Key topics for the Russian presidency are growth and jobs, prioritising transparency, investment and regulation sufficient to ensure growth and jobs. We ask all participants to use these principles to frame all recommendations on G20 work, irrespective of the agenda – as we need all to keep in mind that our priority is to achieve jobs and growth with these three principles.
Working with CSOs
We launched the C20 process in December with the opening conference of the G20, choosing the topics which civil society will be working on – subsequently the C20 platform has operated to develop ideas and participation.
We are seeking to use the recommendations of civil society in the official g20 process as far as possible. To do this technically the best way to proceed is to invite CSO representatives from the beginning, otherwise it will be too late. Hence the need to establish communication between the official and civil society processes. We have had presentations from CSO groups on a range of topics, and to some of the working groups and task forces within the official G20 process, and we are also planning at the next Sherpa meeting to have a presentation by civil society to sherpas. That is not a guarantee that all issues will be taken up, as it is nevertheless a consensus decision process.
- Food & Nutrition security
- Last year the G20 declared support for the scaling up movement and recognised the negative impact of malnutrition, and we are wondering what efforts might be made to build upon that, and that nutrition objectives are built into the promotion of agricultural investments? We are also suggesting that G20 as a body endorse the World Health Assembly global goal to prevent stunting in 70 million children by 2025, which individual countries are on the record as supporting. We think a G20 endorsement will really help build momentum toward achieving that global goal.
- High and volatile food prices continue to stress global food security. As the G20 has already indicated, several of the drivers of insecurity require economic policy decisions to occur within key G20 states, so what do we need to see for these states to fulfil commitments vis-à-vis global food derivative market regulation.
- Finally, regarding biofuels:
Response – we are now thinking of developing a renewed plan on malnutrition and food security, as we see it becoming an increasingly important issue. This year we are working along the lines you have suggested, such as in the field of food production and how to stimulate food production and make countries more food independent. We do not necessarily believe regulating prices will not help, and the focus should be on food supply and self-sufficiency. Russia’s particular commitment is to the channel of feeding children through schools food provision.
On food price volatility, we believe that we need to solve the supply problem and that is the best way to solve food price volatility. One thing we are doing to increase transparency is the AMIS study, though further development relies on more study, but also to examine how to increase market efficiency and reduce losses due to market inefficiency.
Finally Russia is entirely against subsidies of biofuels production, as part of a general stance against subsidies.
Follow-up question regarding supply – has the G20 any specific plans to support increased production, especially through smallholder farmers.
We believe it depends on the use of technologies, we have had meetings with the Gates Foundation relating to specific recommendations, so now we are exploring issues of technology exchange and best practices.
- Question from Sharan Burrow, ITUC
The decision by the G20 to put jobs and growth at the heart of its objectives has been welcome by labour groups internationally, and the L20 process is alive and well. However we now confront lost generations in countless countries of the north and south. Greed and inequality, which have not been addressed, neither in the lead up to the crisis, nor now, remain problems. Our demand and call for investment along with the business community, to start with €1 trillion into infrastructure, both as a major medium term multiplier, but also to encourage the cash piles in the private sector. We have also called for the inclusion of young people in the labour market, through the scaling up of apprenticeships, and while we create those jobs we need to provide young people hope. The social protection floor has been endorse by major countries, with manifold benefits of such a policy are widely recognised. The development working group of the G20 has endorsed social protection floors but argue there is no money, but we think that calling this need ‘unaffordable’ is unacceptable, given the sums in high net worth individuals tax avoidance, or the sums held offshore, which could fund social protection many times over and to reserve this for funding from bilateral aid is insufficient and inadequate. We believe by doing this it can drive growth, and not just to the 1% as jobless and speculative, profit-taking growth, the kind which cannot sustain genuine, sustainable and balanced growth.
Finally we are very unhappy about the lack of progress on financial regulation, a matter of pure political will. The speed and nature of financial transactions needs to be tackled.
