International Relations and Defence Committee

Wednesday 22nd July 2026

(began 2 months, 1 week ago)

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10:38
10:40
None Portrait Speaker 2
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Thank you very much. And thank you for asking me to comment on this. Um, so, um, my, my background is that I'm an academic at the University of Oxford. I was also the chief economist of defeat for, uh, a considerable period of time in the 20 tens. Uh, and then subsequently I advised, uh, various ministers in Fcdo as well. Um, as far as I'm concerned, the way I would look at it is that, um, you know, there is obviously a real challenge in the multilateral system, as you were implying.

We should not forget. It was built essentially on a bargain between, say, uh, us. And European countries and the rest of the world where the design was done by the West. And in return for this access and also possibilities for stability in the rest of the world, where essentially guaranteed, I think definitely after the end of the Cold War, that definitely for decades should be the kind of feature of it. And of course, the geopolitics has changed dramatically. Uh, I'm not saying that multilateral system is on the brink of disappearing, but it's its legitimacy and credibility for a lot of players internationally has definitely been been questioned.

And indeed, its powers of enforcement of the rules of the game internationally are shortened. I think we are in a situation of huge fragmentation that is happening because when legitimacy questioned, other countries are looking for alternative ways of doing this. So you get proliferation of the G20, the BRICs and all kinds of new kind of regional banks and so on in the whole system. So we are, um, in. That sense in, uh, you know, definitely in a facing huge challenges and we're building a credible system.

I don't think that what you can do is rebuild the old system, but actually there needs to be ways of rebuilding a system and starting again from the bottom, building partnerships and coalitions of the willing to actually make progress. Maybe finally, very quick point on a scene from probably my main expertise around international development there, we saw that multilateral system, of course, plays a huge role, but with massive proliferation and, and slippage of mandates and huge confusion in the system, who does what and how. And so a lot of multilateral organizations are clearly not any more clear what their core business is.

And that creates also unhelpful context in a, in a, in a lot of settings. Thank you.
10:43
10:43
None Portrait Speaker 3
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Thank you very much. It's a huge honor and privilege to be here, and I appreciate the invitation. I'm an economist that spent about half my career in policy and government and the other half since 2006 at the University of Oxford, where I'm professor of Globalization and Development, and started something called the Oxford Martin School, which is the world's leading center for studying big global challenges and includes a lot of work in international relations, but also on other topics. Uh, I was involved in I was born in South Africa.

I came to the UK in 1978, involved in anti-apartheid and lived here until 1994 when I was invited by President Mandela to go back and serve in his government and be his economic advisor and run the development Bank of Southern Africa. In that context, I was involved in many multilateral negotiations, including with the world Bank, which we barely borrowed from while I was in that role. I then, when President Mandela stepped down, went to the world Bank, where I became head of policy for the world Bank Group, and the special representative to the UN for the world Bank, and also vice president there under Jim Wolfensohn, uh, involved in many things with the UN, the Millennium Declaration, the MDGs, the beginning of that process, and also invited by Kofi Annan to be on the UN reform Task force that he convened along with Gordon Brown and many others at that time, uh, Jim Wolf.

Retired and was replaced by Paul Wolfowitz. I resigned from the world Bank and fortunately, the opportunity arose to come to Oxford in 2006. And I've been there ever since to respond to the question. I do believe that the United Nations, the global multilateral system, is in crisis. You certainly wouldn't want to look to the Security Council if you were in the Ukraine or Palestine or Sudan for help. Um, and it's this, that and all many other parts of the system are totally unfit for 21st century purpose.

One shouldn't beat up on the people that work in these institutions, although they certainly in need of very major reforms. It's the shareholders of these institutions. In the end, the major governments of the world that are responsible for them. And it's to them that we need to look. And that's why it's important, I think, that this committee and the UK thinks about its role in it. These institutions should be servants of the governments which own them. The World Trade Organization is completely stymied at the moment.

The World Health Organization, which is to me, miserably the most important of the organizations. We need to save us for the future, is in a worse state than it was in 2019, before the Covid 19 pandemic. The US, of course, not funding it any longer. Um, and global politics making it a much more fractured operating environment. So we don't have a United Nations system. We have a divided nation system. Uh, multilateral. Development or team sports.

Uh, I think there's a big tension between the need for governments to work together and a growing need from taxpayers, from voters to see their governments do things which are in their narrow self-interests. And that, I believe, is part of the reason that this is happening. The most sophisticated of the systems finance, which I'm involved in, failed to stop the financial crisis. I was at the world Bank head of policy in the run up to that crisis. We never saw it coming.

As you know, finance, the world Bank, the IMF, the Bank for International Settlements, other multilateral institutions, along with our central banks and treasuries in our national governments, are by far the most data intensive, well-paid, most powerful institutions in our countries. And I think the fact that they failed to see the crisis coming, that for many people, it led to a collapse of trust in multilateralism, in metropolitan elites. And I think much of what we're seeing in the fractured world, in the democracies follows from this failure of multilateralism.

