G20 Update #16 - The G20's Initiative on "Financing for Investment in Infrastructure"

G20 Update #16 - The G20's Initiative on "Financing for Investment in Infrastructure"

G20 Update #16 - The G20's Initiative on "Financing for Investment in Infrastructure"
Heinrich Böll Stiftung
Date of Publication: May 2013
Number of Pages: 18
Language of Publication: English, Spanish, Russian
All issues: G20 and BRICS Update

 

 

 Aspects of the Russian G20 Presidency: Troubles at Home; Initiatives Abroad

Introduction by Nancy Alexander, Heinrich Boell Foundation-North America

 

This issue of the “G20 Update” includes articles on three questions:

  • What is the nature of the upsurge of investigations of, and attacks on, Russian civil society and how this situation should inform engagement by global civil society in the Civil 20 (C20) and its activities, including the C20 Summit in June 2013?  The C20, which is led by Russian civil society organizations, is the vehicle through which global civil society communicates its policy agenda to the G20.
  • Why has the G20 launched a new initiative on “financing for investment,” especially in infrastructure?  What is the nature of this initiative?
  • How do the policy agendas of the G8 and G20 converge?  This year, the G8 Summit takes place on June 17-18 in Northern Ireland – less than three months before the G20 Summit on September 5-6 in St. Petersburg.

 

In Russian Civil Society under Attack: Implications for the C20,” Jens Siegert, head

of the Heinrich Böll Foundation-Moscow, describes how the relationship between the Russian government and civil society has deteriorated over time.  Recently-passed laws, such as the “NGO Law on Foreign Agents,” jeopardize the activities of Russian NGOs with certain types of relationships with foreigners.  Siegert describes the irony of how, on the one hand, the government is investigating, arresting, or fining certain domestic NGOs with such relationships and, on the other hand, the Russian-led Civil 20 is showcasing cooperation between domestic and foreign NGOs.  He suggests that, from one perspective, the C20 can be viewed as a Potemkin village – a democratic facade - set up for the purpose of confusing observers and CSOs from abroad.  Therefore, Siegert advises that international NGOs should examine their motivations for participating in the C20.

In his brief commentary entitled “Investment in the age of austerity,” Sergei Guriev, Rector, Professor of Economics, and President of the Center for Economic and Financial ResearchNew Economic School, Moscow, emphasizes that, in this age of austerity, governments must implement reforms and create incentives for private investment which can, in turn, stimulate growth.

In his article, “The G20’s ‘Financing for Investment’ Initiative: What’s Missing?,” Shoujun Cui, Research Director, Center for International Energy Strategy Studies, Renmin University of China, describes the ambitious work program of the new G20 ‘Financing for Investment’ study group, chaired by Germany and Indonesia.  It is tasked with identifying sources of long-term finance, primarily for large-scale public-private partnerships (PPPs) in infrastructure.  To date, Cui states that the initiative has failed to articulate ways in which social and environmental considerations and safeguards affect the feasibility of infrastructure options and their potential for stimulating economic growth.  He uses the example of the Bujagali Dam to illustrate the need for better infrastructure planning.

 

In “The G20’s Initiative on `Financing for Investment’ in Infrastructure,” Sergey Drobyshevsky, Managing Director of Russia’s G20 Expert Council and Head of the Macroeconomics and Finance Research Division at the Gaidar Institute for Economic Policy (Moscow) describes the impact of the global financial crisis on investment as well as why we face a huge gap between the demand for and supply of infrastructure financing.  Indeed, in 2012, the volume of finance for infrastructure projects was at its lowest level in history.  The reasons for this include the diminished appetite for risk on the part of investors, including corporations and financial institutions as well as institutional investors, such as pension funds, which also suffer from a sharp reduction of the supply of capital.  In Europe, the banks have not resumed their pre-crisis levels of long-term financing and, throughout the developed world, expenditure cuts put major capital expenditures for infrastructure out of reach. 

 

In “2013: A Convergence of G8 and G20 Agendas?” Joanna Rea, Policy and Government Relations Manager of BOND (UK), describes the renaissance of the G8 and the delicate relationship between the G8 and G20.  The headline priorities of UK Prime Minister David Cameron for the June Summit are neatly presented as the ‘3Ts’ – tax, trade and transparency -- all in support of the global economy. These priorities overlap with the three priorities of Russia’s President Vladimir Putin for the September Summit:  “growth through jobs and investment”, “growth through trust and transparency” and “growth through effective regulation.”

 

 

Resource Material on the G20’s Initiative on ‘Financing for Investment’ in Infrastructure

Reports on Infrastructure Investment

"Infrastructure: A G20 Agenda, The French Treasury’s description of the 2011 G20 French Summit mandate on infrastructure (Powerpoint).

“Infrastructure Development: Meeting the Challenge” by Amar Bhattacharya, Mattia Romani and Nicholas Stern (London School of Economics, Group of 24, et al.).

 

Reports on Long-term Financing

Long-Term Investment Financing for Growth and Development: Umbrella Paper,” World Bank, OECD, IMF, UNCTAD, UN-DESA, FSB, February 2013.  (See pp. 31-33 for elements of proposed G20 work program.)

“Investment and its Financing: A Macro Perspective,” Annex to the G20 Surveillance Note, Meetings of G20 Finance Ministers and Central Bank Governors, February 15-16, 2013, IMF.

http://www.imf.org/external/np/g20/pdf/2013/022113annx.pdf

Financial regulatory factors affecting the availability of long-term investment finance,” Report to the G20 Finance Ministers and Central Bank Governors, Financial Stability Board, February 8, 2013.

G20 directs OECD work on long-term financing 

Views compiled by the U.S. Chamber of Commerce for the G20 on long-term financing by G30, World Bank, FSB, and European Commission

 

Role of the Private Sector in Development

Aid and the Private Sector: Catalyzing Poverty Reduction and Development?” Reality of Aid 2012 Report, 2012.

Are we asking the right questions?  Public-Private Partnerships in International Development,” A CAFOD Discussion Paper, April 2013. 

Private profit for public good? Can investing in private companies deliver for the poor? By Jeroen Kwakkenbos, EURODAD, 2012.

 

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