Diplomacy & Defense Think Tank News

A major issuance of special drawing rights (SDRs) through the International Monetary Fund would be a key tool to provide financial support to developing and emerging economies and limit the economic and financial fallout of the COVID-19 crisis. SDRs are an unconditional resource, and the case for such an allocation is very strong during an exogenous shock, such as the current one. An SDR allocation would enhance the international liquidity in the hands of emerging and developing countries, so that public responses to the health crisis are not imperilled by financial crises. Close to two-fifths of a new SDR allocation would directly go to developing and emerging economies. In addition, a new mechanism should be created through which countries that do not need their SDR allocation lend them to the IMF, to increase the Fund’s lending capacity. Developed countries can also allocate the SDRs they do not use for official development assistance.

A major issuance of special drawing rights (SDRs) through the International Monetary Fund would be a key tool to provide financial support to developing and emerging economies and limit the economic and financial fallout of the COVID-19 crisis. SDRs are an unconditional resource, and the case for such an allocation is very strong during an exogenous shock, such as the current one. An SDR allocation would enhance the international liquidity in the hands of emerging and developing countries, so that public responses to the health crisis are not imperilled by financial crises. Close to two-fifths of a new SDR allocation would directly go to developing and emerging economies. In addition, a new mechanism should be created through which countries that do not need their SDR allocation lend them to the IMF, to increase the Fund’s lending capacity. Developed countries can also allocate the SDRs they do not use for official development assistance.

A major issuance of special drawing rights (SDRs) through the International Monetary Fund would be a key tool to provide financial support to developing and emerging economies and limit the economic and financial fallout of the COVID-19 crisis. SDRs are an unconditional resource, and the case for such an allocation is very strong during an exogenous shock, such as the current one. An SDR allocation would enhance the international liquidity in the hands of emerging and developing countries, so that public responses to the health crisis are not imperilled by financial crises. Close to two-fifths of a new SDR allocation would directly go to developing and emerging economies. In addition, a new mechanism should be created through which countries that do not need their SDR allocation lend them to the IMF, to increase the Fund’s lending capacity. Developed countries can also allocate the SDRs they do not use for official development assistance.

The transition to a low-carbon economy will entail a large-scale structural change. Some industries will have to expand their relative economic weight, while other industries, especially those directly linked to fossil fuel production and consumption, will have to decline. Such a systemic shift may have major repercussions on the stability of financial systems, via abrupt asset revaluations, defaults on debt, and the creation of bubbles in rising industries. Studies on previous industrial transitions have shed light on the financial transition risks originating from rapidly rising “sunrise” industries. In contrast, a similar conceptual understanding of risks from declining “sunset” industries is currently lacking. We substantiate this claim with a critical review of the conceptual and historical literature, which also shows that most literature either examines structural change in the real economy, or risks to financial stability but rarely both together. We contribute to filling this research gap by developing a consistent theoretical framework of the drivers, transmission channels, and impacts of the phase-out of carbon-intensive industries on the financial system and on the feedback from the financial system into the rest of the economy. We also review the state of play of policy aiming to protect the financial system from transition risks and spell out research implications.

The transition to a low-carbon economy will entail a large-scale structural change. Some industries will have to expand their relative economic weight, while other industries, especially those directly linked to fossil fuel production and consumption, will have to decline. Such a systemic shift may have major repercussions on the stability of financial systems, via abrupt asset revaluations, defaults on debt, and the creation of bubbles in rising industries. Studies on previous industrial transitions have shed light on the financial transition risks originating from rapidly rising “sunrise” industries. In contrast, a similar conceptual understanding of risks from declining “sunset” industries is currently lacking. We substantiate this claim with a critical review of the conceptual and historical literature, which also shows that most literature either examines structural change in the real economy, or risks to financial stability but rarely both together. We contribute to filling this research gap by developing a consistent theoretical framework of the drivers, transmission channels, and impacts of the phase-out of carbon-intensive industries on the financial system and on the feedback from the financial system into the rest of the economy. We also review the state of play of policy aiming to protect the financial system from transition risks and spell out research implications.