So it's not a new crisis of multilateralism. It's a crisis, I believe, that's been building and brewing for many years. And it's important, I believe, that we try to fix it, because I think it's of vital importance for the future of humanity.
10:47
10:48
None Portrait Speaker 3
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I think one reason, which is very relevant today, was a failure to understand technological change by old men like me, uh, who were in the multilateral institutions but were also in the audit committees, the CEOs of banks not understanding credit derivatives, which were the new gadgets. And I did a BBC series called After the Crash, where I interviewed some of these traders and said to them, did you foresee that your instruments would lead to this sort of thing?And they said, of course we saw that, but we felt like poker players on the decks of the Titanic.

Um, and we knew we'd get out in time. So I think one, one was this disconnect. Of course, library shelves have been filled with books on the causes of the financial crisis. There were many, many reasons. Another was, of course, the political imperative of don't prick the credit bubble while the party is going. Politicians didn't want to reduce the good, feel good feeling that the credit bubble was creating, uh, particularly in the US. But elsewhere too.

And I think there's a real tension between the advice when you speak to economists and when you speak to politicians. Many of them now say, well, we saw it coming. I think that's a rereading of history in some individuals did. But clearly the institutional consensus was that this was manageable. Uh, at the time. And, uh, it was, I think, a failure of will. It could have taken an undergraduate on the back of an envelope to work out that credit derivatives were not sustainable.

Uh, but this just wasn't something that was absorbed into the mainstream. Uh, there was also clearly a failure of information. I think the UK, Gordon Brown at the time was surprised when Lehman Brothers took a very large sum of money out overnight back to the UK, to the US, that sort of institutional failure to keep track of what was happening, I believe, also lay at the heart of it.
10:50
10:50
10:50
None Portrait Speaker 2
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Um, well, so I think it's important to always recognize who we are and our, what our role potentially can be, you know, we, but also what our interest really is, you know, we are a medium sized economy these days. Um, very open, very much exposed to global forces. Um, it's in our interest as the UK that there are rules of the game that are a clear sense of order and rules of the game. What we should be careful with is to do what I, unfortunately, when I was working inside the system, observed too often that national interest became very transactional.

Quick wins, flag waving seemed to be leading while actually you were just a smaller player in the whole system and very much communicating it towards the UK audience, but actually not really constructively doing that medium term building of stronger rules of the game that also in our interest. So so in a sense, a trade off is not the right language because I think it's in our interest that we have some form of functioning multilateral system. Um, and we. Should be willing to be selective.

But the main thing is it's multilateral, multi-sided build coalitions. You know, we usually hear we're going to lead doing the reforms. No, no. Why don't you we say we're going to build the coalitions for reform. Otherwise we just stand there flag waving and sit there I was I find it a bit unfortunate that yesterday Foreign Secretary again said we're going to lead reform of the multilateral system. Why can't we use the word that we need, which is build the coalitions.

That change can actually happening rather than making the points and making the, the the. Point scoring and flag planting. The UK has, of course, has to be selective. I think Professor Golding has already alluded to also. And this is also where expertise of the UK lies is financial architecture. It should be lying there. It should be about issues to do. That's where we strong in. That's where we. Very good historically are setting the rules of the game.

Virtually all bonds held by any government in the world is under UK law and so on. So that's that's things where we can keep on building, innovating, being stronger, probably do better scenario planning and, and being aware of where, where the weaknesses are. So there are areas that are clearly in our immediate national interest as well, including for our own economy, but it has to be seen not transactionally, but from a point of view, building a system that can serve us also in the medium term, with coalitions of willing and actually be a bit more imaginative.

That's not just European countries or the US, but actually broader thinking. Where can we find new partners to build up rules of the games that can help the kind of societies and economies that we are?
10:54
None Portrait Speaker 1
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Thank you.
10:54
10:54
None Portrait Speaker 3
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Yes, please. Thank you. Um, I think if one thinks about what the greatest threats to the UK are in the future, uh, there's not one that could be solved by the UK alone. It requires cooperation, whether it's the next pandemic, whether it's climate change, whether it's the threat of Russia and conflict, whatever it is, one can think of the growth of Britain and the free trade system. We're going to have to be part of a global coalition of countries meeting those.

And the idea that we could build high walls and insulate ourselves from the risks and prosper is profoundly misguided. Although some people seem to still believe it, not least in the US. That doesn't imply that we need to rely on the existing system to solve the problems, which is global governance. And I think part of the challenge is that the word global in governance, uh, in the phrase, makes us feel that everyone has to be part of every solution and agree to it. And indeed, what we find is that's the reason why there's an impasse in many institutions, whether it's the UN Security Council, the World Trade or health organizations.

