The Official ICC G20 CEO Advisory Publication 2013

The Official ICC G20 Advisory Group Publication
INSIDE G20
WELCOME: Vladimir Putin / A.N. Shokhin Global Development: Future of Agriculture ICC G20: ICT for a Better Tomorrow Conflict: Balkan Peace and Prosperity
TOUGH DECISIONS AHEAD: THE FUTURE OF EUROPE
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The G20 / G8 Publication 2013
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first in Asia and the third among the 240 Airlines in IATA, topping all Chinese airlines for 34 years. In June 6, 2012, China Southern Airlines opened the Guangzhou-London route, adding to the existing routes from Guangzhou to Paris and Amsterdam and from Guangzhou to Sydney, Melbourne, Auckland, Brisbane, Perth etc. in Oceania, which form two beautiful fans. The China Southern Airlines European fan route network and Oceania network joins at Guangzhou Hub, cooperating with each other to create Canton Route. By December, 2012, China Southern Airlines have kept a safe record of 10.37 million flying hours and carried close to 600 million passengers without incident. The airlines safety commitment has - and continues to be unwavering both throughout China and globally. On September 28, 2012, China Southern Airlines was honored with the Diamond Flight Safety Award by the Civil Aviation Administration of China (CAAC), becoming the leading Chinese carrier to maintain the highest safety records in China. China Southern Airlines has been honored as
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June 2013
Contents & Contributors

Features
COVER STORY: 28 / CHALLENGES AND OPPORTUNITIES FOR THE B20
By Chrisella Sagers Herzog
28

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The Official ICC G20 Advisory Group Publication
SPECIAL NOTE: 18 / Graham Quirk, Lord Mayor of Brisbane 32 / Peter Anderson Global Development: 36 / The Future of Agriculture
By Juergen Voegele
INSIDE G20
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38 / To Feed the Future, We Need a Feast of Facts, and a Famine of Fear

By David Schmidt
37
Publisher: Chris Atkins Editor-in-Chief: Ana C. Rold editors@diplomaticourier.org Managing Editor: Chrisella Sagers Herzog editors@diplomaticourier.org Design & Creative Director: Christian Gilliham christian@cgcreate.co.uk T: ( +44) 7951 722265 WELCOME NOTES: Publishers Note By Chris Atkins
40 / All Hands on Deck

By Dr. Christian Ketels
42 / The Future of Healthcare is Personalized Medicine

By Bill Frist
ICC G20 Advisory Group looks at G20 agenda: 44 / Towards a more inclusive G20 Agenda
By M. Rifat Hisarciklioglu
46 / B20: How to contribute to Responsible Finance?

By EF de Lencquesaing
48 / ICT for a Better Tomorrow

By Kris Gopalakrishnan
50 / Energy Access and World Prosperity

By By Kimball Chen
60
Editors Note By Ana C. Rold Welcome by: Vladimir Putin, President of Russia A.N. Shokhin, RSPP President and B20 Chairman Richard Goyner, Managing Director, Wesfarmers Limited Chairman, Australian B20 Jean Guy Carrier, ICC Secretary General Marcus Wallenburg, Chairman of the ICC G20 Advisory Group Contributors: Chrisella Sagers Herzog, Dr. Richard Rousseau, Juergen Voegele, David Schmidt, Dr. Christian Ketels, Bill Frist, M. Rifat Hisarciklioglu, EF de Lencquesaing, Kris Gopalakrishnan, Kimball Chen, Kris Gopalakrishnan, Eduardo Eurnekian, Tom Cardamone, Steve Keller, Patrick McQuillan, Calie Hill, Oscar Montealegre, Jodie Grifn, Dr. Valentina Bartolucci, James George Jatras, John Currie, Gerard Worms, Harold McGraw & Victor Fung Publishing Firm: The CAT Company, Inc. Chris Atkins, President Global Advisory Group: Chris Atkins, Peter Atkins Jennifer Latchman, Manuel C. Menendez III (Chairman & Strategic Advisor) Keith Foote Nyborg (United States Ambassador (Ret.) President of Sales: Mike Nyborg Sales Executives: Ray Baker, Guy Furl, Tony Royle, Juan Hierro, Amelia de La Cruz, Don Stauber Special thanks: Diplomatic Courier for their editorial direction and strategy To contact the editors please email us at: editors@diplomaticourier.org
52 / Making More with Less

54 / Growth and Infrastructure in Latin America

By Eduardo Eurnekian
Global Finance: 56 / Assessing David Camerons G8 Agenda on Tax and Transparency

By Tom Cardamone
60 / What Threat Do The Monetary Policies of Developed Nations Pose to Emerging Economies?
By Dr. Richard Rousseau
62 / Too-Big-To-Fail Syndrome
Advertisers Index
03 05 07 09 11 13 15 17 19 21 23 25 31 34 51 57 59 68 73 75 79 81 82 99 100 China Southern Airlines DSX Heifer International CAT Company Publications CGcreate_Design & Art Direction Imirus Grand Hotel Europe Hotel Vedensky The Australian Chamber Alliance Brisbane Economic Development Board Corporacion America Diplomatic Courier Waters Corporation Tufts University Brand South Africa Energy Transportation Group Zurich University of Washington Villa Hotels SIXT Rent a car Global South Summit ICC G20 Advisory Group McGraw Hill Financial Verso Paper Corp Invest in Turkey Telcel
64 / The European Unions: Cycles of History

By Steve Keller
66 / Debt and Instability: The High Costs of Secession in the Eurozone

By Patrick McQuillan
International Trade: 70 / Challenges of Tomorrow: What the Future Holds for the WTO
By Calie Hill
72 / WTO in the 21st Century?

By Dr. Richard Rousseau
76 / Breaking BRICS
By Oscar Montealegre
78 / The Costs of Copyright in the TPP

By Jodie Grifn
Conflict Resolution: 90 / The spectre of terrorism and the Islamist Challenge in North Africa
By Dr. Valentina Bartolucci
Sponsored Features:
02 / 24 / 26 / 80 / 96 / China Southern Airlines Waters Intel McGraw Hill Financial Turkey Investment Board
92 / Balkan Peace and Prosperity

By James George Jatras
94 / Northern Ireland: On the Brink of a Dangerous Marching Season

By John Currie
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The G20 Publication 2013
Publishers Note
Distinguished Guests I would like to take this opportunity to thank all those involved for their dedication in helping produce the ofcial ICC G20 advisory Group publication. It has been a great pleasure to collaborate with the International Chamber of Commerce G20 Advisory Group again. We are very excited with the recent announcement made by the ICC at their World Chamber Federation meeting in Doha to launch the ICC G20 Business Advisory Council. The ICC is the worlds largest business organization and the only one present in many countries. This in turn will give the Ofcial ICC G20 advisory magazine more readership and exposure to the importangt topics being discussed at these summits. The CAT Company is always improving the reach of the publication and its contents and we are very happy to partner with Imirus, the leading e-book technology company. Readers can now download this publication on their mobile devices on the Apple newsstand or the Android Google Play store. We look forward to a very positive summit and we hope there will be some great outcomes in which the worlds leaders can improve all aspects that are on the agenda today. We thanks the Russians for their hospitality and we look forward to seeing you down under in 2014, where the great city of Brisbane will welcome you all.
Christopher Atkins
Publisher and Founder Cat Company, Inc.
THE CAT COMPANY IS ALWAYS IMPROVING THE REACH OF THE PUBLICATION AND ITS CONTENTS AND WE ARE VERY HAPPY TO PARTNER WITH IMIRUS, THE LEADING E-BOOK TECHNOLOGY COMPANY.
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The G8 Publication 2013 The Official ICC G20 Advisory Group Publication
INSIDE G8
INTERVIEW: Sir Peter Westmacott British Ambassador to the United States Global Development: Future of Agriculture Northern Ireland: Conflict Resolution Conflict: Balkan Peace and Prosperity
INSIDE G20
AFTER LIBOR AND ICAP, WHATS NEXT FOR FINANCIAL TRANSPARENCY REFORM?
The CAT company is the proud publisher of the G8 Summit publication and the ofcial G20 Summit publication for the international Chamber of Commerce G20 Advisory Group.
The CAT Company Inc. Contact: Chris Atkins on 1-801-783-5120 catkins@thecatcompanyinc.net
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G8 THOUGHT LEADERSHIP Northern Ireland United Kingdom June 17/18 2013 The G8 Publication 2013
G20 THOUGHT LEADERSHIP St Petersburg Russia June 20 2013 The Official ICC G20 Advisory Group Publication
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Editors Note
A Year of Transparency
Welcome to our third edition of the G20 Business. While the publishers of this publication have produced a G8 and G20 magazine for over 17 years, this is the third year in a row we collaborate exclusively with the International Chamber of Commerce, focusing on business and policy and how the global business leadership collaborates with the political leadership to debate and solve some of the biggest issues facing our world. We are particularly proud to have been selected again as the ofcial publication for this years increasingly relevant and important forum of global leadersa testament to our longevity in the eld and our teams tireless efforts to produce a publication by the leaders for the leaders. The issues at hand are many and it is abundantly clear the G20 remains a key forum for managing the global economy beyond the current economic crisis. The membership of the G20which includes both developed and developing economiesis such that allows for greater inclusion and collaboration; more so than any other global gathering of such nature. The B20, the G20s business mirror summit has become an important voice and conduit; it integrates the international business communitya key partnerinto the G20 process. This group of select business leaders represents the most important industries involved in solution making. From green growth to food security to employment, the task forces within the B20 have set to research solutions to seemingly intractable issues. Their cooperation with the G20 leaders is paramount to the efforts to curtail the global economic crises. Even though the G20 was the result of the nancial crisis in 2008, it is very likely the institution will carry on well after the crisis has subsided. In the future, the G20 has the potential of being the venue of choice for multiple stakeholders to come together to carry on complex solutions that require collaboration on multiple levels and via multiple sectors in a exible format. That type of work is already being carried out by the B20, which is engaging with multiple partners like the World Economic Forum and the OECD. We are honored again to have several business leaders contributing articles and editorials for this special edition of the B20 meeting during the G20 summit. We have assembled a unique set of answers to the challenges posed in the agenda this year in these pages and we hope you will enjoy another world-class publication put together by a world-class team of international editors and writers. Thank you for reading.
Ana C. Rold
Editor-in-Chief
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Welcome
Vladimir Putin
President of Russia
Dear friends THE G20 was established in 2008 and has become an important instrument in managing and responding to crises. Through their coordinated action, in just a short period of time, the participating countries managed to stop the economic slide and tighten supervision over national nancial systems. They then began systemic transformation of the international nancial and economic architecture to bring it into line with Twenty-First Century demands, and started developing the mechanisms that will give us maximum protection from risks, strengthening mutual trust, and giving the impulse for sustained and balanced global economic development. We believe that the Russian presidencys main task will be to focus the G20s efforts on developing measures to stimulate economic growth and create jobs. What will this require? We think the answer is clear: investment incentives, trust and transparency in markets, and effective
regulation. These priorities will be at the heart of discussion of the various issues traditionally on the G20s agenda. These issues include the state of the global economy; implementing the framework agreement for strong, sustainable and balanced growth; facilitating job creation; reforming the currency and nancial regulation and supervision systems; stability on global energy markets; stimulating international development; strengthening multilateral trade; and countering corruption. We will also include two new issues on the nancial agenda: nancing investment as a basis for economic growth and job creation, and modernizing national public borrowing and sovereign debt management systems. Thus, the Russian presidency will ensure continuity in the G20s agenda and fulllment of earlier commitments, while at the same time offering new approaches to examine. Russia is ready for the broadest possible cooperation on reaching the G20s objectives. In order to make the G20s work more effective and transparent and increase trust
in what it is doing, we will hold broad consultations with all interested parties with countries not part of the G20, and also with international, expert, and trade union organizations, and business community, civil society, and youth representatives. Practice shows that global measures are only effective when they are based on the views and take into account the interests of different groups. We hope that Russias presidency of the G20 will help to consolidate the participating countries efforts in order to achieve our common goal of resolving the most serious problems facing the global economy, ensuring sustainable growth for the entire international communitys benet, and giving millions of people around the world a better standard of living. Russia is open for dialogue and constructive cooperation.
Vladimir Putin President of Russia
RUSSIA IS READY FOR THE BROADEST POSSIBLE COOPERATION ON REACHING THE G20S OBJECTIVES.
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Welcome
A.N. Shokhin
RSPP President and B20 Chairman
Dear Colleagues FOLLOWING THE SUCCESS of B20 summits in Toronto, Seoul, Cannes, and Los Cabos we intend to consolidate the progress to advance the G20-B20 dialogue and coordinate actions to generate strong, sustainable and balanced global growth. The B20 will bring together leading CEOs and heads of international organizations from the G20 countries to develop actionable recommendations aligned with the G20 goals, members countries contexts, and Russias priorities for G20 presidency.
Our priority is that the B20 recommendations should promote G20-B20 shared objective of successful global growth. Through the work of B20 Task Forces we will focus on the topics of investment and infrastructure, nancial systems, restoring condence and growth, trade as a growth driver, innovation and development as a global priority, job creation, employment and investments in human capital, transparency and anti-corruption. Our goal is to ensure continuity and enhance impact of B20 recommendations and G20 decisions for global economic recovery
by tracking and promoting their implementation in G20 countries. This task will be taken up by G20-B20 Dialogue Efciency Task Force. We look forward to a productive cooperation and hope that together we will steer global economy towards strong growth and job creation.
A.N. Shokhin RSPP President and B20 Chairman
THE B20 WILL BRING TOGETHER LEADING CEOS AND HEADS OF INTERNATIONAL ORGANIZATIONS FROM THE G20 COUNTRIES TO DEVELOP ACTIONABLE RECOMMENDATIONS ALIGNED WITH THE G20 GOALS, MEMBERS COUNTRIES CONTEXTS, AND RUSSIAS PRIORITIES FOR THE G20 PRESIDENCY.
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Welcome
Richard Goyder
Managing Director, Wesfarmers Limited Chairman, Australian B20
Dear friends IN 2014, Australia will host the G20, culminating in the Leaders Summit in the city of Brisbane, Queensland, in November. It is an honour for me to have been selected by the Australian Government to head the Australian B20, which will lead business engagement during Australias presidency of G20. I believe there is a signicant opportunity for the G20 to make a difference in sustainable global growth and prosperity and the creation of jobs. That belief is shared by the group of leaders from across Australias business community who have joined me on the Australia B20 committee. We aim to collaborate closely with the international business community over the next year to help the G20 deliver real
outcomes at a time of continuing global uncertainty. This includes building on the work being done by the Russian B20 as they help shape the priorities and outcomes of the Russian presidency of G20 this year. I take this early opportunity to invite business leaders and groups in all G20 nations to engage with us in this process. I personally have the responsibility of leading Wesfarmers, a conglomerate which has grown from its origins as a farmers cooperative just under 100 years ago to become one of Australias biggest publicly listed companies. Wesfarmers is Australias largest private employer as a result of our ownership of several of the nations largest retail operations, including the Coles supermarket group, Kmart Australia, Target Australia and the Bunnings home improvement and hardware chain. We also have businesses operating in insurance, coal mining and
industrial and safety equipment. In total we have around 200,000 employees and our core objective is to provide a satisfactory return to shareholders over time. Revenue for many of Wesfarmers businesses is derived largely from our home market, but Australia is an export-driven economy and consumer sentiment and condence is strongly connected to the wellbeing of our global trading partners. As a nation, we are very mindful of the value and importance of working with others to build the health of the global economy. I also look forward to welcoming many of you to Australia next year and showcasing a little of our nations beauty and capabilities. Richard Goyder Managing Director, Wesfarmers Limited Chairman, Australian B20
IN 2014, AUSTRALIA WILL HOST THE G20, CULMINATING IN THE LEADERS SUMMIT IN THECITY OF BRISBANE, QUEENSLAND, IN NOVEMBER.
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BRISBANE FACTS
is Australias New World City, Brisbane with a $US118 billion economy. London Financial Times fDi Magazine named Brisbane is one of the
Top 10 Asian Cities of the Future.

economy benefits from Brisbanes a strong mining and energy sector, servicing many countries with coal and other commodities. economic growth is fuelled Brisbanes by a competitive base for doing business,
trade and innovation. population of 2 million call Brisbane A home with a median age of 35. Brisbane is a multicultural society with one in four residents born overseas. The population is expected to reach 3.9 million by 2056.
Australias new world city ready to welcome you in 2014

By the Lord Mayor of Brisbane, Graham Quirk
Australias sub-tropical capital, Brisbane, is looking forward to throwing open its doors to the world at the 2014 G20 Leaders Summit.
For those who havent been to Brisbane for a few years or are yet to visit, allow me to introduce our city: Brisbane is Australias new world city - unashamedly ambitious, embracing the digital age and hot-housing an entrepreneurial culture. Unburdened by pretension or an age-old history that can weigh down traditional mega cities, Brisbane is synonymous with opportunity. Were the closest Australian capital city on the eastern seaboard to Asia and weve set a course to become an economic powerhouse in the Asia Pacific Region. We were recently named one of the Top 10 Asian Cities of the Future by the London Financial Times fDi Magazine. In fact, were regularly singled out as a city to watch with our optimal location, growing depth of talent, innovation and diverse economic growth potential. Brisbane is a major hub for large resource and energy companies, a significant centre for research and innovation, and the engine room of much of Australias continued economic growth, in defiance of the global downturn of the past five years. The 2013 World Bank Doing Business Annual Report, named Australia one of the most business friendly countries in the world and Brisbane was recently rated as on par with Zurich and Moscow as a global innovation leader as part of the 2thinknow Innovative Cities Index. Our investment opportunity growth industries include: biotechnology, aviation, food and agribusiness, hotels, manufacturing and construction. Brisbanes population of two million is on the rise. With one in four residents born overseas and a median age of 35, we are a young, innovative, bold and multicultural city. Our $US118 billion economy is predicted to almost double to $US223 billion by 2031. Highly-qualified professionals are our workforces largest single employment category. Many investors are attracted by the quality of our skills-base and our world-class universities, including The University of Queensland which regularly rates in the top 100 universities in the world. Over the past 10 years Queensland has pursued a research and development agenda that has driven hundreds of millions of dollars of investment in the research sector and allowed the creation of significant research institutes attracting prime talent. The work of their scientists and researchers is further bolstered by several new science precincts that have attracted international collaborations from industry and research institutes. Brisbanes three major universities have important international research links across areas including climate
change, developing treatments for cancer and other diseases, clean coal technology, nanotechnology, renewable energy, infrastructure, emergency services, community development, the environment and agriculture. Many of the 72,000 international students who attend Brisbane institutions each year stay on to embrace local employment opportunities. We enjoy an enviably relaxed lifestyle in a sub-tropical climate with yearround sunshine, the world- renowned beaches of both the Gold and Sunshine Coast within an hours drive south and north and the Great Barrier Reef within our state of Queensland. Brisbanes lifestyle and international appeal is enriched by a burgeoning local arts and music scene. Our South Bank precinct includes the southern hemispheres largest gallery of modern art: GOMA as well as our world-class Brisbane Convention and Exhibition Centre. We are a city with a lifestyle obsession, global ambitions and a contagious energy and entrepreneurial spirit that lubricates the business environment. This, coupled with a single local council that governs the entire city and a strong economic development focus, is giving Brisbane a bright glow on the international radar. Brisbane is casual but caring, progressive but green, successful but unpretentious. We cant wait to show you around.
G20 LEADERS SUMMIT

Brisbane, host of 2014s gathering of world leaders.
With 4000 delegates converging on Brisbane for the worlds premier forum of global economic cooperation in 2014, the stage is set for collaborative decisionmaking and what a stage it is. Brisbane has a unique, natural beauty, sub-tropical climate, state-of-the-art facilities and recent infrastructure growth, making it an attractive place to do business. Cultural attractions abound and a welcoming multicultural society makes this new world city the ideal place for business leaders to make decisions that affect the world.
C H OO S E B R I S B A N E .C OM
Welcome
Jean Guy Carrier

