
economy.
It was an unprecedented environment, with high un-
employment levels, emergency government bank loans,
rampant business failures and a sense of deep anxiety,
even paralysis, pervading the capital markets. There are
more than a few similarities to what the world has wit-
nessed since 2007.
The enactment in 1933 of the Glass-Steagall Act
(legislation widely known at the time as the “Banking
Act”), and the 1934 formation of the SEC, more strongly
regulated American business and built a firewall be-
tween commercial and investment banking. The recent
enactment of the most significant legislation since 1934,
the Dodd-Frank Wall Street Reform and Consumer Pro-
tection Act, adds a plethora of rules and regulations to
those already in force.
That original small group of 30 is now 15,000 and
the organization’s name has been changed to Financial
Executives International, representative of its global con-
stituency and a reflection of the maturation of the role
and influence of the CFO, a title that started to take hold
in the 1960s. With more counterparts in every corner
of the globe, members are now engaging–connected
to markets and peers–through networking and dialogue
in real time.
FEATURE
Besides colleagues, engagement with policymak-
ers, regulators, standards setters and legislators world-
wide has become part of “business as usual” for financial
executives, particularly those in multinational organiza-
tions. The success or failure of international business or-
ganizations is greatly dependent on the effect of policies
and regulations and an ability to navigate them.
As the global financial world has become more
complicated, mastering it has become equally difficult.
That’s where the expanding responsibility and input of
the financial function on a global basis is so crucial.
Clear, consistent strategic plans, risk management and
financial guidelines must be adapted by internationally-
operated businesses, whether large or small. The senior
corporate finance official needs to have the resources
to ensure that finance across country borders and con-
flicting tax and regulatory systems meets standards of
consistency and operational excellence.
Technology has made the world so much smaller
and far more interconnected. As financial measurement
tools continue evolving to meet rising international de-
mands, global financial officers must keep on top of this
new technology and demonstrate a capacity to apply
it effectively and efficiently to growing business needs.
But global financial management isn’t the only con-
cern of modern financial executives. They must also as-
sert managerial control over the intellectual and human
capital management in an international enterprise. Vary-
ing workplace cultures, conditions and structures make
achieving a globally coherent, optimal performance more
challenging. It’s these often intangible assets that will
be more complex and more difficult to identify, manage
and make attractive as a business investment to poten-
tial shareholders.
For nearly 80 years, FEI has been monitoring the
global business and financial environment and is com-
mitted to continuing its vigilance for the next 80 years
and beyond. To be sure, businesses must create value
to draw the capital of investors and keep shareholders
happy. How the finance and accounting functions adapt
to these evolving needs will be critical in determining to
what heights the global financial executives can aspire.
Marie Hollein is President and
CEO of Financial Executives
International (FEI). Previously,
she was a managing director
of Financial Risk Management
for KPMG, where she led the
firm’s treasury practice.
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 The Beginning of History?
By Uddipan Mukherjee
The world is facing a multitude of problems. Chief
among them are the financial crisis and Islamist funda-
mentalism. In this backdrop, a few pertinent questions
are: Will liberal-democracy remain the only form of po-
litical economy for the future? Are communism and mili-
tant nationalism totally dead? In the November Summit,
it becomes imperative for the G20 leaders to follow a
holistic approach in solving the pressing problems of the
day whereby they can begin history.
In September, the Washington-based Brookings
Institute released a paper on ‘governance studies’ by
William A. Galston and Maya MacGuineas. The authors
expressed concern that the federal budget is on an ‘un-
sustainable’ trajectory. Public Debt is about 60 percent
of the Gross Domestic Product (GDP). According to the
authors, by 2011, the ratio is projected to go up by 1000
basis points.
And alarmingly, it can skyrocket to 109 percent in
the 2020s. It is time the U.S. Federal Reserve and the
policymakers to fasten their seat belts as a Public Debt
to GDP ratio beyond 100 percent reminds us of the Sec-
ond World War. Simply put, the money owed by the
federal government of the United States is in dangerous
proportions to the net output of the country.
One of the obvious reasons for the aforementioned
scenario has been the recession that the U.S. faced
since its housing bubble burst. Global interconnected-
ness in a post-1991 world led to a rapid proliferation of
the same.
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To add, a more recent Euro Crisis is also directly
linked to a ballooning Public Debt. It ultimately paved
the way for a bankrupt Greece. Countries like Latvia,
Lithuania and Estonia, which pegged their currencies
with the Euro, also suffered significant damages. Now,
interestingly, the U.S. recession is ascribed to a ‘lack of
prudent intervention’ by the Federal Reserve which led
to a fragile banking system. On the other hand, seri-
ous fiscal mismanagement is considered to be a major
reason that exacerbated the crisis in Greece and other
‘sick’ countries of Europe.
In any case, it is affirmed by most analysts that rising
Public Debts, compounded by a huge liquidity are the
major financial problems faced by the nations of today.
Are these features a discernible signature of decay
of the philosophy of free market and its political acolyte;
the Western liberal democracy? If such a thesis is ac-
ceded to, then what happens to Francis Fukuyama’s by
now historical assertion of 1989: “What we may be wit-
nessing is not just the end of the Cold War, or the pass-
ing of a particular period of postwar history, but the end
of history as such: that is, the end point of mankind’s
ideological evolution and the universalization of Western
liberal democracy as the final form of human govern-
ment.”
On the flip side, are these financial disruptions mere
periodicities of crests and troughs and we are just wit-
nessing a temporary nadir of such a curve? At least,
neo-classical economists would vouch for the latter.

Naturally, questions which perturb us at this criti-
cal juncture are: In the future, will Western liberal de-
mocracy survive as a form of political economy? Will the
‘newly poor’ of the North be able to keep their hold over
the ‘newly rich’ of the South? Will the ‘other’ strands of
ideology like that of Communism or Militant Nationalism
be won over by the equations of supply and demand?
Nevertheless, at least in the foreseeable future, it
appears unlikely that there shall be a re-emergence of
Communist chauvinism or National Socialism in Inter-
national Relations. However, that does not necessarily
mean that those ideologies are ‘dead’ as Fukuyama
may force us to believe. There are internal contradic-
tions within the liberal-capitalist system and these may
magnify in the form of reactionary regimes or ultra-leftist
movements.
Interestingly, even the Developing World would ex-
perience such instabilities; both in the political and social
domain. In essence, globalization seems to have im-
planted a “First” World inside every “Third” World while
the former continues to possess an egotistic worldview.
Strategically speaking, the world shall chart a path
of counterinsurgency for some time to come. There will
be an inevitable struggle of narratives between a “First”
World (dominated by the U.S.) and a “Third” World (of
Colombia, Sri Lanka et al). However, that is not likely to
suppress any alternative measures adopted by emerg-
ing powers like China in Xinjiang, India in its ‘red corri-
dor’ or a re-emerging Russia in the Caucasus.
That an economic turmoil has strategic repercussions
cannot simply be discredited as facetious. However, the
world is definitely not exhibiting yet another apocalyptic
‘power block’ arrangement so as to engender a war.
Rather, we are more accepting of the premise of non-state
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.
FEATURE
However, by all means, International Relations shall
find itself in a cobweb of environmental, socio-econom-
ic, political and religious problems. Nation-states are
likely to keep on facing volatile security issues, both of
domestic as well as of transnational nature. The eco-
nomic backbone of organizations like Al Qaeda and
Taliban needs to be broken. Otherwise, the challenges
from their side can turn out to be grave.
In this light, it becomes imperative to posit a counter-
argument to Fukuyama that International Relations, as
it stands today, is just not preoccupied with only eco-
nomics. Politics and strategy have not taken back seats.
Sino-India bilateral relation is a glaring example in this
regard as a voluminous trade is unable to assuage the
political climate.
Thus, when the G20 leaders meet in Seoul this No-
vember; they would have to contemplate on a spectrum
of issues ranging from fiscal stimulus to currency ex-
change rates to carbon trading to international security.
They have the chance to begin history; by a holistic
synthesis of the North with the South. They have to
engineer adroitness through novel instruments. A peer-
reviewed format to manage future malfunctions in the
banking system is one such.
The undercurrent of contradictions in the liberal-
capitalist system has to be properly evaluated and pre-
ventive measures ratified. A blind adherence to the ide-
ology of end of history may be ahistorical.
Uddipan Mukherjee has a doctoral degree from the
Tata Institute of Fundamental Research, under the De-
partment of Atomic Energy, India. He writes on strategic
issues concerning international security and is a regular
contributor for the Diplomatic Courier magazine.
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 The Mother of All Ponzi Schemes
By Rami Turayhi
Have we been duped? As a layman and relative
Wall Street outsider, the more I read about the opaque
financial world in New York City and in other major in-
ternational financial centers, the less convinced I am
that much of what Wall Street does today has any real
meaningful macroeconomic purpose. A bird’s eye view
from Main Street might lead an outside observer to call
some of what made Wall Street titans fabulously wealthy
over the past decade a “Ponzi scheme”: the majority
of Americans have been robbed blind, with the United
States and the rest of the world hardly better off than at
the turn of the century.
Capitalism. Efficiency. Productivity. These are
prized words in American culture, and I am a firm believer
in all of them. A quick trip to any U.S. Post Office–which
often ends up being anything but quick–always serves
to reinforce my devotion to the principles of market ef-
ficacy and incentivized productivity. Despite this, there
comes a point at which one wonders whether unbridled
capitalism has an all-too-nasty side-effect: productivity
becomes a codeword for greedy, self-interested gain of
the “part” at the expense of the “whole.”
Perhaps a short story will help to explain my am-
bivalence about 21st century capitalism in the financial
world. Back in 2006, when I was a first-year invest-
ment banker at a major Wall Street bank, I was the ju-
nior member of what I believed to be a cutting-edge
investment banking team devoted to alternative energy
companies and products. At the time, we were heavily
focused on companies that produced corn-based etha-
nol. With the stock market in full, bull-market swing and
with energy prices on the rise, bankers up and down
Wall Street were jetting off to rural farmsteads across the
Midwest and Great Plains, hoping to pitch their big-city
ideas of easy money and quick profits to farmers and
rural cooperatives.
G20
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In theory, none of this was a bad thing. Wall Street
had “discovered” a (sort of) new, profitable venture, and
those lucky enough to have the expertise and resources
to devote to this field were to become the overnight fi-
nancial beneficiaries of their good fortune. There was,
however, one problem: corn-based ethanol had little fu-
ture potential in the marketplace, and anybody with half
a brain knew it.
Indeed, after making some quick, back-of-the-en-
velope calculations that pitted the amount of corn pro-
duced in the United States against what was presumed
to be the minimum demand requirements for this gaso-
line additive and potential gasoline substitute to take off
economically, I was startled to find out that–even putting
aside the negative life-cycle energy and water conse-
quences of producing corn and the various costly do-
mestic subsidies that sustain the crop–there was simply
no way that corn-based ethanol would have any lasting
positive impact on the gasoline market. Stunned by this
simple deduction, I took the information to my boss, a
Vice-President at my bank and the man spearheading
the ethanol charge for our group. Rather than hear an
explanation from my elder as to why my numbers were
wrong or how I had overlooked a crucial element, his
blunt answer–which I have paraphrased here for de-
monstrative purposes–nearly took the wind out of me:
“Yeah, I know that already.”
After pressing my boss to explain himself, he went
on (again paraphrasing for demonstrative effect): “Look,
I know that corn-based ethanol is ridiculous and has no
real future, but get this. I am going to make a ton of
money IPOing these Midwest farmers’ companies, and
when they go bankrupt, I’ll make more money selling
them off to other investors and funds and merging what-
ever companies remain.”
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-
 FEATURE

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
sector.
The solution, however, is not merely more regula-
tion, but rather a better set of effective legal tools that
allow regulators to oversee and stop activity that is
harmful to American society on a net basis. In other
words, regulators need to be granted authority to as-
sess where the risks heavily outweigh the potential in-
cremental individual gains in the banking industry, while
leaving certain activity–for instance, much of the trading
that small- and medium-sized hedge funds do–to the
rigors of the free market to sort out: a so-called “com-
mon sense” approach to regulation. It also wouldn’t
hurt to pay vital actors in government regulatory bod-
ies a more reasonable salary; it is quite difficult to retain
top talent when the incentives are so heavily skewed
towards joining the “regulated” rather than the “regula-
tors.”
The aforementioned are but a few of the problems
and solutions that plague Wall Street today, but I believe
that they are indicative of the general crux of the dilem-
ma: how to allow Wall Street to effectively and efficiently
allocate capital to American businesses and create a
more vibrant marketplace without strangling the innova-
tive rigor and capital flows that set the United States
apart from many other nations. The key appears to be
effective, not necessarily more, regulation, in conjunc-
tion with a common sense that sorts out the systemi-
cally hazardous from the merely risky. While greed and
self-interest are inherent to the human condition, U.S.
policymakers ought to be smart enough to find ways
to inhibit the worst kinds of excesses in order to let the
creative, productive elements of American society flour-
ish. Rather than act as a giant casino or Ponzi scheme,
it is high-time that Wall Street function as the more far-
sighted, compassionate, and generous uncle of innova-
tion. The future of America–and much of the rest of the
world–depends on it.
Rami Turayhi is a graduate of Columbia Law School
and a former investment banker at a major Wall Street
bank.