So the UK, I believe, should be at the centre of new thinking in creating creative coalitions which work to solve problems. And even if we only solve half the problem or 80% of it, we should be very proud of the coalition in making these advances. And through the demonstration effect of working with others. The term multilateralism also implies governments working together. And I think that's something that's very much stuck in a post-Second World war frame, which founded the system. And of course, the UK, with Churchill and Keynes and others, was absolutely at the heart of that construction.

Bretton Woods, UN and other systems. But now we have a very different constellation of actors. And I think when we think of the future of the system, we shouldn't be, uh, automatically thinking that governments only should be part of it, or necessarily even in the lead in the case of, um, pandemics, we've seen the important role of collaboration with pharmaceutical companies, for example, with the UK taking the lead on that, uh, in the case of, uh. Past successes like the closure of ozone layer was working with a small number of companies.

In the case of the fight against HIV, Aids was again working with pharmaceuticals. Increasingly, we're going to be having to work with artificial intelligence companies like DeepMind, based here in London. And so I think a broader thinking of what the coalition would be, who would be key actors in it, to make headway in resolving the problem, is extremely important. Uh, not only private sector, but also other actors, professional associations, cities. In the case of the U.S. states, um, other actors. Actors have a vital role to play.

And I think starting with the problem and thinking about which minimum set of actors would get us to make progress on, this is a better place to start than thinking about which other governments can automatically talk to, to make headway on this.
10:57
10:57
None Portrait Speaker 3
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Um. I think the the first would be. Effectiveness. Impact. So what, which are the key actors that are going to impact on this outcome, be they governments or others. And depending on what one's targeting it would be very different. Pandemic, incidentally, is an extreme case because pandemic is the only threat, I believe, that the UK faces that requires all countries in the world to be part of a solution. A pandemic could come from the poorest village in the poorest country, or the richest lab in the richest country, and everyone needs.

That doesn't mean that all countries need to be the primary actors in finding the solution. One could create rapid response task forces that would come from elsewhere. So who could resolve 80% of the problems of emissions, not of adaptation?Uh. And in finance, it's even a smaller number of countries. So hoovering data and to be part of that, but it's the only one climate change, you know, two dozen countries could resolve 80% of the problems of emissions, not of adaptation.

Uh. And in finance, it's even a smaller number of countries. So who are the key actors?And to act to build a coalition around would be the first selection criteria, uh, depending on the problem. The second would be subsidiarity. What is the lowest, uh, level of action one can include because I believe it's extremely significant that. We don't aim too high. In other words, you will never get 100% of the solution. What minimum set will make you progress and how?How can this be devolved to different groups of actors?And again, depending on the questions, these would be very different sets of actors.

As we saw in the fight against HIV Aids, a non-government organizations, for example, became very important in the case of pandemics. The Gates Foundation is the biggest funder of the World Health Organization. Now would have to be part of a solution. So which group but the smallest number of groups to make the second and the third criteria, I believe, needs to be a demonstration effect. Start modestly, build from that and show that you can actually make progress. Um, and.

There's a tension between being a team player and not waving the flag within these coalitions, because that certainly will alienate all others. Um, and proving to voters and the public, uh, that one is getting value for money and, and that the UK is engaged. But that tension, I believe, should be managed in favor of, of first getting quick wins and then advertising them rather than the other way around, uh, prove. To the public that one's making progress after one's made progress, not before. Um.
11:00
None Portrait Speaker 2
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Let me try to give some other ones rather than just agreeing. Um, the way I would go about it is to um and it alludes a little bit to what Professor Golding was talking about earlier, like the, the lack of ability to foresee, uh. Crisis and so on. I probably have a slightly different view on it, but that the benefit of hindsight is very good. But we do need much more thinking about possible worlds, you know, kind of scenarios. What is possible?Think of big challenges we have in the world.

And it's, it's willingness not to say this is the scenario. Sometimes some of these reviews we have, they seem to be settling. This is the challenge in the world. And we're not thinking enough. Actually, there's quite a lot of different challenges in the world, and some will dominate, uh, all others. Um, so I would say it's about, you know, possible worlds and trying to identify key and important challenges where, where we should focus on. The second one is then a bit of what can we do as the UK and it becomes a bit of the comparative advantage point.

And I do think the comparative advantage we have is that probably where it will filter, even in terms of what may be happening, you know, issues to do with financial, global financial architecture, with debt, with norm setting around illicit finance. That should be definitely one area where we should have a comparative advantage. And, and somehow, but another one is indeed around areas of science and applied science and standards that come into issues, norms and standards. The third one, I sometimes fear we are not as good as as we like to claim, but it's actually, uh.

Our role in helping to stabilize the world. And I don't mean it just from a, from a, from a defense point of view, but also from the complementarities in various ways of, of, of doing this. Um, I know there used to be an extremely good collaboration between defense and the development side in, uh, in the UK government now it feels like they've been played off against each other, which is not a very sensible thing. If the biggest challenge is in a lot of setting is actually stability and, and the externalities that could have on the UK.

