President Donald Trump attacked the World Health Organization (WHO) this week, announcing a 60-day freeze of U.S. funding going into the organization. He said the WHO has “failed in its basic duty.” The president is an unashamed populist, and it’s almost inappropriate to take his words as a reflection of his thoughts. What is important here is how international organizations are going to come out of this, and two of the most important I’m thinking of here are the World Health Organization (WHO) and the IMF, both of which are vital in this crisis.
COVID-19 has caught all of us unaware, including the WHO. Throughout the past decade, I have participated in so many debates about non-communicable diseases like diabetes, cancer and others in terms of their cost impact on doing business. There was never any talk of infectious diseases. An infectious disease pandemic was not considered a high probability event. Like bad students trying to cheat on an exam, our unpreparedness is causing panic, and panic overwhelms our thinking. Leaders are horrified that this has happened “during their watch.” Trump especially looks like he would rather be back in New York, producing bad TV shows.
Let’s just go back and remember how the G20 works. The G20 is not an institution, in the sense that there is staff with fat paychecks and a building with a permanent logo. It is simply a meeting of leaders that happens every year. The agenda of the meeting is set throughout the year by smaller meetings between the various ministries of those countries. The objective is not to replicate any institution of our existing international cooperation architecture, but to steer problem solving efforts at various international organizations just to focus them on the issue at hand. In this sense, the WHO comes up in G20 meetings when there are immediate issues concerning public health.
Overseeing the WHO’s work is crucial for the mitigation and containment of the COVID-19 pandemic. This is a necessary, but most certainly not sufficient, when it comes to a G20 response.
In order to limit human suffering, there is a devastating economic impact to consider. Just have a look at the extent of possible recessions around the globe. The International Monetary Fund (IMF) is now talking about a negative growth figure of 6.1 percent for developed countries and negative 1 percent for emerging market and developing economies. The latter figures were negative 3.3 percent and a positive 2.8 percent during the global financial crisis of 2009. The dire predictions today could well prove to be too optimistic, if you ask me, especially for emerging markets and developing economies. It all depends on the length of prolonged or intermittent social distancing and the intensity of the pandemic.
In the case of such a severe disruption, international trade figures are dwindling, and connectivity between nations is disrupted. We are at a stage where container routes are no longer operational, nations are taking measures to stop sending goods to each other. In an environment where all national payments are postponed, no one can expect debt repayments to be made on schedule. Just to prevent debt defaults, we are going to need for the G20 to demand that the IMF and the World Bank do their jobs properly. This is not only important for a country like Turkey, with $172 billion in short term debt, but most emerging markets and developing economies. For most of us, hard currency earning capacity is suffering as industries like tourism, natural resources and manufacturing exports are all declining rapidly.
It’s all about the IMF to be ready to provide short term credit lines to G20 central banks, and for the IMF and the World Bank to be ready to provide grants and non-interest loans to nations to help them save the livelihood of their citizens and also to design a mechanism for dealing with debt defaults. Initially, a debt moratorium could be useful.
It is up to the G20 to help international institutions to redesign themselves in order to provide a rapid response to the COVID-19 crisis.
That’s what President Erdoğan has called for during the G20 teleconference meeting, I presume. This crisis is going to impact the lives and livelihoods of tens of millions in our part of the world. The G20 must focus on saving lives.
Originally published at https://www.tepav.org.tr.