ICC Secretary General
Dear friends AS THE EVERYDAY practitioners of the global economy, international business has a clear stake in the success of the G20 and is willing to play an increasing role, delivering real-world input to policymaking, partnering with governments to implement commitments, and validating the G20s actions through increased international trade and investment, economic growth and job creation. Business believes that that by monitoring G20 actions and offering constructive feedback, it can help improve G20 outcomes and support the groups objectives of growth, nancial stability, and better global governance. Over the last several years, the ICC G20 Advisory Group has joined with host country business associations, the World Economic Forum, McKinsey & Company, CEOs from corporations large and small, and representatives from the B20 coalition of national business federations to collaborate on the formulation of businessbased policy recommendations. Inclusive of the Seoul G20 Business Summit, 31 unique policy task forces have prepared no fewer than 250 recommendations and presented these for consideration by G20 leaders during respective G20 Business (B20) Summits held in conjunction with the respective G20 Leaders Summits. In order to leverage our G20 advocacy efforts and to assess G20 responsiveness to business priorities, the ICC G20 Advisory
Group publishes the ICC G20 Business Scorecard, now in its second edition. The purpose of the Scorecard is to provide a detailed assessment of the G20s recognition of, action on and response to recommendations put forward by the global business community. Compilation of the annual Scorecard reects ICCs belief that direct feedback from the business community will help the G20 set priorities, honour commitments, measure its own progress over time and identify deciencies that deserve greater attention. Produced halfway through the current Russian G20 Presidency, the 2nd edition (2013) of the Scorecard assesses four policy areas that the ICC G20 Advisory Group considers priorities for G20 attention: trade and investment, nancing for growth and development, energy and environment, and anti-corruption. Overall, the Scorecard rates G20 responsiveness to business priorities as fair, indicating that the G20 is responding to business concerns, but needs to further improve its performance in order to maintain momentum in the global economic recovery. This is an improvement on the score from the 2012 Scorecard, which rated overall progress as poor. Despite the fair overall score, the Scorecard marks good performances in some policy areas. Notable areas of progress include a strengthened dialogue between business and the G20 on anti-corruption and steps taken under the Mexican G20 Presidency to improve nancial inclusion. Although ICC was encouraged by the Mexican G20 Presidencys increased focus on trade and investment, the Scorecard rates the G20s performance in this area as poor. This score reects the continued lack of progress towards completing the World Trade Organization (WTO) Doha Development Round of trade negotiations, and the G20s poor performance on rolling back protectionist measures, despite recurring pledges to do so. According to a recent report by the Peterson Institute for International Economics (commissioned by the ICC Research Foundation), the conclusion of the current WTO trade negotiations would have a
signicant impact on jobs and growth globally. For instance, an agreement on trade facilitation alone would translate into more than US$1 trillion in world export gains and more than 21 million jobs. For these reasons, the Scorecard calls on the G20 to push for an agreement on trade facilitation at the 2013 WTO Ministerial Conference in Bali. Its incumbent on the G20 to take a leadership role in this forum. Of the four sets of business priorities, nancing for growth and development was the G20s strongest performance with a score of good, due largely to the favourable treatment given to trade nance under Basel III, as well as efforts to increase SMEs access to nance, and strong programmes created to improve nancial education, protection and inclusion. Performance relating to both energy and environment and anti-corruption was rated as fair. The mixed result on energy and environment issues comes as a result of encouraging progress on G20 support for clean energy technologies and steps taken to phase out fossil fuel subsidies, tempered by a lack of progress towards eliminating barriers to trade in environmental goods and services. The score of fair for anti-corruption indicates a good level of progress made on the G20s anti-corruption agenda (notably the extension of the G20 Anti-Corruption working groups mandate to 2014), but with plenty of work still to be done, such as universal ratication across the G20 of the UN Convention on Anti-Corruption. The 2012 summit in Los Cabos set out a highly ambitious agenda, yet much of the summit and consequent declaration focused on containing the Eurozone crisis. Despite this, the G20 Sherpas have been working hard behind the scenes, and as this work matures we expect scores to continue to improve. International business is encouraged by the progress on our priorities and we look forward to continuing our dialogue with leaders at the September G20 Summit in Saint Petersburg. Jobs and economic growth are in the balance. Jean Guy Carrier ICC Secretary General
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Welcome
Marcus Wallenburg
Chairman of the ICC G20 Advisory Group
Dear friends IN 2008, 20 heads of state and government decided to take over the reins of a collapsing world economy and rebuild the foundations of the global governance system. The Group of Twenty (G20), bringing together a broad base of leading industrialized and emerging economies representing 80% of world trade and 85% of global GDP, has now emerged as the highest-level policy forum for international economic cooperation. From the perspective of international business, the G20 is uniquely positioned to address some of the worlds most important and intractable economic problems, and its deliberations manifestly bear on core business goals for trade, investment, economic growth and job creation. In order to play a constructive role in representing business views to G20 governments, the International Chamber of Commerce (ICC) has established the ICC G20 Advisory Group. The Group comprises approximately 30 CEOs actively concerned with the G20 policy agenda and keen to engage with peers, set priorities and speak out on the issues most vital to business. Our aim is to build an enduring platform for global business to provide input to the work of the G20 on an ongoing basis. During the preparations for the St. Petersburg G20 Summit, members of the ICC G20 Advisory Group worked within
the Business Summit Task Forces led by this years B20 Chairman Alexander Shokhin, President of the Union of Industrialists and Entrepreneurs - RSPP. These efforts have resulted in the compendium of policy recommendations that form the basis for discussion during the G20 Business Summit and chart a course for effective government going forward. Our efforts also included regional policy consultations in Berlin, New Delhi, Melbourne & Canberra, Geneva, Jakarta, Johannesburg and Doha, where members of the ICC G20 Advisory Group collected business priorities from local companies and briefed G20 government Sherpas on business recommendations pertaining to the G20 Summit agenda. In order to leverage our G20 advocacy efforts, the ICC G20 Advisory Group publishes two reports that convey a business response on key areas of G20 performance with the aim to help the G20 set priorities, honour commitments and measure its own progress over time. The ICC G20 Business Scorecard, now in its second edition, assesses G20 responsiveness to business priorities in four key policy areas: trade and investment, nancing for growth and development, energy and environment, and anti-corruption. Our 2013 Scorecard rated G20 performance as fair, indicating that G20 leaders are making progress but at a somewhat protracted pace. This is an improvement on the score from the 2012 Scorecard, which rated overall progress as poor. In parallel, ICC also publishes the ICC Open Markets Index, which measures a countrys openness to trade and investment and provides a useful barometer for evaluating G20 commitments to reducing trade barriers. The 2013 edition of the OMI shows that only one G20 country (Canada) ranks in the top 20 and that the average G20
performance is slightly below the overall performance measured in the 75-country sample. Consequently, despite the G20s recurring pledges to roll back protectionist measures, more progress needs to be made. In recognition of the critical importance of business engagement with the G20, and with the aim to expand the participation of international business participation in the process, ICC has this year launched the ICC G20 Business Advisory Council. The Council will include representatives from ICCs World Chambers Federation (WCF), Junior Chambers International (JCI) and ICCs global network of 90 national committees. This unparalleled international network represents thousands of chambers, grouping millions of companies and spans a wide demographic, cutting across borders and sectors. The Council complements the CEO group, providing a broad business backdrop to the priorities of some of the worlds most dynamic corporations. By combining leading CEOs from G20 countries, with the worlds largest business network, we are able to deliver legitimate and inclusive policy priorities on behalf of international business. ICC and our member companies have high expectations for the G20 Summit this year in St. Petersburg to provide much-needed stewardship to shore up the drifting world economy and create the condence we need to invest. On behalf of international business, we remain committed to generating solid policy work and working with G20 leaders before, during and after the G20 Summit events from Russia to Australia and Turkey and beyond. Marcus Wallenburg Chairman of the ICC G20 Advisory group
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Sponsored Feature / Waters
Making Global Food Supplies Safer
Douglas A. Berthiaume: Chairman, President & CEOWaters Corporation
GLOBAL FOOD TRADE has more than tripled since 1990. Exports and imports currently exceed $1 trillion per year. This steep growth rate makes the task of assuring food safety increasingly dificultfor all governments and food manufacturers alike. In addition, governments around the world are facing shrinking budgets and ever-changing regulations. Exporters also face the challenge of ensuring that their food products meet ever more demanding standards in their target markets. Varying standards in different countries add to the complexity for exporters eager to comply.
At Waters, we know a challenge like this is too great for any one organization or country to tackle alone. In our ongoing effort to deliver on the promise of the The Science of Whats Possible, Waters is committed to developing the most advanced technologies while also continuing to establish strategic partnerships. Together, we are able to create and continually advance the most effective analytical innovations, helping our customers respond to societys needs. It is that spirit of collaboration which brought Waters and the UKs Food and Environment Research Agency (Fera) together, combining our regulatory, scientific, and industry expertise to open the Fera International Food Safety Training Laboratory (IFSTL) in January, 2012
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the first such facility here in Europe. Led by experts from Fera and utilizing Waters state-of-the-art technology, the Fera IFSTL will train scientists from governments, private organizations and companies who have an interest in exporting food products to the UK and Europe on the best available/fit-for-purpose techniques to test for food contamination. Trainees at the Fera IFSTL will study the latest methods of analysis, operate top-of-the-line instrumentation, learn food safety standards and gain an understanding of how to apply testing methods to meet regulations. This will help promote a harmonization of practices that will ease pressures on regulators and strengthen the safety of the food supply before it reaches the table.
The Fera IFSTL is the second in a growing IFSTL network that will include multiple, strategically-placed labs around the world. The first IFSTL (JIFSAN IFSTL), located in the U.S., opened in September 2011, and is a partnership between the Joint Institute for Food Safety and Applied Nutrition (JIFSAN), established with the University of Maryland and the U.S. Food and Drug Administration and Waters Corporation. The IFSTL network will improve food safety by enhancing communication between international regulators and promoting greater and permanent channels of collaboration between the public and private sectors. This unique partnership, in addition to thoughtful changes by governments and a systematic approach to monitor food, from farm to table, will improve food safety standards globally. Because of Waters numerous strategic partnerships around the world, we see immense potential in public-private cooperation that combines expertise and focuses more resources on a challenge like food safety. As we look to the future, science and collaboration will allow us to rise to any challenge.
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t make Waters an essential part of their food and ocess always know what theyre getting. Innovative t deliver safe, quality products more efciently ly. Attribute it to a 50-year focus on innovation ommitment to helping laboratories in every way. y, scientically, operationally. In the end, its l about stocking shelves around the globe with food and ages that taste great every time. To discover whats possible in your world, visit waters.com/food.
Pharmaceutical & Life Sciences | Food | Environmental | Clinical | Chemical Materials

2013 Waters Corporation. Waters and The Science of Whats Possible are trademarks of Waters Corporation.
Sponsored Feature / Intel
Improving lives, communities and economies through technology
At Intel, we strive to make the best silicon and technology products in the world, and through their application, to create a better future for all. We believe that technology plays a fundamental role in finding solutions to the worlds great challenges. We know that embedding corporate responsibility and sustainability into our vision and strategy helps us make better, more secure products and create value for Intel, our customers and society. Technology has improved the lives of so many people on our planetfrom quality education and health care to energy and water conservation and management. Policy that enables the internet to reach people around the globe has been at the forefront of advancing these and countless other benefits of technology. A decade ago, Intel created the mobile computing category with its large investments in a wireless infrastructure and its Pentium M processors paired with Wi-Fi connectivity through the companys Centrino mobile technology. The result has been a wireless computing revolution, with almost ubiquitous availability of Wi-Fi connectivity and the creation of new mobility solutions built for low energy consumption and high performance. Today, our computing platforms supporting the digital economy are used in a wide range of
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an additional $800 billion in global two-way ICT trade a 20 percent increase over the $4 trillion in annual trade under existing ITA product coverage. Inspiring the Next Generation through Education Transformation The rising generations success in todays innovation economy depends on access to a quality education, which is more easily achieved by the use of technology. Technology enables an unprecedented opportunity to advance student achievement. Intel brings the expertise, technology and a robust ecosystem that can provide the foundation for educators and governments to transform education. Powerful and energy-eficient Intel-based PCs and servers, combined with software and fast internet access, help students acquire 21st century skills and help educators teach more effectively. Through the Intel World Ahead Program, Intel has worked with more than 70 countries on programs aimed at making technology more available, affordable and understandable to first -time users. Intel-funded PC purchase programs enable governments to provide computers at a more affordable price,
applications, such as PCs (including Ultrabook, detachable, and convertible systems), servers, tablets, smartphones, automobiles, automated factory systems and medical devices. We also develop software and services primarily focused on security and technology integration. Enhancing Productivity and Innovation in All Economic Sectors The use of information and communication technology (ICT) products and services can dramatically enhance productivity and innovation in many industrial sectors. Governments should work to remove trade barriers that prevent people from obtaining the best ICT products at the lowest cost possible. For example, expanding the WTO Information Technology Agreement (ITA) so that it covers new ICT products developed since the ITA became effective in 1997 could remove tariffs on
THOUGHT LEADERSHIP
allowing thousands of teachers and students access for the first time. Intel also works with telecommunications providers to connect millions of people to the internet with high-speed wireless technologies. Government policies that encourage the deployment of wireless and wired broadband services play a significant role in supporting student and teacher development worldwide. Driving Innovation across Healthcare Effective use of ICT products and services in healthcare saves lives. Technology improves access and quality of care, reduces costs and improves satisfaction among both patients and providers. Intel is making great progress, collaborating with healthcare providers, other companies and policymakers on innovative new products and solutions aimed at improving global access to quality, affordable healthcare. The Citizen Telecare Service System (CTCS) used in Chinese Taipei, where 600,000 seniors with chronic conditions are remotely monitored through technology to help them reduce their blood pressure, showed a significant decrease
blood pressure and helped them maintain healthy levels. CTCS uses biometric measurement, hypertension risk assessment, video communication, education programs, and other tools to change the behavior of high-risk seniors so they maintain their wellness. The technological tools that improve care delivery continue to advance at a steady rate. But in most countries, the development and implementation of policies to govern the use of these technologies in healthcare lags behind. It is more often policy barriers, rather than technological barriers, that stand in the way of greater progress in e-Health. Interoperability standards among data systems and between technologies will help reduce these barriers, while assuring privacy and security of online health data. Closing the Digital Divide Policies that expand the allocation of universal service/access funds to include broadband internet access, especially in remote regions where broadband has previously been cost-prohibitive, are key to bridging the digital divide. In India, Intel contributed to the creation of the National
Digital Literacy Mission, which seeks to proliferate digital literacy across the country. As a result, the Indian government announced an ambitious information technology (IT) policy mandating that one citizen per household be digitally literate by 2020. The success of this program depends not only on the availability of cutting edge products available at the lowest cost possible, but also on widespread broadband penetration. We have an ambitious vision for the next decade: Create and extend computing technology to connect and enrich the lives of every person on earth. Policy makers around the world are in a unique position to facilitate innovation and affect change by allowing broad dissemination of ICT goods and ICT-enabled services.
KEY LINKS: Intel Policy Web Site: http://www.intel.com/ about/companyinfo/policy/index.htm Intel Policy Blog: http://blogs.intel.com/policy/ Corporate Responsibility at Intel Web Site: www.intel.com/go/responsibility
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Cover Story / Tough Decisions Ahead: The Future of Europe

Cover Story by: Chrisella Sagers Herzog, Managing Editor

The latest story in the Eurozone crisis is perhaps not just a retelling once more of an old news story, but instead is the latest slice in a tragedy of the Euro of death by a thousand cuts.
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THOUGHT LEADERSHIP
N APRIL 2013, it became clear that Slovenia was nearing the cliff of scal collapse and was working to avoid becoming the fth Eurozone nation to need a bailout. Initial analysis and statements from EU nancial leaders suggest that Slovenia is not suffering from the same severity of troubles as Cyprus, the last troubled Eurozone nation to make headlines. However, the handling of the Cyprus crisis is still very fresh on everyones mindseemingly manageable nancial problems escalate when the national government responds too slowly or hesitantly, and EU authorities step in to impose unpopular and possibly counterproductive measures. There are questions over the future of the Euro, talk about Germanys leadership through the crisis, calls for reform of the banking system, and protests against austerity measures and intervention by the Troika. It is not the rst time we have heard this story, and time will only tell if it will be the last. The response to the nancial crises in both the U.S. and the EU have been repeatedly described as technocratic, driven by ostensibly scientic techniques [that] would manage risks and predict rare events. The European Union, united by a common currency but divided
A FISCAL UNION WILL REQUIRE FURTHER POLITICAL INTEGRATION TO BECOME SUCCESSFUL.
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Cover Story / Tough Decisions Ahead: The Future of Europe

Habermas called on Germany to move away from policies to stabilize the budgets of shaky Eurozone economies through austerity, to a policy of solidaritycommon liability and mutual debt, along with more democratic inclusion of smaller countries in the decision-making process. The revolt against austerity brewing in the Eurozone will target not only German leadership, but also the role of the European Central Bank, which has been working since September 2012 to bring more scal uniformity and stability to the Eurozone by becoming a lender of last resort to local banks on the verge of collapsing under bad debt. The ECB must take a stand in banking reform, moving away from a too big to fail mentality and forcing banks across the Eurozone to put some skin in the game. Nassim Taleb and George Martin, in the SAIS Review, wrote, [N]obody should be in a position to have the upside without sharing the downside, particularly when others may be harmed. While this principle seems simple, we have moved away from it in the nance world, particularly when it comes to nancial organizations that have been deemed too big to fail. The captain must go down with the ship; bankers must reap the consequences of bad decisions. Such reformsincreased political inclusion and constitutionalism in the European Union, as well as reforms of the nancial sector are vital to returning stability to the Eurozone and preventing the spread of protests and a virulent rise in nationalism across the EU. From the Golden Dawn in Greece to the latest anti-austerity protests in Slovenia, a combination of high youth unemployment and cuts to social benets are setting the stage for a growing backlash. Said Damijan Sencar, a 51-year-old electrical engineer, to Reuters during protests through Ljubljana, I am here because I believe we have to get rid of anyone who has held high political ofce during the last 20 years. I fear that things will get even worse in Slovenia if the Troika comes, but I hope that can still be avoided. This is not the mindset of a citizen who feels included in democratic or decisionmaking processes affecting his life. The latest story in the Eurozone crisis is perhaps not just a retelling once more of an old news story, but instead is the latest slice in a tragedy of the Euro of death by a thousand cuts. The Euro was built on shaky ground to begin with, but it could still be possible to turn things around. However, it will require a difcult rethinking, from all across the region, over what kind of future should be built for Europe.
Biography
Chrisella Sagers Herzog is the Managing Editor of the Diplomatic Courier magazine. She writes on issues ranging from technology developments to global economic security, and she is the author of a forthcoming book on Iranian politics.
by scal policies decided on a countryby-country basis has struggled to nd an economiclet alone politicalsolution for its structural weaknesses. In the process it has, in the words of Frankfurt professor Jrgen Habermas, resorted to constructing a technocracy without democratic roots, trapping the European Union between scal accountability and democratic legitimacy, unsure of what form it truly wants to take. In a speech in late April at the Catholic University of Leuven in Belgium, he called for a revival of Europes otherwise doomed constitutional efforts, as current policy has become torn between, on one hand, the economic policies required to preserve the euro and, on the other, the political steps to closer integration. Clearly, the European Union is in the early stages of a new transformation, and one in which member states must decide what the future of a united Europe will be. A scal
union, with the ECB as a lender of last resort, seems to be the preference of EU authorities, pushed by German Chancellor Angela Merkel; however, this option leaves the voices of the people out of the equation, and has contributed to a rise of nationalist and anti-EU sentiment. A scal union will require further political integration to become successful. The challenge of the Euro crisis has been described as Germanys most challenging political test since reintegration after the collapse of the Soviet Union. If the Euro fails, Germany will be blamed; if it makes it through the crisis successfully, Germany will be credited. But Angela Merkel is becoming a lonely advocate of austeritythe French Socialist party has accused Merkel of selsh intransigence for insisting on austerity policies in return for nancial assistance, and EU citizens, particularly in Eastern Europe, are beginning to turn against what some perceive as German imperialism.
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Special Note
Overcoming the Global Financial Crisis: The Australian Industrys Response

Those who can win a war well can rarely make a good peace and those who could make a good peace would never have won the war. Sir Winston Churchill
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HE G20 LEADERS SUMMIT in Russia in September 2013 will mark the passage of ve years of intensive work by the G20 governments to overcome the global nancial crisis and ensure continuing global growth and stability. The G20 has demonstrated that it can win the war of the GFC, but the ongoing challenge is to win the peace in terms of economic development and organisational credibility. G20 leaders have been able to come togetherforced together in the creation of the groupbased on a crisis of condence. They have been able to provide decisions and instruction to halt a nancial meltdown and clamp down on moves toward increased protectionism, but as the crisis element retreats, the challenge is to maintain the momentum in other areas of global decision making to ensure that jobs and growth are preserved and accelerated. While a number of governments have implemented domestic austerity and economic stimulus measures with expansionary monetary policies, they have shied away from actions that could see substantial benets to jobs and growth through debt free actions, such as completion of the WTO Doha Round, which has been estimated would boost the global economy by at least $150 billion per annum and create millions of jobs around the world. If we review the Leaders Statements from all of the past six Summits there are two things to note. Firstly, the frequency of meetings is diminishing. In some ways this reects the appropriate change from crisis decision-making to the now longer term action agenda. The second point to note is that the strength of the statement is also diminishing. In Washington in 2008 the Trade related Statement was: We shall strive to reach agreement this year on modalities that leads
THOUGHT LEADERSHIP
to a successful conclusion to the WTOs Doha Development Agenda with an ambitious and balanced outcome. In London in 2009: We remain committed to reaching an ambitious and balanced conclusion to the Doha Development Round, which is urgently needed. In Pittsburgh also in 2009: We are determined to seek an ambitious and balanced conclusion to the Doha Development Round in 2010. In Toronto in 2010: We therefore reiterate our support for bringing the WTO Doha Development Round to a balanced and ambitious conclusion as soon as possible. We direct our representatives, using all negotiating avenues, to pursue this objective, and to report on progress at our next meeting in Seoul, where we will discuss the status of the negotiations and the way forward. In Seoul in 2010: Bearing in mind that 2011 is a critical window of opportunity, albeit narrow, this engagement must intensify and expand. We now need to complete the end game. We direct our negotiators to engage in across-the-board negotiations to promptly bring the Doha Development Round to a successful, ambitious, comprehensive, and balanced conclusion. In Cannes in 2011: We stand by the Doha Development Agenda (DDA) mandate. However, it is clear that we will not complete the DDA if we continue to conduct negotiations as we have in the past. We recognize the progress achieved so far. To contribute to condence, we need to pursue in 2012 fresh, credible approaches to furthering negotiations. In Los Cabos in 2012: We stand by the Doha Development Agenda mandate and reafrm
our commitment to pursue fresh, credible approaches to furthering trade negotiations across the board. We will continue to work towards concluding the Doha Round negotiations, including outcomes in specic areas where progress is possible, such as trade facilitation, and other issues of concern for least developed countries. So, after ve years of strong statements about completion of the Doha Round, the business community is still frustrated at the lack of progress in the one area that will really make a difference. What will the statement in Russia be? And more importantly will it be acted upon? The Russian presidency will end later this year and Australia will then take up the mantle. Australia is a strong free trade advocate, and one of the fresh, credible approaches that could be considered is in fact the G20 leaders putting their statements into action and going alone as a critical mass group to agree on the Doha Round outcomes, implement them as a block, and call upon other nations to join in the agreement. We are working closely with the International Chamber of Commerce in encouraging governments to ensure that the G20 continues to be a forum for good from which action ensues. If the Statements lose credibility through lack of action, then there will be a heightened risk that business will lose faith in the institution. We cannot allow this to happen. We look forward to the B20 Summit in June in St Petersburg and then Australias hosting of the G20 Leaders Summit in November 2014, and plan to push for business and real-time free trade and investment outcomes. Peter Anderson Chief Executive, Australian Chamber of Commerce and Industry
THE G20 HAS DEMONSTRATED THAT IT CAN WIN THE WAR OF THE GFC, BUT THE ONGOING CHALLENGE IS TO WIN THE PEACE IN TERMS OF ECONOMIC DEVELOPMENT AND ORGANISATIONAL CREDIBILITY.
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A world of potential in Africa
The world is in a state of great transformation. The balance of economic power is shifting towards developing economies: nations able to harness vast untapped resources, cultivate human potential, encourage political stability, and boost business in new and innovative ways. South Africa has an important role to play. As one of the leading economies in Africa, South Africa is ideally placed to navigate the shifting poles of power. As the bridge between east and west with world-class infrastructure, abundant resources, and leading banking and investment sectors were delivering Africas potential to the world.
Publicis JHB 10526
1st Regulation of Security Exchanges 1st Strength of Auditing and Reporting Standards 1st Efficacy of Corporate Boards 1st Legal Rights 2nd Soundness of Banks 2nd Availability of Financial Services
3rd Local Equity Market Financing 6th Effectiveness of Anti-Monopoly Policy 15th Quality of Management Schools 15th Quality of Air Transport Infrastructure 20th Intellectual Property Protection
*As ranked by the 2012/2013 WEF Global Competitive Index
Global Development / Agriculture

By: Juergen Voegele, Director of Agriculture, The World Bank Group
Agriculture must urgently address three sets of issues:
The Future of Agriculture