Um, okay. This is kind of possible areas of comparative advantage. The final thing is, um you can. Only do things if you have entry points. Maybe it's a version of what Professor Golding was saying, but really thinking where there is a chance for change. So it's not just the most important things and keep on arguing about, but where do we have a chance for actually generating something to happen?And it comes back to where do we think we have can find some like minded people around particular issues.

If we go back to rebuilding an international rule based system, we need to understand how we build it as well at a time. You know, if we think of the trade system, it used to be not there, you know, and it took a long time process of GATT, endless negotiations, endless building from below before we got to WTO and so on and so on. So it was not as if we suddenly invented it at Bretton Woods. And so really thinking, you know, where can we start?Get the entry points right and the right partners to begin to build on it and diversify your portfolio in that, because some things will fail and some things will succeed.
11:04
11:04
11:04
11:05
None Portrait Speaker 2
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Um, yes. Um, sorry, I have a bit of a déja vu because I was working in government when the cuts came through and having to handle the spreadsheet and finding £4 billion in five weeks and being criticized that we didn't do it well enough, uh, in five weeks. So look. Um, it is a reality of, of tight budgets. Um, yes, they are too tight and the choices are being made, but you ask how to prioritize. So maybe I'll link it back to what I was mentioning earlier.

Um. We sometimes. Have the tendency to want to do the things because they are important and it's a very typical thing in, in government that I've observed over all these years as a chief economist as well, is that we identify a problem and we think by putting money on it, we can solve it. And in between, we don't think hard enough about how can we solve it and how can we generally actually begin to, to, to think through. And that's part of reasoning helps already with prioritization.

And it comes back to do we generally think through where there is an entry point, where there is a chance that we can actually make an impact, rather than actually doing everything problem based in international development, there are endless problems and there is definitely all kinds of things we can spend money on, but we can't solve all the problems with our resources. And so the prioritization really needs to begin to think about, you know, is there an entry point for us to make a difference here?Rather than saying this is an important problem?And I think it helps a great deal.

I definitely think from going back in my time inside government, if we do that a little bit as a bit more systematically, uh, and not not just responding to problems, but actually there you mentioned, say AI, I'm not an expert on it, but there's definitely a lot of expertise in UK these days on it, which bits and pieces would we have an entry point, for example, related to global norm setting. We all can cry about more global regulation tightening the the hands of some of the biggest tech companies and so on.

But where is the entry point?Where are the coalitions that we can do it?So my view, and I tell our students that always the how is far more important often than the what if we have a way of doing it?It helps you to actually decide where you'll have the biggest impact, rather than an endless list of problems we need to tackle. Thank you.
11:08
None Portrait Speaker 6
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Thank you, thank you.
11:08
None Portrait Speaker 3
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Perhaps just to to build on what Professor Durkin has said. I think it's important to reflect on both the UK soft and hard power as professor and I, late professor, and I distinguished them. And it's often the case that the soft power can be generated with small amounts of money. More important, my own personal opinion is that cuts to the BBC World Service. For example. Uh, are not in the UK's interests. Um, one can debate.

And Stefan was at the hard end of that. The cuts from the aspirations for 0.7 and where they've ended up today. But these are part of the UK's global reputation and ability to influence other debates. It gets us the seats at the table and gives us a power that goes way beyond the amounts of money involved. And there are other questions around what makes the UK special, and I would argue that our commitment to human rights, to democracy, to anti-corruption and those sorts of activities associated with it are central to what we are about, and therefore, for example, uh, easing off on the monitoring of the Bribery Act, uh, of money laundering, all of that type of, I believe, is an undermining not only of our hard power, but also more importantly, our soft power in the process.

I think standing up for what we are, I think there's a growing tension between us and the United States. Uh, on this, uh, they've removed some of these constraints on their activities, and there will be growing tension, perhaps with other democracies too, in Europe and elsewhere. But at the heart of what the UK is able to offer to. Other nations and to people around the world, I believe, is this question of standards and norms, as Professor Durcan alluded to, uh, and cutting back on those, I believe, uh, is not in the UK's interests.

After that, the prioritization is necessarily a very difficult. I was involved in it in many, many countries. In my context of the head of policy at the world Bank Group. But, uh. In the future, the UK will be more, not less dependent on the rest of the world, uh, and forming these coalitions will become more important to safeguard our future than it is today. Uh, and so a key question is, which budget cuts are we undertaking, which will undermine that?Clearly, defence expenditure is one hard power question, but I believe it's only a small part of it in terms of the future of the security of the UK pandemics, climate change and other threats, or at least as important to the future of the UK.