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 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
Economic Research (NBER) announced that, in techni-
cal terms, the recession provoked by the financial crisis
had ended in June 2009. To many American people,
however, the crisis is far from over. Unemployment re-
mains stubbornly high, a sense of job precariousness
is spreading and income inequalities are on the rise. In-
deed, the crisis will not be overcome until these imbal-
ances are tackled.
To achieve this, it is crucial to avoid rapid cuts in
government spending, and, more fundamentally, to
boost domestic demand in surplus countries like China
and Germany. This article shows how it can be done and
provides estimates of the benefits of such sustainable
exit strategies.
The first remedy–fiscal stimulus–is motivated by the
fact that the private sector has not acquired sufficient
dynamism yet. In the face of high unemployment, the
private sector across several large advanced economies
continues to withdraw spending. Sustained resumption
of growth therefore requires further fiscal support, rather
than immediate reduction of fiscal deficits.
True, U.S. government deficits increased substan-
tially, primarily due to “automatic stabilizers,” such as
reduced tax revenues and increased social insurance
payments following the contraction of GDP. The political
pressure to reduce the deficit–$1.6 trillion in absolute
terms and almost 11 percent relative to GDP in the sec-
ond quarter of 2010–is immense, even in the face of an
unprecedented increase in both the level and duration
of unemployment. Further, it is often said that the U.S.’s
profligate ways have to change, that saving rates need
to increase. Otherwise, the argument goes, the external
deficit cannot be corrected. Reducing government defi-
cits is one way to address the twin public and external
deficits.
However, the build-up of the U.S.’s external deficit
largely coincided with increased private indebtedness.
The private sector is, of course, frantically trying to lower
its debt levels, so that without increased net exports or
higher public borrowing, unemployment will continue to
rise. A recent study–discussed in more detail in this year’s
World of Work Report of the ILO’s International Institute
for Labour Studies (IILS)–confirms these insights. Cur-
tailing U.S. public borrowing relative to GDP by two per-
centage points reduces the external deficit. But it does so
at a substantial cost. The unemployment rate increases
G20 by three percentage points. Moreover, the trade deficit
Summit 2010
56
improves not because of higher exports, but largely be-
cause of lower imports. The demand contraction affects
other economies, particularly NAFTA-partners. There
are simply no benefits to public deficit reduction in the
midst of a fragile recovery.
The second policy plank involves a combination of
higher wages and stronger currencies in surplus coun-
tries. An appreciation of Asian currencies like the Chi-
nese Yuan would make U.S. products more competitive
in these markets, and shift production toward the hard-
hit manufacturing sector. In Asia, production would shift
toward domestic goods and services, further deepening
national markets and regional economic linkages. Why
is this not happening? The IILS study suggests that over
the next year, a nominal exchange rate revaluation in
China would lead to a significant increase in unemploy-
ment of about one and a half percentage points. While
it can be expected that improved competitiveness will
help rebalancing over a few years, and will have positive
effects both on the U.S. and surplus Asia, it is a diffi-
cult political option to pursue. What else can the region
do to aid global rebalancing without endangering
recovery? Higher wages and higher social spending
can have two immediate positive effects. First, it would
provide a direct stimulus to the domestic economy.
Such spending increases the share of nontraded activity
and hence aids rebalancing. Second, increased spend-
ing on social services reduces precautionary savings of
low- and middle-income households. Likewise, policies
to support labor incomes can support domestic growth
and help rebalancing.
There is a time dimension as well. Further fiscal
support is necessary to buffer the short-term negative
impact of private sector deleveraging on output and
employment. The emphasis on sustainable industrial re-
lations, labor income growth and improved social safety
nets will provide a longer-lasting effect on demand, out-
put and jobs. Indeed, a degree of international policy
coordination is necessary, notably through the G20, to
avoid free riding and improve overall outcomes. How-
ever, experience with the bank bailouts at the start of
the crisis shows that such coordination is possible. Ac-
tion is all the more needed because what is at stake is
the well-being of many people and, beyond that, social
cohesion itself.
Raymond Torres is Director of the International Insti-
tute for Labour Studies, ILO in Geneva, Switzerland. Ru-
diger von Arnim is Assistant Professor of Economics at
the University of Utah, in Salt Lake City.
 Back to the Future? China’s Sea of Foreign
Exchange Reserves is Not New
By David Schneider
China opens its economy, accumulates massive
surpluses and immense stores of hard currency re-
serves. Western powers push for further opening and
reform to reduce global imbalances as they begin to
affect other major economies. Trade friction builds…
The year 2010? No, 1793, the year King George III sent
Lord George Macartney as an envoy to the Qianlong
Emperor to request normal diplomatic and trade rela-
tions.
In many ways the main features of China’s growth
and rise are not new. The massive accumulation of sil-
ver in the Ming and Qing dynasties appears to be re-
emerging with Beijing’s present accumulation of foreign
exchange reserves, primarily U.S. Treasury bonds. The
trade practices that led to these global imbalances are
different in form, but quite similar in their underlying
meaning and result.
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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-
tablished 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 inter-
national relations. The ensuing clash between the Brit-
ish and Chinese empires led eventually to the Opium
Wars of the mid-nineteenth century.
China subsequently dropped out of the world
economy as it became engulfed in civil wars and inva-
sions by foreign powers, ending only with the establish-
ment of the People’s Republic of China in 1949. The
Communist government immediately reoriented the
Chinese economy toward the Soviet Union, and in
another radical shift Mao Zedong pulled the country
into near autarky beginning in 1958. It was yet another
twenty years before China would again open to the
world.
In the 1980s Deng Xiaoping moved to integrate
China’s dynamic export potential into global trade and
 FEATURE

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

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 Dollar Diplomacy Revisited
By Ken Weisbrode
Commercial diplomacy is as old as diplomacy itself.
Some of the first treaties dealt with trade; some of the first
“overseas” settlements were trading entryports; some
of the greatest empires began as commercial enter-
prises.
It is customary to consider commercial diplomacy
as subordinate to “great power” relations, and to grand
narratives of war and peace. But throughout most of
human history, commerce was the normal interaction
among people from different places. The interpenetration
of goods, markets and the whole variety of commercial
activity is a long standing historical fact.
Today’s global economy, like its predecessors, is not
self-governing. Norms, institutions, laws and treaties
give it structure and standards. This has been true to
such an extent that some optimists have argued on oc-
casion—since the 18th century, in fact—that commerce
can buttress peace. Trade is usually said to follow the
G20 flag, but it also happens the other way around. So too
Summit 2010 with peace.
60
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
politics.
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-
alized nations. Later this became the G8 and now there
is the G20.
The agenda of these gatherings is now so broad,
and the numbers of attendees so large, that it is a won-
der anything meaningful can be accomplished there.
Certainly the meetings bear little resemblance to their
1970s predecessors, although even by the end of that
decade the summits required professional “sherpas” to
guide them.
It is on this lower level of interaction—sherpas and
deputies and their non-governmental counterparts—
that global governance, or what used to be called world
order, is hammered out and negotiated on a more or
less permanent basis. The work can be tedious. But
the alternative—to dollar diplomacy, and to peace—is in
nobody’s best interest.
The author is a historian at the European University
Institute in Fiesole, Italy and the author of The Atlantic
Century (Da Capo).
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 A Curious Camaraderie:
Beijing’s Abiding “Friendship” With Pyongyang
By Paul Nash
In Jilin Yuwen Middle School, under the protective
shadow of Beishan Mountain in north-eastern China,
155 miles from the North Korean border, there are two
curious relics that symbolize China’s enigmatic relation-
ship with North Korea.
An old wooden chair and a student’s desk are care-
fully preserved within the dreary grey walls. They have
been kept there for more than 80 years, ever since Kim
Il-sung, the first leader of North Korea’s communist re-
gime, used them from 1927 to 1929.
In 1925, Kim Il-sung crossed the Yalu River from Ko-
rea into Manchuria with his parents at the age of 13,
fleeing famine and Japanese occupation forces. He en-
rolled in the school in 1927 and there, under the tute-
lage of the Chinese historian Yan Dan, studied Marxism-
Leninism.
Before his first year was out, Kim had joined an un-
derground Marxist organization. The next year he led
demonstrations against “reactionary” teachers, as well
as anti-Japanese protests that led to his imprisonment
in the autumn of 1929.
After his release the following year, he went to
Changchun, the capital of Jilin province, to continue
his revolutionary work. He later won fame as a guer-
rilla fighter against the Japanese in north-eastern China.
When the Japanese closed in on him in 1940, he es-
caped to Khabarovsk in Russia, where he enlisted in the
Soviet Red Army, rising in rank to captain during World
War II.
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In 1945 Stalin sent Kim back to Soviet-controlled
Pyongyang, installing him at the head of a provisional
government that would become the Democratic Peo-
ple’s Republic of Korea (DPRK) in 1948. He ruled the
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
since the 1970s it has altered its core policies to jibe
with a series of successful market-style economic re-
forms initiated by Deng Xiaoping. China has embraced
greater openness, economically as well as politically, to
the point where some cadres wonder if it is beginning,
in effect, to abandon its communist agenda altogether.
North Korea’s political philosophy, by contrast, has
remained stagnant, progressively isolating its regime
from the international community while plunging the
country into catastrophic famines and economic back-
wardness.
If the Jilin Yuwen Middle School represents a shared
revolutionary tradition and the cradle of the modern Si-
no-DPRK “friendship”, it has become a curiously am-
biguous one. It was to this school that the 69-year-old
Kim Jong-il made a secretive trip in August 2010.
Met by Hu Jintao, China’s president and general
secretary of the CPC’s central committee, a slighter and
greyer Kim, aged by the effects of a stroke he suffered
in 2008, arrived in Changchun in an armoured train from
Pyongyang.
 FEATURE

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

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.