Food security requires ensuring access to sufficient nutritious food every day to every person, which goes beyond what agriculture can doon its own.
Reduce the hunger and malnutrition affecting 870 million people. We must address the fact that 165 million children under ve years of age are stunted, and the number of stunted children is rising in sub-Saharan Africa, with 52 million children suffering from wasting, and with little improvement globally since 1990. For most of these children, the damage to their growth and development is irreversible and will impact the world for generations. Provide sustainable solutions to extensive rural poverty on a large scale. Threequarters of the worlds very poor people (incomes in 2005, incomes of less than US$1.25 per day) live in rural areas, and most get their main livelihoods from farming. Mitigate 30 percent of the Green-House-Gas (GHG) emissions that are leading to world that could be hotter by 4 degrees Celsius (7 degrees Farhenheit). Producing more food will not solve hunger and malnutrition problems on its own. Food security requires ensuring access to sufcient nutritious food every day to every person, which goes beyond what agriculture can do on its own. However, failing to produce at least 60 percent more food by 2050 will ensure that there will not be enough to go around, with truly catastrophic effects. And the way we increase production has a lot to do with the distribution of its benets for food security. So, we also need to worry about the resilience of production systems, nutritional implications of production systems, and how to reduce wastage. For success in both production growth and ensuring that food gets to those who most need it, small farmers will have to be a big part of the solution. Today roughly 83 percent of the worlds population lives in developing and emerging countries. And there are roughly 400-500 million small farmers in the world, heavily concentrated in developing countries. Globally, the average farm size (scale of production) declined from 2.1 hectares in 1980-1985 to 1.9 hectares in 2006-2010, with large regional variations. Resource depletion is beginning to set in. By 2025, nearly two-thirds of all countries in the world will be water-stressed and 2.4 billion people will face absolute water scarcity. Since about 70 percent of freshwater use is for agriculture, such countries will depend on imports to meet their food needs.
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THOUGHT LEADERSHIP
Worldwide, about 18 percent of cropland is irrigated, producing 40 percent of all crops and 60 percent of all cereals. Large parts of the world are already living beyond their water means by supporting agriculture based on unsustainable use of groundwater. In addition, about 25 percent of the worlds crop land is degraded; a further 35 percent of present African cropland is likely to be unsuitable for cultivation by 2100 due to climate change. And, just between 2000 and 2010, we lost on average 5.2 million hectares of forest every year. We also face the prospect of as much as a 4 degree Celsius-warmer world. If this happens, food staple production could decline by 10-15 percent over current levels, rather than increase as is needed, leading to greatly expanded hardship, conict, and even mass starvation within the span of one lifetime. So we not only need to increase production under conditions that are harder than when the world was responding to a big food crisis in the 1970s, but we also need to pay specic attention to how production occurs to produce the benets of improved livelihoods and better nutrition. Fortunately, agriculture is in a unique position to help on all these things. Only agriculture at scale (including forestry) can take carbon out of the atmosphere. Forests cover 25-30 percent of the earths land surface and absorb about 15 percent of the planets GHG emissions, and crops can potentially absorb more. In-depth work in 2008 also showed that agricultural growth is very effective (2 to 4 times more so than other sectors) at reducing poverty. And agricultural growth at the smallholder level can be managed to provide more benecial nutritional outcomes. But it takes proactive investment and policy changes to achieve these outcomes at scale. The climate-smart agriculture of the future requires that we think in terms of an integrated approach to landscapes. A landscape approach means taking both a geographical and socio-economic approach to managing the land, water, and forest resources that provide the natural capital for food security and inclusive green growth. The World Bank Group is increasingly using landscape approaches to implement strategies that integrate management of land, water, and living resources, and that promote sustainable use and conservation in an equitable manner. The precedents for this were a few large-scale but highly successful projects in what would now be called emerging countries such as China, India, and Brazil. Here the landscape approach combined with strong local
THE CLIMATE -SMART AGRICULTURE OF THE FUTURE REQUIRES THAT WE THINK IN TERMS OF AN INTEGRATED APPROACH TO LANDSCAPES.
leadership integrated livestock, trees, a range of crops, and the development of off-farm rural income opportunities, depending on the slope of the land and the direction of the streams, to increase incomes while conserving the landscape. But examples are now found in Africa as well. In Ethiopias Great Rift Valley, the landscape approach has included establishing forest cooperatives that sustainably manage and reforest the surrounding land using Farmer-Managed Natural Forest Regeneration techniques, thus addressing deforestation that threatens groundwater reserves that provide 65,000 people with potable water. In Rwanda, a landscape approach is being scaled-up to a large area of steep hillsides by providing infrastructure for land husbandry (for example, terracing and downstream reservoir protection), water harvesting and hillside irrigation. Training is provided for farmers, farmer organizations are supported, and marketing and nancing activities are enhanced. As a result, productivity in rainfed areas has tripled, more land is protected against soil erosion, and the share of commercialized agricultural products has increased. In Western Kenya, some 60,000 farmers on 45,000 hectares of land are now combating erosion using sustainable land management practices to enrich degraded soil. In Niger, new farming systems now include trees that capture nitrogen. For a landscape approach to work, we need secure land tenure rights, so that individual
farmers, especially women, as well as communities have an incentive to invest in improved land and water management and to protect trees and forests. In Indonesia, for example, research by the CGIAR on Forests, Trees and Agroforestry shows that community management and village forest permits not only lessen deforestation and forest degradation, but also reduce risks for smallholder farmers and improve the well-being of forest-dependent communities. Appropriate pricing regimes are needed to encourage rational use of scarce resources. Regulations backed by strong legitimacy at the local level are needed to control pollution run-off or to avoid free-grazing of animals, while appropriate incentives are in place for private farmers to invest in public good activities. An environment conducive to behavioral change is fundamental. Transparent and accountable institutions are critical. And if people do not have access to information they can understand, they do not have an incentive to change behavior. The ICT revolution is now widely spread, including in many parts of Africa. This serves to impart information, provide interactive information exchange, and to collect data. In summary, agriculture is the essential sector for reducing poverty, creating shared prosperity and promoting environmental sustainability. Together, we can harness the power of agriculture to meet the worlds challenges.
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Global Development / Food

By: David B. Schmidt, President & CEO, International Food Information Council & Foundation
To Feed the Future, We Need a Feast of Facts, and a Famine of Fear

At every step of the journey from farm to fork, technology is helping us produce a safe, abundant, sustainable and nutritious food supply.
ESS THAN THREE decades from now, in 2041, the United Nations estimates that the population of the world will reach 9 billion people. Thats a lot of mouths to feed, to put it mildly. So how will we do it? How can a world of limited resources possibly adjust to the food and sustenance needs of its people when their numbers will expand by more than onequarter, and in such a relatively short period of time? How will we cope with what the U.N. Food and Agriculture Organization estimates will be a 60 percent increase in overall food demand? The answer is the same as it has always been: technology. And with nearly 2 billion additional inhabitants of our planet to be added just one generation hence, that answer is more important, and the stakes are higher, than ever before. At every step of the journey from farm to fork, technology is helping us produce a safe, abundant, sustainable and nutritious food supply. Precision agriculture, with the aid of GPS satellites, can target individual crop treatments to the smallest plots of soil, which reduces environmental impacts. Advances in livestock production, from climate control to the nutritional qualities of feed, have improved animal health and welfare, and boosted agricultural output. Refrigeration and modern packaging technologies increase the safety of our food, the distance across which it can be transported, and its extended freshness. Among the most successful and still more promising advances is food biotechnology, which is a range of processes to enhance foods through various breeding and other techniques. At its heart, food biotechnology is the science of employing the tools of modern genetics to enhance benecial traits of plants, animals, and their food components. Food biotechnology can help feed our growing planet, while also bringing several
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additional benets along the way. Not only do insect-protected and virus-resistant biotech crop varieties produce hardier plants, leading to higher yields, but plants are also being engineered to grow in places where they would not survive before. The food itself can be more healthful and nutritious, as crops with enhanced nutritional traits make their way to the supermarket. These foods can help to combat chronic diseases by providing more healthful compounds, including higher levels of antioxidants and vitamins, and lower amounts of fats we should limit. Scientists have also begun to target allergy-causing proteins. Biotech crops can also aid in protecting the environment by producing herbicide-tolerant varieties, thereby decreasing the amount of pesticides used in farming. Decreasing pesticide use can have a positive impact on the health and well-being of wildlife, decrease farmers exposure to pesticides, and contribute to a cleaner water supply. But for any technology to be truly useful, it must rst be adopted. Barriers to adoption include fear and misperception, both on the part of users and, ultimately, the consumers who stand to benet from technological progress. Thats why for those who care about the worlds capacity to feed the future, communication and education are critical. Some opponents would synonymize terms such as biotechnology or genetic engineering with unnatural. But nothing could be farther from the truth. Biotechnology is merely a renement on processes that already occur in nature, and a step beyond traditional methods of crossbreeding that have been used to genetically enhance agricultural products for centuries. At the International Food Information Council (IFIC), we have learned that consumers are not predisposed to fear, and that when they understand food
biotechnology and its benets, they respond positively. According to the 2012 IFIC survey Consumer Perceptions of Food Technology & Sustainability, respondents, when given a basic denition of food biotechnology, react favorably by a ratio of almost two to one (38 percent to 20 percent). By a margin of 35 percent to 20 percent, they expect biotechnology will provide benets for them or their families within the next ve years. In terms of foods produced through biotechnology that consumers would be likely to purchase based on specic attributes: 77 percent would purchase foods that required fewer pesticide applications; 69 percent would purchase foods with better nutritional qualities; 71 percent would purchase foods that provided more healthful fats, such as omega-3 fatty acids; and 68 percent would purchase foods with less saturated fat. Feeding the future will rely on technology, but equally important is a world with access to accurate, science-based information
about new and emerging technologies. Thats why just this past April, the IFIC Foundation released the third edition of Food Biotechnology: A Communicators Guide to Increasing Understanding, which is available at http://www.foodinsight.org/foodbioguide. aspx. Intended for use by leaders and other communicators in the food, agricultural, nutrition and health communities, the guide offers the latest science and consumer-friendly information in a variety of accessible formats, targeted to different audiences. Consumers of both today and tomorrow need a climate where fact trumps fear, where credible information is easily attainable, and where evidence outweighs emotion. Only such a climate will be conducive to continued progress across a whole host of technologies that are vital to sustainably produce the safest possible food supply, in the amounts and with the nutritional attributes we need, and in the ways that least impact the environment. The 9 billion people who will soon occupy our planet are counting on nothing less.
FOOD BIOTECHNOLOGY CAN HELP FEED OUR GROWING PLANET, WHILE ALSO BRINGING SEVERAL ADDITIONAL BENEFITS ALONG THE WAY.
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Global Development / Prosperity

By: Dr. Christian Ketels, Michael Porters Research Team, Institute for Strategy and Competitiveness Harvard School of Business
All Hands on Deck

Why Future Prosperity Requires a New Model of Public-Private Collaboration.
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HE GLOBAL ECONOMY has had a number of difcult years, and the outlook for the near future doesnt look much better. Most observers agree that the current quagmire is not just a protracted but ultimately cyclical challenge. It is a sign that the growth recipes of the previous decade have either failed or lost their effectiveness. In large parts of the OECD, growth had been fuelled by easy money, driven by a nancial sector unleashed by prior deregulation and monetary policy that did not step into the way. This period is now decisively over. Macroeconomic stabilization is the focus of today, and is sorely needed to get economies back into balance. Whether to achieve this through front-loaded austerity
programs or a more growth-oriented mediumterm policy approach is in itself a complex and controversial debate. But it is either way ultimately a remedy for past ills, not a recipe for future growth. Many other countries, especially among the emerging economies, have beneted from opening up to globalization, serving markets abroad and creating new ones at home. Countries with deposits of natural recourses have prospered, too, beneting from the growth in the global economy. But both now face at best slowing growth rates. Emerging economies need a growth strategy that moves beyond exports based on cheap labor or increasing capital intensity. And natural resource exporters need diversication to overcome the economic and political pitfalls
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in human skills make the list for a large majority of experts. There are other candidates as well, and there is a widediscussion on which of these factors matter most and which are endogenous rather than ultimate drivers of performance. But still there is signicant on what is generally good policy. Third, however, there is an increasing realization in the academic community that looking for one set of policies, or even worse one policy, as the general answer is ultimately the wrong approach. Policies need to be right given the context in a specic location. And for that, knowing what works on average across countries is useful but not sufciently specic. Increasingly, then, the question has become how to correctly identify what a specic location should do to enable higher prosperity. Fourth, especially practitioners have started to point out that knowing what to do is not enough. What differentiates successful from less successful places is the ability to implement action. Successful implementation, it turns out, is a complex result of convincing the right people to act in a coordinated way, it is not just a matter of getting an external advisor to come up with the right analysis. What to do and how to get it done? The experience from countries at all stages of development suggest that a new model of public-private dialogue is critical to give the right answer to these questions. Lets start with the diagnostics. In many situations there is wide disagreement as to the current status of the economy. Having a shared language helps, even when different groups focus on different types of information. The competitiveness framework, rooted in the focus on productivity and capturing a broad range of macro- and microeconomic factors, does provide such a language. But often it is not a different conceptual framework but differences in the perceived data that is crucial. A large number of surveys indicate that business leaders and political leaders often have widely diverging assessments about the competitive realities in their country. With such different views on what is, how can one expect a productive debate on what should be done? No one has the complete picture, but together the public and the private sector can arrive at a more realistic view on where their location stands. Following the analysis, decisions need to be taken on what actions to prioritize. Here again, the fragmented nature of the policy dialogue typical today has a clear cost: Governments select what they think has the most benecial impact on the economy, but lack sufcient understanding of market
dynamics to correctly assess impact. Private sector interest groups push at the same time for specic benets or actions, but fail to concern themselves with overall budget limits or the impact on the wider economy. Everyone is entitled to his or her private interests, but decisions that drive sustained growth require a joint focus on the common good. Ultimately, decisions have to be implemented to have an impact. Governments tend to have an oversized assessment of what the tools that they control can achieve. Often, however, real change only happens if many individual decision makers, in companies, in universities, and in many others private and public organizations that government doesnt directly control, make complementary choices about what to do. Implementing a national growth agenda is a team effort, not a government policy. The global debate about prosperityenhancing economic policy is at an important inection point. There is increasing consensus on what good policies are. But there is also a growing realization that to get to the right policies in a particular location, process is crucial. An emerging new model of privatepublic collaboration is a critical element of such a more effective process, leading to better diagnostics, decision-making, implementation and ultimately more sustainable growth.
of their narrow economic base. It is easy to identify the need for a new growth model; the hard part is to describe what it should be. Economic research offers some answers (beyond explaining why the past approach has failed)? First of all, there is broad consensus that what matters most is productivity. Locations are prosperous, when they provide conditions for doing business that are productive both in the sense of enabling workers to generate much value and mobilizing a large share of the available workforce to participate in the economy. Second, there is quite a lot of agreement on what types of policies are conducive to better economic performance: open markets, modest ination, robust institutions, including property rights, and investments
IT IS EASY TO IDENTIFY THE NEED FOR A NEW GROWTH MODEL; THE HARD PART IS TO DESCRIBE WHAT IT SHOULD BE.
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Global Development / Agriculture

By: Bill Frist, Transplant surgeon and former Senate Majority Leader (R-Tennessee)
The Future of Healthcare is Personalized Medicine

We are poised to capitalize on decades of innovation, tying together disparate fields including genetics, social networks, supercomputing, the internet, stem cells, cutting edge imaging and sensors, and pharmaceuticals.
TS A COMMON REFRAIN that America has the best health care in the world but our people are far from the healthiest. We spend twice as much as any other nation on health services yet rank dismally, behind more than twenty other countries in basic health metrics like infant mortality and life expectancy. We have more MRI machines, heart transplants, new drug patents, Nobel Prize winners than any country in the world and yet people in Greece, Israel and Jordan live longer. How can this be? The New York Times will tell you that the lack of a true healthcare system, preferably a nationalized and universal system, causes these failures. If only we had a true, equitable and universal system, such as Britains or Frances, we could skyrocket up the rankings. This is simply not true. Data have shown that when all factors are taken into account health services only account for roughly 10% of determining how long we live. The two major factors are personal behavior, accounting for 40%, and genetics, accounting for 30% (social circumstances and environmental exposure round out the rest at 15% and 5%, respectively). So how do we harness the true drivers of mortality? How do we live healthier, create a more targeted and personalized approach to medicine all while simultaneously cutting costs and eliminating waste? The answer lies in what I call New Medicine. I believe that we are currently at an inection point in medicine. We are poised to capitalize on decades of innovation, tying together disparate elds including genetics, social networks, supercomputing, the internet, stem cells, cutting edge imaging and sensors, and pharmaceuticals. These forces, unleashed in a dynamic, coordinated fashion can usher in this era of New Medicine that treats each patient as an individual, not the average, eliminates waste, adverse side effects and maximizes the outcome of diagnosis and treatment for you specically, not just for most people or the population in general. We have been building towards this inection point for decades with seemingly unrelated advances such as the advent of cell phones in the 1970s, the discovery of the double helix model of DNA in 1953, or the rst MRI on a human being in 1977. I have written in several forums about some of these advances, most notably pharmacogenomics and the rise of consumerism in healthcare, but today I focus on one breakthrough of incredible potential. Stem cells hold the power to be a major
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pillar of the New Medicine. Scientists have speculated for years about the awesome potential of stem cells. Conditions as wide ranging as diabetes, spinal cord injuries, burns, limb amputations, heart disease and neurological disorders can all likely be treated by stem cells. But what makes embryonic stem cells so special? Embryonic stem cells are special for two reasons; rst they produce exact copies forever and second they can grow into specialized tissue, which fully formed (or adult embryonic stem cells human cells cannot, or at least were not thought able to. Embryonic stem cells are harvested from a ve day old embryo, taking the inner cell mass of the blastocyst, generating pluripotent embryonic stem cells. These cells can be differentiated into heart cells, brain cells, basically any cell in the human body. But there are two problems with embryonic stem cells. First is the ethical issue. It requires the destruction of embryos, the destruction of something that, left to nature, would become human life. Second, it is non-self. Even though these cells can become specialized into any type of cell, they do not come from you and your body knows this. But this approach has yielded remarkable scientic breakthroughs. We have cloned frogs and sheep. I had the great pleasure of visiting Dolly in Scotland, the rst cloned sheep, which many may not know was actually named after Dolly Parton, the famous Tennessean entertainer. However, for reasons we dont fully understand, humans cannot be cloned using this same method. Thus, the real breakthrough came using a radically different approach. In 2012, the Nobel Prize for Medicine and Physiology went to Dr. Shinya Yamanaka (along with Sir John B. Gurdon). Yamanaka induced skin cells to become Pluripotent Stem Cells (iPS). These iPS cells have all the special properties of the magical stem cells. In the simplest terms, Yamanaka was able to take normal, adult skin cells and transform them, using four master genes, into pluripotent stem cells, just as capable of transforming into any cell type, but without the use, and consequent destruction of an embryo. Not only does this solve an incredibly complex moral issue, it also bypasses the issue of embryonic stem cells being foreign or non-self to the eventual patient or user. Doctors can simply use the patients own skin cells to create the iPS cells needed to treat him. The rst real application of this breakthrough is in the form of regenerative medicine. As a transplant surgeon, I have performed hundreds of operations to extend the life of patients by giving them a new heart or lung. This complex procedure meant that I would get on a plane, y to the organ donor, remove the donor heart and y back, transplanting it into my patient, all in a matter of hours. The patient receives years, even decades, of life with family and friends. I have many patients who I transplanted more than 25 years ago. But the heart transplant patient has traded a fatal disease for a chronic disease, which requires daily management. The heart a surgeon transplants is non-self and thus the body continually attempts to reject it. On top of having just undergone one of the most traumatic operations a human body can endure, the patient must then take multiple immunosuppressant medicines to keep his own body from killing his new heart. Consequently, pneumonia, or even a common cold, becomes deadly. But this operation may well become a thing of the past, like the iron lung. In the not too distant future, we will take a patient who needs a heart transplant, perform a skin biopsy, create patient-specic iPS cells, grow them into healthy heart cells and then transplant, not a separate heart, but merely the genetically matched healthy heart cells. The body, recognizing its own genetic material, would nd no cause for rejection and this operation can be done with a needle, not a bonesaw. There is also no shortage of organ donors or patients dying while waiting for just the right match. This example represents just one of hundreds of applications. In fact, the rst clinical trials for macular degeneration (blindness) will occur this year. The second application of Yamanakas breakthrough is the huge potential for drug discovery. Lets take Alzheimers Disease for an example. Up to now, all drugs have failed. But what if we could test a new drug specically on your brain cells to see if it works. Using this technology we can. We simply take adult skin cells, revert them to iPS cells in a test tube and then again into brain cells and then test their response to a potential drug in a dish. Now we can literally conduct clinical trials in a dish. Its a new world. The Gladstone Institute, where Dr. Yamanaka works, has already made cells for Alzheimers, Parkinsons, Huntingtons and cardiac disorders. With the ability to test drugs on actual cells of a specic patient, we can take the guesswork out of efcacy and toxicity of drugs. This should, and will, lead to a major rejuvenation of the pharmaceutical industry and more targeted, specic and effective care for patients. New Medicine is coming. Dont be left behind.
STEM CELLS HOLD THE POWER TO BE A MAJOR PILLAR OF THE NEW MEDICINE. SCIENTISTS HAVE SPECULATED FOR YEARS ABOUT THE AWESOME POTENTIAL OF STEM CELLS.
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ICC Advisory Group / Agenda

By: M. Rifat Hisarciklioglu, TOBB President
Towards a more inclusive G20 Agenda

After the global financial crisis, G20 is now considered as amajor global policy coordination mechanism.
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HE IDEA BEHIND the foundation of the G20 platform is to respond to economic crisis that hit the world at the end of the 1990s. After the global nancial crisis, G20 is now considered as a major global policy coordination mechanism. G20 mainly deals with the global imbalances through focusing on macroeconomic and nancial stability, stimulating growth and job creation. Global business community gives special importance to the G20 governments policy coordination efforts. Following the global nancial crisis, in the last 5 years, allpolicy efforts were focused on the global nancial crisis. Today we should contemplate a new question: If there will be no crisis agenda in the upcoming period, what should be the new agenda items of the G20? Even if there is no crisis agenda in the medium term, global imbalances will be here to stay. Moreover, enhanced globalization and rising interdependencies requires enhanced policy coordination tools. So, it is obvious that the need for G20 platform is to last in the long term. It would be crucial to understand the interdependencies among all countries both economically and politically. Furthermore being capable of managing these interdependencies will be a key success factor for the global economy. At that very point, G20 can be regarded as one of the policy coordination tools that we need However, in order to meet evolving expectations, G20 should have a more inclusive agenda parallel to the global shift of power. The way G20 dealt with the nancial crisis shows that there is room for enhancing trade and investment as well. Therefore a tighter collaboration between WTO and G20 might arise out of these new opportunities, of course with a balanced distribution of tasks and depending upon key responsibilities of organisations. Such collaboration opens a door to new economies and multilateral trade. An agenda not only focusing on crisis
management and prevention, not only concentrating on developed markets and MNEs, but also covering the most disadvantaged ones of the global economy: Emerging economies and SMEs within these economies. Practically, emerging economies and SMEs have bigger problems. Also, they are more vulnerable to global economic imbalances. First, the lack of south-south cooperation seems to be one of the biggest problems in the upcoming future. Currently, global economy is designed according to the needs of developed markets. Export baskets, supply chains and trade routes are designed accordingly. Trade complementarity is low among emerging countries, largely due to low FDI ows between them. And low FDI ows is mostly an end result of low connectivity among emerging markets. For example, it is hard to nd a direct trade route from Istanbul to Karachi. One should rst ship the goods to Rotterdam, then to Karachi by doubling the route and costs. Now it is time to think about alternative transportation modes and connectivity tools. Thus, G20 should pay more attention to foster trade and investment relations among emerging markets. Secondly, G20 should focus more on SMEs and their integration to the global economic order. The emerging phenomenon of SME internationalization should be promoted. SMEs have a pivotal role in the economic development; yet most of them have stuck in their domestic markets with excessive competitive pressures. A coordinated effort for cross-border SME value chains might be very benecial to integrate SMEs into global economy. The same tomorrow as it is today, G20 will keep its utmost importance in the continuum of the global economic order. A more inclusive agenda, which focuses on south-south cooperation and SME internationalization, will keep G20 on track even after the crisis agenda.
Biography
M. Rifat Hisarcklolu has been the President of the Union of Chambers and Commodity Exchanges of Turkey (TOBB) since 2001. Hisarcklolu is the Deputy President of EUROCHAMBRES and the Vice President of the Islamic Chamber of Commerce, Industry and Agriculture. As a Board Member in ICC, Hisarcklolu is member of the ICC G-20 Advisory Group and General Council of World Chambers Federation. He is board member in Association of Balkan Chambers, ECO Chamber of Commerce and Industry and Confederation of Asia-Pacific Chambers of Commerce and Industry. Recently, he has been elected as the International President of the Jerusalem Arbitration Center. Hisarcklolu was awarded with the Gold Medal of Merit by the Austrian Republic, the Commendatore from the Italian Republic and the Medal of Inspiration from Mongolia.
NOW IT IS TIME TO THINK ABOUT ALTERNATIVE TRANSPORTATION MODES AND CONNECTIVITY TOOLS.
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ICC Advisory Group / Finance

By: By EF de Lencquesaing, CEO European Institute of Financial Regulation-EIFR/Paris-EUROPLACE
B20: How to Contribute to Responsible Finance