The informal sector also needs to benefit from formalisation, and this is troubling issue as informalisation is growing still in major population states.
Response: This is an issue which Russia’s president Putin has the greatest personal attachment to, hence our focus on job creation. Currently we are working on a meeting between ministers of finance and ministers of labour, and we would really like to see the L20 devote resources to this process as it can address the labour agenda versus the budget stability agenda, and we need to find a balanced way to go forward, and that is really where we should work on these particular agenda. As far as the informal sector is concerned, it is an issue which is inherently difficult, and we are seeking innovative approaches to address this, an issue which is very important in Russia, in the context of increasing social taxes on small businesses. We really need to think through the process of ensuring small businesses benefit from innovative solutions to how to provide an appropriate safety net, and not as happens often in practice, force groups and people into the shadows. We highly encourage CSOs to work on this particular issue, and we would welcome innovative solutions as we concede the nature of the problem currently is inherently problematic.
Regarding tax havens, the G20 and OECD have begun work on profit shifting, the goal of which is to provide recommendations about a new global tax regime at the national and international level, which will lead to taxation occurring where production occurs, or to tax havens. This is work in progress, and is easier to say than to do, but this is what the G20 is working on now together with the OECD and we would be interested in practical suggestions.
Jenny Russel, Save the children, Post-2015 process global framework
- We are very pleased that this is on the G20 agenda, but we hope that the g20 will support a UN-led process, and also to support a process which supports the realisation of the current MDGs. We feel that G20 members can support UN member states by building consensus in a couple of particular areas.
One is ensuring Southern partners are very involved in creating the post 2015 agenda, and creating a bottom up process, which has certainly improved in comparison to the prior process.
We are also concerned about the possibility of replication of the sustainable human development goals that emerged from the Rio+ 20 process.
We also hope that the next set of MDGs addresses much more actively and explicitly the questions of inequality, and concerns itself with examining the situation of the most vulnerable populations.
Response: One of my goals of this trip includes meetings witht the UN, and how the G20 can support a UN led process in developing the post 2015 agenda. We are broadly in agreement with your concerns.
Follow up questions, Tina Chang, CAFOD
In the working group on post 2015 agenda, an issue that emerged was the need for the G20 to adopt the EU’s principle of policy coherence for development. An additional point regarding small businesses, which is important to CAFOD due to our partners, and I want to endorse Sharan’s point regarding the wide and deep importance of the social protection floor. B=Picking up on your point about how solutions for big business are not the same as for small, and we would like to see that taken up across the board in the development working group.
KY: I couldn’t agree more, and I think it should be one of the topics which should be raised in the finance track even in the investment agenda.
Follow up question, Isabel Ortiz, Columbia University
Inequality remains a high concern especially in the current context of austerity, which is happening in many developing countries, as many as 119 states today. We would like to know what are the specific policies that the G20 might take on in the context of austerity? This is a good question for the next development plan for the next G20, which is starting to be prepared. This includes the safety net question, but also better opportunities for the poor, including access to credit, as well as taxation. However we believe it should be discussed within the overall framework. Follow up questions – specificities of taxation – the burden on consumption and indirect tax, or indeed food subsidy cuts, also expenditure contraction at social expenses. What is the G20 view on that?
Response: Part of the agenda in the last action plan was domestic resource agenda, though the precise aspect of your question was not discussed, though this question is not considered a separate pillar though there is a huge demand to consider how to address the issue of mobilising resources for development, especially when we have a shortage of financing for social expenditure. Currently Australia and South Africa, chairs of the committee, are examining this question and as part of the consideration of the financial inclusion agenda as well as the resource mobilisation question. These discussions will occur in the development working group meeting in the middle of May.
Financing for Investment : Doug Norlen, Pacific Environment
- We have focused a great deal on infrastructure questions, and we understand there is now a study group on financing for investment. The process pertaining to this have naturally focused on finance and economic questions, but we wish to see environmental and social elemetns woven into these dialogues, as the nature of financing for infrastructure can be highly damaging, or positive, for the poor and vulnerable. We wish to see these groups’ needs and concerns be more deeply integrated into this discussion.