And, uh, that and a growing, uh, case for AI to. On creative coalitions. This does not mean that we can only work with people that have the same principles as us. That would be impossible because we'd have no one to work with. In terms of many of the key questions. But it does mean that we're clear about and grown ups in our discussions with them on our differences, and that they are not swept under the table.
11:11
None Portrait Speaker 5
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Thank you very much.
11:11
11:11
None Portrait Speaker 4
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Thank you. Chairman.
11:12
None Portrait Speaker 6
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Um.
11:12
11:12
None Portrait Speaker 2
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Well, um, I think this is a really important question. And, um, you know. There's definitely been a failure of many of us to, first of all, properly make the case for a global governance issues, but also issues to do with globalization. But also secondly, and I'll come to that in a moment, how to rethink it in this in the current circumstances. Um, I mean, there's no doubt that globalization, definitely around trade and so on has been a huge driver of lifting up the standard of living of huge amounts of people in poorer countries.

For us, it's been created a massive reduction in actually cost of living, of prices of all kinds of goods. And we see that at the disruptions in trade flows are a big driver now in, in what, what is called the cost of living crisis as well. Um, of course, globalization as it was practice and the rules of the game, it had, um it. Benefited everybody as consumers. But it hurts some people as workers, as producers in Western countries. And just finding a way of balancing these two interests, we probably fail to do properly in Western countries.

This is also well understood in a lot of emerging economies as well. And I do think um, it's not. Just a matter of communicating better the benefits, but it's a real task for us to rebuild a case for globalization. Version two that actually can handle some of these issues better, that recognizes that these kind of liberalizing forces in trade have lots of benefits, but they also come with, uh, at least temporary and sometimes longer term costs and actually begin to build a system. It would serve the world very well, and it would again, provide ways of building coalitions with all kinds of emerging economies that at the moment look more suspicious, not least with all the trade barriers that seem to be emerging explicitly in some countries, implicitly in other places.

So I think there's a real case, and it's not just communication, it's actually design. It's thinking carefully through it, what it should look like, and then not failing to communicate it this time.
11:14
11:14
None Portrait Speaker 3
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Yes. Thank you. As the professor of Globalization at Oxford, I. Um, I think it's a much abused term. Uh, people have a very different sense of what the content of globalization is. For me, it means flows across national borders of all types, good flows, trade, investment, vaccines, very bad flows, pandemics, financial crises, etc. what I call the butterfly defect of globalization. Uh, it's absolutely endogenous. It cannot be removed. We, we are entangled increasingly with others around the world.

What we do impacts them. What they do impacts us. And there's no reversing this. And certainly high walls will not reverse it because they will not, as China found after trying for over a year to keep out a pandemic, stop pandemics. They will not stop climate change. They will not stop the big threats we face. And so the question really is, how do we manage these flows?The problem arises from the widening, ever widening gap between the growing intensity of the flows and the governance of them, which is increasingly fractured and national.

And that's why we have more and more. That's why we have greater threats from pandemic, climate and other threats. The. Response, I think politically for domestic constituencies needs to be both to be able to demonstrate that these flows have been beneficial, that people are better off, as Professor Dercon mentioned. But in in multiple of ways. And we certainly all better off for these flows. Autarky is a recipe for disaster for any economy. North Korea is, of course, the extreme case of what it does to you.

We need to demonstrate that more forcefully, but we also need to demonstrate that our future depends on this, not only in terms of the need for goods and services, ideas, digital traffic and everything else, but also coordination with others. Uh, it's not going to be popular politically, but it is the case that we need more globalization, not less. Um, but not of everything, not of the bads, not of illicit traffic, not of, uh. The many bad things of globalization, increasingly cyber space, illicit movements, and certainly not of the bad flows like climate, pandemic and others.

Those require more management. Uh, and we need to be able to differentiate between them and to identify, work with others to reduce the harms of globalization and enhance the goods. This is true domestically as well. There are communities in our country, uh, in, in others that have been hollowed out by these flows. We need to empathize with those people and think about how our days on trade reform and multiple other ways we can demonstrate to them, too, that they have a better future, not by being less integrated, by being more integrated with the world.

The race to the bottom on taxation is one of the very negative features of globalization. The creation of offshore tax havens, islands, the incorporation of companies in other jurisdictions of which we have no power, uh, and the revenue raising ability of governments, I believe, has been greatly undermined by this lack of governance. The OECD is trying to come up with principles which are basic low base for it, but are being undermined. And I think the UK being at the forefront of that discussion as well, will be an important contribution to restoring faith that we can be integrated and still, uh, shape our.

Own destiny.
11:18
11:18
None Portrait Speaker 3
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Yes. There's an irony that people are using global digital tools to, to be anti-global. Um, but that is absolutely the case. And it's true of many of the movements of, of anti-globalization that they, they makes the most globalized, uh, of different institutions. I think we, we, and that's, you know, academics, um, members of. And businesses need to be on the front foot much more on this. Uh, one of the things that I'm always surprised about, and I was involved in the Uruguay round of trade negotiations, which just shows how old I am.