Through the B20 dynamic, the business worlds objective is to contribute to a more pragmatic coherence in redefining the global regulatory framework.
LOBAL FINANCE is entering a new phase. After being stabilitydriven, it is now time to seek growth as a priority. Value creation is the condition for development and employment. Through the B20 dynamic, the business worlds objective is to contribute to a more pragmatic coherence in redening the global regulatory framework and to identify the key breakthrough drivers in order to leverage a competitive nancial industry able to nance the real economy. The needs to be nanced in front of us are huge. If we take as an indicator the global nancial assets, they represent 400 percent of GDP for advanced countries and 200 percent for developing countries; the gap may be estimated at around 225 trillions of dollars. How can we get there? At the same time, taking lessons from
the eastern crisis, the G20 is xing new and converging rules of the game. They will have huge structural consequences on the nancing models we are used to, either credit or market driven. We have to invent a new balance based on efciency, cultural practices and political decisions, then we must prioritize the pros and cons of each model. This transitional period, added to the prior period of getting out of the crisis, will represent for most countries a period of high risk. There will be a risk of ruptures in the nancial mechanisms especially for the most fragile actors, mainly SMEs. Instead of continuing the trend of pleasing public opinion with too easy concepts, it is necessary to address the real issues responsibly. The excessive reinforcement of capital ratio to armor-plate the nancial industry or the use of too-simple binary
mechanisms to fence banking activities do not address the essential points: i) reinforcing nancial external and internal surveillance; ii) simplifying the structure of banks to face stress periods through a robust resolution process based on responsible dialogue between banks and their college of regulators; and iii) reinforcing trust between regulators to promote mutual recognition based on compatible rules and regulatory best practices. This new phase should be driven by a profound yet coherent analysis of the competitive needs of the 3 pillars of the economy: The nancial needs of corporate from global to SMEs; The needs of investors (through a clear saving policy allocating sufcient capital ows to long term assets); The needs of intermediaries (banks and capital markets) to properly address those
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WE HAVE TO INVENT A NEW BALANCE BASED ON EFFICIENCY, CULTURAL PRACTICES AND POLITICAL DECISIONS THEN WE MUST PRIORITIZE THE PROS & CONS OF EACH MODEL.
needs that do not automatically match in investment horizons or risk profiles. As nance is the fuel of the economy, society must organize as for any other energy policy to make it safe, efcient, and competitive. To address this challenge, the B20 nancial task force is working on 3 priorities: Stability and growth, with long term investment as a major condition; Financial inclusion to ease SMEs access to nance; Financial market infrastructures as a condition for trust and efciency. The objective of these priorities could be summarized as from trust to growth. This is all about a responsible nance. Finance should prioritize transparency and simplicity as the best answer to customer challenges, which are risk, complexity, and opacity of a globally-and technologicallydriven world. That is what intermediation is for. In the past the nancial answer has been too driven by complex solutions or instruments. Innovation should be encouraged to simplify without caricaturizing or proposing a return to the middle ages. Who are the actors of this dynamic? Financial centers should play a major role in the consolidation of the general interest of the real economy, as is the case in France with Paris Europlacea round table of all the stakeholders of the nancial ecosystem. The priority of such nancial centers is not to compete for market share; it is to bring the users as near as possible to nancial services, expertise, and skills. The proliferation of nancial centers around the world is good news, as it is both a sign of growth as well as an engine for growth. These nancial centers, however, cannot be in isolation. They should be part of a global network subdivided into regional clusters with increasingly integrated links, as is the case in Europe or progressively in ASEAN. They have to be the actors of crossfertilization and convergence on compatible rules, driven by the interest of the real economy. Finally, the dynamic of this responsible nance is not just a question of top-down initiatives, as is common in the G20. It needs a real bottom-up drive that adds its force to the entrepreneurial, innovative dynamic of the business world. Skepticism cannot be a source of value. An entrepreneur is positive and believes in success. It should be the same for us acting at a collective level. The solution is around the cornerlook for it with positive thinking.
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ICC Advisory Group / Future

By: Kris Gopalakrishnan, Co-chair of Innovation & Development Task Force of the B20, Co-founder and Executive Co-chairman of Infosys Ltd
ICT for a Better Tomorrow

The world today has almost as many cell phone subscriptions as inhabitants.
E ARE LIVING in a time when technology is changing the way we interact with each other and the eco-system around us. Globally, access to mobile phones, smartphones, tablets, and a host of other affordable devices is bringing the power of computing to our palms in the comfort of our homes and ofces. The world today has almost as many cell phone subscriptions as inhabitants. There are currently 6 billion mobile subscribers worldwide, which roughly
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equals 87 percent of the worlds population. Further, an estimated 2.3 billion people which translates to one in every three of the worlds 7 billion peopleare internet users. Such unprecedented penetration of technology plays an important role in reducing global imbalances and the digital divide. Technology, led by ICT, presents solutions to some of the most pressing global challenges in areas like nancial inclusion, healthcare, education and disaster management amongst others. There are short-term challenges to be overcome in view of the communication infrastructure and lack of global cooperation. Over the next 20 to 30 years, the ICT space will continue to be a major driver of economic growth and employment. There are 5 focus areas for ICT that the Taskforce is looking at recommendations for the G20 coalition: 1. Importance of public-private cooperation in ICT The private sector has always led from the front in developments in ICT. To enable the benets of these developments to reach the masses, public-private cooperation is crucial. There is a need for long term solutions towards giving better service to citizens. Governments have a key role to play because private sector investments typically go to regions where there is high investment rather than rural areas. Therefore, governments have to invest in strengthening communication infrastructure. 2. Protection of the data privacy Private and public sectors alike are still guring out where to draw the line when it comes to data privacy. Governments play a key role in protecting interest of the state and citizens by ghting cyber-crime (including acts of terrorism) and strengthening data protection measures. To achieve these objectives, the government needs access to information. However similar to a warrant for searching a citizens house, the government will need legal clearance to access personal information of individuals. For getting access, they need to document what they need the data for. This calls for cooperation even within governments because the crime may occur in one state and the jurisdiction may be in another state. 3. Role of government and public/ private institutions in conducting IT training and creating other conditions for the modern IT-involved citizens In the 21st century, change is continuous and rapid. There is a need for continuous and life-long training to stay relevant. We need industry, government and academia partnerships to implement this. We can leverage technology to bring quality education to smaller, remote communities where getting teachers would pose a challenge. This will leverage the IT infrastructure set up through public-private partnerships. 4. Role of ICT in fostering entrepreneurship Innovation and entrepreneurship are the bedrocks of any economic activity. It creates jobs, it creates wealth, and it improves the general standard of living for large sections of the population. Small and medium enterprises in particular play a very important role as they create the maximum number of jobs. At a time when there are over 200 million unemployed youth in the world, 40 million of which are in the advanced economies alone, entrepreneurs will have to lead from the front in job creation. The need of the hour is to create incubators which provide the enabling environment to foster entrepreneurship. Entrepreneurship is unparalleled in its ability to enable job seekers to become job creators. 5. Catalytic role of the public sector in ICT and other spheres ICT is today a catalyst for growth in every sector including banking, education, healthcare, and governance. It enables governments to provide better and effective citizen services. ICT will continue to be a key driver for productivity in the next 30 to 50 years. In the past 20 years, ICT has led job creation and wealth creation and will continue to do so in the foreseeable future. Governments must come forward and play a central role in order to bring in scale to these efforts. We need to foster global discussion, collaboration and action in order to share best practices and create enabling policies. Special focus should be given to inter-governmental cooperation. The scale of the challenges we face today is so huge that no single stakeholder can work in isolation and hope to move the needle. What we need is a multi-stakeholder response between governments, private sector, policy makers and NGOs alike. ICT will continue to play the role of being an enabler in the design and delivery of these coordinated responses. Forums like the B20 will play a critical role in representing the views of the business community which has to lead from the front in these efforts.
Biography
S. Gopalakrishnan (Kris), the Co-chair of Innovation & Development Task Force of the B20 is the Co-founder and Executive Co-chairman of Infosys Ltd. He is the President of the Confederation of Indian Industries (CII) and a Member of the Board of the United Nations Global Compact. He was the Chairman of The Business Action for Sustainable Development 2012 (BASD). Kris was recently selected to the Thinkers 50, an elite list of global business thinkers. He is also a recipient of the Padma Bhushan, Indias third highest civilian honor.
THERE ARE CURRENTLY 6 BILLION MOBILE SUBSCRIBERS WORLDWIDE WHICH ROUGHLY EQUALS 87% OF THE WORLDS POPULATION.
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ICC Advisory Group / Energy

By: Kimball Chen, Chairman & CEO, Energy Transportation Group
Energy Access and World Prosperity

Developing countries will contribute significantly to global prosperity and peace only if they can access sufficient quantities of affordable energy.
LOBAL IMPROVEMENT in living standards, increased political stability and conict avoidance depend on achieving economic progress in developing countries. They are rising fast in aggregate world GDP share and will pass the developed countries by 20301. Developing countries share of world from 2000 to 2009... from 19 percent to 28 percent. The top long-term GDP growth rates after 2020 will be India, Indonesia, and Africa3, not China. Africas population will double from 1 to 2 billion by 2050. Its trade with the rest of the world increased 200 percent in the last decade, with only one-third related to commodities.4 Developing countries need secure, accessible, and affordable energy to perform value-creating work (agriculture, transport, manufacturing, service industries, IT and communications, resource extraction and processing) and to improve living standards. And they need energy in a context of rapid industrialization, urbanization, and population growth. Between today and any sustainable and prosperous future lies a period of major transition for developing countries and their energy economies. The starting conditions for many are difcult, including energy import dependency and/or energy scarcity: Some developing countries, such as Jamaica, spend as much as 30 percent of GDP on imported energy. Some developing countries, such as Malawi, spend close to 0 percent of GDP on energy consumption. They have limited indigenous energy production capability and limited scal capacity to import energy. Africa, for example, spends almost 70 percent more on energy as a share of its GDP than OECD countries5. The developed and developing world can be, and should be, interdependent collaborators in regard to energy supply, to ensure an efcient transition to sustainable,
greener prosperity and peace. Consumer behavior, government policies, and investments in infrastructure must interact properly to achieve growth in GDP. Well-planned investment in energy infrastructure and energy supply will lead to more-sustainable, less carbon-intensive energy supply and economic growth. To achieve effective and efcient development of developing energy economies requires well-coordinated national and global policy ecosystems. These ecosystems are comprised of domestic and international policies, agreements, trade, capital markets, innovation, technology, and technology transfer. Such ecosystems, properly structured and implemented, can provide secure, accessible and affordable energy through mutually benecial transactions between developed and developing countries. Effective energy ecosystem development requires harmonizing the development of the right energy supply systems and the right energy nancing systems more effectively than presently occurs if long-term global goals of increased sustainability, increased health for the large populations still dependent on highly polluting solid fuels, and diminished carbon emissions are to be achieved. It requires coordination of policies across policy sectors and national boundaries, more effectively than presently occurs. How can good global results be achieved most effectively? The international system must devise ways for developing countries to get long-term nancing for energy infrastructure and supply, without impairing their development by weakening their national balance sheets or sapping their early-stage scal capacity. Public and private capital sources in developed countries should be induced to invest on acceptable terms in developing countries to help those countries access and afford energy and to develop the right energy infrastructure in those countries. The direction of such energy investment should gravitate toward sustainable energy solutions as the relative costs of sustainable
solutions fall and the capability of developing countries to afford and maintain sustainable solutions increases. The benets would be signicant in both human terms and for the world system: For humanity, increased access to, and use of, cleaner fossil fuels such as natural gas and liqueed petroleum gas (LPG), as well as increased deployment, where appropriate and economically feasible, of renewables such as wind, biomass, and solar, will lead to economic development and improved living standards. For the world system, improved human living standards lead to increased social stability, which in turn leads to greater political stability, which in turn leads to lower capital costs and increased foreign trade and investment, which in turn lead to even greater improvement in human living standards. A virtuous cycle.
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OECD. Measured on a PPP basis World Bank OECD and African Development Bank 4 Economist Intelligence Unit 5 World Bank
2 3
Biography
Mr. Chen is the Chairman of Energy Transportation Group, Inc. (ETG), which develops international energy logistics systems, including liquefied natural gas (LNG) shipping and import projects and liquefied petroleum gas (LPG) distribution. ETG also leads the Global LPG Partnership (GLPGP), a Public Private Partnership focused on expanding LPG use in developing countries. The GLPGP includes the UN, development agencies, national governments and the private sector.
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ICC Advisory Group / Innovation

By: Peder Holk Nielsen, President and CEO of Novozymes A/S
Making More with Less: Investing in Innovation for Sustainable Growth

How do we achieve global growth which does not cost us the Earth, and our future upon it?
N THE WAKE OF the global economic crisis, dwindling natural resource supplies, and the rising needs of a growing human population, we face a stark question: how to achieve global growth which does not cost us the Earth, and our future upon it? Part of the answer lies with industry, which must turn the challenges of the post-crisis world into a unique opportunity to build a biobased economy, which is based on a sustainable, low-carbon approach to energy and production. Biotechnology is already making this transition possible by greening value chains in diverse industries such as textiles, paper, and detergents. Biobased products are boosting agricultural yields, helping develop plastics based on renewable biomass rather than oil, and making biofuels from trash a commercially viable alternative to gasoline. The benets include lower energy and resource costs for businesses, higher living standards for millions of consumers, clean industrial production, and a green infrastructure that fosters innovation, jobs, and global growth. But realizing the full potential of the biobased economy demands sustained investment in innovation which is scalable and meets market needs. Innovating for the Market Innovation is the cornerstone of the biobased economy, and lies at the heart of Novozymes, the worlds biggest producer of industrial enzymes. Research and development (R&D) absorb more than 20 percent of the companys global workforce and 13-14 percent of its revenues. A unique industrial biotechnology platform helps it undertake innovation in step with market needs, and in close collaboration with customers. The goal is to help customers make more with less: more and better-quality products using less energy and fewer raw materials. Moreover, Novozymes uses life cycle assessmenta cradle-to-grave measure of a products environmental footprintto
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THOUGHT LEADERSHIP
understand better which solutions in the companys R&D pipeline could reduce environmental impact in the industrial area in which it is deployed. These considerations inform the process which determines whether a particular product is market viable. Typically, Novozymes brings 6 to 8 new products to market per year, and holds some 7,000 granted or pending patents. These innovations serve a market need: they help our customers improve manufacturing processes and save resources and costs, which in turn improves their sustainability. Doing Laundry, Doing Good Take, for example, the detergent industry, where enzymes have revolutionized how we do laundry. Enzymes are proteins that help speed up biochemical reactions in all living organisms. As they have one, unique function, and degrade into harmless compounds, enzymes are ideal tools for use in clean industrial production. Enzymes such as protease, lipase, and amylase improve stain removal even when clothes are washed at 30 degrees Celsius, down from typical wash temperatures of 60 degrees, thereby cutting energy and chemical use, as well as reducing carbon dioxide (CO2) emissions. The average American family does around 400 loads of washing per year, only 21 percent of which are done in cold water. If all Americans reduced their wash temperatures, they could collectively save US$1 billion in energy bills each year. If all consumers in North America washed their clothes in cold rather than warm water, the energy savings would equal 21 million barrels of oil, or slightly more than one days worth of the U.S.s petroleum consumption. Similarly, enzymes can replace chemicals in many stages of the textile manufacturing process. The enzyme pectate lyase, for instance, degrades pectin and removes wax from raw cotton, thereby enabling the textile scouring process to take place at lower temperatures, and reducing the number of rinsing baths needed. By adopting enzymatic
solutions, manufacturers could save 70-90,000 liters of water and around one-ton CO2 emissions per ton knitwear. Were these solutions applied in the textile industry globally, there would be potential savings of 630 billion liters water and nine million tons CO2 annually. Investing in Tomorrow Greener detergents and textiles may seem unlikely agships for innovation in a world of smartphones, aerial drones and robotic limbs. But they are proof of technology that works, helps business earn bigger prots, delivers savings to consumers, and mitigates climate change. In 2012 alone, Novozymes helped customers reduce their CO2 emissions by an estimated 48 million tonscorresponding to CO2 emissions from 12 large, coal-red power plantsby the application of its various biosolutions in diverse industries. It is our ambition to enable a 75 million ton reduction in CO2 emissions in 2015. Although many biotechnological solutions needed to support the greening of value chains in key, global industries already exist, more investment in innovation and research is needed to quicken and scale-up the transition to a biobased economy. More innovation is also needed to optimize continuously the biosolutions demanded by industry. Biotechnology and the biobased economy offer a realistic path to stimulate economic recovery in the post-crisis world and foster sustainable growth. Industries and governments must seize the opportunity to support this transition.
Biography
Peder Holk Nielsen is President and CEO of Novozymes A/S, the world leader in bioinnovation.
THE AVERAGE AMERICAN FAMILY DOES AROUND 400 LOADS OF WASHING PER YEAR, ONLY 21 PERCENT OF WHICH ARE DONE IN COLD WATER.
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ICC Advisory Group / Latin American Growth

By: Eduardo Eurnekian and Javier Gerardo Milei
Growth and Infrastructure in Latin America

Investment in infrastructure is fundamental to achieving sustainable growth and development in Latin America.
NVESTMENT IN infrastructure is fundamental to achieving sustainable growth and development. When implemented in a timely and efcient manner it promotes a virtuous cycle that stimulates both economic growth and social equality. On the one hand, investment in infrastructure improves businesses productivity. This leads to increased protability which, in turn, facilitates additional increases in investment. On the other hand, investment in infrastructure also improves quality of life by providing greater access to production centers, raising the levels of basic health care education and services (especially for the poor), and lowering general economic and social costs. These welfare gains, in turn, stimulate greater human capital accumulation and further economic and social development which in the long term leads to higher economic growth. Investment in infrastructure is also fundamental for the integration of regional trade. Countries that wish to insert themselves into the global economy cannot ignore their infrastructure demands. By reducing the costs related to production, transportation, and transactional activities, countries and regions increase their competitiveness thereby promoting regional value chains, cross-border ows of capital and knowledge, and a more efcient use of resources. The Infrastructure Gap in Latin America and the Caribbean Recent studies show that Latin American and Caribbean (LAC) countries are far from meeting their infrastructure needs, and the entire region faces a major challenge if it wishes to meet recognized international standards, or at least those standards necessary to achieve reasonable and sustainable economic growth levels. Broadly speaking, this infrastructure gap can be
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dened in two dimensions: one horizontal and one vertical. The vertical gap is dened by internal factors in a country or a region and assesses whether infrastructure stock and investment are sufcient to accompany the demand derived from its economic activity. In this sense, the LAC region requires an annual expenditure of around 5.2 percent of its GDP to sustain GDP growth of 4.5 percent over the next 20 years. The horizontal gap measures a country or regions lag with respect to others in terms of differences between its levels of per capita infrastructure stock. In this sense, the LAC region requires an annual outlay of 7.9 percent of its GDP in order to reach the per capita infrastructure stock levels of those countries commonly known as The Asian Tigers. On this basis, it is clear that investment in infrastructure in the LAC region has been insufcient and great efforts should be made to reverse this situation. Role of the Private Sector in the development of Infrastructure Over the last three decades, investment in infrastructure in the LAC region has shown a signicant decline. From almost 4 percent of GDP in 1980 to 1985, its investment in infrastructure fell to 2 percent of GDP by 2007-2008. Apart from this notorious aggregate decline in terms of GDP, there was also a noted change in the involvement of the public and the private sectors. Up until the 1980s, governments maintained high levels of investment in infrastructure. However in the 1990s new roles were assigned to the market and the state resulting in a contraction in public investment in infrastructure. This was a period which saw the privatization of many state enterprises and the creation or modication of relevant regulatory frameworks where private (often foreign) investment assumed a new leading role. As foreign investment entered the local markets,
new production techniques, new technologies and new business models were introduced, helping to modernize local infrastructure and produced services. This transformation process prevailed over the past decade in most LAC countries. However, aggregate private investment during these same years did not fully cover the related decline in public investment. Nevertheless, it became clear that with the structural changes during the 1990s to economic policies, the advances of globalization and technological improvements, and a strengthening of the nancial markets, the private sector had
THOUGHT LEADERSHIP
Biography
Eduardo Eurnekian: Born in 1932, Eduardo Eurnekian is an Argentine entrepreneur who currently presides as CEO and President of Corporacin Amrica, 1st Vice President of the Argentine Chamber of Commerce, and Chairman of the International Raoul Wallenberg Foundation. Mr. Eurnekian initiated his career in the textile industry and later diversified into communications and multi-media. He has owned and operated a major Argentine broadcast television station, four Argentine radio stations and two Argentine newspapers. He also established Argentinas first cable television company.
Biography
Javier Milei is Head Economist of Corporacin Amrica, B-20/G-20 advisor and member of the Group of Economic Policy of the ICC/G-20. Since 2012 he also leads the division of Economic Studies of Fundacin Acordar, a think tank of national scope, with the mission to transform Argentinas vision and approach to economic and social policies. Before his current position in Corporacin Amrica, Mr. Milei was Head Economist of Estudio Broda and Mxima AFJP, and Senior Economist of HSBC in Argentina. He was also Advisor of the Argentine Government at ICSID. Javier has written more than 50 academic papers (two of them together with Nobel Prize candidate William Baumol), and has been a university Professor for more than 20 years of Macroeconomics, Economics of Growth, Microeconomics and Mathematics for Economists. Javier is Licentiate in Economics from the Universidad de Belgrano in Argentina, and has two Masters in Economics from Universidad Torcuato Di Tella and CEDES/IDES.
replaced the public sector as the main investment motor for infrastructure works worldwide. Yet visible gaps in the levels of infrastructure investment have made it clear that there is still much to do. Imperfections in the nancial markets have been one of the biggest obstacles. In this sense, for this model to be successful it is necessary that each party involved in the regulation, nancing and operation of infrastructure works assume those risks that it is best suited to assess and manage. Final Thoughts While the drivers of this infrastructure
gap are diverse, it is important to understand that to make optimal use of infrastructure investment, governments must design and implement investment strategies that contemplate not only the expansion of physical capital stock (the hardware), but the implementation of a set of policies and regulatory framework (the software) consistent with regional trade integration. One of the largest constraints to LAC regional growth has been its low level of regional integration. If these strategies can be successfully implemented, commercial levels could be doubled across the LAC
region. Deeper regional integration is of great strategic importance, not only to balance demand from Asia (which is currently focused primarily on commodities), but also to promote more sophisticated sectors within the LAC region to reduce its vulnerability to terms-of-trade volatility. Thus, it is integrated regional value chains, greater cross-border ows of capital and knowledge, and more efcient use of transport and energy infrastructure that will boost the regions productivity and enhance its capacity to compete in world markets.
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Global Finance / Tax Reform and Transparency

By: Tom Cardamone and Christine Clough
Assessing David Camerons G8 Agenda on Tax and Transparency