G20
Summit 2010

63

Alessandro Barberis,
President of EUROCHAMBRES
For the fifth consecutive time,
the European Members of the ‘C20
Group’ (see separate box) have
agreed on a common position for
the official G20 Summit.
Below are the main recommen-
dations from European Chambers
to political leaders meeting in Seoul,
based on the three key items that
appear on the official agenda of the
Summit.
1) ECONOMICS AND FINANCE
European Chambers recognise
the importance of ensuring sustain-
able world growth in the short-to-
medium term. At the same time,
they recognise that this can be only
achieved by consolidating public fi-
nances, ensuring adequate financ-
ing of the real economy and bringing
forward balanced financial sector
reforms.
As one of the main messages,
European Chambers call on G20
governments:
- To ensure that the imple-
mentation of the new Basel III reg-
ulations is global and rules are im-
plemented everywhere across the
G20 world, not only in Europe but also
Summit 2010 particularly in the US and Asia.
64
European Chambers’ recommen-
dations to the Seoul G20
- To steer the global economy
to sustainable growth while consoli-
dating public finances and bringing
forward financial sector reforms
which ensure the stability and sus-
tainability of the financial system
through an international framework
for reform based on a principle-
based global financial supervision
framework. Priority should be given
to ensuring adequate financial sec-
tor capital and liquidity requirements
and to developing an efficient sur-
veillance and early warning system.
- To halt the start of exchange
rates’ tensions.
- To achieve private sector-
led growth by ensuring that busi-
nesses, particularly SMEs, have
adequate and efficient access to fi-
nancing, both from banks and capi-
tal markets. Employment needs to
be fostered decisively through struc-
tural reforms and active labour mar-
ket policies.
2) DEVELOPMENT
European Chambers ask the
G20 governments in general and the
G20 working group on development
in particular, to take into account the
following:
- SME development and en-
trepreneurship are crucial areas in
improving economic development
and implementing government pro-
poor policies successfully, as well
as achieving the UN Millennium De-
velopment Goals (MDGs) and the
gradual integration of developing
economies into the global economy.
- That Chambers have a
crucial role in improving economic
performance especially by putting
in practice instruments to tackle a
myriad of constraints to business-
es. Among others, tools aiming at
stimulating transparent and effective
regulatory frameworks, promoting
business skills and training.
- For European Chambers,
aid and trade are inextricably linked
to any serious reflection around de-
velopment. If well managed, trade
can be a silver bullet for poverty
alleviation. Aid for Trade remains
the main instrument to support de-
veloping countries to expand trade
and to promote growth. In order to
maximise outcomes, however, the
way SMEs engage with trade also
requires particular attention.
3) TRADE
European Chambers are con-
vinced that international trade flows
can play a crucial role in supporting
the nascent global economic recov-
ery. This recovery must be sustained
by trade and investment facilitation
actions and policies, bringing eco-
nomic growth and jobs. European
Chambers call for national govern-
ments to:
- Speed up the negotiations
towards closing the Doha Round of
multilateral trade talks.
- Stop now the moderate, yet
persistent, trend in the introduction
of trade restrictive measures, which
now total almost 300 worldwide.
But more importantly, to remove the
ones which were introduced at the
beginning of the global economic
crisis.
- Start exploring the possibili-
ties of harmonising the existing rules
of origin of the bilateral and/or re-
gional free trade agreements signed
so far, for the benefit of businesses
and especially SMEs.
- Include the issue of raw ma-
terials in international trade agree-
ments.
 FEATURE

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

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

G20
Summit 2010

65
 International Security:
Why the World Needs to Engage With Iran Again
By Arash Aramesh
President Barack
Obama has in many
ways told the Iranian
leadership that the
United States is open
to holding talks with
Iran on important is-
sues including Iran’s
controversial nuclear
program and the
possibility of utilizing
Iranian assistance to
combat the Taliban in
Afghanistan.
Iran’s Supreme
Leader Ali Khamenei
responded on August 18 that negotiating with America
was possible provided that the United States does not
behave in an aggressive and hostile manner.
But then came President Mahmoud Ahmadinejad’s
speech at the UN General Assembly in September, call-
ing for an investigation into possible U.S. involvement in
the attacks of September 11, 2001. The West needs to
ignore the empty rhetoric of Ahmadinejad and instead
work on developing a long-term strategy in dealing with
Iran. The first step begins by directly engaging the Ira-
nian government.
Despite the anti-American rhetoric coming from the
Islamic Republic, it appears that Tehran and Washington
have publicly declared willingness for talks. It is neces-
sary to point out the many benefits that could result from
such dialogue, before another opportunity is lost. First
and foremost, despite what has been touted as con-
ventional wisdom in Washington, engaging the Islamic
Republic and helping the opposition are not mutually
exclusive.
As long as there is no dialogue with Iran, the threat
of a possible military strike against Iran’s nuclear facilities
looms large. With each passing day, Israel is growing
more worried about Iran’s nuclear capabilities and the
5+1 permanent members of the UN Security Council
have not reached groundbreaking success in a deal with
Tehran. An attack by Israel, or any other country for that
matter, would thwart any progress with pro-democracy,
pro-peace, and pro-human rights aspirations.
Once attacked, the Islamic Republic would treat dis-
G20 sidents as enemies of the state and would quash the
Summit 2010
66
opposition to a degree
that would dwarf the
brutality it displayed
in the aftermath of the
June 12 presidential
election. History has
already shown this to
be the case.
Thirty years ago, the
Islamic Republic, faced
with growing domestic
tensions and various
potent political opposi-
tion groups, was hand-
ed a most timely gift by
the ruling Baath Party
in Baghdad when Iraq’s Saddam Hussein invaded Iran.
This provided the regime with the best opportunity to
rally the crowds around the flag, decimate the opposi-
tion through execution and incarceration, and consoli-
date power.
The first decade in the life of the Islamic Republic
was defined by a war that allowed the government to
resort to the most brutal measures, including the mass
executions of political prisoners in summer of 1988, all
in the name of retaining the power necessary to fight for
victory.
With the war’s end, a new era called “Reconstruction”
was born during which the government of former Presi-
dent Akbar Hashemi-Rafsanjani focused on rebuilding a
country ruined by eight years of a bloody war. Political
reconstruction, however, did not commence until almost
two decades after Saddam first attacked Iran. Reform-
ist President Mohammad Khatami’s election in 1997 was
viewed as the beginning of an era of political moderniza-
tion. Khatami’s domestic and international supporters
were quickly disillusioned, however, once they realized
that long-lasting effects of the Iran-Iraq war, were still
very much present in Iranian society and had a direct
impact on the political equations of the Khatami era.
The reform that so many had been anticipating was ex-
cruciatingly slow as the war—a war that many in the
West had supported hoping Saddam would check Iran’s
insurrectionary brand of Islamic revolution—had set the
clock back on Iran’s political modernization for three de-
cades.
The effects of the Iran-Iraq war are still felt in Iranian
society. Today, any military strike against Iran would be
 FEATURE

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

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

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 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-
tions in Copenhagen can bear witness, what might be
called a “climate change agenda” has now rapidly crept
to the forefront of world politics. Prompted by an in-
creasing international interest in green themes, mostly
headed to the center stage of international relations by
the more and more pro-active role of transnational ad-
vocacy groups as well as by a growth in the media and
even entertainment industry attentions, this agenda now
lingers in much contemporary diplomacy. The concerns
and debates around environmental issues that now in-
form much of the priorities of the key international fora
have progressively become the everyday lingo of global
governance, and the latest G20 summit is no excep-
tion. While much of the discussion of the Group remains
focused on finance issues and the post-GFC recovery,
some environmental concerns are deemed to make
an appearance in-between growth and developmental
considerations, whether in the more classic ‘Commit-
ments’ or the ‘New Agenda’ side of the ministerial talks
in Seoul.
Yet, as the G20 might aptly demonstrate, this mount-
ing centrality of climate change unveils a broader problé-
matique international politics has only just recently come
to grasp with: the sustainability challenge. Climate is only
part of a question of endurance that calls for a pairing
of environmental and developmental policies to ensure
the survival of the species. In this view curbing global
warming represents only a step in a multifaceted agenda
targeted towards ensuring that the legacy of the present
generations is one future one will be able to tell. How can
we support the current exploding demographic rates,
or how can we best manage the declining natural re-
source pools?
This, in an age of urbanization where the city rep-
resents a quotidian experience for most of the world’s
population, means that most of these dilemmas bring
us to the unavoidable realization that global gover-
nance solutions will necessarily need to ‘go though’ the
urban scale to make a significant impact on the faith of
humanity.
In this sense, the cities occupy a very peculiar and
certainly pivotal place in contemporary global gover-
nance. To begin with, global issues are increasingly par-
alleled, intertwined, if not originated in urban issues–to
the extent that the urban has nowadays become an al-
most ever-present factor in public policy. Moreover, cit-
ies are gradually demonstrating how they hold strategic
G20
Summit 2010
68
governance potential in most of these security, develop-
mental and environmental concerns, and how they do
not solely represent partners but agenda-setters in their
own right.
Metropolises are increasingly less “policy-takers” (as
Claus Schultze put it in the case of the European Union)
subjugated to the pecking order of the state, as they be-
come more and more “policy-makers” capable of being
key stakeholders in various arenas of participatory gov-
ernance beyond the nation-state. As the development
of transnational city-based coalitions such as the ICLEI
Local Governments for Sustainability, the Climate Lead-
ership Group or the Sister Cities International coalition
can testify, cities are more and more present in inter-
national policymaking processes and major sources of
lobby on international institutions. This is of course not
just a feature of Westerns metropolises only, as testified
by the World Mayors and Local Governments Climate
Protection Agreement signed in 2007 and now gather-
ing more than one hundred metropolises worldwide. Ur-
ban settlement have to date set up environmental coop-
eration forms that, in structure and competences, might
match state-based institutions, thus making it hard to
deny the capacity of local government representatives
in undertaking foreign policy activities.
However, what remains largely unscrutinized is the
issue of “sustainability” per se. Few are those who
would these days criticize the need for sustainable solu-
tions, yet few are also those who look into what is being
made ‘sustainable’ and for whom. This is hardly a new
concern, as the 1990s calls by urbanists Peter Marcuse
and Mike Davis testify, but it has thus far failed to echo
down the corridors of the highest spheres of global gov-
ernance.
The internationalization of cities into the broader
spheres of global governance is in fact not just a result
of a cosmopolitan drive for the common good: along
with the philosophical tenets for the growing presence
of key globalizing metropolises in environmental politics,
we need to take into considerations the more pragmatic
and economically determinist reasons that drive most
of this transnational move of City Halls at large. Hence,
while much of the pressing questions of sustainability are
often implicitly subsumed, in an antipodean logic, under
the debate on climate change (rather than vice-versa),
the necessary critical inquiry into the basis and underly-
ing rationales of sustainability itself is lost in such errone-
ous translation.
 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
inequality.

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-
rary global system. So while on the international politics
scale cities contribute to raise awareness and promote
new green agendas, at the crucial everyday street level
of urban policy the contradictions of the neoliberal sys-
tem that leads to a call for novel governance solutions
at a broader scale are perpetrated with more and more
dangerous “politics via markets”–to borrow Ronnie Lip-
schutz’s expression.
This is not to say that a focus on sustainability is the
wrong way. On the contrary, there is much to gain from
the ‘glocalization’ of environmental initiatives at scales
below and above the state, and there is certainly much
to be praised when it comes to today’s metropolitan in-
novative potential. Indeed, as many of the cross-nation-
al networks of localities are showing us, urban public
policy can demonstrate flexibility and a governance ca-
pability that challenge the effectiveness of the machi-
nations of traditional global governance alignments.
Nevertheless, the environmental (if not, more broadly,
the political) role of cities should not go unscrutinized.
To put it simply, we should not take cities for granted.
‘Cities’ are, after all, nothing but those inherently politi-
cal systems that organize the urban conditions of much
of humanity in manageable collective entities and, as
such, they are continually in the making. Problematiz-
ing the bases, directions and long-term social conse-
quences of sustainability initiatives, and thus taking into
account issues of political participation to policy-forma-
tion mechanisms, is an imperative for practitioners and
analysts at all governance levels. We should guarantee,
as Australian philosopher Clive Hamilton puts it, the “de-
mocratization of survivability” at all levels, not solely the
global but chiefly the everyday scale of urban affairs.
Indeed, the world’s key metropolises have a pivotal role
in the global governance of the environment. Our chal-
lenge, however, is not assume their active participation
without verification – but to ensure the social viability of
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-
nated by headlines of civilian or military deaths due to
armed conflict. As tragic as these deaths are, their
numbers pale in comparison with the loss of lives due
to other reasons such as maternal deaths and infant
mortality. For example, about 2,000 international
troops, mostly from the United States, have lost their
lives since 2001 in Af-
ghanistan. About 3,000
civilians have been killed
in the first six months
of 2010, while about
20 Afghan policemen
and soldiers die every
day trying to secure the
country against a brutal insurgency that is maintained
outside our borders.
In contrast, however, more than 50,000 Afghans die
annually due to a lack of human security. Newly born
babies, children under the age of five and mothers con-
stitute the bulk of these lives that can, and must, be
saved. Unfortunately, these silent deaths do not grab
Afghan or international headlines. Why is this and what
can be done about it?
One of the key reasons has to do with the fact that
defense spending continues to outstrip spending on de-
velopment. In other words, protective security is often
prioritized at the cost of human security, even though the
two types of security are inextricably intertwined, par-
G20
Summit 2010
70
ticularly in Afghanistan with a population of vulnerable
groups. Conservatively speaking, more than 60 percent
of insurgents in Afghanistan are rented fighters, or
“10-dollar-a-day Taliban” who, for a lack of livelihood to
support their families, have been recruited by regional
terrorist networks.
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
want” may be forcing some 60 percent of insurgents to
fight for a daily pay, a whopping 80 percent of interna-
tional aid resources is spent on protective security mea-
sures, or “freedom from fear.” Much of the remaining 20
percent of international aid devoted to civilian assistance
bypasses the Afghan government. A multitude of par-
allel mechanisms sap some 80 percent of civilian aid
resources, leaving the Afghan government with only 20
percent. To make matters worse, more than 15 percent
of this is earmarked to be spent on donors’ projects of
choice.
This immense imbalance between security and de-
velopment, or civilian aid versus military assistance, is
partly why the Afghan government continues to remain
weak. In effect, the Afghan government receives a very
small amount of discretionary funding, which is not even
enough to reform a Ministry. Hence, a proportionally
small amount of civilian aid coupled with ineffective aid
delivery mechanisms has perpetuated weak governance
and incentivized petty corruption in Afghanistan’s deep-
ly insecure human environment. Consequently, these
overlooked problems continue bolstering the regional
and transnational dimensions of instability in the country.