But, uh, business didn't speak up on the benefits of lower tariffs and removing trade barriers. They were silent. If you read the FTT and the Wall Street Journal and so on, there's virtually nothing from business leaders at that time talking in favor of trade reform and lowering of tariffs. So I think those that believe in the importance of, of this, I think, need to to be more vocal in defending it. Part of the challenge is we don't use TikTok or I don't anyway, um, it's a generational thing and thinking about how we use influencers is important.

The UK was phenomenally successful. Making campaigns like make poverty history, Band Aid, live Aid and so on, using then the icons of the time like Geldof and Bono and others to get these messages out to young people. Extraordinary success. But we've done nothing like that since. Uh, and how we ensure. That we're able to talk to multiple generations, I think is, is a, is something that we've lost in recent years and that Parliament has lost, uh, in, in recent years.
11:20
11:22
None Portrait Speaker 6
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Thank you.
11:22
11:22
11:23
11:24
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11:27
None Portrait Speaker 3
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Thank you. I think we have a number of existing instruments. That, uh. Are powerful. The Commonwealth, uh, is, is very much one of those. It's a wonderful convening platform. Uh, we're going to be hosting the G seven and the G20 in the coming years. That gives us a great opportunity to establish priorities, to work with others. The danger in the G's, of course, is that there's really no institutional continuity.

So each country that hosts it makes bold statements, and then the next one makes their own bold statements. And nothing happens. Um, so we need to avoid that trap. I think by building on previous, but demonstrating that we can use those institutions, uh, to, to make effective changes. So I think we have some existing structures. I think there's a lot of goodwill and relationships with many countries that could be nurtured. And it comes back to this question of where will we where's our leverage?The point you're raising, is there 1 or 2 pressing global issues where we could make a significant difference?And let's start with those.

Despite the cuts in budgets and everything else, and I, I think I would be driven by those, I think we're very powerful on climate in many respects. We're doing the right thing on climate. It gives us a moral advantage. We're very powerful on pandemics. We have great pharmaceutical industries. There are certain areas we're very powerful on AI. We leverage one of these to make real progress that goes beyond statements into some institutional continuity.
11:30
None Portrait Speaker 6
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Um.
11:30
None Portrait Speaker 2
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So if I could add, so if your question was also a little bit on the how, given that, uh, budgets are low and diplomats are being cut, um, I mean, one of the things definitely my experience working in, uh, in, in Fcdo, um, I was very, very surprised how centralized everything is. And as a result, um, initiative. From extremely skilled diplomats on the ground that begin to build partnerships has very little resonance in London. There is a kind of sense of the system is still designed for a very clear set of global rules.

And our role is simply to make sure everybody follows them. But given that these rules have disappeared and where, as you allude to, new partnerships need to be built, you need a very different type of diplomacy, whether it's in development, whether it's in other areas of multilateral cooperation. You need to have people that actually have the liberty to try to, within a broad and general framework, try to build up these relationships and so on. So whenever I travel, I still do an awful lot and go to high commissions or embassies.

I'm actually amazingly impressed by the quality of the people on the ground and their local knowledge, but it has to go through desk here, and then it goes somewhere in in what kind of maybe a semi quagmire in the system, that kind of things doesn't get translated. So for me a lot from what you're saying, how we can begin to do this is actually empowering, empowering much more on the on the ground to missions to actually do what you just described. I don't think it's just a matter of, you know, money doesn't buy you influence in these countries.

The fact that it's less money is in itself not it's again, to how do you use this, these resources to build up the partnerships, the links, the links with well meaning governments. There's plenty of not well-meaning governments. So you want to be careful, be selective, and build the partnerships around particular issues that you say, look, we can begin to build, make sure that you communicate across different missions and embassies to, to build up new, new ways from the bottom up, to build up a rule based system.
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None Portrait Speaker 7
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Yes, it.
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None Portrait Speaker 3
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So, so I wouldn't give up. It is difficult. And I do think the current crisis in the UN system, especially, especially in New York, which is a lot to do with finance being massively curtailed. Well, it is an opportunity. It does focus people's minds a bit. I think this is probably the right moment to generally ask yourself, ourselves, whether, you know, the kind of relatively overstated position we have ourselves in the system, whether it's in the shareholding or whether it's in the in Security Council and so on, to actually be willing to discuss this.

In return to actually be part of the designers of the new system and actually to play a role in it. And I'm not trying to suggest the negotiation strategy here, but it's again, without having the buy in from some of these other players that are all mentioned, uh, across the developing and emerging economies, which, as Professor Goldin implied, a huge, diverse set of countries. But unless we can build some coalitions with them around this and give them a little bit more, as it often is referred to voice in these organizations, we can make them relevant again, because otherwise we'll just keep on creating the incentives that, uh, that all the kind of alternatives keep on emerging.