Five years after the financial crisis hit, the G8 finally seems to be serious about addressing the issue offinancial opacity and illicit outflows.
IVE YEARS AFTER the nancial crisis hit, the G8 nally seems to be serious about addressing the issue of nancial opacity and illicit outows. During a speech at the World Economic Forum in Davos earlier this year, UK Prime Minister and current G8 Chair David Cameron outlined his agenda for the Lough Eurne Summit to focus on a special blend of T: trade, tax, and transparency. He has called for a more serious debate on tax compliance and fairness, including the topics of automatic exchange of tax information and abusive tax avoidance. His transparency plan weaves strands of benecial ownership disclosure and country-by-country reporting to his golden thread for development. The trade outline has a similar focus on openness, but it needs some direction. This aggressive agenda is impressive, but it falls short in its push for nancial transparency, and it lacks a road map for turning these statements into coordinated action when the Summit concludes. To break the cycles of poverty and instability, the G8 Leaders need to rst break the cycle of inertia and debate. Mr. Cameron should champion coordinated action on the following items in order to achieve his agenda: automatic cross-border exchange of tax information; country-by-country reporting for multinational corporations; disclosure of benecial ownership information for all companies; better disclosure of import and export data; and greater enforcement of and stricter penalties for trade mispricing, abusive transfer pricing, and money laundering. Why Financial Transparency? Illicit nancial ows and abusive transfer pricing drain developing and developed countries of tax revenue and investment, and they facilitate corruption, terrorism, and transnational crime. Our research at Global Financial Integrity estimates that developing countries alone lost an estimated $859 billion through illicit outows in 2010. This gure is extremely conservative, because it does not include the mispricing of services or (illegal) movements of physical cash. Individuals and corporations that evade taxes or avoid them through aggressive tax planning that abuses national tax laws undermine domestic resource mobilization and rob countries of potential investment. Research by ActionAid shows how an international beer company in Ghana and an international sugar exporter in Zambia use tiny subsidiaries in Ireland, The Netherlands, and other secrecy jurisdictions to shift
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Global Finance / Tax Reform and Transparency

hundreds of millions of dollars in prots out of the countries in which the money was actually earned. The Ghanaian and Zambian governments lost the corporate tax revenue on these prots, which means smaller budgets for critical social services for the public, but the greater percentage is that lost to the economy as a wholemoney that otherwise could have supported local investment and economic growth. Mr. Cameron has rightly pointed out that these abuses are not limited to developing countries. The economies of Greece and Cyprus also demonstrate how illicit nancial ows can destabilize economies, governments, and societies in developed countries. The same shadow nancial system that multinational corporations and individuals use to avoid and evade taxes also manages the proceeds of corruption, terrorism, and transnational crime. In secret jurisdictions it is possible for virtually anyone to setup an anonymous shell corporation, in some cases without providing proof of identity or even a name for the owner of that company. If some kind of identity is required, a paid nominee often sufces. These anonymous shell companies can legally open bank accounts and credit cards, buy property, and access the legitimate nancial system in places such as New York, London, and Paris. Notorious weapons trafcker Viktor Bout used shell corporations in the U.S. to facilitate his international arms smuggling business. Current and former Arab Spring heads of state, such as Gadda, Ben Ali, Mubarak, and Assad are either known or alleged to have billions of dollars in cash and high-end real estate in the U.S., Britain, France, Germany, Italy, and elsewhere. A New York Times investigation revealed how Hezbollah was able to route its money through Lebanon, Canada, and the United States. And these are just a few of the cases that have come to light. A Road Map for Meaningful Change Mr. Cameron, to his credit, has recognized many of these issues stemming from illicit nancial ows, and his T agenda for the G8 Summit this year will, if followed, help to address this damaging situation. However, he has so far missed important opportunities to go much further, and it is unclear whether and what actions will actually result from his bold words. Mr. Cameron and his fellow G8 Leaders should consider the following proposals. Transparency: Companies must be required to publish information on their sales,
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TAXES ARE A VITAL PART OF ANY MODERN, DEMOCRATIC, STABLE, AND PROSPEROUS SOCIETY.
prots, taxes paid, and number of employees on a country-by-country basis. Investors, government ofcials, and the public need this information to properly understand where and how a given company is operating, such as monitoring investment risk and detecting abusive transfer pricing. Companies already gather this information for internal use, so it is a small step to make it public. Member states should also require nancial institutions to identify the true, human, benecial owner of all accounts held in or passing through their jurisdiction. Foundations, trusts, and companies should be required to divulge substantive benecial ownership information to authorities at the time of incorporation. This measure would also contribute to Mr. Camerons counterterrorism agenda and the G8s work on asset recovery and anti-corruption through its Deauville Partnership with Arab Countries in Transition. The current lack of sufcient nancial governance creates the space in which these nefarious actors are able to
nance and prot from their crimes. Tax: The G8 should do more than just debate the issue of tax compliance and fairness; it should set an example by agreeing to automatically exchange tax information with one another. The U.S. government now has the Foreign Account Tax Compliance Act, and the governments of the UK, France, Germany, Spain, and Italy just announced plans to share tax information automatically. Canada, Japan, Russia, and the United States should join this initiative, with developing and emerging economies being invited to join as soon as possible. This must be promoted as the new global standard of information exchange. Taxes are a vital part of any modern, democratic, stable, and prosperous society, as they share the burden of paying for public goods like defense, infrastructure, and social services. Trade: The shadow nancial system undermines free trade by creating barriers to entry and by creating unstable nancial markets. Access to good information on international price norms is vital to detecting and deterring the mispricing of trade, which accounts for roughly 80 percent of illicit nancial ows from developing countries. The G8 should commit to publishing all export and import data publicly online on a monthly basis, identifying products traded by the 10 digit Harmonized System identications, as the United States currently does. Accessible trade data can do more to curb abusive transfer pricing and other trade mispricing than any other process. Opponents to these reforms have argued that this agenda is unrealistic, cumbersome, and anti-business or anti-capitalism. Mr. Cameron has already refuted the last claim; enforcing laws, clarifying rules, and correcting information gaps supports a strong economy and business sector. The successful curtailment of shell banks in the previous decade demonstrates how changing this status quo of nancial opacity and abuse is possible and relatively simple. If the G8 Leaders muster the political will, they could transform global nance into a system that is more stable, resilient, prosperous, and fair.
Biography
Tom Cardamone is Managing Director of Global Financial Integrity (GFI), a research and advocacy organization based in Washington, DC. Christine Clough is a Senior Program Officer at GFI.
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Global Finance / Monetary Policies

By: Ronan Keenan, Diplomatic Courier Contributor
What Threat Do The Monetary Policies of Developed Nations Pose to Emerging Economies?
Emerging markets have garnered much attention in the aftermath of the 2008 financial crisis as their improving infrastructure, competitive edge, and strong growth potential attracted investment from the developed world.
HERE WILL BE no currency wars. Or so the G7 tried to say in February. A week later the G20 released a similar statement claiming its nations will not target their exchange rates in search of a competitive edge. Yet the message was deemed too vague by nancial markets and did little to ease concerns from emerging economies that their growth will be hampered by monetary policies of major developed nations. Emerging markets have garnered much attention in the aftermath of the 2008 nancial crisis as their improving infrastructure, competitive edge, and strong growth potential attracted investment from the developed world. A relatively weaker currency is a key tool for emerging economies as it makes their exports more appealing to developed nations that have stronger purchasing power. So it was with little surprise that ofcials in numerous emerging economies reacted with cynicism late last year when new Japanese
premier Shinzo Abe called for a weaker yen to boost his nations exports and revealed plans to spur growth by increasing Japans money supply through the purchasing of government bonds. The yen has consequently depreciated sharply across the board. The U.S. Federal Reserve and Bank of England also utilize similar stimulus measures, albeit without directly stating their desire for a weaker currency. Comparatively high inationary pressures in many emerging economies prevent them from adopting comparable policies. As a result, there has been anxiety that emerging economies will react to any signicant strengthening of their own currencies by launching large-scale intervention in markets to articially manipulate exchange rates while also adopting beggar-thy-neighbour policies that could disrupt global growth. The currency war terminology was rst used by Brazils nance minister in 2010
regarding the Federal Reserves quantitative easingthe buying of bonds with newly created money. The phrase was reignited in January by the Russian central bank when it accused Japan of potentially instigating very serious, confrontational actions. In February, the president of Chinas sovereign-wealth fund advised Japan against using its neighbors as a garbage bin by deliberately devaluing the yen. Later, several of South Koreas biggest companies warned that a stronger domestic currency will lead to signicant deterioration in prots. Fears have been compounded by some economists cautioning that reactionary devaluations could lead to a similar scenario that occurred following the removal of the gold standard in the 1930s. At that time, nations engaged in devaluations against each other and ultimately introduced trade barriers and protectionist policies that dislocated trade and segregated the global economy. Several
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countries such as Brazil and South Korea have already introduced controls to reduce speculative capital ows that may strengthen their currencies. A depreciation in currency value will be a short-term consequence of Japans policies and will likely have a negative impact on its smaller neighbors who trade in similar export markets. The possibility of lost jobs in manufacturing sectors is understandably difcult for political leaders in developing nations to accept. Yet despite this short-term prospect, the likelihood of a currency war scenario is exaggerated. The U.S., Japan, and UK are not intervening in currency markets. Their monetary stimulus efforts are not direct attempts to weaken their currencies; the intention is to lower domestic lending rates and boost spending at home. Focusing on the policies of developed nations and overstating their threat gives authorities in emerging economies an opportunity to turn attention away from difculties at home. The outlook for the major emerging economies is not as upbeat as in previous years. With further scal expansion unfeasible, China is incapable of sustaining rapid growth. A drop in Chinese demand will hurt the Brazilian economy, and a relaxation in monetary policy has left Brazil vulnerable to ination risks. And while the Indian stock market is near record highs, the country is facing rising ination, falling growth and potential political uncertainty following elections next year. Russia has the potential to perform well, although it too has been dealing with increased ination and a stubbornly high dependency on oil prices, leaving it with a precarious economic outlook. Looking past the alarming rhetoric, emerging economies actually have much to gain from stronger currencies. In the longerterm, buoyant major economies result in increased demand for their trading partners output. Stronger emerging market currencies will give developing economies an opportunity to ease inationary pressures
THE OUTLOOK FOR THE MAJOR EMERGING ECONOMIES IS NOT AS UPBEAT AS IN PREVIOUS YEARS.
while spurring domestic consumption by making imports cheaper, potentially driving companies to develop more innovative products which will spawn higher-paying jobs. Moreover, the extent of a weaker yen is unclear. The Bank of Japan will have a considerable amount of expansion to do if it is to bring the yen to a level that will have a truly lasting impact on its exports market. It would be remarkable if this year the yen weakened to its pre-2007 levels. The G7/G8 has not done enough to help the situation. While the G7 statement in February said its nations would not target exchange rates, the message was too ambiguous as it made no reference to Japan. The group needs to clearly state that largescale currency manipulation by its members will not be tolerated. Such measures can help dismiss currency war rhetoric, allowing leaders of emerging economies to focus on addressing their own policies.
Biography
Ronan Keenan is an alternative investments analyst and writer. With an economic background, he has a keen interest in global financial and geopolitical analysis and his writing has appeared in the Global Policy Journal, Economonitor, Geopolitical Monitor and Business & Finance magazine among others.
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Global Finance / Too-Big-To-Fail Syndrome

By: Dr. Richard Rousseau, Diplomatic Courier Contributor
Too-Big-To-Fail Syndrome
Despite five years of reform efforts, Too-Big-To-Fail Syndrome is far from gone.
HE SUBPRIME CRISISand the subsequent global nancial crisis was set in motion when a bank considered too big to fail bank was actually allowed to fail and go bankrupt. Despite ve years of reform efforts, Too-Big-To-Fail Syndrome is far from gone. More research work, including analyzing the costs and benets of various structural reforms schemes, would help authorities put the worlds nancial system back on the right track. Prior to the subprime crisis, twenty-nine of the largest global banks saw their ratings raised just over one notch by credit rating agencies because markets expected that they would be able to get state support. Today, those same nancial behemoths benet from implicit support of nearly three notches by credit rating agencies. Expectations of public funds support have tripled since the beginning of the crisis. In real terms this amounts to an enormous subsidy to the worlds largest banks at articially low funding costs and ensuring greater prots. Before the nancial crisis hit the world economy, tens of billions of dollars were pumped into big banks coffers on an annual basis. Today, it amounts to hundreds of billions. In other words, if we are to believe the nancial markets expectations, the regulations put in place by governments and international institutions have not prevented too-big-to-fail syndrome. The nancial industry never misses an occasion to warn against oppressive regulations of worlds largest banks. What we know for sure, though, is that regulations to subdue the too-big-to-fail syndrome have come in from all sides, and came rather quickly after the start of the crisis. Three types of reforms are observed. The rst type of reforms consists of overloading additional capital collected from the worlds biggest banks based on their size and connectivity (the way in which corporations and banks communicate electronically). Conceptually, this tax on systemic externalities is built on strong economic foundations and, thankfully, has been incorporated into sound public policy. Last year, the Financial Stability Board (FSB)an international agency established in 2009 after the G20 London summit and based in Basel, Switzerland agreed to use a sliding scale approach in setting up systemic surcharges for the worlds largest banks. The highest capital surcharge was established at 2.5 percent. This is the heart of the problem. Based on the estimates of Andrew G Haldane, Executive Director at the Bank of England, this tax rate is insufcient to affect the behavior of the worlds largest banks. The probability of default with a more or less 2 percent tax is plausibly reduced, especially if the biggest banks are faced with an
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external shock. However, this amplied absorption capacity will likely entail riskier behavior by the largest banks; this does not constitute in itself a reinforced protection of nancial systems. The capital surcharge is simply being levied at rates that are not high enough to change banks sometimes dangerous behavior. The second type of reforms is to modify the resolution regimes for nancial institutions, banks in particular. Effective resolution regimes for banks reduce the cost of such an operation and the cost for taxpayers. They also should treat the root cause of systemic risks. Signicant progress has been made in public policy on this front, as over the last 18 months the Financial Stablity Board has published (with the G20 approval) a number of legislative proposalsfor example, Key Attributes for Effective Resolution Regimes. A key attribute of these proposals is the so-called bail-in, i.e., the ability to impose losses on private creditors and shareholders rather than to ask taxpayer to incur these losses. The problem with these proposals is not so much the principle but, as with systemic surcharges, its application in practice. Whether it deals with large banks or public debt, a good resolution regime for a bail-in is liable to a serious time-consistency problem. Policymakers must choose between, on the one hand, placing losses on a small group of taxpayers shareholders and bondholderstoday or, on the other hand, spreading out these losses across a wider number of taxpayers now and into the futurea bail-out. In general, risk-averse Western governments tend to adopt the second solution (bail-outs). Throughout history, they have almost always used this strategy, particularly in response to nancial crisis similar to the current one. A bailoutor spreading the lossescan hold off deadlines and avoids a direct conict with inuential groups. However, the market is usually skeptical of politically based rational choices. For example, the DoddFrank Wall Street Reform and Consumer Protection Act, passed by the U.S. Congress on May 20, 2010 and the largest nancial regulation overhaul since the 1930s, on paper set out the obligation to use bail-ins in the future and rules out future public bail-out for incompetent or irresponsible investors and market speculators. However, market expectations of state support for U.S. banks are, ironically, higher today than they were before the 2008 crisis, despite the Dodd-Frank Act. In the eyes of the markets, the timeconsistency problem is now more acute than ever. Finally, too-big-to-fail syndrome could be overcome with structural reforms. One way of mitigating the time-consistency dilemma may be to directly alter the scale and structure of banking itself. The Volcker rule in the United States, for instance, has sought to restrict U.S. banks from making certain kinds of speculative investments which are harmful to their customers. In the UK, the Vickers proposals try to do the same, as well as the Liikanen plans more recently in Europe. Although they differ in details, each of these proposals shares a common goal: to achieve a degree of separation between investment and commercial banking activities. In principle, these ring-fencing initiatives generate benets both ex-post (better resolution regimes or bankruptcy laws) and ex-ante (improved risk management). As they affect the banking structure, their chances of withstanding the test of time are increased. While this is a real step forward, these benets will only be credible if the separation between investment and commercial banking activities is maintained in the long term. Indeed, many wonder if, in practice, the ring-fencing could prove porous over time. Without constant monitoring, the ring-fencing of today has the potential to become a leaking umbrella tomorrow. What if each of these initiatives is necessary but none is individually or collectively sufcient to address the too-big-to-fail syndrome? One solution might be to consolidate these proposals. For example, one might consider a re-sizing of the capital surcharge, possibly on the basis of quantitative estimates of the optimal capital ratio for bank, as David Miles, former Chief UK Economist of Morgan Stanley, and Jing Yang, senior economist at the Bank for International settlements, argued in an the Economic Journal in 2012. A more radical approach would be to simply set a ceiling for the size of banks, either as a proportion of the nancial system as a whole or, more reasonably, relative to GDP, as suggested by Daniel Tarullo, FED governor, and Thomas Hoenig, Director of the Federal Deposit Insurance Corporation. Proposals of this type, mooted recently by a number of commentators and policymakers, are generally criticized on two counts. The rst criticism pertains to a practical matter: How to calibrate an appropriate limit? A recent IMF working paper, authored by Jean-Louis Arcand, Enrico Berkes, and Ugo Panizza, on the link between nancial depth and economic growth sheds light on the question. It suggests that a negative impact on GDP starts to kick in at a certain level of the private-credit-toGDP ratio. Productivity growth is also affected negatively. By carefully analyzing this aggregate threshold and the most appropriate concentration level in the banking industry, a threshold could be derived for each nancial institution. The second criticism is empirical: Would limiting banks size make them less efcient? Can smaller banks achieve economies of scale?
THE FINANCIAL INDUSTRY NEVER MISSES AN OCCASION TO WARN AGAINST OPPRESSIVE REGULATIONS OF WORLDS LARGEST BANKS.
Until recently, the empirical literature suggested that the efciency of banks starts to decline at a relatively small size. But a number of studies published recently have debunked these ndings. David C. Wheelock and Paul Wilson (Do Large Banks have Lower Costs? New Estimates of Returns to Scale for U.S. Banks, Journal of Money, Credit, and Banking, 2012), for example, found that some banks with balance sheets over $1 trillion were still able to achieve economies of scale. However, these results should be interpreted with caution, especially because they do not take into account the implicit subsidies associated with too-big-to-fail, as we have described above. These subsidies tend to bring down big banks nancing costs and to inate their value. In other words, the implicit subsidy increases the threshold at which banks efciency begins declining. A study by the Bank of England has recently shown that banks with assets upwards of $100 billion see their economies of scale disappear once implicit subsidies are taken into account. In fact, it seems that banks efciency declines fairly rapidly with size because large banks are also too big to manage. The too-big-to-fail syndrome still prevails and this must be continuously kept in mind, for regulators and investors alike. Additional research on this crucial topic would do much in helping to refresh memories once in a while and keep banking industry reforms on track.
Biography
Richard Rousseau is Associate Professor and Chairman of the Department of Political Science and International Relations at Khazar University in Baku, Azerbaijan. His research, teaching, and advisory interests include Russian politics, Eurasian geopolitics, international political economy, and globalization.
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Global Finance / Europe

By: Steve Keller, Diplomatic Courier Contributor
The European Unions Cycles of History

The Nobel Committee has pointed out that the European Union has done more to advance the cause of world peace than most anything in the 20th or 21st centuries.
Union expanded east; now only a few nations remain outside of the organization. Nevertheless, this has meant peace for Europe, and allowed two generations to live without knowing war like their parents and grandparents did. It is not that this is unremarkable, but this extended season of peace, concurrent with pan-European frameworks is not something without precedent. Similarly, the current era of peace cannot be misconstrued to mean that war is over for good. Europe has always gone through cycles of devastation, introspection, attempts at integration, and (just before all hell breaks loose) the prevailing sense that there is no way all hell could again break loose. Indeed, it may be this false perception that has doomed Europe to Great War after Great War over the centuriesthe calm before the storm. We are in the midst of an extended period of calm, and an intense period of integration. But to keep it going, we must study how some of the more recent periods ended. Concert of Europe Aside from the post-World Wars, the best example of a long peace can be found in the aftermath of the Napoleonic Wars. Europe had just come through an exhausting period of upheaval, with the French Revolution and Battle of Waterloo bookending twenty-ve years of near-constant conict touching every single European state. At this time, integration took the form of an alliance between Europes major powers. Organized by the Austrian statesman Klaus von Metternich, the Concert of Europe involved the victorious Britain, Prussia, Austria, Russia, and the restored French monarchyand by proxy, their satellites. At Congresses in the three decades after Waterloo, the informal organization smoothed over diplomatic squabbles that would previously have led to hostilities. Among these were differences over Belgiums violent secession from the Netherlands, Greek independence from the Turks, and intervention in an early Spanish Civil War. Mid-Century Conict It was the Revolutions of 1848 that ended this comity. The Concerts goal was to avoid war, and in order to do so, it sought to clamp down on the liberalism that had collapsed the old order, and the nationalism that had driven Napoleons takeover. By 1848, the memory of the Napoleonic Wars had faded, and radical ideas again took hold from Paris to Frankfurt to Budapest. Europes states survived intact,
HE NOBEL COMMITTEES recent awarding of the Peace Prize to the European Union was met in some quarters with astonishment. After all, why reward the institution whose hastily-formed currency union now threatens to plunge the Western World into recession? (At least it was not a prize in economics.) Others, including the Nobel Committee, pointed out that the European Union has done more to advance the cause of world peace than most anything in the 20th or 21st centuries. Sure, the institution is now teetering on the brink. But after millions dead and nations laid to waste in the rst half of the 20th century, the integration of Europes fragmented nation-states in the latter half has brought a weary continent some unprecedented tranquility. And theyre rightexcept about the unprecedented part.
Current European Union When the European Union was founded, it was not the European Union. It all started with the European Coal and Steel Community (ECSC) between France, Germany, Italy and the Low Countriesan economic union formed with the intent to, in the words of Frances foreign minister Robert Schuman, make war not only unthinkable but materially impossible. The ECSC was formed in 1952 and lasted until 2002, though the unity it brought paled in comparison to what it inspired: The framework drawn up then set the stage for the European Economic Community (EEC) which joined European economies even furtherand the European Union in 1993, which brought considerable integration to the political organs of the continents various nation-states. As the Iron Curtain retreated and Moscows inuence waned, the European
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but the concessions of Europes monarchies made the Concert system essentially defunct. The Crimean War, which pitted Britain, France and Turkey against Russia, was the rst test in which the Concert failedand miserably so. About 600,000 died in two and a half years, ending a forty-year period without major war. For two decades afterwards, Central Europe found itself a battleground for nationalist interests, without any central authority or consensus acting as a check on entropy. Bismarckian System Chaos reigned until the 1871 entry of a unied Germany as a balancing juggernaut. Concerned about his countrys vulnerable geographic position in Europe and eager to maintain its recent gains, Otto von Bismarck built the eponymous Bismarckian System a web of alliances and understandings, mostly running through Berlin. This period also coincided with the Scramble for Africa. The Congress of Berlin formally set the rules for European expansion into Africa, and by the turn of the century, what had been the so-called dark continent was now carved up. It was through this safety valve of controlled competition over Africa that Europe saw another fortyyear period without any major power war. Of course, by 1914, Bismarcks network of alliances had been sorted out into two camps. Four years and eighteen million deaths later, Europe lay in ruinsan entirely unexpected outcome by policymakers who thought a repeat of the lengthy Napoleonic Wars impossible. Interwar Period They were wrong, and by the end of the Great War, it was colloquially called The War To End All Wars. To provide some assurance that they were not really so sick as to go through the same thing again in twenty years, the League of Nations was born. Since the interwar period was the apex of Europes near-total global inuence, it can be said that in some ways the League was a protoEuropean Unionespecially since the United States took no part. It gets a bad rap, but the League was more successful than is commonly acknowledged. Unlike after Waterloo, there was a sudden fragmentation of four major empires: German, Austro-Hungarian, Ottoman, and Russian. Redrawing the map this time would be slightly more difcult, but through League Mandates, plebiscites, and interventions both threatened and undertakenthe League managed to put out all the brush res in the Great Wars wake. There were still more good-faith showings of internationalism in those years. Often forgotten is the Kellogg-Briand Pact, an international renunciation of war. Obviously by 1939, that was no longer the case. But the League still accomplished its mission for a good fteen years, much like the Concert did before and the EU does now. The difference? Since Versailles was more punitive than stabilizing, the undertaking was short-lived. Post-World War II Its logical to think that after World War II, the length of peace and the breadth of the follow-on institutions would be just as massive as the conict itself. But there were certainly other factors at work. European manpower resources having been depleted like almost never before, it fell to the U.S. and USSR to ll in the gap. This, of course, led to the Cold Waran ideological struggle that almost wholly trumped nationalism, putting the states of Europe into two clearly-dened teams. It was this rigid framework that allowed for the institutional hardening of pan-Europeanism, and not the other way around. Had World War II been concluded without outside interventionand the stakes those powers claimedit is easy to imagine yet another rerun again after the obligatory breather. Of course, that intervention did happen. And what began with a free trade agreement is now a continent-wide confederation. Undeniably, there are signicant differences between the modern European Union and its informal predecessors. It involves more more nations, and more bureaucracy, which means bureaucratic inertia. And, perhaps most of all, a hegemon is currently guaranteeing its cohesion. Though the threat of Soviet invasion no longer exists, Europes current reliance on the United States for defense means that the continents powers are, in the conventional sense, disarmed. But even ofcial confederations collapse if their constituent parts believe union is no longer in their interest. The large amount of autonomy retained by European Union members makes this a realistic possibility if things get rough. Obviously, it is a whole new ballgame should the Eurozone crisis break the EU, but there are some historical lessons to bear in mind as well. Should the youth of Spain, Italy, Greece or another budget-busted country blame Germany or France for their lost generation, we are suddenly in a similar dynamic to that post-Versailles. As World War II becomes a far-distant memory with the inevitable
THE ECSC WAS FORMED IN 1952 AND LASTED UNTIL 2002.