The international response to underinvestment in
development came in 2000 when world leaders ad-
opted the Millennium Development Goals (MDGs)–a
set of 8 development-related goals–to be achieved by
2015. The MDGs provide a framework for the interna-
tional community to work together towards a common
aim, ensuring that human security reaches everyone,
everywhere. Because Afghanistan endorsed the Mil-
lennium Declaration in 2004, the deadline for reaching
its country-specific goals was set at 2020. In addition,
Afghanistan has set security outcome as the 9th, self-
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
and just 9 percent to electricity. More than 40 percent
of the Afghan population remains unemployed, and more
than half hovers at the brink of poverty. Another 8.5 mil-
lion, or 37 percent of the people, are in the borderline of
food insecurity and thus hunger.
Clearly, the security picture is mixed in Afghanistan.
Much has improved, but so much more needs to be
done. To have a secure and prosperous Afghanistan, we
must ensure that healthy Afghan mothers give birth to
healthy children. Programs must shift from haphazard
local projects implemented by various non-state actors
to strategic national programs reaching far and wide
with a long-term vision.
The Basic Package of Health Services (BPHS),
implemented by the Ministry of Public Health, and the
National Solidarity Program (NSP), managed by the Min-
istry of Rural Rehabilitation and Development, are the
prime examples of the Afghan government’s successful
national programs that focus on the basic yet very criti-
cal needs of the rural population. The two national pro-
grams cover more than 80 percent of the population in
over 25,000 villages. As a result, access to health care
has increased from less than 5 percent under the Taliban
to more than 80 percent now across the country. This
government-led effort is saving more than 50,000 lives,
FEATURE
mostly mothers and their children, each year. And un-
der NSP, villagers, including women for the first time,
have formed community development councils, through
which they participate in designing and co-implement-
ing projects that address their acute local needs.
This past summer on July 20th in the Kabul Con-
ference, the Afghan government presented to our na-
tion-partners a blueprint for true partnership: the donor
community must channel at least 50 percent of all aid
resources through Afghan state institutions–including
the Ministry of Public Health–and must align their inde-
pendent aid efforts with the priorities of the Afghanistan
National Development Strategy.
One of the core objectives of our Strategy is to ad-
dress Afghanistan’s human security needs so that chil-
dren can be better nourished, mothers have skilled as-
sistance in childbirth, and families can have access to
electricity, clean water, and education. And when more
over 60% of Taliban fighters eventually see that their ba-
sic human security needs are met, they will disengage
from violence and choose to lead a peaceful life in the
society. Indeed, the war in Afghanistan cannot be won
militarily alone. We and our partner nations must work
together and mobilize our resources to invest at least
50% of all international aid and national revenues to
change forever Afghanistan’s dire human security situa-
tion. The time to act is now.
Dr. Suraya Dalil is Afghanistan’s Acting Minister of
Public Health, and Ashraf Haidari is the Chargé d’Affaires
of the Embassy of Afghanistan in Washington DC.
Sebastian Rich is a Senior Contributing Photog-
rapher with the Diplomatic Courier magazine. Se-
bastian has been a photographer and cameraman
for over 30 years. His work can be viewed at: www.
sebastianrich.com.
G20
Summit 2010
71
 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.
The impact of this disease is not just shouldered on the
women who are battling, but their families and friends
who are supporting them through the treatment and pal-
liative care process. The emotional impact of losing a
wife, mother or daughter to cancer is immeasurable, but
the economic impact of premature death by all cancers
is measurable and it is devastating. A recent study found
that twenty-five nations are losing more than 2 percent
of the GDP to deaths and disability caused by cancer.
These figures are only for the deaths that can be attributed
directly to cancer, how many deaths each year go unde-
tected, but are ultimately caused by cancer?
Cancer is no longer a “western” or “rich” country dis-
ease; it is clearly evolving as a global problem. Cancer
is the great equalizer: it affects men, women and fami-
lies; it affects the rich, the poor, the young and the old;
and it burdens rich countries and poor countries alike.
G20 Without comprehensive cancer control plans, the devel-
Summit 2010 oping world is facing a disease tsunami that will overload
72
healthcare systems, strain national budgets, destroy lo-
cal economies and devastate families.
As the World Health Organization’s Goodwill Am-
bassador for Cancer Control, I regularly explain the
importance of including cancer in the global health agen-
da. Not only does cancer kill more people globally than
HIV/AIDS, TB and Malaria combined, we are witnessing
a huge shift in the cancer burden from the developed
world to middle and low income countries. By 2020, an
estimated 60 percent of all new cancer cases will occur
in the least developed nations, however, currently only 5
percent of global resources for cancer are spent there.
With so many pressing problems on the global
agenda, many will argue that fighting cancer is too com-
plicated or too expensive. That the focus should be on
cheaper and less complicated problems. They argue
that countries with strained national budgets can’t afford
to take on another global health issue. But the world
does not have a choice. The cancer burden will con-

tinue to grow and so will the economic impact: the total
economic impact of premature death attributed to can-
cer worldwide is estimated to be $895 billion in 2008.
It will take a global movement to help prevent a cancer
crisis in the developing world and this is why the atten-
tion of global organizations such as the G8 and G20 are
so important.
Recognizing the size and scope of the problem,
Komen decided to increase its resources in the global
battle against cancer. We recently launched the Susan G.
Komen Global Health Alliance to manage our global
efforts and develop a strategic vision for including cancer
on the global health agenda. In addition to our grassroots
education efforts and our global races in 11 countries that
raise money for education and research programs, the
Alliance has identified four major areas to focus our
global efforts:
Attacking the Stigma
One of the most significant barriers to effective cancer
control in many countries is continuing myths associated
with the cause of cancer and the stigma associated with
admitting one has cancer. In many countries cancer is
synonymous with death, a curse bestowed because of
bad behavior. Even worse, many societies see cancer
as contagious. As a result, cancer patients and survivors
are ostracized from their communities and often avoid
addressing their cancer in order to prevent any negative
stigmas to be bestowed on them or their families. For
a disease like cancer, a disease that is best fought ear-
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.
FEATURE
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
and global health experts in order to educate them about
women’s cancers and encourage the development of
national cancer control plans.
Engaging Local Leaders
The success of any global health program is adop-
tion by the general public. Recognizing the need to en-
gage local NGO partners and advocates, Komen has
offered the Course for the Cure (CFTC) program in 10
countries with close to 900 participants trained, to date.
The curriculum, which is tailored to each country’s spe-
cific needs, is based on our 30 years of experience in
breast cancer education, awareness, fundraising, advo-
cacy, and survivor support services. Graduates of the
CFTC are empowered to educate their communities,
fundraise for worthy causes, and work with local law-
makers.
The Susan G. Komen for the Cure Global Health Al-
liance will continue to work with stakeholders at all lev-
els to address the barriers to high quality screening and
treatment, battling the stigma of cancer, and educat-
ing all. We will need the support and leadership of the
G8, G20, and other global health organizations as we
work to prevent a global cancer crisis. After all, where
a woman lives should not determine whether she lives.
Ambassador Nancy G. Brinker is Founder and CEO,
Susan G. Komen for the Cure® and Ambassador for
Cancer Control, World Health Organization, United
Nations.
G20
Summit 2010
73
 Déjà Vu? World Food Price Hikes Raise Concerns
By Daniela Carcani
Food is a basic human need and an essential ingre-
dient to a healthy and stable society. In many countries
around the world, food is less of a given, and lack there-
of can cause hunger, malnutrition, and even instability
and conflict. United Nations Secretary-General Ban Ki-
moon has stated that: “Food and nutritional security are
the foundations of a decent life, a sound education and
the achievement of the Millennium Development Goals.”
Fear of a new global food crisis has lurked around the
world’s commodity markets as prices for staples such
as corn, rice and wheat recently mushroomed. This fear
is not new as our memory is still fresh of the dramatic
increases in world food prices during the years of 2007-
2008, which led to a global food crisis and caused po-
litical and economic instability and social unrest in both
developed and developing nations. The spiraling global
food prices in 2008 were a threat to global food and
nutrition security and were particularly devastating for
low-income food deficit countries.
The facts were staggering. According to the Interna-
tional Monetary Fund (IMF), global food prices increased
G20 an average of 43 percent between March 2007 and March
Summit 2010
74
2008, and according to the U.S. Department of Agricul-
ture, wheat, soybean, corn, and rice prices increased
by 146 percent, 71 percent, 41 percent, and 29 percent,
respectively.
In 2007-2008, price hikes were affected by various
supply and demand dynamics including climate-related
events in grain-producing nations like droughts, floods,
and environmental degradation, rising oil prices, diver-
sions of maize to ethanol production, as well as public
reactions such as hoarding which further exacerbated
price volatility. Oil price increases also caused general
escalations in the costs of fertilizers, food transportation,
and industrial agriculture.
These factors were compounded by the increas-
ing demand for food worldwide due to a growing world
population, the growth of the middle class in China and
India, and a decline in agricultural investment. The de-
mand for higher production of biofuels further exacer-
bated the situation. Corn ethanol production in the Unit-
ed States and elsewhere led to increased corn prices.
So, are we in for another global food crisis?
 FEATURE

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

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

75
 Injecting Life Into the World Economy
By Orin Levine and Ciro A. de Quadros
As the world looks to South Korea this week, there
is one vital question that must be posed as G20 leaders
seek solutions to inject new life into the global economy.
How can we have any hope of achieving and sustaining
economic growth without improving the survival rate of
the next generation? And if tackling the leading killer
of children is imminently achievable, will save millions
of children’s lives each year and promises an impressive
return on investment, isn’t there both a moral and an
economic imperative to do so?
The mutually reinforcing ties between improved
health outcomes and economic prosperity are well doc-
umented–which is why efforts to solve the latter without
a plan to improve the former are self-defeating. Accord-
ing to a 2004 paper published by David Bloom in World
Development, a 1-year increase in life expectancy im-
proves labor productivity by four percent. And research
by Hans Rosling at the Karolinksa Institute demonstrates
that decreasing child mortality offers the best hope of
lifting countries out of poverty, and stabilizing population
growth over the long-term.
There is a disease for which prevention offers a dra-
matic and far-reaching opportunity for return on invest-
G20
Summit 2010
76
ment, both for individual countries and for the global
economy: Pneumonia.
You may be surprised to learn that pneumonia is the
world’s leading killer of children, claiming a young life
every 20 seconds. It kills more children annually than
AIDS, malaria and measles combined. Yet it can be
treated with antibiotics that cost less than US $1, and
in many cases prevented entirely with a safe and effec-
tive vaccinenow available to developing countrieson an
unprecedented timeline and at prices their governments
can afford.
Allowing young children to suffer and often die from
preventable diseases such as pneumonia not only de-
nies children a fair shot at life, but robs families of their
meager earnings, and redirects community resources
away from economic progress. Alternatively, investing
in effective health interventions—particularly the protec-
tion afforded young children by immunization against
the leading causes of death, including pneumonia—can
dramatically improve the economic potential of individu-
als, families and communities in the developing world.
And it’s easy to see why.