And the system has even fewer rules of the game as we would like. The important thing is that shareholding or voting power is one way of having influence. It goes through power. But if the power diminishes all the time, that's also not very useful. There's other ways of having influence and it's again, comes back to the UK. We are historically designers. John Maynard Keynes was mentioned. We were designers of the system. Uh, we are a place of ideas of, of being conveners and play that role.

And we, our influence can come from that form of, uh, power in the, in the system that people come to us, as I remember in development, they would always come to us because I remember on the German side said they wouldn't decide anything until they first checked. What if it was doing. You know, this is the kind of things that we can do across the whole system. But so yeah, give up a bit of hard power for a space in this current crisis to build up our own soft power, with good ideas, being the conveners of new ideas.
11:38
None Portrait Speaker 7
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Thank you.
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11:38
None Portrait Speaker 2
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Thank you chairman.
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11:38
None Portrait Speaker 3
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Right. That takes us back. Um, I think, you know, um, I mean, it started with multilateral aid review, I think in 2011. And then, uh, follow up in multilateral development review must have been 16 or 17, something like that. That that was thing look, that was another age. Money was going up and it was very right to question whether we simply would put an extra zero behind someone's check. I think it was very much inspired and saying, okay, what does it what does it get us?And the instrument that we were using at the time, so to speak, was thinking more money on the table gives us more influence.

Now, that's a fair enough assessment. And by then it was definitely an important thing to review. Uh, the performance and the alignment with, with broader UK objectives. I noticed that the House of Commons International Development Committee was arguing they should have one. To be honest, the current time and age, I'm not quite seeing what its role would be to do this, because this is not a. It's not about huge amounts of of resources being shifted. This is much less than that used at the time.

And also at. The risk is that, given that the entire environment is a bit more transactional, we start looking at much more short term benefits. Like, do they vote in favour or do they support us in a vote or something for challenge?I don't think it's going to help the system to do that, because I worry that the criteria would use for assessment would be far more short term, far more pushed through in the current time and age to be much more transactional. So I don't think it's going to earn that much.

Yeah. You know, there's other processes that are being monitored. I think it would be much better to, to focus on rethinking what, what, what the future reasonable structure could look like and have some scenarios for that. And just seeing, can we nudge using our influence in some of these institutions, them in a certain director working with others in a certain direction, working with others rather than than trying to think this process will now decide our ever smaller checks. I'm not sure that's the best way of using resources.
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None Portrait Speaker 7
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Thank you.
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None Portrait Speaker 4
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Yes. I think you've put it very succinctly. Um, I think Mark, Mark Carney's um, speech was welcome. Um, he was really articulating what's been part of the international relations literature for a long time about middle, super and lesser powers. Um, and underlining the point of a sort of more variable geometry that we shouldn't just be bystanders, that we have a role to play in key addressing key questions. I think that's welcome. I'm not a great fan of the middle Powers idea for for two, two main reasons.

One is I think it's exclusionary. Um, so it's implying that that's the group you're going to work with when actually sometimes you really want to work with superpowers and also with, which is a rather derogatory term, lesser powers. Um, I think it puts a lot of developing countries backs out of joint because they think, what about us?And I think that's legitimate. So a bridge power is a more attractive concept to me than a middle power, someone that's able to build coalitions with whoever one needs to.

But the other is that it goes back to this idea that it's just governments powers. And as I as I mentioned earlier, I think we need to be thinking more creatively about other actors, the private sector and other other actors too, in this, the challenges we face will not only be resolved by governments, whether they're middle or any others speaking to each other. And so that's my second concern with the with the idea of this is how we're going to resolve the issues.
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None Portrait Speaker 7
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You go first. Um.
11:48
None Portrait Speaker 4
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I think on the question of the direction of travel. There's no foregone conclusion. I'm with Martin Rees, the Lord Rees on this, that this could be our final century. Um and, uh. The decisions we. Make and the decisions that this Parliament and others make are consequential, uh, to. This end. He slightly, I think pessimistic because he puts, I think a 50% probability. I put a much lower. But even if it was 1%, it's too much.

Um and. So it matters and there's no inevitable outcome. And we clearly have gone from a world in my short career of the Millennium Declaration and harmonization agendas, uh, the seeming utopia of the collapse of the Berlin Wall and opening of China and everything else in the 90s to a very different world today. Not only in the fractious power structure, but in the emergence of serious existential risks, pandemic and others and new ones in AI. So there's no inevitability. This depends on what governments and people do around the world, which is why this is an important conversation.

Uh, the, the question then of how flows from that. I think for the reasons you've, you've outlined, uh, government grants. Strategies, uh, are tasks which probably absorb too much attention. Um, and what is important, I think is to have civil servants, government departments that provide a continuity, that have a roadmap to what's important. I mentioned earlier, I think the values are at the heart of that. Uh, what does Britain stand for in all of this?And I think that hopefully is not something negotiated by each incoming prime minister.