passing of that generation, the lessons learned from that time have to potential to be forgotten as welljust note the rising of ultra-nationalist parties in Greece and Hungary. Should the United States pull back its military umbrella, Europe will again be responsible for its own defense. This means cutbacks to beloved social programs and a higher density of native arms on the continenta Pandoras box this generation has no experience with. But the future is not fated to be divisive. A generation of Europeans with no memory of world war has not coincided with a non-Eurocentric world in centuries, so individual European states may nd it better to stick together than to fall apart. Europes aging population represents a reversal of a classic war-inducing demographic dynamic, and it is a challenge European states are all facing together. And then we have an unexpected, new issue: Should the inux of Muslim immigration unify Old Europe against the new, the fractures of the 21st century may be across class and religious lines rather than geographic borders, which creates a whole host of problems on its own. These factors may breathe a new relevance into the organization. Although history is a guide, there are no permanent cycles. If the EU can retain the relevance and structural help it has had, peace will probably continue as it facilitates Europes advance into the 21st century. If not, peace cannot be taken for granted.
Biography
Steve Keller is chief editor at the geostrategic consultancy firm Wikistrat and a freelance columnist. A graduate of Vassar College, he specializes in American politics and the history and legacy of imperialism. He is currently working on an international relations simulation game for the social media age.
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Global Finance / Eurozone

By: Patrick McQuillan, Diplomatic Courier Contributor
Debt and instability: The high costs of seccession in the eurozone

The European sovereign debt crisis remains a prevalent issue that threatens the growth of the U.S. economy, as well as global market stability.
HE WORLD ECONOMY has seen its waters poisoned by the European economic debt crisis, which has been an ominous shadow lurking over Europe and inhibiting the growth of global markets since 2009. States have struggled to maintain a consistent competitive standard for the Euro, which has thus far proven detrimental to European markets. The European Monetary Union (EMU) denotes the scal coalition of 17 states that have adopted the Euro as their primary mode of currency. Several of these statessuch as Spain, Ireland, and Greecehave demonstrated over the past two years that they lack the capacity to effectively integrate the Euro into
their economies. Meanwhile, other states like Germany and Belgium outperform most EMU sovereigns. These radical economic disparities have polarized the Eurozone: weaker states have been characterized as agents of stagnation in the system, while the most efcient states exorbitantly raise the Eurozones competitiveness. This economic crisis threatens a global double-dip recession at the hands of European scal deterioration. It has become increasingly popular to call for breaking up the Eurozone according to a system of policies known as Secession Theory. Notwithstanding, Secession Theory cannot be practically applied without shattering the EMU system. Instead, Eurozone leaders
should consider Macroclimate Reform. Secession Theory proposes three EU policy adjustments that could each plausibly restore Eurozone stability: 1) a German exit to lower the high competitive market standard; 2) a Greek exit to eliminate scal stagnation; and 3) a stage-managed German and Greek withdrawal to cleanse the system and lower competitive standards to a level at which all Eurozone countries can operate. Secession Theory, however, is not a particularly realistic undertaking. These quick xes to the immediate symptoms of the Euro crisis confront the issue from a viewpoint that understands the Eurozone as a collection of self-interested states operating within a vastly differentiated
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economic framework. Unfortunately, it does not address the structural aws of the EU as a whole, which are damaging state solvency and sucking the blood from EMU markets. Several aws in Secession Theory would not only lead to failure in achieving EMU balance, but may also cause further macroeconomic damage to the Eurozone. They include: A German secession would incur economic stagnation as the deteriorating Greek economy continues to devalue the Euro, further injuring dwindling state markets. A Greek exit and re-adoption of the drachma would impose severely elevated costs on the public and private sectors, forcing Greece to default on its loans. This default could result in the economic collapse of European banking systems holding Greek debt, causing prolonged stagnation and inhibited economic growth. A joint, strategic exit by Germany and Greece could shock Eurozone markets and instill widespread economic panic in the absence of both the high and low competitive standards these states have respectively created. Despite its good-humored reception and the amount of support for its implementation, Secession Theory leaves too wide a margin for error to offer any kind of long-term stability to the Eurozone. Macroclimate Reform compensates for the gaps in Secession Theory and attacks the debt crisis with recommendations for EMU systemic restructuring. This approach aims to reinstate sustainable scal balance and reliable debt insulation in the Eurozone. This theory has been formulated to address the principal faults of the EU scal system, including the absence of a universal debt regulation mechanism; the extensive reliance of states with outstanding debt on failing loan programs, such as the International Monetary Fund and the European Central Bank; and the robust German and poor Greek standards jointly polarizing the Eurozone into one economically stronger part and one weaker part. These aws have prevented the development of state solvency within the EU and the implementation
of development programs. Macroclimate Reform identies three chief EU policy modications as imperative agents for long-term economic stability: The establishment of an EU Treasury modeled after the U.S Treasury, which will adopt an adjusted European government bond program in place of external aid. Limited German concession to these bond programs as one of the most economically powerful EMU states. Greek secession from the Eurozone, with the promise to repay its outstanding debts. These measures aim to lower sovereign debt ratios and allow room for scal growth within the Eurozone and, by connection, the global economy. Macroclimate Reform would not only ensure the improvement of economic stability in European markets, but it would also create lower debt ratios for peripheral states on the verge of collapse. The presence of an EU Treasury fueled by German-supported government bonds would offer structured scal policies and help to prevent global recession. These new scal regulations contain sovereign debt relief within the EU and promote intereconomic cooperation among sovereigns. A Greek secessionwhen applied to this new system under Macroclimate Reform policieswould allow for freer capital ows, the expansion of commercial markets, and ensure healthy scal growth in the Eurozone without the extended threat of stagnation. With the assistance of an adjusted German standard, the EU Treasury would also be able to help Greece repay its debts via a customized government bond program. The European sovereign debt crisis remains a prevalent issue that threatens the growth of the U.S. economy, as well as global market stability. Macroclimate Reform is one of countless viable solutions for long-term recovery, future debt insulation, and growth in the Eurozone. Although instability remains a primary concern in Europe, an effective cure to the crisis must be implemented soon to prevent continued international recession.
STATES HAVE STRUGGLED TO MAINTAIN A CONSISTENT COMPETITIVE STANDARD FOR THE EURO, WHICH HAS THUS FAR PROVEN DETRIMENTAL TO EUROPEAN MARKETS.
Biography
Patrick McQuillan is currently an undergraduate candidate for a Bachelor of Arts in International Affairs and Economics at Northeastern University. He recently returned from the United Nations Headquarters in New York City, where he served as a political analyst and conference officer for the UN General Assembly and the First Committee on Disarmament and International Security. Previously, he conducted independent weapons research with the United Nations at their European office in Geneva, Switzerland.
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International Trade / WTO

By: Calie Hill, Assistant Editor, Diplomatic Courier
Challenges for tomorrow: What the future holds for the WTO
WTO regulations, dispute settlement strategies, and the work of its administration have become crucial to the management and smooth functioning of global trade.
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WENTY YEARS AGO, votes in favor of implementing the Uruguay Round trade agreements established the World Trade Organization (WTO). Since its creation, membership has grown from 23 to 155 countries and continues to grow. Along with gaining momentum in numbers, diversity and depth of resources are vastly increasing. With more than two-thirds of its members from developing countries, the WTO is far more diverse than ever before. WTO regulations, dispute settlement strategies, and the work of its administration have become crucial to the management and smooth functioning of global trade. During the 2008 global nancial crisis when tumbling economies and rising unemployment created pressures to protect domestic industries, the WTO was recognized for stopping the threat of trade protectionism. This year, members of the WTO will select a new Director General in hopes of continuing the young organizations legacy. Indeed, the newly appointed leader will have a foundation of various accomplishments to commence their role at the helm of the WTO. However, despite the organizations undeniable success, a changing international economic environment creates a series of signicant challenges. The most evident challenge is the Doha Development Roundthe current round of multilateral trade negotiations to further liberalize trade and reform the WTO. After a decade of talks, the discussions remain at a standstill. The Doha Round is focused on reducing critical trade barriers in areas such as agriculture, industrial goods, and services. This would urge businesses around the world to specialize in the production of goods and services, achieve greater economic status, and increase their efciency and productivity, all of which would permit them to deliver higher quality and cheaper products to international consumers. The Doha Round is specically determined to provide increased market access to goods and services from developing countries. In the end, the WTO estimates that the passage of the Doha Round could increase global GDP by $150 billion per year. Part of the reason the Doha negotiations are at a stalemate, many observers now recognize, is that it was simply too ambitious, relying on a single undertaking approach which sought an all-encompassing agreement on the markets for agriculture, goods, and services. Developing economies, which had been assured special and differential treatment in the talks, also became perturbed as the richer and more developed countries demanded more and more allowances, cautious of giving rising trade powers such as Argentina and China a larger competitive advantage.
THIS YEAR, MEMBERS OF THE WTO WILL SELECT A NEW DIRECTOR GENERAL IN HOPES OF CONTINUING THE YOUNG ORGANIZATIONS LEGACY.
The economic expansion of large developing countries has created a new set of challenges for the WTO. How these countries are incorporated into the global trading system, and specically how China as the worlds second largest economy, involves itself with the WTO is important not only for the Doha Round but for the future of the Organization. Since Doha has been in a stalemate, the worlds trading powers have been busy bypassing the WTO by signing multiple bilateral and regional trade agreements. As more free trade agreements have been created, the primary role of the WTO in liberalizing trade has been increasingly questioned. The WTO has played a fairly limited role in helping address other global issues related to trade, such as food security, climate change, and global trade inequalities. While some FTAs can help to cement the relationship between trading partners, two large aws from the perspective of development promoters have emerged. First, the major nationsthe EU and U.S., for examplecan use their intimidating bargaining power to press for more concessions from weaker countries than they could get away with in the setting of the WTO, where the governments of smaller
economies can form consensus blocks. Second, they create what has been labeled as a spaghetti bowl of cross cutting and inconsistent rules governing different markets, which can be very expensive for producers in poor countries to conform to, let alone keep track of. With the various challenges that lie ahead, new thinking is needed in the WTO. The approaches of twenty years ago are no longer adequate to todays global obstacles. The WTO Secretariat needs to begin a process that will revitalize the organization and equip it to deal with the changing international economic environment. As well as inheriting a sturdy foundation of triumphs, the new District General has a daunting task ahead.
Biography
Calie Hill is the assistant editor for the Diplomatic Courier. She graduated from Utah Valley University with a bachelor degree in Political Science and an emphasis in international relations.
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By: Richard Rousseau, Diplomatic Courier Contributor
WTO Trade and Global Governance in the 21st Century

World trade is a rather different beast in the 21st century. The WTO must adapt to this new world or it will be quicklymarginalized.
ORN IN THE twentieth century, the World Trade Organization (WTO) is still largely built on the rules and dispute settlement mechanisms it adopted at its inception in the last century. However, world trade is a rather different beast in the 21st century. The WTO must adapt to this new world or it will be quickly marginalized. The WTO is not keeping pace with the changes taking place in the world. The cross-border ows of goods, services, know-how, investment, and people participating in international production networkssupply-chain trade in economic jargonhave transformed the global economy. The WTO is caught between fullling its original mission and addressing new and emerging realities. It seems mired in malaise. The 20th century conicts over tariffs and agricultural barriers prevent the WTO from concluding the Doha Development Round commenced in November 2001. It seems equally incapable of moving forward in any other areas. Consequently, the most stalwart WTO members are developing trade arrangements independently of existing WTO structures to regulate 21st century trade. This failure is in several respects paradoxical. The malaise does not in itself reect hostility towards the principles of free trade or the liberalization of international commerce. Quite the contrary, WTO members, including countries like India, Brazil and China which have long criticized the organization, have conducted a massive liberalization of trade, investment, and services on their own accord since the beginning of the new century. In fact, WTO members have unilaterally, bilaterally, or regionally advanced the WTOs liberalization objectives everywhere except within the WTO itself. Nor is the apparent disillusionment with the WTO a sign that it has lost popularity. The organization continues to attract new members, including powerful nations like the Russia, despite the political cost they must incur to gain a membership card. The WTO may seem less useful now to some members but it would be premature to write it off as irrelevant. Indeed, its dispute settlement procedures are used by an ever wider range of members. In short, when trade issues characteristic of the 20th century have to be addressed, the WTOs existence is still justied and it remains a viable entity. The WTO is aficted by the emergence of a new type of trade: the unbundling of production or, as it is more commonly expressed, the emergence of Global Value
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Chains (GVCs) which have reshaped the geography of global production. Today, joining a supply chain is the fastest route to industrialization for emerging markets. Unbundling has also restructured the geography of global demand. In this new trade conguration, there is no place for protectionism. In fact, countries that establish trade barriers are signaling local manufacturers to relocate elsewhere, thus excluding themselves from GVCs. In other words, protectionist measures have become, for all practical purposes, destructive measures. New forms of trade need new governing rules which go beyond those of the WTO as they stand. Since the Uruguay Round of multilateral trade negotiations in 1995, virtually all the necessary new governance required has been formulated spontaneously by developing countries in regional trade agreements (RTA) or through unilateral trade policy reforms. The real danger for the WTO, therefore, is not so much its complete failure, but the erosion of its centrality in the global trading system. In this context, the WTOs future will most likely take one of two forms. In the rst scenario, it will merely handle matters associated with 20th century trade rules but irrelevant for 21st century trade and GVCs. All new generation trade issues will be addressed in other formats, most likely in RTAs. In this rather optimistic scenario, which seems to be the path currently being followed by the WTO, the Geneva-based organization will maintain its role as one of the pillars of world trade governance. This outcome would be reminiscent of the European Unions three-pillar structure, in which the rst pillar (basically, the disciplines agreed to in different treaties up to the 1992 Maastricht Treaty) was supplemented by two new pillars to cover new areas of cooperation. A pessimistic version of this scenario envisions that a lack of progress in adopting new rules may undermine political support for the organization and that violations of WTO disciplines may become commonplace. Under the second scenario, the emergence of other mechanisms of trade governance will reinvigorate the centrality of the WTO, forcing it to then engage in 21st century trade issues both by developing new multilateral disciplinesor at least general guidelineson issues such as investment guarantees, and by providing a multilateral dimension to some of the new disciplines which have emerged in RTAs. This future outlook could take different forms. The WTOs engagement may involve
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THE WTO IS CAUGHT BETWEEN FULFILLING ITS ORIGINAL MISSION AND ADDRESSING NEW AND EMERGING REALITIES.
varying levels of pluri-lateralism where only a group of members sign up to new disciplines rather than the latter being binding on all WTO members. Several examples, such as the Information Technology Agreement (ATI) and the Government Procurement Agreement (GPA), embody this approach. Another variant is an expansion of the Doha Round agenda which would include some of the new trade issues which are now matters for RTAs. Naturally, 20th century-type trade has not disappeared, but if it remains important in certain goods (e.g. primary products) and for some countries (Global Supply Chains are still rare in Latin America and Africa), the most dynamic aspect of trade in the 21st century is the development of GVCs. For this reason, the formulation of new rules and disciplines regulating trade, services, intellectual property, investment, and business mobility is being increasingly undertaken outside the structures of the WTO, which was not designed to regulate these issues. Developing countries seek to quickly and unilaterally lower their tariffs (especially on intermediate goods), and unilaterally remove barriers and other behind the border obstacles (non-tariff barriers) to the expansion of trade, investment and services, and intellectual property rights protection. Moreover, both developed and developing countries are eager to sign bilateral investment agreements and comprehensive RTAs which clearly stipulate the 21st century disciplines. These developments have dramatically eroded the WTOs bearing in the global trade governance system. The implication for states trade policies is obvious. WTO members will now have to decide whether the international trade organization should continue to regulate global trade with a 20th century mindset, or work constructively and creatively to delineate a new range of rules and disciplines to address the realities of 21st Century trade.
Biography
Richard Rousseau is Associate Professor and Director of the Department of Political Science and International Relations at Khazar University in Baku, Azerbaijan.
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2013
International Trade / BRICS

By: Oscar Montealegre, Diplomatic Courier Contributor
Breaking Apart: The End of BRIC

BRICS nations should be viewed as a market for exports not only for the United States, but also for the European Union and emerging Latin American and Asian nations.
OT TOO LONG AGO, Brazil, Russia, India, and China were looked upon with envy by the international arena. Predictions of decouplinga theory in which emerging economies have strengthened so much that they no longer depend on the United States for economic growthwere seen as a foregone conclusion for the BRIC nations. To the surprise of many, what was once a mere formality is now a distant reality. Lately, BRIC nations have encountered different degrees of turbulence with engineering economic growth. The European economic crisis, coupled with sluggish U.S. growth, has hindered the BRICs economic growth when analyzed as a single blocdiscarding the decoupling phenomenon and proving the opposite is still the norm, to the chagrin of BRIC leaders. In addition, corruption continues to be an endemic problem for all BRIC members, dampening not only their political systems, but also investor condence. High taxes and heavy
regulation are thorny matters that never appear to cease, stalling future productivity, investment and growth, especially in Brazil and India. In short, not all is rosy in BRIC land. However, to undervalue these emerging economies now would be a mistake, or living in a state of denial. Most importantly, the state of the global economy should not be perceived as a G7 vs. BRICs battle for economic supremacy. Instead, the BRIC nations should be viewed as a market for exports not only for the United States, but also for the European Union and emerging Latin American and Asian nations another vehicle fueling the engines of economic growth. If we were to include South Africa in the BRIC bloc, as is increasingly common, the ve nations would represent 40 percent of the worlds population and approximately 25 percent of the worlds GDP. South Africa has participated in the last two BRIC summits and hosted the latest summit in March 2013. I say
the more the merrier, as long as the goal for BRIC nations is to integrate more profoundly with the world economy, instead of designing a model of us against them. The problems for BRIC nations are threefold. First, the BRIC economies are not performing at a rate that was forecasted by domestic and foreign economists. Second, although all BRIC nations appear to stutter simultaneously, the notion that they are similar cannot be further from the truth. Each country has a unique economic model that is not duplicated by other BRIC members; in fact, the only two commonalities are that they are both emerging economies and they happen to be lumped together in a catchy acronym. Third, no one can really answer who is leading the BRIC group, whereas the G7 and Western nations look to Washington, D.C. for leadership, The BRIC nations seem to jockeying for the leadership role, or at times shying away from it (i.e. China). If there were to be a leader of the BRIC
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order to tame ination and cool the countys real estate craze and avoid property bubbles similar to episodes in Japan during the 1990s and the United States in 2008. China is still the second largest economy in the world, and out of all the BRIC members, it is still the fasting growing economy. The country is projected to bounce back in 2013, avoiding a hard landing, and targeting the ever-important 8 percent growth rate for 2013. However, according to Ruchir Sharma, author of Breakout Nations, if Chinasgrowth were to fall to a GDP rate of 6 to 7 percent, recession would occur, but it would not be on the same scale as the Euro crisis or the United States Great Recession. The bad news is that a decelerated China will hurt other growing nations, including BRIC partners India, South Africa, and Brazil. The darling of the Americas, Brazil, is no longer feeling the condence it exuberated when they were awarded the 2014 World Cup and 2016 Rio Olympics. The nations 2012 GDP is expected to come in below 1 percenta very disappointing gure, especially compared to its 2010 growth rate of 7.5 percent. Brazil was once the hot spot for international investors and businesses, but lately the samba country has lost some of its mojo, muddled with an overvalued currency against the U.S. dollar, high taxes, poor infrastructure, constant government intervention, and self-placed barriers holding back entrepreneurial growth. The slowdown in China has hurt Brazil, which now sees itself as a quasi-prisoner to Chinas economic growth, transferring their dependency from the U.S. to the Middle Kingdom. To counteract the economic bottleneck and galvanize economic activity, Brazil is lowering interest rates and easing credit. It may work. However, what we have learned as of late is that Brazil is miles away from decoupling from anybody. India too is struggling with below average growth rates. A few years ago, India was touted as the second coming of China-esque growth, projected to grow from 2010 and onward at a rate of 8 to 10 percent. But not so fast. The last two years have been meager for India. At the beginning of 2012, India was scheduled to reach a GDP of 6.5 percent, but unfortunately economists project that the country will not deliver that number, aligning India to a lower growth rate of roughly 5 percent. For investors in Indian stocks, the last ve years have delivered a negative yearly return of 8.3 percent, a microcosm of Indias underperformance. The Indian government has initiated new reforms to jump-start the economysuch as opening retail sectors to foreign investors and raising prices for
THE LUSTER OF THE BRICS IS SLOWLY LOSING ITS SHINE.
nations, the obvious candidate would be China. However, China is dealing with its own set of woes. In 2012, for the rst time this century, China grew at a rate below 8 percent. Although a gure near 8 percent would be a miracle for crisis-laden EU countries and the United States, for China it is seen as average or less. Why the drop? Chinas labor force is no longer growing as fast as before, the so-called labor dividend (a surplus of a cheap labor pool) has been exhausted; moreover, wages in China are increasing, especially in factory labor, which causes a severe dent in Chinas competitiveness. This has opened a new space for Mexico to reignite their exports for the United States, placing China in a position where it now has to compete against other nations based on strategy, efciency, and optimal productivity instead of relying on dirt-cheap labor. A portion of the slowdown can be also attributed to Chinese leaders, who made a bold decision earlier this year to increase interest rates in
subsidized fuels; although they are welcomed, pervasive corruption and horrid regulations need to be addressed in order for India to become an authentic emerging market player. No more than two years ago India was riding a wave of enormous condence; it now needs to x their internal problems before they can once again look outward. Russia is no exception to the BRICs latest snags. Putins quasi-authoritarian style of governing has put a wet blanket on investment condence, as the current governance style appears to hinge on whether Vladimir Putin favors a certain domestic or international company. Russia faces other challenges such as a heavy dependency on natural resources and a shrinking and aging population, akin to Japan. If the price of oil continues to drop, Russia will be adversely affected, as oil and gas are their largest exports. The EU and its crippling recession has not done Russia any favors lately either; Europe is Russias main trading partner and the largest purchaser of Russias natural resources, yet demand has dropped signicantly, affecting Russias GDP growth. Corruption also cripples economic growth in Russiaan overlapping characteristic that all BRIC members share. The luster of the BRICs is slowly losing its shine. The advancements of the BRIC nations and other emerging markets in the last 12 to 15 years have been nothing short of amazing, but to sustain incredible growth without encountering periods of slow growth is virtually impossible. The lesson here is to move away from categorizing emerging markets in lazy groups dressed in acronyms. Each country has unique characteristics and comparative advantages, and while some emerging markets are in near crisis mode, others like Colombia, Nigeria, Chile, Indonesia, and Turkey are in an expansionary phase. The BRIC nations have had their run, and maybe they have one or two more hurrahs left in them. However, the notion that Brazil, Russia, India, and China were on the road to create an alternative to the United States and the G7 wasand still is a distant desire.
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International Trade / Copyright