A sick child is unable to attend school, help with the
family crops or animals, tend to household chores, or
care for siblings. Her parents will divert their time and
very limited income to caring for her, undertaking long
journeys fortreatment, and purchasing medicines that
are beyond their means. Her local health clinic will likely
be overrun with children who also suffer from prevent-
able infectious diseases. And her parents, knowing she
and her siblings have a high likelihood of dying before
the age of five because children dying in the developing
world is a fact of life, will continue to bear children in
hopes that some will survive—all of which perpetuates
the same cycle, and keeping families, communities and
entire countries mired in poverty.
But the cycle can be broken. Brazil, for example,
took lessons and momentum from its successful small-
pox eradication campaign to better coordinate their
broader national health efforts, take on other diseases,
improve both the life expectancy and the quality of life
for their citizens and ultimately grow their economy.
As the world’s most powerful decision makers, world
leadershave the power to prioritize efforts to wipe out
the leading—and most preventable—killers of children.
FEATURE
Defeating pneumonia will offer a huge step toward
achieving Millennium Development Goal 4—a two-thirds
reduction in child mortality—and helping to remove one
obstacle for countries desperately struggling to achieve
economic stability.
Fittingly, the G20 meeting coincides with the second
annual World Pneumonia Day. There is an opportunity
here for those who have the power to make financial
commitments to health infrastructure to prioritize pneu-
monia prevention, and in doing so, realize long term
health and economic development goals. There is no
greater or more far-reaching return on investment than
when we rededicate ourselves to every country’s most
important resource: people.
Orin Levine is Executive Director, International Vac-
cine Access Center (IVAC) at the Johns Hopkins Bloom-
berg School of Public Health. Ciro A. de Quadros is Exec-
utive Vice President, Sabin Vaccine Institute. The authors
are Co-chairs of the Pneumococcal Awareness Council
of Experts (PACE), a project of the Sabin Vaccine Institute
dedicated to the prevention of pneumococcal diseases.
G20
Summit 2010
77
 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-
plex and increasingly important issue when considering
the financial and economic crisis in developing coun-
tries. International social work, when operating through
a universalism lens, is an underutilized resource and
voice in the larger global development conversation.
Social workers in the 21st century are afforded
numerous opportunities that permit collaboration not
only in their own countries, but internationally as well.
Due to modern technology social workers are made
aware within moments of global issues that impact hu-
mankind, particularly the issues that impact the most
vulnerable among us—those who are subject to “dis-
crimination, oppression, poverty and other forms of so-
cial injustice,” according to the National Association of
Social Workers Code of Ethics.
The values voiced by both social work organizations
refer to the fact that social work grew out of humanitar-
ian and democratic ideals. However, it has been argued
that the above definition comes from a Western world-
view, as well as ideals steeped in Christianity, and as
such can undermine the reality of universalism in social
work contributing to global imbalance. Universalism
is crucial to the utilization of social work as a key tenet
to development.
Mel Gray, a professor in the School of Social Sci-
ences at the University of Newcastle, Australia, defined
universalism as “trends within social work to find com-
monalities across divergent contexts such that it is
possible to talk about a profession of social work with
shared values and goals wherever it is practiced.”

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
G20
Summit 2010

78
 Universalism specific to social work is not a new
notion or concern. In 1951, Tashiro stated in refer-
ence to the impact of the post-World War II occupa-
tion of Japan by the United States and the effect on
social work, “In social work…it is necessary to re-
consider impartially, what occupation has brought, and
then criticisms should be made on the matter without
emotionalism or intuitionalism, but calmly, and from a
broad and high point of view…I think that there may
be, or must be, something international or universal in
our ideas, and something that cannot be styled either
American or Japanese, but world-wide and having all
Humanity in view.”
Universalism must be addressed when social
workers are involved in collaboration on an internation-
al level. By so doing ethnocentric musings that per-
petuate a one-world view of social work values, ethics
and education that can lead to exclusion of thought
and dialogue can be recognized and addressed. Ac-
knowledging issues surrounding universalism and so-
cial work issues will permit a deeper understanding
and ability for international collaborations and the de-
velopment of international policy and programs to as-
sist developing countries. Strengths and challenges to
such collaborations can be responded to, and the end
results should further practitioners and policy makers’
relationships at multiple levels of international social
work.
Exchange of information regarding social work ed-
ucation within the international social work community
will permit discussions that can address and alleviate
ethnocentric attitudes thus approaching the salient is-
sues of development with the appropriate cultural lens.
This process will permit a sharing of ideas and models
that honor diversity and hopefully produce a trusting
environment that can facilitate honest academic and
political dialogue.
If such an environment can be created and main-
tained, social workers can influence the level of under-
standing (for example, understanding of issues such
as globalization, genocide, oppression and poverty) of
future social workers and the way those social workers
practice, regardless of their country of origin, in ways
never before achieved. This would thereby lend the
unique perspectives, practical experience, and cultur-
ally sensitive tenants of social work as a key compo-
nent in the larger conversation of international devel-
opment.
G20
Summit 2010
79
 Causes, Conditions and Reform
of African Economic Neocolonies
By Brian Corry

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

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
resources. Before leaving, some colonial powers ap-
pointed sympathetic elites who continued to siphon off
Africa’s wealth to the Northern Hemisphere. Pulling out
quickly without properly training the new African leader-
ship created a situation where African leaders and their
economies were dependent on Western advice and re-
sources. This dependence created an arrangement of
quasi-sovereignty that continues in various post-colonial
countries, in some form, today. There was a shift from
bureaucratic colonization to economic colonization.
As colonial governments withdrew, multinational
corporations (many of them based in the very coun-
tries which were leaving) replaced them. Economically
weak nascent African states, such as Tanzania, de-
sired investment. They gave favorable terms of taxation
to these new arrivals with the hopes of greater levels
of development. As reported by Third World Network
Africa et al., these tax policies began to further lean
in favor of multinational corporations under pressure
from the World Bank to open up mining to private in-
vestors. The result of this opening of investment
has been a funnel of wealth from the Global South
to the North.
G20
Summit 2010
developed countries are many multiples of these rates.
Even more disturbing is that of all the foreign mining in-
dustries operating in Tanzania; as of 2008, AngloGold
Ashanti was the only company to have paid any corpo-
rate income tax in the country. This situation is not an
anomaly; similar cases have been cited in Ghana, Sierra
Leone and South Africa, among others.
As one of the 10 poorest countries in the world, Tan-
zania could have expanded its social services tremen-
dously with this foregone revenue. Tanzanian Member
of Parliament Zito Kabwe stated, “If all taxes were paid,
if no gold was undervalued and if there were no over-
declaration of total cost, this year we should get slightly
more [in revenue from mining] than what the donors give
us.” In other words, if business were conducted fairly
in Tanzania, revenue from mining could replace depen-
dence on foreign aid. The potential of a self-sufficient
Tanzania can be seen in other countries that have suc-
cessfully been able to manage mineral extraction tax
policy. Botswana and Chile are examples of former
colonies that are now in the top third of the world based
on GDP per capita, in part because of effective taxa-
tion of multinational corporations operating within their
borders.

80

Nyerere expressed the effects of decolonization and
lost revenues in an interview with Ikaweba Bunting of
California State University, Long Beach. When asked
why Tanzania was failing he explained, “We took over
a country with 85 percent of its adult population illiter-
ate. The British ruled us for 43 years. When they left
there were two trained engineers and 12 doctors.” Tan-
zania had been able to overcome these obstacles until
they were compelled to ascribe to austerity measures
set forth by the International Monetary Fund and the
World Bank. Once they complied with these measures,
school enrollment fell by 63 percent
. training to leaders on legislating more effective taxation
Because many African leaders were poorly equipped
to run their newly independent countries and because
the democratic process was often immobilized by
political polarization, there was a rash of African dictators
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.
FEATURE
The inability to enact effective policies to create
mutually beneficial relationships with multinational cor-
porations is an enormous barrier to development in
Tanzania. The Tanzanian situation is not unique in its
problems and similar examples can be seen in Sub-Sa-
haran Africa and other post-colonial societies through-
out the world. Former colonial governments need to act
responsibly by mitigating the effects of their prior acts of
greed and carelessness. They can do this by creating a
system that holds multinational corporations that have
operations in former colonies accountable for adhering
to tax policies in those countries. They can also provide
policies. This, in the end, will be more beneficial for the
former colonizers and colonized by creating greater au-
tonomy and independence from foreign aid through the
cultivation of competent leaders.
G20
Summit 2010
81
 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)

G20
Summit 2010

82
 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)