Where are we in this?Do we understand that we are. A relatively middle and declining power globally in terms of our size?And what can we do with that?Uh, what do we want to prioritize?Uh, and I think that can go from Parliament to Parliament and Prime minister and Foreign Secretary to one to the other. If we decide that we are going to be part of fixing the World Health Organization, addressing climate change, that needs to have continuity.

For example, we've always been at the heart of the financial system, reforms of the trade system, reforms. If we commit to that, that has continuity. Uh, and that would be then reflected in the budgets allocated to different departments, the power given to different ministers, uh, cabinet. Discussions and everything else that flows from that. Clearly. We also, and I look at Lord Robertson at the heart of NATO, uh, which is extremely important. Topical conversation. I don't think those are the high level strategic ambitions.

Beyond that, I think there's there's the detail which does change.
11:52
None Portrait Speaker 7
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Um, yeah.
11:52
None Portrait Speaker 3
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I'd like to, um, generally to judge people's view also views also based on their actions and behaviors. And I don't think you would be sitting here if you were just descending into philosophical pessimism, uh, about the future. I'm definitely there as well. You know, if I work in, uh, in international development, I have to be an optimist and there has to be at least, uh, an optimistic scenario there as well. So, you know, where I stand here is that there are some really dangerous scenarios possible.

There are possible worlds that are really terrible and that may well be existentially deeply challenging, but are still alternatives. And there's still agency. And I wouldn't be working as a as a Belgian born economist in the UK and in the UK system. If it didn't believe that the UK system also can play a role in it. So yeah, so my point is there is agency still, there's still actions that can be taken. But that means. Com links back to the to the question was asked on on on strategy you.

Know I've observed too often in different departments strategy. That was just for the sake of strategy. Um even. Reviews that were done for the political moment of their launch and not for anything else. So clearly the incentives to do strategic work inside government are not set very well. So you want to always do this quite light touch. I'm a bigger fan of actually very carefully thinking through possible scenarios, possible scenarios of what the world may look like, and to actually then ask yourself, what are the actions that we would do?In any case, what are the no regret actions within it?And if then other actions that are contingent, whether Mr.

Trump gets out of bed with the right leg or not, then you actually say, well, we need to have the agility to respond to that and actually change direction if we need to do so. It's basically basically have no regrets, actions that you can define across a whole series of, of, of, uh, contingent contingent outcomes. And then otherwise make sure you build enough agility in the system that we can change our mind. That comes back to the how in within a system. Um, I've had, you know, unfortunately, it is the reality of this.

I can never get out of my head. One minister, which I will not name that I had to serve, uh, who refused to had information, refuse to have information meetings, i.e. where he would be informed about the state of the world. And the only meetings he wanted to take was decision meetings, where a decision had to be taken at the end. Now that's really bad. If we do not get our our leaders willing to be informed about possible scenarios so that at least they're aware that we may need to change our mind about something, some sometimes it's actually really bad.

So so it is about within the system, having the right people with the skills, having the right people in power, in powerful position in the civil service and so on, that are willing to advise changing your mind when the situation changes, when the facts change. As John Maynard Keynes said, and building the agility and do we have it?Up to a point, I don't think we have it necessarily in some of the areas that are required for this.
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None Portrait Speaker 7
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Yeah.
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None Portrait Speaker 7
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Um.
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None Portrait Speaker 3
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Yes. I just want to make sure I clarify. You know, I considered it largely centralized in the sense of London centric. Uh, and then, and then, uh, you know, the way Fcdo or our foreign foreign site work is missions relative to the center, but then no, I absolutely agree with you then then we have our own problems at the Whitehall level where, where coordination is, is virtually impossible. And indeed all these different, uh, multilaterals are then governed often by different departments with their own objectives and so on.

Um, yeah, I mean, my, my, my best answer would be is to actually having, without wanting to go into a whole strategy to have a kind of a, a minimal set of principles that, that our relationship in all these organizations would need to satisfy, you know, so that we don't get that one says, oh, it is, uh, poverty alleviation above all. And another one says it's protecting nature above all because then actually you don't have a that can actually be competing with each other at times. And even though we could argue sometimes it can overlap.

So yeah, so there is a, there is an element of, of, of coordinating principles that need to be done. Um, and, um, I mean, we could go into specific examples, but um, you know, the, but it's probably not, not the place here, I think just get the, get some clearer principles to be honest, get some interest centrally, uh, in the issue of having similar principles as well. And it comes back to it that often, um, my experience, um, and of course yours is far richer and more and far more.

Um, is that the, the instinct sometimes relates to multilaterals or to some of these kind of international issues gets very quickly for a quick win, as seen from the UK and as projected to the UK. Um, where it comes back to, you know, do we have actually a set of medium term principles that we want to use in these organizations because they are multilateral, they need to be based on coalition building and beyond. But I'll leave it there.
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12:02
This debate has concluded
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