By: President Gigi Sohn and Staff Attorney Jodie Grifn, Public Knowledge
The Costs of Copyright in the TPP
HE TRANS-PACIFIC PARTNERSHIP agreement (TPP) has sparked much debate over its many chapters, but many discussions have thus far overlooked the serious consequences the TPPs copyright provisions could have for internet freedom and emerging technologies. Those who have been following the TPP negotiations know the TPP is a trade agreement currently being negotiated by the United States and eight other countries bordering the Pacic Ocean that holds major implications concerning international copyright law. Excessive copyright protections in the TPP would not only affect producers and distributors of content, but also stie the ability of technology companies to make products that can be used to copy, store, access, use, and repurpose copyrighted works, and threaten users ability to utilize digital technology to use content in new ways. Before any public interest advocate can begin a meaningful analysis of the TPP, it is important to note that the TPP has been negotiated under shocking levels of secrecy, so consumer advocates can only rely on outdated leaks of the text to evaluate the public harms the TPP would cause. While the U.S. Trade Representative has been willing to receive comment from the public, meaningful transparency cannot exist until the USTR publicly responds to public interest groups analysis, or ofcially conrms what negotiating objectives the USTR is seeking in negotiations. Some say the USTR must operate in secrecy to achieve its negotiating goals, but this is cold comfort if the provisions the USTR secretly seeks would stie internet freedom or user rights and fail to actually incentivize new creative works. The TPP copyright provisions in particular are not limited to provisions on trade and tariffsthey would require countries to implement detailed substantive provisions of copyright law, which affects users, technology companies, and creators alike. These provisions are much more akin to domestic legislation than they are to trade quotas or tariffs, and therefore the process and substance of the TPP should be as transparent
as we expect domestic legislation to be. Otherwise, consumers will be in a position with little time to act and with little information to act on. The public should be involved in these conversations that may decide the fate of the worlds most innovative communicative resources. Without any access to ofcial negotiating texts or positions, it is difcult to know the full extent of the harms the TPPs copyright provisions may pose to the public interest. But based on a leaked U.S. proposal from February 2011, Public Knowledge can identify a number of proposals or likely proposals that would have serious consequences for consumers and should be changed or removed entirely. Of course, the actual text of the TPP may be far worse than what we estimate, but it is impossible to know until the text is released to the public. Based on leaks of the TPP proposals and past trade agreements, a number of likely copyright provisions in the TPP could threaten internet freedom and thwart emerging new technologies that would otherwise contribute signicant economic value to the negotiating countries. For example, one leaked TPP proposal from the U.S. would grant copyright owners power over buffer copiesthe temporary copies that computers need to make in the process of moving data around. With buffer copy protection, many more transactions would require a license from the copyright owner and many more uses would expose consumers to liability. The TPP would also prevent users from breaking technological protection measures, even if users intend to make non-infringing uses of the protected work. The TPP would not only require this additional level of restriction beyond those already created by copyright law itself, but would tie member countries hands from creating new permanent exceptions to those restrictions based on evolving social need and market practices. For example, if the U.S. wanted to create an exception that permits circumvention for lawful uses, it would be in violation of the TPP. The TPP also threatens to criminalize small-scale copyright infringement, which would, for example, make downloading music for personal use a crime instead of simply making the user liable for damages to the copyright owner. Police could then seize the accuseds computer as a device aiding the offense and send the end-user to jail for downloading. It should be noted here that the TPPs criminal rules go beyond current U.S. law and would impose similar rules on other countries. The TPP would encourage ISPs to institute
measures like three strikeswhich kicks users off their internet connection after three infringement accusationsand deep packet inspection. This promotes a system in which the punishment is wildly out of proportion to the offense, and would prevent those accused of infringement from using their internet connection for any purposeincluding normal communications and commerce. Finally, the TPP proposals for limitations and exceptions to this over-expansive copyright system would not actually create balance itself, but would actually restrict what limitations and exceptions a member country could enact. But limitations and exceptions to copyrightlike fair use, the rst sale doctrine, and compulsory licenses not only leave room for free speech and cultural participation, but enable companies to utilize innovative new technologies and platforms the ultimately contribute to a countrys economy. Platforms like search engines, online re-sale forums, and tools to create and distribute user-generated content create immense economic and social value, but can be threatened by incumbent companies that seek to leverage copyright provisions anticompetitively to prevent market entrants that threaten their 20th century business models. Indulging these anticompetitive efforts is no way to build a thriving marketplace, nor to develop a robust and creative culture. The TPP negotiators have a responsibility to seriously examine and consider the economic and social costs of overreaching copyright, and ensure that the TPP does not restrict economic and cultural growth for its member nations.
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Sponsored Feature / McGraw Hill Financial

By: Gerard Worms, Harold McGraw & Victor Fung
Four Ways To Stimulate Global Trade And Job Creation

The decade-long slowdown in global trade liberalization is coming to an end and not a moment too soon.
MID CONCERNS over decits and sovereign debt that have dominated the attention of policymakers in recent years, many of the worlds leading trading nations had put trade on the back-burner. Thats one reason why the volume of global trade increased only two percent last year, down from a 5.2-percent increase in 2011. And the WTO recently scaled back its projected global growth estimates for 2013 from 4.5 percent to 3.3 percent. There is now renewed momentum in favor of trade liberalization as governments realize that free exchange is the easiest way to stimulate growth and job creation. In February, the United States and the European Union announced that they would begin negotiating a comprehensive free-trade agreement. Such an agreement, if completed, would represent the worlds largest free-trade zone and would deliver economic gains of $86 billion for the United States and $82 billion for the EU. Also of note, Japan signaled its intention last month to be a party to the Trans-Pacic Partnershipa comprehensive trade liberalization negotiation already involving 11 countries, including major economies such as Australia, Canada, Mexico, and the United States. These developments come as new leadership is being installed at the top of one of the most important institutions for trade the World Trade Organization. All this activity signals that theres an opportunity ahead for trade to rise to the top of the global economic agenda. The effort will get an important boost when business leaders and the heads of chambers of commerce from around the world gather in Doha on April 22 for four days of meetings hosted by the International Chamber of Commerce (ICC). As the leaders of the ICC, as well as executives with considerable experience running global businesses, we are keenly attuned to the pivotal role of trade. We come from different parts of the world, and have different business interests, but each of us has seen how trade can make companies more competitive and grow economies around the world.
At a time of slow growthor no growth in many parts of the world, the stimulative effect trade can deliver becomes even more important. The biggest payoff from trade liberalization would come from completion of the global trade negotiations launched in Doha in 2001. But with those talks at a standstill, there is an urgent need to focus on four goals that are achievable in the run-up to the G-20 summit in Moscow in September and the WTO ministerial conference in Bali at the end of the year. First, a WTO agreement on trade facilitation should be concluded so as to reduce red tape and simplify customs and border controls. The resulting improvement in trade ows could generate more than $1 trillion in world export gains. Second, WTO members should expand coverage of the Information Technology Agreement, a highly progressive measure agreed to in 1996 that committed the signatory nationswho were responsible for more than 90 percent of the worlds IT tradeto eliminate all tariffs on 180 products in the IT sector. In the intervening years, countless IT products have come onto the market, some of which have resulted in trade disputes, growing out of uncertainty as to whether these products are covered by the ITA. A renewed commitment to refrain from imposing tariffs on IT products is needed. Third, there is a compelling need to further open markets to international trade in services, given the growing role of services in todays global knowledge-based economy. Twenty-one like-minded economiesrepresenting nearly two-thirds of the global trade in servicesare about to start negotiating a comprehensive liberalization of trade across a range of services. The initiative, known as the International Services Agreement, will also focus on securing greater transparency and predictability regarding regulatory barriers to trade in services, while addressing the emergence of new services-related issues in the global marketplace. Expanded trade in services will benet service providers and their workers in developed and developing countries.
It will also benet consumers of services, including those in the manufacturing and agricultural sectors, the operations of which are increasingly dependent on the cross-border supply of services. And the successful conclusion of an International Services Agreement will provide a template that other nations can use when liberalizing their services sectors. Fourth, we need to help the leastdeveloped countries by enabling them to export to developed markets on a duty-free and quota-free basis. While some developed markets are already meeting this objective, others should make it a priority. Such a move will help accelerate the integration of the least-developed countries into the global economy. Each of these measures would deliver meaningful benets. Cumulatively, they would send an unambiguous signal of a global commitment to free trade. And that would give new energy to the WTOs global trade liberalization efforts that started more than a decade ago, and that once completed will deliver greater opportunity and prosperity to people throughout the world.
Grard Worms is International Chamber of Commerce Chairman; Vice Chairman, Rothschild Europe.
Harold McGraw III is ICC Vice Chairman; Chairman, President and CEO, The McGraw-Hill Companies. Victor K. Fung is ICC Honorary Chairman; Chairman, Fung Group.
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DEEP ROOTS, NEW ROUTES At Verso, our commitment to sustainability means going beyond business-as-usual thinking to improve performance in everything we do. We continually strive to take our rich papermaking tradition to the next level, leveraging the deeply rooted fundamentals that dene our corporate character with strategic agility that opens new routes to future economic success, environmental progress and meaningful stakeholder engagement. On the pages that follow, youll nd examples of how our steadfast reliance on Versos founding principles, our multigenerational, state-of-the-art expertise and our passion for doing whats right combine to deliver results that further demonstrate our companys long-standing reputation as a trustworthy and reliable business partner, a responsible environmental steward and a good neighbor. We invite you to read on and encourage you to share your comments @ facebook.com/versopapercorp.
Sustainability Statistics
69%
of Verso wood ber is from certied forests.
64.9%
of Versos total on-site energy generation is from wood-based carbon-neutral biofuel.
47.6%
reduction in sulfur dioxide emissions primarily due to Versos efforts to become more energy self-sufcient.
30.3%
reduction in waste sent to landlls due mostly to agricultural benecial re-use programs at the Quinnesec Mill.
100%
environmental compliance with zero notices of violation from regulatory agencies.
58%
reduction in transit damage since 2009 has reduced waste, transportation miles and associated GHG emissions that result from recovering damaged products and reshipping new ones.
22%
improvement in safety performance with 16 fewer injuries than 2011.
97%
of nutrient rich bio-solids from our Quinnesec Mill wastewater treatment plant was recycled on local farm elds.
21% 32%
of total sales were chain-of-custody certied papers. increase in Versos combined employee and company contribution to the United Way.
versopaper.com
ROOTED IN THE FOREST
Verso has a sustainability advantage that most other manufacturers do not: our business is literally rooted in responsibly managed forests. We depend on healthy forests for a renewable supply of wood ber to make our paper, and forests depend on us, too. In todays environmentally conscious marketplace, the demand for sustainable paper products provides a strong nancial incentive for landowners to hold onto their forested acreage and manage it responsibly rather than selling it off for development the number one cause of deforestation in the United States.
Good forest stewardship is something our customers expect of Verso and something we demand of ourselves. We make sure all the ber in our products comes from responsibly managed forests and meets the criteria in Versos Wood Fiber Procurement Policy. We recognize all credible forest management certication standards and the majority of ber we use 69% in 2012 is third-party certied. All three of our mills are chain-of-custody (CoC) certied and one-third of our total 2012 paper sold was CoC certied. Were champions of efcient ber use, specializing in high-quality lightweight and ultralightweight papers that require less ber to produce, and we promote responsible forestry practices wherever we can.
Photo by Deb McCash, Iron Mountain, Michigan Courtesy of the Dickinson Conservation District
Providing On the Ground Support

Verso paid dues totaling more than $90,000 to Sustainable Forestry Initiative State Implementation Committees (SICs) in Maine, Michigan, Minnesota, New Hampshire and Wisconsin in 2012. These important committees provide on-the-ground programs at the state and regional levels to expand certication, promote best management practices, deliver training to loggers and other forest professionals, and provide forestry education resources.
Verso Recognizes and Supports All Credible Forest Management Certication Standards
Verso Wood Fiber Procurement Policy

Verso will not procure wood that is harvested: illegally; in violation of traditional or civil rights; from forests where high conservation values are threatened by management activities; from forests being converted to plantations or non-forest use; or from forests where genetically modiied trees are planted.
Verso Forest Certication Grant Program

In June, we launched the Verso Forest Certication Grant Program, an initiative aimed at increasing certied ber and certied acreage on lands near the companys three paper mills. The program provides start-up funding to encourage and assist landowners, consulting foresters and other stakeholders in developing innovative new projects that will help expand and maintain certication in Versos wood procurement zones. While most of the wood ber Verso uses is certied to credible forest management certication standards, the availability of certied ber in the United States remains limited with only about 28% of privately owned U.S. land certied. As customer demand for certied paper products increases, Versos efforts are helping make sure the supply of certied ber keeps pace.
3
chain-of-custody certiied paper mills
of total iber is certiied
69%
32%
chain-of-custody certiied sales
Deep Roots, New Routes
EFFICIENT AND RENEWABLE ENERGY

Verso is continually exploring new routes to greater sustainability for our company and for our planet. Nowhere have we been more successful than in identifying and executing opportunities related to our energy strategy. In 2012 we achieved three major milestones in our long-term plan designed to reduce overall energy consumption, increase electricity from renewable resources, improve efciency and reduce costs.
Quinnesec Renewable Energy Project

This $45 million project at our Quinnesec Mill is fully operational and is exceeding expectations for efciency and cost reduction. The project includes an upgraded biomass delivery system, upgraded combination boiler and new 28 megawatt turbine generator.
Bucksport Renewable Energy Project

Completed and commissioned in November, this $42 million investment includes an upgraded biomass delivery system, upgraded combination boiler and new 25 megawatt turbine generator. The boiler, previously fed by a combination of fuels, now runs solely on renewable biomass save for a small amount of natural gas used to ignite the boiler at startup.
Thermal Energy Efciency Projects

Verso completed multiple projects across our mill system that are meeting expectations to more efciently recover steam and water in our pulp and papermaking operations. This $21 million investment included a $9.4 million grant from the U.S. Department of Energy.
In 2013, Verso will benchmark and optimize these upgraded systems and continue to invest in energy projects at all three of our mills to close the realizable gap between our energy-related operating practices and achievable best practices.
Verso Paper Corp.
Versos Long-Term Energy Strategy

Immediate Immediate to 2 years 2 to 5 years 5+ years
Conventional Technology
Power Producer
Produce Liquid Fuels
Reduce Energy Cost
Reduce Cost and Max Green Power
Green Power Production
Max Power Production
Progress as of year-end 2012
Bucksport Energy Upgrades Increase Renewable Biomass Use

Pictured behind Renewable Energy Project Managers Kirk Soule (L) and Rick Cyr is a small section of the upgraded biomass delivery system at Versos Bucksport Mill. Part of the mills $42 million renewable energy project completed in 2012, this system feeds an upgraded, eight-story combination boiler that now uses 90% less fossil fuel than before. The boiler burns three times more renewable wood-based biomass, with a small amount of natural gas used only to ignite the equipment at startup. The boiler drives a new 25 megawatt steam turbine that generates green electricity equal to the amount used by 19,000 U.S. homes annually.*
* Based on average annual U.S. residential electricity use of 11,496KWh, U.S. Energy Information Administration, 2010.
Verso Energy Generation Sources

In 2012, Verso increased our use of carbon-neutral, wood-based biomass to 64.9% of total onsite energy generation sources, up from 58.7%* in 2011.
Versos energy initiatives have us on track to achieve our DOE Better Buildings, Better Plants goal of reducing energy intensity by 25% by 2019. Versos efforts are helping the nation benet from energy efciency. Together with the other partners in the Better Buildings, Better Plants Program, Versos actions will save billions in energy costs, create new manufacturing jobs, strengthen the nations economic competitiveness, and help protect the environment. Kathleen Hogan Acting Program Manager Ofce of Advanced Manufacturing U.S. Department of Energy
Biomass
64.9%
1.3%
Coal
30.3% 1.2%
Hydro
Natural Gas
2.1
Oil
Tire Derived Fuel

* Based on revised data for 2011
0.2%
Verso Paper Corp.
Addressing a Changing Climate

We do not know what the ultimate effects of climate change will be, but we do know that the earth is warming as a result of human activity, especially the burning of fossil fuels, and that global efforts to increase understanding of the potential consequences must continue. We also believe that entities that use fossil fuel resources, like Verso, can and must take steps now to reduce greenhouse gas (GHG) emissions. Aligned with our goals for continuous performance improvement, Verso is pursuing an eight-point climate change mitigation strategy: Increase the energy efciency of our operations to reduce emissions of GHGs, including CO2, methane (CH4) and nitrous oxides (N2O); Optimize the use of renewable, carbon-neutral biofuels; Encourage responsible forestry practices globally to assure the worlds forests remain healthy and continue their important climate change mitigation role absorbing and storing CO2; Minimize our use of purchased electricity; Develop products with a smaller carbon footprint, including lighter weight papers that require less energy to produce and ship; Communicate our expectations of key suppliers efforts to reduce their GHG emissions; Improve transportation efciency of raw materials and chemicals to our mills and nished products to our customers to reduce transportation-related GHG emissions; and Promote the recovery of paper, especially magazines and catalogs, for recycling, in order to divert waste paper from landlls and prevent methane emissions that result when paper biodegrades.
Greenhouse Gas Emissions 2005-2012
2.5
CO2-e (million tons) Production (million tons)
2.0
1.5
1.0
0.5
For more information about Verso Paper Corp.s sustainability initiatives or to order a copy of our 2012 Sustainability Report, visit:
05 06 07 08 09 10 11 12
versopaper.com/sustainability
Renewable Energy Certicates: a REC represents and conveys the environmental and other non-power attributes of one megawatt-hour of renewable electricity generation. (Source: U.S. EPA) REC offsets (Scope 2 purchased energy emissions) attributed to Verso resulting from the generation of RECs Scope 2 emissions from purchased electricity Scope 1 emissions for pulp and paper production from fossil fuels used at mills Pulp and paper production
Conflict Resolution / Terrorism

By: Dr. Valentina Bartolucci, Diplomatic Courier Contributor
The spectre of terrorism and the Islamist Challenge in North Africa

North Africa remains afflicted by the spectre of terrorism and there are indications that the threat is on the rise. There is no state in the region which has not experienced it. Furthermore, the worsening of socio-economic conditions in the region have stimulated the development and spread of terrorist recruitment networks in these and neighbouring countries.
ORTH AFRICA REMAINS aficted by the spectre of terrorism, and there are indications that the threat is on the rise. There is no state in the Maghreb region which has not experienced it, and the worsening socioeconomic conditions in the region have stimulated the development and spread of terrorist recruitment networks in neighbouring countries. Furthermore, the political impasse in the Middle East between Israel and Palestines, as well as geostrategic interventions in Iraq and Afghanistan by a coalition of actors including the U.S., the UK, and their allies, has further fuelled the rise of political and violent extremist terrorist movements in the region. In particular, the 2003 U.S.-led operation in
Iraq fuelled violent extremist ideologies and boosted jihadist recruitment. According to some analyses, between 2006 and 2007 almost one third of foreign ghters in Iraq was North African. The Inter-University Center for Terrorism Studies reports that terrorist attacks by violent North African groups in the past ten years increased more than 500 percent from their low point in the period, to reach 204 attacks in 2009. For decades, North African states have been overlooked by European and American academics and policy makers; yet in the last few years, those states, together with Chad, Mali, and Niger, have emerged as one of the most worrying strategic challenges to the international community.
In particular, Algeria has long been a focal point of domestic terrorism, and is now a major source of international terrorism. According to Archer and Popovic, Algeria is arguably the cause of the terrorism in the wider Saharan region. Two Algerian terrorist groups are U.S. State Department Designated Foreign Terrorist Organizations (FTOs): the Islamic Armed Group (GIA) and Al-Qaeda in the Islamic Maghreb (AQIM). The Salast Group for Preaching and Combat (GSPC) a local Algerian Islamist group turned pan-Maghreb jihadi organisationhas openly stated its allegiance to the goals and tactics of al Qaeda. AQIM is one of the most vocal and active terrorist groups in North Africa. It has taken
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responsibility for a number of terrorist incidents in the region, and it looks in recent years as though it has been trying to pursue a more global strategy. Furthermore, as a result of the increased difculties encountered in northern Algeria and in line with the AQIMs emir Droukdels regional ambitions, its operations have moved into Mali, Niger, and Mauritania, with wider aspirations. During 2012, AQIM carried out 125 attacks in Algeria. Similarly, the violent events of last decade have led to the end of Moroccan exceptionalism in terms of vulnerability to terrorist planning and attacks. The Casablanca bombings of 16 May 2003 in which 12 suicide bombers killed 33 people in coordinated strikesdemonstrated that this was no longer the case. On 11 March 2007, there was a suicide bombing marking the three-year anniversary of the Madrid explosions. On 10 April 2007, three suicide bombers attempted an explosion inside an Internet caf, and on 11 April 2007, two suicide bombers detonated their devices near the U.S. Consulate. Morocco is also increasingly seen as a producer of terrorist violence internationally, especially after the involvement of Moroccans in major terrorist events in Spain and elsewhere. According to some analysts, Moroccan immigrants in Europe have been implicated in a number of failed terrorist plots, were reported to have carried out several suicide attacks in Iraq, and were also implicated in the murder of Theo Van Gogh. The most recent terrorist attack in the country took place on 28 April 2011 at a very popular caf in the world-famous Djelma el-Fna square in Marrakech; seventeen people were killed. AQIM denied direct responsibility. On 5 February 2011, twenty-seven people were arrested under suspicion of involvement in the planning of terrorist attack in Morocco and in other countries. In December 2012, an al Qaida cell that was allegedly recruiting young Moroccans to join the group in Algeria and other afliates such as MUJAO in northern Mali was dismantled, and members of Ansar al-Sharia, a new offshoot organization, were arrested on suspicion of plotting major attacks throughout the country. Furthermore, although terrorism is less evident in Tunisia than in surrounding states, there are signs that the threat level is on the rise. Following the departure of long-time President Zine el-Abidine Ben Ali in January 2011, domestic tensions between Islamists and secularists have burgeoned. Islamists and secularists have grown increasingly polarized and Salast agitation and violence have increased. In the last few years, Tunisian security forces have eliminated several plots by al Qaeda-linked militants. On 11 April 2002, a truck bomb targeted a synagogue on the island of Djerba, killing 21 people. The Islamic Army for the Liberation for the Holy Sites, allegedly connected to al-Qaeda, claimed responsibility. In recent years, a number of Tunisians suspected of ties to al Qaeda have been arrested in Spain, Italy, France, Germany, Pakistan, Afghanistan, Iraq, Mauritania, and the U.S. Moreover, Tunisia shares an extensive border with Libya, and it has been reported that some of the Libyan arms and militants who fought against Gaddas regime have been imported to Tunisia to prepare for the next battle. Worryingly, Libyas ideological, religious, ethnic, and tribal fragmentations as well as pervasive violence make it a fertile ground for violent extremist groups. By January 2013, continued kidnappings, assassinations, and bombings underlined the countrys political and economic instability. Faced with concerns over Malis political situation, Libya vowed cooperation against violent extremism and terrorism with other Maghreb states and France. The uprisings that erupted in Tunisia, then continued in Egypt, Libya, and beyond raise questions as to what extent violent groups will attempt to take advantage of further regional destabilisation. While effective counter-terrorism efforts gave the illusion of diminishing the immediate threat of terrorism in the region, the spread of violent extremism ideology is striking, with new venues popping up on a daily basisall exhorting Muslims to join in holy war. North African counterterrorism strategies have been generally effective in breaking up terrorist cells, but sometimes to the detriment of human rights. States in the region, however, are becoming more aware that heavy-handed measures can backre, and some of them are also focusing on religious education (including Morocco, Tunisia, and Libya) to attempt to prevent people from embracing Sala Islam. This brief survey across North Africa reveals a story that is more complex and nuanced than one might otherwise assume. The continent is at a crossroads. Africa is on the verge of either falling into the dragnet of terrorists or of realising its true democratic potential. The current political situation in the region is unclear, and deep, long-term socio-economic problems remainproblems that have been, and continue to be, obscured by the ght against terrorism and this needs to be urgently addressed. Moreover, we must be mindful when discussing North Africa to avoid lumping all countries together in a homogenous solution. In fact, all countries consist of very different histories and likely trajectories.
Biography
Dr. Bartolucci is a Lecturer at the University of Pisa (Italy) and at the Marist University, NY (campus of Florence). Valentina has worked for a number of years as a Junior Technical Expert for the Italian Ministry of Foreign Affairs in Morocco, and as a consultant for the UNDP (Ghana), and various international organisations (in North Africa, BurkinaFaso and India). She is currently offering consultancies on issues linked to terrorism, organised crime, migration, American foreign policy and Middle East for various national and international organisations (NGOs, ONLUS) and governmental departments all around Europe (e.g. Italian MAE, DFID UK, UK Ministry of Defence, Swedish International Development Cooperation Agency, US DoS).
FOR DECADES, NORTH AFRICAN STATES HAVE BEEN OVERLOOKED BY EUROPEAN AND AMERICAN ACADEMICS AND POLICY MAKERS.
Finally, the fear of Islamist radicalism should be re-contextualised. Even if violent components are present in all countries, political Islam in the region has a long history of pacism. Following the historical repression of Islamists and its consequences, it can be argued that a different approach, based on dialogue and mutual comprehension with secular parties rather than open confrontation, is necessary to avoid a new spiral of violence.
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Conflict Resolution / Balkans