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 Argentina
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
2008)
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: $52.31 billion
were married in March 1975 and have two children. (31 Dec. 2008)
Distribution of family income-Gini index: 49.0 (Jan-Mar.
2007)
Argentina Polity Political party: Frente para la Victoria
Unemployment rate: 7.8% (Sep. 2008)
(FV)/Justicialist Party
Labour force: 16.27 million (2008 est.) [urban areas only]
Head of State: President Cristina Fernandez de Kirchener
38th (world rank, 2008)
Most recent election: 28 Oct 2007
Oil Production: 29th (world rank, 2008)
Government: Lower House — Majority; Upper House —
Oil Consumption: 21st (world rank, 2008)
Majority
Natural Gas Production: 18th (world rank, 2008)
Political system: Presidential Legislature: Bicameral,
Natural Gas Consumption: Military 1.3% of GDP; 120th in
elected Chamber of Deputies, elected Senate
world rank (2005)
Capital: Buenos Aires
Military Expenditures: Markets
Official language: Spanish
MERV index: 2,352.760 (10 Jan 2010)
Economy Currency: Peso (P)
% change on 31 Dec. 2008: +30.6 (local currency); +21.8 ($
GDP (official exchange rate): $324.8 billion (2008 est.)
terms)
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
China’s Hu Jintao has
been president of the
People’s Republic of
China since March 15,
2003. He replaced Jiang
Zemin, who had held the
position since 1989. Hu
also serves as general
secretary of the Com-
munist Party of China’s
(CPC) Central Commit-
tee and chair of the Central Military Commission. Be-
fore entering into politics he worked as an engineer.
He joined the CPC in April 1964, and began working
with the party in 1968. In 1992, he was elected to the
Standing Committee of the Political Bureau of the CPC
Central Committee and re-elected in 1997. He became
vice-president of China in March 1998 and vice-chair
of the Central Military Commission in 1999. In Novem-
ber 2002, Hu was elected general secretary of the CPC
Central Committee. He was born in Jiangyan, Jiangsu,
on December 21, 1942. In 1965 he received his engi-
neering degree from Tsinghua University. He is married
to Lui Yongqing and they have two children.
Political party: Communist Party of China
Most recent election: 15 Mar 2008
Government: Single House — Majority
Political system: Presidential
Legislature: Unicameral, elected National Congress
Capital: Beijing
Official language: Mandarin
Currency: Yuan (¥)
GDP (real): $4. 327 trillion (2008 est.)
Predicted change: 6.1% (Q1 2009); 6.5% (2009)
Composition by sector: 11.3%-agriculture; 48.6%-indus-
try; 40.1%-services (2008 est.)
Central Bank interest rate: 5.31% (22 Dec. 2008)
Official reserve assets: NA
Foreign currency reserves: 1, 953.7 billion (Mar. 2009)
Securities: NA
IMF reserve position: $1,286.78 million (Feb. 2009)
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.
2008)
Stock of money: $2.434 trillion (31 Dec. 2008)
Stock of quasi money: $4.523 trillion (31 Dec. 2008)
Stock of domestic credit: $4.653 trillion (31 Dec. 2008)
Household income or consumption by % share:
1.6%-lowest 10%; 34.9%-highest 10% (2004)
Inflation rate (consumer prices): 6.0% (2008 est.)
Investment (gross fixed): 40.2% of GDP (2008 est.)
Current account balance: $400.7 billion (latest year, Q2
2008)
Budget: $847.8 billion-revenues; $861.6 billion-expendi-
tures (2008 est.)
Budget balance: -3.5% of GDP (2009)
Public debt: 15.7% of GDP (2008 est.) [cumulative debt of
all government borrowing]
75 Exchange rates (per USD): 6.82 (May 2009); 6.99 (Mar.
2008)
Economic aid-recipient: $1.331 billion (2007) [ODA]
Debt-external: $420.8 billion (31 Dec. 2008 est.)
Stock of direct foreign investment: $758.9 billion-at
home (2007 est.); $149.33 billion-abroad (2008 est.)
Market value of publicly traded shares:
$2.794 trillion (31 Dec. 2008)
Distribution of family income-Gini index: 47.0 (2007)
Unemployment rate: 4.0% (2008 est.)
Labour force: 807.3 million (2008 est.) 5th (world rank,
2008)
Oil Production: 3rd (world rank, 2008)
Oil Consumption: 11th (world rank, 2008)
Natural Gas Production: 12th (world rank, 2008)
Natural Gas Consumption: Military
4.3% of GDP; 25th in world rank (2006)
Military Expenditures: Markets
SSEA index: 3,397.15 (10 Jan. 2010)
% change on 31 Dec. 2008: +42.3 (local currency); +42.4 ($
terms)
SSEB index ($ terms): 255.75 (10 Jan. 2010)
% change on 31 Dec. 2008: +52.0 (local currency); +52.0 ($
terms)
Trade balance: $316.9 billion (latest year, Mar. 2009)
Trade to GDP ratio: 73.4 (2006-2008)
Exports: $1.435 trillion (2008 est.)
Top export partners: E.U. (20.5%); U.S. (17.7%); Hong
Kong, China (13.4%); Japan (8.4%); Japan (8.1%); South
Korea (5.2%) (2008)
Imports: $1.074 trillion (2008 est.)
Top import partners: Japan (13.3%); E.U. (11.7%); South
Korea (9.9%); Taipei, Chinese (9.1%); China (8.2%) (2008)
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 Brazil
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
terms)
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)
Minority
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
(2008)
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: $4,188.38 million (Oct. 2009)
Commercial Bank prime lending rate: 47.25% (31 Dec.
2008)
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 Australia
Australia’s Julia Gillard
became prime minister
of Australia on June 24,
2010, replacing Kevin
Rudd, who had held
the position since 2007.
Before entering into
politics, Gillard worked
as a lawyer. From 1996
to 1998, she served as
chief of staff to Victorian
opposition leader John
Brumby. Gillard was first
elected as a member of
the House of Representatives in 1998. Since then she
has served in various positions including shadow min-
ister for population and immigration, shadow minister
for health and deputy leader of the opposition. From
2007 to 2010, Gillard served as deputy prime minister.
She was born in Barry, Vale of Glamorgan, Wales, on
September 29, 1961. She moved to Australia in 1966.
She earned a bachelor of arts and bachelor of law in
1986 from the Uiversity of Melbourne. She lives with her
partner, Tim Mathieson.
Political party: Australian Labour Party
Head of State: Prime Minister Kevin Rudd
Most recent election:
24 Nov 2007
Government: Lower House — Majority; Upper House —
Minority
Political system: Parliamentary
Legislature: Bicameral, elected House of Representatives,
elected Senate
Capital: Canberra
Official language: English
Economy Currency: Australian dollar (A$)
GDP (official exchange rate): $1.013 trillion (2008 est.)
Predicted change: -2.1% (Q1 2009); -0.7% (2009)
Composition by sector: 2.5%-agriculture; 26.4%-industry;
71.1%-services (2008 est.)
Central Bank interest rate: 3.00% (7 Apr. 2009)
Official reserve assets: $44,768.56 million (Oct. 2009)
Foreign currency reserves: $39,912.34 (Oct. 2009) [in
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]
Financial derivatives: $ -0.66 million (Oct. 2009)
Loans to nonbank residents: $0.00 (Oct. 2009)
Other reserve assets: $371.20 million (Oct. 2009)
Commercial Bank prime
lending rate: 8.91% (31 Dec. 2008)
Stock of money: $298.5 billion (31 Dec. 2007)
Stock of quasi money: $667.2 billion (31 Dec. 2007)
Stock of domestic credit: $1.312 trillion (31 Dec. 2007)
Household income or consumption by % share:
0.9%-lowest 10%; 38.2%-highest 10% (2004)
Inflation rate (consumer prices): 4.4% (2008 est.)
Investment (gross fixed): 27.6% of GDP (2008 est.)
Current account balance: $-44.1 billion (latest year, Q4
2008)
Budget: $350.3 billion-revenues; $332.4 billion-expendi-
tures (2008 est.)
Budget balance: -3.3% of GDP (2009)
Public debt: 14.7% of GDP (2008 est.)
Exchange rates (per USD): 1.34 (6 May. 2009); 1.06 (6
May. 2008)
Economic aid-donor: $2.9899 billion (2006-2007 expect-
ed) [ODA]
Debt-external: $799.8 billion (31 Dec. 2008 est.)
Stock of direct foreign investment: $366.5 billion-at
home; $197.2 billion-abroad (2008 est.)
Market value of publicly traded shares: $1.298 trillion
(31 Dec. 2007)
Distribution of family income-Gini index: 30.5 (2006)
Unemployment rate: 4.2% (Dec. 2008)
Labour force: 11.25 million (2008 est.)
71 30th (world rank, 2008)
Oil Production: 21st (world rank, 2008)
Oil Consumption: 20th (world rank, 2008)
Natural Gas Production: 26th (world rank, 2008)
Natural Gas Consumption: Military
2.4% of GDP; 69th in world rank (2006)
Military Expenditures: Markets
All Ord. index: 4,981.400 (10 Jan. 2010)
% change on 31 Dec. 2008: +4.9 (local currency); +11.2 ($
terms)
Trade balance: $+5.2 billion (latest year, Mar. 2009)
Trade to GDP ratio: 46.1(2006-2008)
Exports: $189.9 billion (2008 est.)
Top export partners: Japan (22.8%); China (14.6%); E.U.
(10.5%); Korea, Republic of (8.3%); India (6.1%) (2008)
Imports: $194.2 billion (2008 est.)
Top import partners: E.U (21%); China (15.6%); U.S.
(12%); Japan (9%); Singapore (7.2%) (2008)