The G7 practices forms of external accountability to answer for its behavior to the outside world and internal accountability to lead the implementation of what it has decided. To follow up on its development related commitments, it has set up a permanent framework to produce annual public reports on how G7 national administrations have worked together to implement them.
Reports under this framework draw from implementation experience but G7 Leaders never use them to make decisions on how to carry implementation forward or design new commitments. This is because the G7 process is generally discontinuous and its accountability process is currently not targeted at facilitating feedback from implementation experience to policy making. The learning potential inherent in internal accountability is not fully used. As a result, the G7 is less effective than it could be in implementing its commitments under changing circumstances. In addition, G7 commitments and methodology do not always make it easy for outside stakeholders to check G7 words against its behavior, even though this is important for external accountability. This makes it harder to have a rational debate about G7 legitimacy.
This paper suggests ways to improve G7 accountability practice so that it systematically produces learning effects and better supports G7 legitimacy. The G7 can capture learning effects by underpinning every commitment with an explicit notion of how they want to achieve what and making sure that this notion gets tested regularly against implementation experience. Closing this feedback loop could be a job for G7 portfolio ministers who can make decisions on further implementation based on the experience set out in an accountability report. Better designed commitments and improved follow up would also support G7 legitimacy, because this would make it easier for external stakeholders to check G7 action against its words.

The G7 practices forms of external accountability to answer for its behavior to the outside world and internal accountability to lead the implementation of what it has decided. To follow up on its development related commitments, it has set up a permanent framework to produce annual public reports on how G7 national administrations have worked together to implement them.
Reports under this framework draw from implementation experience but G7 Leaders never use them to make decisions on how to carry implementation forward or design new commitments. This is because the G7 process is generally discontinuous and its accountability process is currently not targeted at facilitating feedback from implementation experience to policy making. The learning potential inherent in internal accountability is not fully used. As a result, the G7 is less effective than it could be in implementing its commitments under changing circumstances. In addition, G7 commitments and methodology do not always make it easy for outside stakeholders to check G7 words against its behavior, even though this is important for external accountability. This makes it harder to have a rational debate about G7 legitimacy.
This paper suggests ways to improve G7 accountability practice so that it systematically produces learning effects and better supports G7 legitimacy. The G7 can capture learning effects by underpinning every commitment with an explicit notion of how they want to achieve what and making sure that this notion gets tested regularly against implementation experience. Closing this feedback loop could be a job for G7 portfolio ministers who can make decisions on further implementation based on the experience set out in an accountability report. Better designed commitments and improved follow up would also support G7 legitimacy, because this would make it easier for external stakeholders to check G7 action against its words.

The G7 practices forms of external accountability to answer for its behavior to the outside world and internal accountability to lead the implementation of what it has decided. To follow up on its development related commitments, it has set up a permanent framework to produce annual public reports on how G7 national administrations have worked together to implement them.
Reports under this framework draw from implementation experience but G7 Leaders never use them to make decisions on how to carry implementation forward or design new commitments. This is because the G7 process is generally discontinuous and its accountability process is currently not targeted at facilitating feedback from implementation experience to policy making. The learning potential inherent in internal accountability is not fully used. As a result, the G7 is less effective than it could be in implementing its commitments under changing circumstances. In addition, G7 commitments and methodology do not always make it easy for outside stakeholders to check G7 words against its behavior, even though this is important for external accountability. This makes it harder to have a rational debate about G7 legitimacy.
This paper suggests ways to improve G7 accountability practice so that it systematically produces learning effects and better supports G7 legitimacy. The G7 can capture learning effects by underpinning every commitment with an explicit notion of how they want to achieve what and making sure that this notion gets tested regularly against implementation experience. Closing this feedback loop could be a job for G7 portfolio ministers who can make decisions on further implementation based on the experience set out in an accountability report. Better designed commitments and improved follow up would also support G7 legitimacy, because this would make it easier for external stakeholders to check G7 action against its words.

Effective and sustainable multilateral peace and security initiatives in Africa depend on a strong partnership between the United Nations and the African Union. While their strategic partnership has grown since 2017, collective peacebuilding efforts still lag behind cooperation in other areas. Different institutional mandates, policy frameworks, and operational practices have led them to carve out distinct roles in the multilateral peacebuilding space, often impeding closer cooperation.

This report—a joint publication of IPI and the Institute for Security Studies (ISS)—analyzes the UN and AU’s approaches to peacebuilding and identifies opportunities for a more robust and effective peacebuilding partnership. These include aligning their political strategies, fostering cooperation between the AU Peace and Security Council (AUPSC) and the UN Peacebuilding Commission (UNPBC), reconciling differences in their peacebuilding approaches, securing sustainable financing, and capitalizing on emergent peacebuilding approaches. The paper concludes with recommendations for UN and AU member states and officials:

• UN and AU member states should build consensus around shared peacebuilding concerns, better institutionalize the working relationship between the AUPSC and the UN Africa Group, and strengthen implementation of the recommendations from the 2018 meeting between the AUPSC and UNPBC.
• UN and AU officials should include peacebuilding and development personnel in annual engagements on peace and security, explore opportunities for joint analysis and planning for peacebuilding activities, and share more analysis and expertise at the working level.