By: James George Jatras, Diplomatic Courier Contributor
Balkan Peace and Prosperity Will Remain Elusive Unless Freed of Dead Hand of the 1990s
It has been said that the Balkan region produces more history than can be consumed locally.
T HAS BEEN SAID THAT the Balkan region produces more history than can be consumed locally. Much of the world would prefer to forget the bloody breakup of former Yugoslavia, if only to escape the competing versions of history that members of the various communities seem so inordinately fond of reciting. Fresh and constructive approaches to current problems and future prospects are smothered when the dead hand of the past continues to exert a tenacious grip on the present. Unfortunately, that remains the case with the Balkans, where outsidersnotably the
American and European foreign policy establishmentsinsist that the future must be strictly conned by reverence for past idols. Two such idols stand out: First, that the United States and NATO intervened in Bosnia and Herzegovina in 1995 to rescue European failures, and brought peace by imposing the Dayton Agreement. In fact, in 1992 Washington played a key role in touching off the Bosnian war and was instrumental in prolonging it, notably through the April 1994 green light for Iranian arms shipments in violation of a U.N. embargo.
Second, that in Kosovo in 1999 the U.S.led NATO war was the textbook example of a successful humanitarian intervention. In fact, far from stopping a claimed genocide of Albanians in Kosovoa claim about as real as Saddam Husseins WMDsintervention precipitated a genuine eradication of most of the provinces Serbian community, along with Roma and others. Worse, the Kosovo precedent became the template for actions elsewhere in contravention of the international legal ordernotably the authority of the Security Councilin Iraq, Libya, and now in Syria.
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Rule One: The Serbs are always wrong. Rule Two: The Muslims are always right. The Corollary: Other actors (notably, the Croats) are right when opposing the Serbs (for example, clearing them from the Krajina with U.S. assistance in 1995), but wrong when opposing Muslims (for example, expendable Croats massacred by mujahedin in central Bosnia in 1993). Rule Two is a complex phenomenon, with application well beyond the Balkans, dating back at least to American support for the 1980s anti-Soviet jihad in Afghanistan and continuing in Syria today. It remains a pillar of U.S. policy, despite abundant evidence that such favoritism leads not to the expected gratitude but to blowback, starting with the birth of al-Qaeda itself, and most recently in the conict in Mali and the Algerian hostage crisis as fallout from NATOs intervention in Libya. In applying Rule Two in the Balkans, the U.S. has been explicit in its subjective intention to help Muslim communities and movements because they are Muslim. For example, as stated by then-House Foreign Affairs Chairman, the late Tom Lantos (D-CA), at a 2007 hearing on Kosovo: Here [Kosovo] is yet another example [i.e. yet another after Bosnia] that the United States leads the way for the creation of a predominantly Muslim country in the very heart of Europe. This should be noted by both responsible leaders of Islamic governments, such as Indonesia, and also for jihadists of all color and hue. The United States principles are universal, and in this instance, the United States stands foursquare for the creation of an overwhelmingly Muslim country in the very heart of Europe. In contrast, objective reality starts with the fact that Bosnia is not a Muslim country but has a Christian majority, if one adds Orthodox Serbs and Catholic Croats together. No matter: as recently as November 2012, Washington supported a plan for greater centralization of Bosnia and further marginalizing Serbs and Croats.
Similarly, American and European policymakers can think of no better solution to Kosovo than pressing for more recognitions of the separatist administration in Pristina while hammering away at Belgrades already feeble resistance to amputation of its province. Today, such simplistic approaches serve only to keep alight fond memories of the idolized successes of the 1990s. They do little to promote good governance in postYugoslav states, communities, and families plagued by corruption, organized crime, pervasive bureaucracy, and economic stagnation, below which papered-over communal tensions will continue to smolder.
On the global level, these idols established the dangerous notion that American exceptionalism means that the rules of international conduct do not apply to us, and that whatever we do is right because we claim as our goals promotion of democracy and human rights. On the local level, they established in the Balkans two simple identity-based rules and one corollary, where right and wrong are determined not by actions but by the identities of the actors and of those acted upon. These continue in force today, including disparate treatment of accused war criminals, and include:
Biography
James George Jatras is a government and media relations specialist in Washington. He formerly served as a foreign policy adviser to the U.S. Senate Republican leadership and as a U.S. diplomat. He is director of the American Council for Kosovo (savekosovo.org). This commentary is adapted from his remarks at a roundtable conducted by the Universal Peace Federation on January 30, 2013.
93
Conflict Resolution / Northern Ireland

By: John Currie, Diplomatic Courier Contributor
Northern Ireland: On the Brink of a Dangerous Marching Season
N MARCH 2011 the Northern Ireland power-sharing assembly, led by unionist and republican party elected representatives, completed one full term in ofce. Considering the tumultuous history of Northern Ireland, and that these parties have diametrically opposed views and have stood at polar ends of the political spectrum during the thirty years of violent conict, this was certainly a momentous achievement. The stable relationships built particularly between the leaders of the two largest governing parties and arch-rivalsthe Democratic Unionist Party (DUP) and Sinn Feinwas illustrated when Sinn Feins Martin McGuinness, the deputy rst minister, described the two DUP rst ministers he worked with as friends. With the democratic decit of direct rule from London replaced by a locally elected assembly, executive, and all-Ireland institutions, the four years from 2007 to 2011 were more about building relationships across the political divide, while parking difcult decisions if they looked likely to cause any signicant upheaval. Two years on and those relationships
have been severely tested by the unionist and loyalist reaction to the democratic decision taken by the Belfast City Council last December to only y the Union ag on designated days as opposed to 365 days a year. Nationalists had been pushing for the removal of the union ag over Belfast City Hall year-round. Unionists distributed thousands of leaets in the Alliance partys distinctive yellow colour, pointing out that the crosscommunity party held the balance of power and inviting all those concerned to make their views known respectfully to Alliance ofces. When Alliances suggested compromise of ying the union ag for just 18 designated days was passed by the council, there was nothing respectful about the reaction of the crowd of loyalists outside. There have been hundreds of protests since, and much of the associated street violence has set back community relations, damaged the local economy, and threatens to destabilise the power-sharing administration in Stormont, particularly if this summers upcoming marching season gets out of control. Dissident armed Irish republicanswho are totally opposed to the existence of the
Northern Ireland state and therefore the current peace processare also determined to create more instability, and have attempted to attack police ofcers only for their efforts to be regularly thwarted by security forces. Given the history of the region from 1921 to 1972, during which the Ulster Unionist Party ruled Northern Ireland consistently and exclusively in the interests of one section of the community, the Good Friday Agreement of 1998 requires power-sharing between the two main communities based on proportional representation. From 2007 to 2010 this resulted in a four party government: two unionist and two nationalist parties. However the DUP and Sinn Fein could not reach agreement on devolving policing and justice powers from London to Belfast, leading to a ve month paralysis in the executive and ten days of talks that needed to be chaired by the British and Irish Prime Ministers. The issue was resolved when an agreement was reached to nominate and support the cross-community Alliance Party as a compromise Justice Minister, thereby leading to a ve-party coalition. Of course, the operation of this form of government
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automatically brings with it the perception and criticism that there is no real effective opposition. Nevertheless, on the last day of its rst full four-year term in March 2011, the assembly passed their most ambitious legislationthe rst justice bill in 40 years. Indeed, the 2007 to 2011 assembly and executive certainly provided more effective governance than its 1998 predecessor. The assembly elected in 1998 was categorised by a series of both short-term and long-term suspensions amid acrimonious relationships between all the main parties of government. The assembly in fact remained suspended from October 2002 until May 2007, due to a stand-off between the two main unionist parties and Sinn Fein over the decommissioning of paramilitary weapons, strongly divergent views on the Good Friday Agreement itself (an agreement the DUP had opposed and were not signatories to), and Sinn Feins withholding of support for the new policing structures that emerged in 2002. With the DUP and Sinn Fein signing the St. Andrewss Agreement of 2006, these issues were resolved and both parties committed themselves to power-sharing following the March 2007 Assembly elections. Indeed the 2007 to 2011 assembly that emerged went on to achieve agreement on budgets and programmes for government, worked together in passing legislation, and most importantly, was not once suspended during the four years. Some of the most striking images during those four years included the remarkable sight of DUP founder, leader, passionate anti-Good Friday Agreement campaigner, and First Minister from 2007 to 2008, Ian Paisley regularly laughing out loud alongside his arch-enemy, Sinn Feins Martin McGuinness, a one-time IRA commander and the current Deputy First Minister. Indeed such was the jovial nature of their professional working relationship that Paisley and McGuinness were widely dubbed the chuckle brothers. Given Ian Paisleys implacable opposition to any form of power-sharing with Sinn Fein prior to 2007, this new relaxed and very different approach was seismic. The 82 year old stood down as First Minister in June 2008 and was replaced by DUP deputy leader Peter Robinson. The Irish peace process has had to deal with many challenges and face down threats by political and paramilitary opponents since its earliest beginnings in the 1990s. However in March 2009, it faced one of its toughest tests following the killing of two British Soldiers and a police ofcer by dissident republicans intent on thwarting the peace process and turning the clock back to violent conict on the streets. In April 2011, another police ofcer was killed made to date, acknowledging, in Peter Robinsons words, that the assembly had much more to do. Martin McGuinness said the next term would be about making real decisions. The majority of Northern Irelands voters clearly believed and supported this positive message, as both the DUP and Sinn Fein returned with increased mandates and assembly seats. In July 2012, the First Minister and Deputy First Minister issued a statement detailing agreement on ten policy areas and promising further progress in the weeks and months ahead. However six months later only three pledges had been delivered. One policy area not delivered upon was the publication of the Cohesion, Sharing, and Integration Strategy (CSI). It has been speculated that had it not being for the controversy over the Union ag, CSI would have been published, the irony being that a government document about a shared future cannot be published because its contents may iname tensions. The lack of political unity between the DUP and Sinn Fein over the Union ag protests was a setback; Peter Robinson refused to hold a joint press conference alongside Martin McGuiness. The violence on the streets challenged the police, community, and political leaders. No doubt he was under pressure from his party and conscious of the reaction to such a show of political unity with unionisms arch-enemy at a sensitive time. However, real political leadership in such a highly charged political atmosphere was needed. The next decade there will mark a series of signicant centenary commemorations that both main traditions will be building up to events that will mark the foundation of both the Irish Free State and the state of Northern Ireland. This will inevitably involve parades and protests, and in a deeply divided society has always the potential to be destabilising. Various loyalists and republican groups opposed to the peace process will do their best to exploit what will already be a fairly volatile situation. All the parties involved in power-sharing in Stormont must absolutely commit to work constructively together and stand shoulder to shoulder in the face of such threats to the peace and political processes. With policing structures and political institutions under attack from minorities on both sides of the divide, the next three years will certainly be an acid test for community and political leaders of Northern Ireland, and nothing less than the future of the entire peace process could hinge on their collective ability to hold the line and live up to their previous public commitments.
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THE LACK OF POLITICAL UNITY BETWEEN THE DUP AND SINN FEIN OVER THE UNION FLAG PROTESTS WAS A SETBACK.
by dissident republicans. However, on both occasions Robinson and McGuinness displayed great courage and leadership, standing shoulder to shoulder with each other alongside the police chief constable, in strongly condemning the murders and reiterating their total commitment to the peace and political processes. Their message was very clear your attempt to destroy the peace process will not work; indeed it will only serve to unite us even further as we continue to build a better future for all the people of Northern Ireland. Meanwhile, back within the assembly and executive itself, issues such as reform of local government, the post-primary transfer procedure, adjudication of controversial parades, and a shared future were shelved or left in chaos. Nevertheless, the May 2011 assembly election was remarkable for the complete lack of animosity between the two main parties; both the DUP and Sinn Fein put all their energies into emphasising the effectiveness of the power-sharing administration in the previous four years. Both parties called for a renewed mandate to build upon the progress
Sponsored Feature / Turkey
Business Environment and FDI in Turkey

Turkey has been undergoing a profound transformation over the past decade. This transformation has fundamentally changed both the political landscape and the economic structure of the country. After decades of unstable collation governments, a single party government was formed in late 2002. Since then the ruling party, Justice and Development Party, has been elected for three consecutive terms, thus ending political and economic instability, which provided the government with the leverage to implement comprehensive reforms in many areas. The structural reforms, hastened by Turkeys EU accession negotiations that started in 2005, have made Turkey one of the most attractive destinations for foreign direct investment (FDI) in the world. The economic performance, the young and dynamic population, the strategic location, as well as an investor-friendly environment have altogether created plenty of investment opportunities in Turkey.
institutions to make confident projections about Turkeys future. For example, according a recent report issued by the OECD, the Turkish economy is expected to grow with an average annual real GDP growth rate of 5.2 percent between 2012 and 2017. With such a robust economic performance, Turkey will be the fastest growing economy among the OECD countries, as well as the fastest growing economy in Europe. Population Turkeys young and growing population has been one of the main drivers of the economic growth. With a population of 76 million people, Turkey has the second largest population as compared with the EU countries. Moreover, Turkeys population is increasing by 1 million people every year, which of course makes it the fastest growing population in Europe. Most importantly, half of Turkeys population is under the age of 30, making the country with the largest youth population in Europe, both in proportion and absolute figures. These are of high importance as investors are faced with considerable challenges such as weak domestic demand and labor force in Europe, due to ageing and shrinking populations.
Economic performance Once fundamental reforms were implemented, Turkey embarked on an unprecedented economic growth and development. The Turkish economy has sustained robust economic growth over the past decade, growing with an average annual real GDP
growth rate of 5 percent between 2002 and 2012. As such, Turkey has been the fastest growing economy in Europe and one of the fastest growing economies in the world. Turkeys proven record of economic success over the past decade has impressed and encouraged many experts and international
Population Pyramid, 2012

Age Group Turkey
Source: OECD, Eurostat, National Sources

Age Group
Female Europe
Male
Female
Male
Source: OECD Economic Outlook No.91, June 2012
Source: UN and TURKSTAT
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Turkey is the crossroad of business Turkey has part of her land in Europe and other part in Asia, and is referred to as the bridge between the East and the West. It is indeed a source of sensation every time you cross the Bosphorus Bridge, as you cross between Europe and Asia at the same time. Yet, the phrase of the bridge between the East and the West does not quite explain the geopolitical benefit of Turkey and its location in the global map. Especially these days when mature markets of the US and Europe are slow, the benefit of Turkeys location is that the country is at a close proximity to North African countries, the Middle Eastern countries, Iraq, with its tremendous demand for reconstruction, resource-rich Iran, Central Asian countries which are also rich in natural resources and in an urgent need to upgrade their infrastructure, and Russia in north. All of these countries have potential demands that are much stronger than mature markets. Of course, it is right next to the EU. Turkey has been a member of the EU Customs Union since 1996 and any product manufactured in Turkey can be shipped to Europe without paying customs duties. Most large-scale companies, however, have already done what they have to with regard to European market, but very few activities are there in the Middle East. North Africa and Central Asia are even less developed as a market for them and when they try to establish a regional base to develop these markets, Turkey is often the answer. Having such a unique geostrategic location, many multinational companies have moved their regional headquarters to Turkey, as the country offers a robust platform for economic expansion on a regional scale, enabling these companies to leverage common qualities and local capabilities in Turkey. For example, Coca-Cola manages over 90 countries from its ofice in Istanbul; likewise, Microsoft and GE Healthcare manage over 80 countries from Turkey. The Turkish government is strongly supporting global companies to move their regional headquarters to Turkey. With a recent amendment in the legislation on foreign direct investment, foreign companies can now establish their regional management centers in Turkey under liaison ofice structure without paying corporate tax, VAT, personal income, and stamp duty. Favorable investment climate with ample opportunity The Turkish government is well aware of the importance of foreign direct investment, which it views as a main component of its economic development. In order to create an attractive investment climate, Turkey has significantly improved its investment environment through
Source: IMF World Economic Outlook and WTO; GDP, imports and population figures as of 2012
Source: World Bank Doing Business Reports
reforms and new legislations. In 2003, it enacted a new foreign direct investment law, which provides foreign investors with legal guarantees by treating them equally with local investors. Later, it established the Coordination Council for the Improvement of Investment Environment, which is a key structure, where private sector makes contributions to the process of improving investment climate and is recognized as a success story of public-private platform by international economic authorities. The council has rationalized the regulations on investments in Turkey, developed policies by determining the necessary arrangements that will enhance the
AFTER DECADES OF UNSTABLE COLLATION GOVERNMENTS, A SINGLE PARTY GOVERNMENT WAS FORMED IN LATE 2002.
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Sponsored Feature / Turkey

levels of development. Therefore incentives for investors in the lesser developed regions will benefit from a larger scope of support. The new incentives system also gives priority to several specific sectors such as defense, automotive, aerospace and aviation, maritime freight/ passenger transportation, pharmaceuticals, education, tourism and mining. Investments in these sectors will be supported across Turkey by means of incentives provided for Region 5, the second least developed region. This new system is expected to contribute to the structural transformation of Turkeys industries, particularly through strategic investments, by encouraging domestic production of goods that are commonly imported. The main purpose of the incentives for strategic investments is to promote and support investments in sectors in which there is considerable trade deficit. It is important to highlight that strategic investments will be strongly supported in all regions with the same incentives. On the back of the robust economic growth, together with the Turkish governments efforts to improve its investment climate, ample investment opportunities have emerged in many sectors, such as energy in particular, and pharmaceuticals, chemicals and petrochemicals, automotive, machinery, finance, real estate, as well as iron and steel. More opportunities will come out with the realization of Turkeys ambitious targets for 2023, the centennial celebration of the foundation of the Republic of Turkey. The government has set specific targets to achieve by 2023, ranging from healthcare to economy, from defense to education, and from energy to transportation. Turkey aims to become one of the top 10 economies in the world with a GDP of USD 2 trillion, to increase its exports to USD 500 billion, to upgrade its energy, transportation and healthcare infrastructure through the construction of hospital cities, to more than double its electricity generation, and to build new bridges on the Bosphorus and the Dardanelles straits. It is also a national target for Turkey to make Istanbul an international financial center. Having been tested by the global economic crisis, Turkey has one of the most stable and profitable financial sectors in its region. The Turkish governments Istanbul Finance Center project offers global companies a chance to run their financial operations in the region through Istanbul thanks to various incentives, a skilled workforce, and a global, cosmopolitan city with a vibrant local economy. Impressed by the attractive investment environment in Turkey, foreign investors have been flocking to Turkey. Over the past decade, Turkey attracted USD 123 billion of FDI. Similarly, the number of foreign companies in Turkey has rapidly increased, exceeding 33,000.
Source: Central Bank of the Republic of Turkey and the Ministry of Economy
competitiveness of the investment environment, and generated solutions to the administrative barriers encountered by the local and foreign investors in all phases of the investment process, including the operating period. For example, it used to take more than a month to establish a company in Turkey in 2003, whereas now it takes only six days to set up a company. Moreover, the government has taken exclusive measures to provide a more businessfriendly environment for foreign investors in Turkey. In addition to the Coordination Council for the Improvement of the Investment Environment, the government has established the Investment Advisory Council with the participation of senior executives from prominent multinational companies in order to address the administrative barriers to investment, improve the positive image of Turkey as an attractive investment destination, and provide a global perspective to the ongoing investment climate reform agenda. Since 2004, the Investment Advisory Council of Turkey has been meeting under the chairmanship of the Prime Minister and has been taking important decisions since then. These decisions constitute the top items of the reform agenda of the Coordination Council for the Improvement of the Investment Environment. In order to provide foreign investors with better services, Turkey also established the Investment Support and Promotion Agency of Turkey (ISPAT), which is directly attached to the Prime Minister. Turkey has been supporting investors through certain policies; meanwhile it has institutionalized these policies, thus providing investors with more professional services. Being attached directly to the Prime Minister indicates how great importance Turkey attaches to foreign direct investment in Turkey. ISPAT provides investors with assistance before, during and after their entry into Turkey. It serves as a reference point for international investors and as a point of
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contact for all institutions engaged in promoting and attracting investments at national, regional and local levels. Working on a fully confidential basis, as well as combining the private sector approach with the backing of all governmental bodies, ISPATs free-of-charge services include, but are not limited to, market information and analyses, industry overviews and comprehensive sector reports, site selection, coordination with the relevant governmental institutions, facilitating legal procedures and legislation issues such as establishing a company, incentive applications, obtaining licenses and work/residence permits. Lucrative investment incentives The Turkish government has also been implementing a series of incentives schemes. Over the past decade, it has implemented three incentives programs in 2003, 2006 and in 2009 respectively, and announced the fourth one in April 2012. These incentives programs have resulted in a radical transformation of the Turkish economy. The main objectives of the new incentives scheme are to reduce the current account deficit, boost production and investment for high-import-dependent intermediate goods, as well as to increase investment in the lesser developed regions. The new system comprises four different schemes, namely general incentives, regional incentives, incentives for large-scale investments and incentives for strategic investments. More specifically, Turkey offers investors value-added tax (VAT) exemption and corporate tax reduction, as well as social security premium support, interest payment support and land allocation. Under the new system, the government intends to balance the levels of local development, particularly focusing on boosting investment in lesser developed areas. To maximize the impact of the program as a balancing mechanism, Turkey has been categorized into six regions according to their

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TOUGH DECISIONS AHEAD: THE FUTURE OF EUROPE

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Contents & Contributors

TOUGH DECISIONS AHEAD: THE FUTURE OF EUROPE

38 / To Feed the Future, We Need a Feast of Facts, and a Famine of Fear

40 / All Hands on Deck

42 / The Future of Healthcare is Personalized Medicine

46 / B20: How to contribute to Responsible Finance?

48 / ICT for a Better Tomorrow

50 / Energy Access and World Prosperity

52 / Making More with Less

54 / Growth and Infrastructure in Latin America

Global Finance: 56 / Assessing David Camerons G8 Agenda on Tax and Transparency

64 / The European Unions: Cycles of History

66 / Debt and Instability: The High Costs of Secession in the Eurozone

72 / WTO in the 21st Century?

78 / The Costs of Copyright in the TPP

92 / Balkan Peace and Prosperity

94 / Northern Ireland: On the Brink of a Dangerous Marching Season

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