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South Africa
South Africa’s Jacob Zuma
became president of South
Africa on May 9, 2009,
succeeding Petrus Kgalema
Motlanthe, who had held the
position since September
2008. Zuma joined the ANC
in 1958 and started serving
in the National Executive
committee of the African
National Congress (ANC) in
1977. In 1994, Zuma was
elected National Chair of
the ANC and chair of the ANC in KwaZulu-Natal. He was
re-elected to the latter position in 1996 and selected as the
deputy president of the ANC in December 1997. Zuma was
appointed executive deputy president of South Africa in
1999. He held that position until 2005 and was elected ANC
president at the end of 2007. He was born April 12, 1949, in
Inkandla, KwaZulu-Natal Province. He has three wives and
several children.
Political party: African National Congress
Chief of State: President Jacob Zuma
Head of State: President Jacob Zuma
Most recent election: 22 Apr 2009
Government: Lower House — Majority; Upper House —
Majority Political system: Parliamentary
Legislature: Bicameral, elected National Assembly, elected
National Council of Provinces Capital: Pretoria
Official language: Afrikaans, English 49,052,489; country
comparison to the world: 24th (July 2009 est.)
Population: 0.281%; country comparison to the world:
173rd (2009 est.)
Population Growth Rate: NA
Economy Currency: Rand (R)
GDP (official exchange rate): $276.8 billion (2008 est.)
Predicted change: 1.0% (Q4 2008); -1.8% (2009)
89 Composition by sector: 3.3%-agriculture; 33.7%-in-
dustry; 63.0%-services (2008 est.)
Central Bank interest rate: 7.0% (7 Jan. 2009)
Official reserve assets: $39,789.00 million (Oct. 2009)
Foreign currency reserves: $32, 764.00 million (Oct.
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.
2008)
Stock of money: $44.66 billion (31 Dec. 2008)
Stock of quasi money: $124.1 billion (31 Dec. 2008)
Stock of domestic credit: $214.8 billion (31 Dec. 2008)
Household income or consumption by % share:
1.3%-lowest 10%; 44.7%-highest 10% (2000)
Inflation rate (consumer prices): 11.3% (2008 est.)
Investment (gross fixed): 23.2% of GDP (2008 est.)
Current account balance: $-12.0.0 billion (latest year, Q3
2009)
Budget: $77.43 billion-revenues; $79.9 billion-expenditures
(2008 est.)
Budget balance: -5.0% of GDP (2009)
Public debt: 31.6% of GDP (2008 est.) [cumulative debt of
all government borrowing]
Exchange rates (per USD): 7.33 (7 Jan 2010); 8.47 (May
2009); 7.52 (May 2008)
Economic aid-recipient: $597.18 million (2007)
Debt-external: $71.81 billion (31 Dec. 2008 est.)
Stock of direct foreign investment: $120 billion-at home;
$63.57 billion-abroad (31 Dec. 2008 est.)
Market value of publicly traded shares: $491.3 billion
(31 Dec. 2008)
Distribution of family income-Gini index: 65.0 (2005)
Unemployment rate: 24.5% (Sept 2009)
Labour force: 17.79 million (2008 est.) [economically active]
41st (world rank, 2008)
Oil Production: 30th (world rank, 2008)
Oil Consumption: 53rd (world rank, 2008)
Natural Gas Production: 54th (world rank, 2008)
Natural Gas Consumption: Military 1.7% of GDP; 98th
world rank (2006)
Military Expenditure: Markets
JSE AS index: 27,998.87 (6 Jan. 2010)
% change on 31 Dec. 2008: +1.3 (local currency); -10.6 ($
terms)
Trade balance: $-2.5 billion (latest year, Nov. 2009)
Trade to GDP ratio: 62.1 (2005-2007)
Exports: $86.12 billion f.o.b. (2008 est.)
Top export partners: U.S. (11.1%); Japan (11.1%); Ger-
many (8.0%); UK (6.8%); China (6.%); Netherlands (5.2%)
(2008)
90 Imports: $90.57 billion f.o.b. (2008 est.)
Top import partners: Germany (11.2%); China (11.1%);
U.S. (7.9%); Saudi Arabia (6.2%); Japan (5.5%); UK (4.0%)
(2008)
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 India
India’s Manmohan Singh
was re-elected prime
minister of India in May
2009. He was first elected
in 2004 when he replaced
Atal Bihari Vajpayee. Be-
fore entering into politics,
Singh worked as an econ-
omist, including for the
International Monetary
Fund. He was governor of
the Reserve Bank of India
from 1982 to 1985. Singh was first elected to the upper
house of Indian parliament in 1995. He was re-elected
in 2001 and 2007 and held cabinet positions includ-
ing minister of finance and minister for external affairs.
Singh also served as minister of finance from November
2008 to January 2009. He was born in Gah, Punjab
(now known as Chakwal district, Pakistan), on Septem-
ber 26, 1932. He received his bachelor’s and master’s
degrees from Punjab University in 1952 and 1954.
He also received an additional undergraduate degree
from Cambridge University in 1957 and a PhD from
Oxford University in 1962. He and his wife, Gursharan
Kaur, have three children.
Political party: Indian National Congress
Head of Government: Prime Minister Manmohan Singh
Most recent election: July 2007
Government:Lower House — Majority (coalition); Upper
House — Majority
Political system: Parliamentary
Legislature: Bicameral, elected Assembly, indirectly elected
Council of States Capital: Delhi
Official language: Hindi
Economy Currency: Indian rupee (Rs)
GDP (official exchange rate): $1.207 trillion (2008 est.)
Predicted change: 5.3% (Q4 2008); 5.0% (2009)
Composition by sector: 17.2%-agriculture; 29.1%-indus-
try; 53.7%-services (2008 est.)
Central Bank interest rate: 4.75% (21 Apr. 2009)
Official reserve assets: $284,391.00 million (Oct. 2009)
Foreign currency reserves: $266,768.00 million (Oct.
2009) [in convertible foreign currencies]
Securities: $150,662.00 million (Oct. 2009)
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
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98
79 residents: $0.00 (Oct. 2009)
Other reserve assets: $0.00 (Oct. 2009)
Commercial Bank prime lending rate: 8.5% (31 Jan.
2009)
Stock of money: $250.9 billion (31 Dec. 2007)
Stock of quasi money: $647.3 billion (31 Dec. 2007)
Stock of domestic credit: $769.3 billion (31 Dec. 2007)
Household income or consumption by % share:
3.6%-lowest 10%; 31.1%-highest 10% (2004)
Inflation rate (consumer prices): 7.8% (2008 est.)
Investment (gross fixed): 39% of GDP (2008 est.)
Current account balance: $-37.5 billion (latest year, Q4
2008)
Budget: $126.7 billion-revenues; $202.6 billion-expendi-
tures (2008 est.)
Budget balance: -7.7% of GDP (2009)
Public debt: 78.0% of GDP (2008 est.) [cumulative debt of
all government borrowing]
Exchange rates (per USD): 49.6 (7 May 2009); 41.4 (May.
2008)
Economic aid-recipient: $903.19 million (2007)
Debt-external: $229.3 billion (31 Dec. 2008 est.)
Stock of direct foreign investment: $144.2 billion-at
home; $61.77 billion-abroad (2008 est.)
Market value of publicly traded shares: $650 billion (31
Dec. 2008)
Distribution of family income-Gini index: 36.8 (2004)
Unemployment rate: 9.1% (2008 est.)
Labour force: 523.5 million (2008 est.)
23rd (world rank, 2008) Oil Production: 5th (world rank,
2008)
Oil Consumption: 26st (world rank, 2008)
Natural Gas Production: 19th (world rank, 2008)
Natural Gas Consumption: Military
2.5% of GDP; 66th in world rank (2006)
Military Expenditures: Markets
BSE index: 17,672.09 (6 May 2010)
% change on 31 Dec. 2008: +23.9 (local currency); +21.7 ($
terms)
Trade
Trade balance: $-109.0 billion (latest year, Mar. 2009)
Trade to GDP ratio: 47.6 (2006-2008)
Exports: $187.9 billion (2008 est.)
Top export partners: E.U. (21.6%); U.S. (11.8%); UAE
(10.5%); China (5.6%); Singapore (4.9%) (2008)
Imports: $315.1 billion (2008 est.)
Top import partners: E.U. (13.9%); China (10.0%); U.S.
(7.8%); Saudi Arabia (7.3%); UAE (6.2%)
(2008)
 Indonesia
Indonesia’s Susilo Bam-
bang Yudhoyono re-elect-
ed president in July 2008.
He first became president
on October 20, 2004, af-
ter winning the election in
September, replacing the
incumbent Megawato Su-
karnoputri. Before enter-
ing into politics, he served
as a lecturer and a military
general. His first experi-
ence in politics came when he was appointed minis-
ter of mines and energy in 1999. He later served as
co-ordinating minister for politics and security. He was
born on September 9, 1949, in Pacitan, East Java. He
received his doctorate in agricultural economics from
the Bogor Institute of Agriculture in 2004. He and his
wife, Kristiani Herawati, have two children.
Political party: Democratic Party
80 Head of Government: President Susilo Bambang Yud-
hoyono
Most recent election: 8 July 2009
Government: Lower House — Minority; Upper House —
Political system: Presidential
Legislature: Bicameral, elected House of People’s Repre-
sentatives, elected House of Regional Representatives
Capital: Jakarta
Official language: Indonesian
Economy Currency: Rupiah (Rp) GDP (official exchange
rate): $511.8 billion (2008 est.)
Predicted change: 5.2% (Q4 2008); -1.4% (2009)
Composition by sector: 13.5%-agriculture; 45.6%-indus-
try; 40.8%-services (2008 est.)
Central Bank interest rate: 7.25% (May 2009)
Official reserve assets: $64,528.45 million (Oct. 2009)
Foreign currency reserves: $58,862.90 million (Oct. 2009)
[in convertible foreign currencies]
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.
2008)
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)
G20
Summit 2010
100
Household income or consumption by % share:
3.0%-lowest 10%; 32.3%-highest 10% (2006)
Inflation rate (consumer prices): 11.1% (2008 est.)
Investment (gross fixed): 23.6% of GDP (2008 est.)
Current account balance: $7.3 billion (latest year, Mar
2009)
Budget: $92.62 billion-revenues; $98.88 billion-expendi-
tures (2008 est.)
Budget balance: -2.9% of GDP (2009)
Public debt: 29.3% of GDP (2008 est.) [cumulative debt of
all government borrowing]
Exchange rates (per USD): 10,410.0 (6 May 2009);
9,225.0 (May. 2008)
Economic aid-recipient: $362.09 million (2007 est.) [ODA]
Debt-external: $143.5 billion (31 Dec. 2008 est.)
Stock of direct foreign investment: $63.46 billion-at
home; $4.277 billion-abroad (2008 est.)
Market value of publicly traded shares: $98.76 billion
(31 Dec. 2008)
Distribution of family income-Gini index: 39.4 (2005)
Unemployment rate: 8.4% (Aug. 2008)
Labour force: 112.0 million (2008 est.) 22nd (world rank,
2008)
Oil Production: 17th (world rank, 2008)
Oil Consumption: 13th (world rank, 2008)
Natural Gas Production: Natural Gas Consumption: 24th
(world rank, 2008)
81 Military 3% of GDP; 50th in world rank (2005)
Military Expenditures: Markets
JSX index: 2,645.79 (10 Jan. 2010)
% change on 31 Dec. 2008: +32.7 (local currency); +38.9
($ terms)
Trade Trade balance: $7.3 billion (latest year, Mar. 2009)
Trade to GDP ratio: 60.4 (2005-2007)
Exports: $139.3 billion f.o.b. (2008 est.)
Top export partners: Japan (20.2%); E.U. (11.3%); U.S.
(9.5%); Singapore (9.4%); China (8.5%);
(2008)
Imports: $116 billion f.o.b. (2008 est.)
Top import partners: Singapore (16.9%); China (11.8%);
Japan (11.7%); E.U. (8.2%); Malaysia (6.9%);
(2008)
 G20
Summit 2010

101
 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

102
 G20
Summit 2010

103
 Mexico
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
2009)
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

104
 G20
Summit 2010

105
 Turkey
Turkey’s Recep Tayyip
Erdoğan became prime
minister of Turkey on March
14, 2003, replacing Abdul-
lah Gül, who had occupied
the office since 2002. Before
becoming prime minister,
Erdoğan was mayor of
Istabul from 1994 to 1998.
He was born on February
26, 1954, in Rize, Turkey,
and studied management at
Marmar University’s faculty
of economics and administrative sciences. He is married to
Emine Erdoğan and has two children.
Political party: Justice and Development Party (AKP)
Chief of State: President Abdullah Gul
Head of State: Prime Minister Recep Tayyip Erddogan
Most recent election: 22 Jul 2007
Government: Single House — Majority
Political system: Parliamentary
Legislature: Unicameral, elected Grand National Assembly
Capital: Ankara
Official language: Turkish
76,805,524; country comparison to the world: 17th (July
2009 est.)
Population: 1.312; country comparison to the world: 102nd
(2009 est.)
Population Growth Rate:
Economy Currency: Turkish lira (YTL)
GDP (official exchange rate ): $730.0 billion (2008 est.)
Predicted change: -6.2.% (Q4 2008); -4.4% (2009)
Composition by sector: 8.8%-agriculture; 27.5%-industry;
63.8%-services (2008 est.)
Central Bank interest rate: 6.50% (7 Jan 2010)
Official reserve assets: $75,905.47 million (Nov. 2009)
Foreign currency reserves: $69,750.01 million (Nov. 2009)
[in convertible foreign currencies]
Securities: $65,330.62 million (Nov. 2009)
IMF reserve position: $181.00 million (Nov. 2009)
Special Drawing Rights: $1,559.00 million (Nov. 2009)
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)
G20
Summit 2010
106
Household income or consumption by % share:
1.9%-lowest 10%; 33.2%-highest 10% (2005) Inflation rate
(consumer prices): 10.2% (2008 est.)
Investment (gross fixed): 20.3% of GDP (2008 est.)
Current account balance: $-11.4 billion (latest year, Oct.
2009)
Budget: $160.5 billion-revenues; $173.6 billion-expenditures
(2008 est.)
Budget balance: -6.3% of GDP (2009)
Public debt: 40% of GDP (2008 est.) [cumulative debt of all
government borrowing]
Exchange rates (per USD): 1.57 (6 May 2009); 1.25 (May
2008)
Economic aid-recipient: $237.45 million (2007)
Debt-external: $278.1 billion (31 Dec. 2008 est.)
Stock of direct foreign investment: $128.7 billion-at
home; $14.8 billion-abroad (31 Dec 2008 est.)
Market value of publicly traded shares: $117.9 billion
(31 Dec. 2008)
Distribution of family income-Gini index: 43.6 (2003)
Unemployment rate: 13.4% (Sept. 2009)
Labour force: 24.06 million (2008 est.) [about 1.2 million
Turks work abroad]
64th (world rank, 2008)
Oil Production: 27th (world rank, 2008)
Oil Consumption: 63rd (world rank, 2008)
Natural Gas Production: NA
Natural Gas Consumption: 23th (world rank, 2008)
Military 5.3% of GDP; 17th world rank (2005)
Military Expenditures: Markets
ISE index: 68,929.90 (6 Jan 2010) % change on 31 Dec.
2008: +25.5 (local currency); +23.6 ($ terms)
Trade balance: $-37.0 billion (latest year, Nov. 2009)
Trade to GDP ratio: 48.5 (2005-2007)
Exports: $140.7 billion f.o.b. (2008 est.)
Top export partners: Germany (9.8%); UK (6.2%); Italy
(5.9%); France (5%); Russia
(4.9%)(2008)
Imports: $193.9 billion f.o.b. (2008 est.)
Top import partners: Russia (15.5%); Germany (9.3%);
China (7.8%); U.S. (5.9%) Italy (5.5%); France (4.5%); Iran
(4.1%) (2008)
 G20
Summit 2010