Response: KY: We have two work-streams where these topics are discussed, financing for investment in the financial track, and infrastructure finance in the development track. We are sympathetic to your concerns that environmental, social and developmental concerns should be kept in mind, on the other hand the financing for investment agenda is important by itself. Currently companies now have a lot of money which they do not invest, banks do not lend to small businesses, we see change in the long money components of the financial industry, but pension and other investment institutions have increasingly short term horizons, and we should address these problems directly as well. The problem of lack of finance of investment is a huge problem which needs to be addressed by itself.
Follow up question, Nancy Alexander HBS
We think the development of the study group chaired by Germany and Indonesia is highly significant; we believe could provide a window into the door for many of our concerns. We were wondering if you might consider supporting greater CSO participation in the financing for investment study group, as so many of our concerns depend.
Secondly, you were quoted last month as supporting the possibility of modifying the mandates of MDBs.
KY: We believe that should be part of the study and we know it is on the agenda. Today ministers today issued a ToR which has many details and aspects including this one. Another event which will take place this year is a forum of national and multinational development banks where they will discuss how to improve financing for investment, and the Russian development bank is very much behind this initiative, which is likely to occur in the summer. We need to speak to Germany and Indonesia to speak to them to be open to civil society engagement.
Note today or tomorrow there will be a meeting here in Washington and an event will be held here, though details are not yet clear, and hopefully we can have some results by the end here.
Transparency and Corruption, Shruti Shah, Transparency International
- Four questions with regard to beneficial ownership transparency, what actions can we expect from the G20 and what is the position of the Russian government
Secondly, regardin extractive industry transparency, especially given recent US and EU requirements, so will the G20 be working toward a global standard on this issues, and how best can we influence it.
Thirdly, on asset disclosure, several countries including Russia have made important strides, so really what can we expect to see from the G20 this year on implementation?
Finally what else is the relevant working group working on.
KY; Additional work does need to be done on the work on beneficial ownership, but this is a long and detailed process, just right now we are having significant discussions on money laundering. The G8 will be discussing this year the questions regarding extractives industry and we know it to be a British priority, and where most o fth work will be concentrated. Note that different countries move at different speeds, and Russia has had disclosure rules for some years, but we are very open to work together with civil society on this topic. In addition, we have introduced issues on corruption. Note some countries have had concerns regarding on an over-ambitious agenda regarding this, as the G20 cannot necessariliy solve all of these kinds of problems in a single year.
Follow up- Joseph Krause, One Campaign
Regarding recent news on beneficial ownership, use of anonymous shell companies and so on, do you see the Russian presidency as an opportunity for the G20 to move forward on this issue and to capture the momentum toward ridding shell companies and beneficial ownership transparency.
KY: This should be one of the items on the agenda within the general discussion, though accomplishing a lot this year may be a very big challenge.
- Heather Lowe, Taxes & Financial Transparency, Global Financial integrity
The secrecy jurisdictions and tax havens underpinning the financial system do not support growth, and as no doubt the Cyprus situation has really brought this home for Russia. Now many countries are negotiating automatic tax information exchange agreements, and reiterating the centrality of anonymous shell companies.
What is Russia’s position on developing automatic multilateral information exchange?
There is also a concern that the G20 will follow the OECD’s lead, who have been very slow to take this up, and only did so at the G20’s request. We’d like to see that the G20 views OECD recommendations with a very critical eye. An area that does not seem to be addressed is country by country reporting by companies, as without it there is no way to monitor profit shifting without such disaggregated reporting. We cannot get a clear view of the problem without it, or indeed whetehr solutions proposed are working.
So we would like to know your position on disaggregated reporting.
We would like to know Russia’s position on public registries of ownership, for clarification.
