Large participant counts and weighty official statements that took hours to prepare are not necessarily the most important part of major international meetings and conventions. Often, it is the discussions that take place in the small private meetings by invitation only that are more crucial and interesting. These meetings follow the Chatham House Rule. Named after the famous British think tank, the rule allows participants to use information shared during the meeting but prohibits revealing who made any particular comment. The purpose is to encourage open dialogue.
The recent gathering of the Bretton Woods institutions in Washington is no exception to this. While the main part of the IMF/World Bank Group Annual Meetings is the formal sessions, such as the WBG’s Development Committee and the International Monetary and Finance Committee of the IMF, which meet twice a year, the seminars, roundtables and other smaller meetings outside the major sessions are increasingly attracting interest and popularity.
You may have seen the reports from these international institutions about the dire state of the global economy, reflecting the gravity of the man-made misery visited on the planet through direct and proxy wars, rising debt and poverty, severe income and wealth inequality, and climate deterioration. The global economic growth rate is expected to stabilise at a modest 3.2 per cent, with the US maintaining the lead among advanced economies with growth rates of 2.8 per cent and two per cent in 2024 and 2025, respectively. India is likely to achieve over 6.5 per cent growth, surpassing China, whose growth rate hovers around 4.5 per cent. By contrast, European countries, whose growth rates do not exceed one per cent, are struggling to avoid recession.
In the Arab region and Africa, the growth rates range between two per cent and four per cent, which is not enough to achieve sustainable development goals (SDGs). Apart from a few exceptions, these countries’ growth rates are lower than the global average, which is a sign of a widening gap with more advanced countries. Unlike the emergent ASEAN countries, growth in the Arab and African regions is concentrated in low-productivity, low-competitiveness sectors with limited capacity to create decent jobs for young people. Their modest growth, moreover, is jeopardised by external shocks, the impacts of new industrial policies and protectionist measures, and increasing global restrictions on trade, investment, and advanced technology transfer. On top of this, there are the dangerous ramifications of the silent debt crisis gripping developing countries where debt servicing costs more than their outlays on SDGs, including in education and healthcare.
Meanwhile, global inflation rates have dropped to 5.8 per cent, down from their peak at 8.6 per cent in 2022, which was the highest level since the Covid-19 pandemic and subsequent crises. Inflation is expected to fall further to 4.3 per cent in 2025. Yet, while inflation rates in advanced countries are approaching their two per cent target, the rates in other parts of the world remain several times higher. Those populations are reeling beneath the sharply rising costs of living. The cumulative effects of the waves of the sudden price spikes followed by modest reductions have become unbearable.
While supporting low-income groups might be relatively easy through various forms of monetary or in-kind assistance with or without conditions attached, the major problem is the middle-income classes who lack support mechanisms. These groups are not used to receiving support for their living expenses. Nor would they find the support given to the lower-income groups compatible with their way of life and aspirations. To them, the deterioration is an acknowledgement of a decline they had never foreseen. They hear repeated promises that the hardship is temporary and will soon pass, only to realise that the temporary is becoming a permanent new reality.
For the foreseeable future, low- and middle-income countries will remain vulnerable to fluctuations in the prices and transport costs of fuel and food due to shocks and fallout from geopolitical conflicts and climate change, as well as the usual seasonal variations.
In this rapidly changing world, it is futile to attempt to mentally or practically prepare for the challenges ahead by rushing to embrace the same strategies used in times of conflict in the past. Based on their experience in World War I, the French constructed the Maginot Line, a series of massive defence installations along their eastern border, only for the German invasion in World War II to come through Belgium. Many countries today think they are wise by investing extravagantly in similar “Maginot Lines,” under the assumption that current and future threats they face are the same as those they encountered ahead of their victories or defeats in the past. Benefitting from history is one thing. The blind faith that history repeats itself and that the forces which determined the past continue to determine the present and future is another. Benefitting from history entails empowering people to deal with the challenges and opportunities of the future by investing in the development of their minds and skills and caring for their health.
The constants have changed while former variables have become constants. Here is an example I just picked up in the Chatham House manner in one of those aforementioned meetings in Washington: A financial risk management expert told me, “I used to manage financing for European factories based on three constants: affordable and abundant energy from Russia; an open market for production components and the ability to sell the final product in China; and a strong security alliance with the United States.”
We already know how the first two constants have changed in recent years. We will soon find out what will become of the third, once the votes are tallied in the contest over the new occupant of the White House.
This article also appears in Arabic in Wednesday’s edition of Asharq Al-Awsat.
* A version of this article appears in print in the 31 October, 2024 edition of Al-Ahram Weekly
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