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We examine the role of foreign multinationals in services sectors in the context of Brexit, which is assumed to induce an increase in different types of barriers: (i) FDI barriers to multinationals in services; (ii) non‐tariff barriers to trade; and (iii) import tariffs between the UK and the rest of the EU. We use a state‐of‐the‐art Melitz approach in manufactures with multinationals operating in imperfectly competitive services sectors in a multiregional general equilibrium framework. We find that the increased FDI barriers in services explain about one third of the total welfare loss of Brexit. Furthermore, our decomposition analysis (by introducing each type of barriers separately) shows that the barriers against the EU services multinationals in the UK are harmful to British manufacturing sectors because they face a reduced (and more expensive) supply of intermediate services.

We examine the role of foreign multinationals in services sectors in the context of Brexit, which is assumed to induce an increase in different types of barriers: (i) FDI barriers to multinationals in services; (ii) non‐tariff barriers to trade; and (iii) import tariffs between the UK and the rest of the EU. We use a state‐of‐the‐art Melitz approach in manufactures with multinationals operating in imperfectly competitive services sectors in a multiregional general equilibrium framework. We find that the increased FDI barriers in services explain about one third of the total welfare loss of Brexit. Furthermore, our decomposition analysis (by introducing each type of barriers separately) shows that the barriers against the EU services multinationals in the UK are harmful to British manufacturing sectors because they face a reduced (and more expensive) supply of intermediate services.

We examine the role of foreign multinationals in services sectors in the context of Brexit, which is assumed to induce an increase in different types of barriers: (i) FDI barriers to multinationals in services; (ii) non‐tariff barriers to trade; and (iii) import tariffs between the UK and the rest of the EU. We use a state‐of‐the‐art Melitz approach in manufactures with multinationals operating in imperfectly competitive services sectors in a multiregional general equilibrium framework. We find that the increased FDI barriers in services explain about one third of the total welfare loss of Brexit. Furthermore, our decomposition analysis (by introducing each type of barriers separately) shows that the barriers against the EU services multinationals in the UK are harmful to British manufacturing sectors because they face a reduced (and more expensive) supply of intermediate services.

This policy brief investigates the interplay of two critically important Group of Twenty (G20) agenda items: trade and climate change. We argue that there is significant room for a stronger emphasis on climate-friendly trade measures that are in line with the global trade regime. We believe that the G20 should fully tap into this potential. We recommend (1) using preferential trade agreements to leverage climate action, (2) phasing out fossil fuel subsidies, (3) seeking international cooperation and consensus on the implementation of border carbon adjustments, (4) making use of investment law and, more generally, (5) fostering trade and climate linkages through the G20.

This policy brief investigates the interplay of two critically important Group of Twenty (G20) agenda items: trade and climate change. We argue that there is significant room for a stronger emphasis on climate-friendly trade measures that are in line with the global trade regime. We believe that the G20 should fully tap into this potential. We recommend (1) using preferential trade agreements to leverage climate action, (2) phasing out fossil fuel subsidies, (3) seeking international cooperation and consensus on the implementation of border carbon adjustments, (4) making use of investment law and, more generally, (5) fostering trade and climate linkages through the G20.

This policy brief investigates the interplay of two critically important Group of Twenty (G20) agenda items: trade and climate change. We argue that there is significant room for a stronger emphasis on climate-friendly trade measures that are in line with the global trade regime. We believe that the G20 should fully tap into this potential. We recommend (1) using preferential trade agreements to leverage climate action, (2) phasing out fossil fuel subsidies, (3) seeking international cooperation and consensus on the implementation of border carbon adjustments, (4) making use of investment law and, more generally, (5) fostering trade and climate linkages through the G20.

John Hendra and Silke Weinlich assess the recently established UN Joint SDG Fund and explain that it's significance lies in the fact that it provides a unique financial instrument to the newly empowered resident coordinators, in turn one of the outstanding features of the Secretary-General’s reforms in the UN development system.

John Hendra and Silke Weinlich assess the recently established UN Joint SDG Fund and explain that it's significance lies in the fact that it provides a unique financial instrument to the newly empowered resident coordinators, in turn one of the outstanding features of the Secretary-General’s reforms in the UN development system.

John Hendra and Silke Weinlich assess the recently established UN Joint SDG Fund and explain that it's significance lies in the fact that it provides a unique financial instrument to the newly empowered resident coordinators, in turn one of the outstanding features of the Secretary-General’s reforms in the UN development system.