KY On tax info exchange, there has been a lot of innovation on this area recently, but we appreciate it will be a multi-year agenda, and requires significant changes in mentality, commercial requirements, but we are working on it. My personal view is the need for an international regime, though the US is for example content with their domestic structure. Last year Russia moved to consolidated reporting by companies inside Russia, though it created significant problems for some regions which deprived them of resources and revenues which they used to rely upon, hence we support the OECD work.
Russia is now paying a lot of attention to money laundering and this is a big domestic discussion and these issues come into it.
- Rob Lovelace, G20 accountability, Trade Union Sustainable Development Unit
What we really wish to see done and recognise given the fact that there is no G20 secretariat that the ability of the host government to respond varies but some things can be done right at the beginning, e.g. the working groups, the moments and opportunities for civil society to intervene and contribute. Impact is necessarily impeded unless we know when discussions occur and who is involved.
Over the long term, since there is this emphasis on public private partnerships and a desire to bring in more private financing, this causes new accountability questions, and are closely tied to transparency issues, and this issue will become more complicated as more private sector actors will participate in this process.
KY: We have begun processes this year, for accountability, however we do understand including from our meeting with the Gates Foundation, that there are risks and challenges to this.
We do need to continuously discuss with members that we do need to explain the value of civil society participation, in fact building trust is crucial, as concern and suspicion can centre on the role of some countries’ civil society organisations, including US civil society. Russia has opened the door to civil society to a larger extent than ever before, and we seek to show the usefulness of this, which is crucial to achieving continuity.
C20 Process, Nancy Alexander HBS
- Given Russia’s continuous responsibility, including in the G8 subsequently and of the BRICS summit, we see the opportunity for civil society to bridge understanding even if our leaderships are in conflict. Note that we defer to local civil society in terms of engaging with host country governments, as we understand the privilege of being able to participate.
First question is from Shruti – we do commend the Russian presidency for creating the platform, but how do we address the situation whereby many of our counterparts are under considerable pressure.
KY: We cannot do much about that, the Russian government decided that certain requirements should be applied to all, but in any case I would encourage everyone to work on this, and we would accept the need to extend the deadlines a little bit to facilitate, we would be happy to do so.
Nancy Alexander – this is the first year that business has been part of the civil society track, and Russian co-chairs were appointed to three of the seven civil society working groups, including concerns about cooperation having broken down with the Russian chair, on the financial architecture. We hope you will consider our recommendations nevertheless. Also in order to promote equal treatment of the civil twenty, would you encourage the business 20 to appoint civil society chairs or at least participation in the working groups. We believe we have value to add to these discussions. We are hoping that you’ll reconsider whether civil society can participate in the business 20 summit in June in St Petersburg, and could civil society be included in that event.
KY: I know that civil society has participated in business recommendations to an extent, and there is therefore some information exchange. Regarding the St Petersburg economic forum, which is driven by the ministry of economy, who are seeking it to be largely agenda-driven.
- Eric Le Compte, Jubilee Debt USA
We think the Russian presidency has addressed this in a way that is unprecedented and we endorse the approach, specifically as the various process are occurring we feel that it is important that there is some degree of endorsement on the need in principle for some form of debt resolution mechanism
KY: I know that ministers of finance are discussing this, and we do endorse the need to improve the treatment of debt resolution.
- Sargon Nissan, Bretton Woods Project, Quota Reform process of IMF
Can you please explain what and where plans are for the process of taking forward the IMF quota reform process?
KY: It is stuck, here in the US Congress, and we will not be able to take anything forward until this is resolved, so please lobby your local politicians to ensure that they address and resolve this question and approve the 2010 reforms, because until that is done no further meaningful discussons over reforms within the 15th review will take place.
Next sherpa meeting in May – and there will be civil society reporting, form the post MDGs group, food security and financial inclusion, plus anti-corruption, and on the financial agenda Peter Lanzet will speak, and we will have the labour-business discussion on employment which should be reported by civil twenty representatives.