107
 South Korea
South Korea’s Lee Myung-
bak became president on
February 25, 2008, re-
placing Roh Moo-hyun,
who had occupied the
position since 2003. Lee
joined the Hyundai
Construction company
in 1965 and eventually
became chief executive
officer of the Hyundai Group before being elected to
the Korean National Assembly in 1992. In 2002 he was
elected mayor of Seoul, a position he held until 2006.
He was born in Kirano, Osaka, Japan on December 19,
1941. He received a degree in business administration
from Korea University in 1965. Lee and his wife, Kim
Yun-ok, have four children.
Political party: Grand National Party
Chief of State: President LEE Myung-bak
Head of State: Prime Minister Chung Un-chan
Most recent election: 9 April 2008
Government: Single House — Majority
Political system: Presidential
Legislature: Unicameral, elected National Assembly
Capital: Seoul
Official language: Korean 48,508,972; country comparison
to the world: 25th (July 2008 est.)
Population: 0.266%; country comparison to the world:
178th (2009 est.)
Population Growth Rate: Economy
Currency: Won (W)
GDP (official exchange rate): $929.1 billion (2008 est.)
Predicted change: -4.3% (Q4 2009); -5.9% (2009)
Composition by sector: 3%-agriculture; 39.5%-industry;
57.6%-services (2008 est.)
Central Bank interest rate: 2.0% (7 Jan. 2010)
Official reserve assets: $264,187.00 million (Oct. 2009)
Foreign currency reserves: $259,436.00 million (Oct.
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.
2008)
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
108
Household income or consumption by % share:
2.7%-lowest 10%; 24.2%-highest 10% (2007 est.)
Inflation rate (consumer prices): 4.7% (2008 est.)
Investment (gross fixed): 27.1% of GDP (2008 est.)
Current account balance: $+41.9 billion (latest year, Nov.
2009)
Budget: $227.5 billion-revenues; $216.7 billion-expendi-
tures (2008 est.)
Budget balance: -4.5% of GDP (2009)
Public debt: 24.4% of GDP (2008 est.) [cumulative debt of
all government borrowing]
Exchange rates (per USD): 1,277.0 (May 2009); 1,026
(May 2008)
Economic aid-donor: $699.06 million (2007) [ODA]
Debt-external: $381.1 billion (31 Dec. 2008 est.)
91 Stock of direct foreign investment:
$124.2 billion-at home (31 Dec 2008 est.); $74.6 billion-
abroad (30 June 2008)
Market value of publicly traded shares: $494.6 billion
(31 Dec. 2008)
Distribution of family income-Gini index: 31.3 (2006)
Unemployment rate: 3.5% (Nov. 2009)
Labour force: 24.35 million (2008 est.)
69th (world rank, 2008)
Oil Production: 11th (world rank, 2008)
Oil Consumption: 68th (world rank, 2008)
Natural Gas Production: 25th (world rank, 2008)
Natural Gas Consumption: Military
2.7% of GDP; 58th world rank (2006)
Military Expenditures: Markets
KOSPI index: 1,705 (6 Jan. 2010)
% change on 31 Dec. 2008: +23.9 (local currency); +22.2 ($
terms)
Trade Trade balance: $+41.0 (latest year, Dec. 2009)
Trade to GDP ratio: 85.7 (2005-2007)
Exports: $433.5 billion f.o.b. (2008 est.)
Top export partners: China (22.4%); U.S. (10.9%); Japan
(6.6%); Hong Kong (4.6%) (2008)
Imports: $427.4 billion f.o.b. (2008 est.)
Top import partners: China (17.7%); Japan (14%); U.S.
(8.9%); Saudi Arabia (7.8%); UAE (4.4%); Australia (4.1%)
(2008)
 G20 Seoul Summit – Ripe with Opportunities
Amy Jackson - President
American Chamber of
Commerce, Korea
Congratulations
go to Korea for being
selected as host to
the November 2010
G20 Summit! Clearly
this summit will fo-
cus the attention of
business and politi-
cal leaders on many
key issues of impor-
tance to the G20 membership and
beyond, and there are a wide range
of anticipated outcomes. Seoul has
been busily preparing for this event
for months, and it is very aware of
the myriad of benefits that hosting
this global event can and will bring
to South Korea. One of these is to
showcase the Korea of 2010 – a
country willing and able to act as a
global leader. In addition, Koreans
and Americans from the public and
private sectors are anxiously await-
ing a show of leadership by Presi-
dent Barack Obama and President
Lee Myung-bak in the form of an an-
nouncement that the two countries
are finally ready to move forward
with the long-anticipated ratification
of the U.S.-Korea Free Trade Agree-
ment (FTA).
Reintroducing Korea to the
World As a Leader
Many foreign visitors to Korea
express surprise at how modern,
always “connected,” and bustling
Seoul is. Indeed, there is a distinct
lack of knowledge in the United
States and many other countries
around the world about what really
does and does not characterize the
Korea of 2010. Many remember the
Korea of 50-plus years ago in the
aftermath of the devastating Korean
War. Perhaps more still think of Ko-
rea as the insular, command econo-
my it was 20 years ago. As host of
the G20 Summit, Korea has a unique
opportunity to “re-introduce” itself to
G20 the world as the modern, free na-
Summit 2010 tion Korea is today – one which has
110
changed quite dramatically in the
last 50-plus, 20 and even 5 years.
On the economic front, Korea is
already a leader. In 2009, accord-
ing to the International Monetary
Fund, Korea ranked as the world’s
15th largest economy (by nominal
GDP) and the ninth largest exporter.
Not only do Korean companies such
as Samsung, LG, Hyundai/Kia and
POSCO now dominate in many mar-
kets around the world, but there is a
new and growing recognition among
world consumers that these compa-
nies are South Korean – giving rise
to the new South Korean “brand.”
Korea’s economic success is linked
to the country’s focus on promoting
exports. Exports provided around
44 percent of Korea’s GDP in 2009.
Korea’s strong performance in the
export of manufactured goods has
been crucial not only to the coun-
try’s rapid industrial development,
but also to Korea’s robust recovery
from economic recessions, once in
1998 and again in 2008. It has also
strongly shaped Korea’s pro-free
trade economic policies.
Korea – A Leader on Free Trade
In the face of rising protection-
ist sentiment around the world, a
key agenda item for the G20 Seoul
Summit is how to ensure free and
fair global trade. The G20, as to-
day’s premier forum for discussing
global economic issues, has already
played an important role in con-
taining the spread of protectionism
during the recent global economic
crisis. As a globally-competitive
mid-sized economy that has reaped
significant benefits from cross-bor-
der trade and investment, Korea has
a fundamental interest in promoting
free and fair global trade.
At the G20 summit in Wash-
ington D.C. in 2008, President Lee
Myung-bak took a leading role in
advocating free trade, suggesting a
‘standstill’ on all protectionist mea-
sures. This concept was accepted
by the other participants, and many
believe that the coordinated re-
sponses by the leading economies
played a crucial role in preventing a
deeper global recession. However,
as the recent surge of trade disputes
show, protectionist sentiments have
not completely disappeared. Joint
efforts are needed to reduce new
forms of trade barriers, and Korea
has a key role to play in regard.
FTA Leaders and Laggers
The number of bilateral and re-
gional free trade agreements (FTAs)
has sky-rocketed in recent years.
The United States was one of the
quicker countries out of the gate
on FTAs, but we have now fallen
way behind. The U.S. currently has
FTAs in force with 17 countries,
but is not actively negotiating new
agreements. On the flip side, Ko-
rea was slow to jump on the FTA
bandwagon, but is now one of the
world leaders in terms of number
of FTAs (concluded or in the works)
and volume of trade covered by its
agreements. As the diagram shows,
Korea has completed or is currently
negotiating FTAs with many major
trading partners. Likewise, Australia
has FTAs with 15 countries, and is
currently negotiating FTAs with over
10 countries.
At a time when so many coun-
tries around the world are moving
forward rapidly to secure preferential
access to other markets for their pro-
ducers, the absence of the United
States in this “race” is quite appar-

ent. It is disappointing that anti-free
trade sentiment in the United States
has grown to the point that many
Americans are openly advocating a
return to protectionism and isola-
tionism. Messages as to the very
real benefits of free trade seem to
have been drowned out, particularly
in the aftermath of the global eco-
nomic recession. But the reality is
that the United States is significantly
more open to imports from around
the world than many of the countries
where U.S. exports are headed. By
eliminating high tariffs and restrictive
non-tariff barriers to trade, FTAs can
be very effective as a tool to level
the playing field for American busi-
nesses and as a means to increase
exports and create jobs.
A study commissioned by the
U.S. Chamber of Commerce found
that total trade with the fourteen
countries with which the U.S. has
FTAs boosted GDP by $1.0 trillion
and supported 17.7 million Ameri-
can jobs. Of this total, an estimated
5.4 million jobs were supported by
the increase in trade generated by
the FTAs. Moreover, the study found
that U.S. merchandise exports to
these fourteen countries from 1998
to 2008 grew nearly three times as
fast as did exports to the rest of the
world.
U.S.-KOREA FTA – An Im-
portant Step Forward
President Obama’s announce-
ment in June of this year at the
Toronto G20 summit was a pivotal
moment for watchers of U.S. trade
policy. President Obama stated that
“It is time that our United States
Trade Representative work very
closely with his counterpart from
the ROK to make sure that we set
a path, a road, so that I can present
this FTA to Congress. We are go-
ing to do it in a methodical fashion.
I want to make sure that everything
is lined up properly by the time that
I visit Korea in November. And then
in the few months that follow that, I
intend to present it to Congress. It is
the right thing to do for our country.
It is the right thing to do for Korea.
It will strengthen our commercial
ties and create enormous potential
economic benefits and create jobs
here in the United States, which is
my number one priority.”
This was an important message
to Korea and the rest of the world
that the United States is a good ally
that honors its commitments, puts a
priority on staying actively engaged
in Asia, and plans to continue to be
a leader in the region on the political
as well as economic front.
The U.S.-Korea FTA is the most
comprehensive and large-scale
trade agreement the United States
has entered into since the North
American FTA (“NAFTA”) took ef-
fect in January 1, 1994. Under the
agreement, almost 95 percent of
bilateral consumer and industrial
goods trade will become duty-free
within three years, with almost all re-
maining tariffs on goods eliminated
within ten years.
FEATURE
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
benefits of the agreement, as it will
eliminate non-tariff market access
barriers to goods, services and
investment. Moreover, new and
mutually-beneficial partnerships be-
tween leading American and Korean
businesses are expected to flourish
in virtually all sectors including future
‘engine of growth’ industries such
as energy, green growth and bio-
pharmaceutical sectors.
The benefits of the U.S.-Korea
FTA to both economies have been
well documented by researchers.
Apart from the economic benefits,
the deal will reinforce the strategic
alliance between the U.S. and Ko-
rea which remains one of America’s
closest allies in Asia and a strong
partner in advancing regional secu-
rity. In addition, this FTA will help
the United States stay an active,
involved leader in the Asia-Pacific
region.
We look to the United States
and Korea to demonstrate leader-
ship during the G20 Seoul Sum-
mit. The opportunities are vast and
in today’s economic climate cannot
and should not be squandered. We
hope that on November 11, the U.S.
and Korean Presidents will stand
together and make an historic an-
nouncement on the U.S.-Korea
Free Trade Agreement that will dem-
onstrate the commitment of both
countries to each other and to mak-
ing their G20 pledges a reality.
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 Reaching the World’s Most Vulnerable
The Lilly MDR-TB Partnership is a public-private ini-
tiative that encompasses global health and relief orga-
nizations, academic institutions and private companies,
and is led by Eli Lilly and Company. Its mission is to
address the expanding crisis of multi-drug resistant tu-
berculosis (MDR-TB). Created in 2003, the Partnership
mobilizes more than 20 global healthcare partners on
five continents.
Lilly is contributing US$ 120 million in cash, medi-
cines, advocacy tools and technology to focus global
resources on prevention, diagnosis and treatment of pa-
tients with MDR-TB; and an additional US$ 15 million
to the Lilly TB Drug Discovery Initiative to accelerate the
G20 discovery of new drugs to treat TB.
Summit 2010
114
Empowering Local Communities
The Partnership has implemented community-level
programmes to raise awareness about MDR-TB, in-
crease access to treatment, ensure correct comple-
tion of treatment and empower patients by eliminating
the stigma of the disease. The Partnership also trains
healthcare workers to recognize, treat, monitor and pre-
vent the spread of MDR-TB.
A global Approach for Global Results
Because global change requires a global perspec-
tive, the Partnership works with policymakers around
the world to raise awareness about the toll that TB takes
on the global population and encourages new initiatives
that curb the spread of MDR-TB.

Sustainable Access to Medicines
To increase the supply of high-quality, affordable
medicines, Lilly has partnered with manufacturers in
countries hardest hit by MDR-TB, providing both knowl-
edge and financial assistance to create sustainable, lo-
cal sources for MDR-TB drugs.
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.
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
Helping Those in Need
The initiatives of the Lilly MDR-TB Partnership all
have one thing in common: improved care for some of
the world’s most vulnerable people, delivered in a sus-
tainable manner that builds capacity within the commu-
nities where it is needed most.
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