Careful optimism and tough realities

At year’s end, the signals for the future of the global economy are mixed. On the one hand, recovery of the financial markets continues – with some fluctuations. On the other hand, all the experts state that unemployment will remain stubbornly high – some improvement is foreseen in the US, China, Brazil, India, Australia – but in general 2010 will be a year of confronting very tough times, for millions of working families.

Time-lags mean that public revenue in many countries will get worse before they get better, with the threat of so-called “exit strategies”, to write down debt, looming for all our public services, notably education. And great uncertainties are still there for Greece, Venezuela, Ukraine, Ireland, Italy, Spain, Portugal – the list goes on.

And the developing countries in all this!

Maybe cautious optimism for the experts. But tough, tough realities for many, many people!

Dubai World - Fast Track/Global Fund for EFA

Dubai hit the headlines last week, shaking financial markets with the news that its flagship investment company, Dubai World, had announced a delay in meeting payments on billions of US dollars of debt. As one financial newspaper put it “Dubai montre que la crise n’est pas finie” (Le Temps, Economie, 27 novembre 2009).

Much of the reporting in financial papers has turned around the question of whether Dubai is an isolated case that could be contained, or was a harbinger of more shocks to come, “like the canary in the cage”, as one paper put it. Just as the OECD and the IMF began to speak cautiously about recovery from the crisis, the announcement by Dubai World renewed doubts that spread quickly around the global community.

For the Dubai announcement came on top of other signs that all is not well. Four Eurozone countries, Portugal, Ireland, Greece and Spain, face increasing difficulty in financing their public debt. Experts say the risk of sovereign default, as in the case of Iceland, is increasing. Meanwhile, public sector budgets are being slashed, with a direct impact on schools and teachers.

Investors are hoping that if any one of the four Euro zone countries faces the dire prospect of sovereign default, the other Eurozone countries would come to the rescue. In the case of Dubai World, similar hopes that neighboring Abu Dhabi would come to the rescue remain unanswered for the time being. Meanwhile, several Central and Eastern European countries, notably Hungary, Latvia and Ukraine, face similar situations. In their case, the IMF has intervened, with the well-known problems of conditionalities, with dramatic consequences for schools and teachers.

So even if OECD and IMF Global Indicators seemed to be pointing in a better direction, there is plenty of room for doubt. As unemployment remains high in the wake of the crisis, as public revenues continue to decline, there is an additional risk of more shocks that could knock this timid recovery right off course.

Fast Track/Global Fund for EFA

Ironically Dubai was also the setting for a major conference I attended 2 weeks ago – the meeting of the World Economic Forum (WEF) Global Agenda Councils. Best known for its annual meeting in Davos every January, WEF has embarked on an ambitious programme to engage some 1500 individuals from diverse backgrounds – business, governments, civil society and academia – in a comprehensive “redesign” of global institutions. WEF Founder Klaus Schwab suggests that the world is desperately in need of such an ambitious undertaking to address three fundamental problems:
a) Global market failures;
b) Sovereign state failures;
c) Inter-governmental failures.
The initiative is pursued through 76 “Global Agenda Councils”, each composed of about 20 people. While none speaks for his or her government, agency, company, university or organization, they bring together in each Council both depth and diversity of experience. I participated in the Global Agenda Council (GAC) on Education Systems together with Kailash Satyarthi, GCE Chairperson.

There is an important difference between this initiative and the Davos annual meeting or the regional meetings convened by WEF around the world. Davos is the occasion for hundreds of panel discussions and networking, with no attempt to record conclusions – the value is said to be in the exchanges. The Global Agenda Councils, on the other hand, have been invited to bring forward recommendations, and proposals as to how those recommendations can be implemented. This makes the process more than a “talk-shop”. It is explicitly action oriented.

The intellectual and conceptual drive behind the process comes from people like Rick Sammans, who was Chief Adviser on International Economic Affairs to former US President Clinton, and Mark Malloch-Brown, former Administrator of UNDP and UK Minister of Development in the Blair and Brown governments.

The GACs hold regular “virtual meetings” using video-conferencing over the internet, with documents and opinions exchanged on a dedicated website platform. They met physically in Dubai 20-22 November.

The GACs are grouped together in nine “clusters”, the GAC on Education Systems being in the cluster entitled “Creating a Values Framework”. In Dubai, opportunities were provided for interaction within and between “clusters”. The process there was a wild ride: the opposite of sedate processes in the UN and agencies like UNESCO or the ILO. It was fast-moving, stimulating, chaotic, at times perplexing. But ultimately, I think, productive.

The important thing is that out of this process is emerging a real opportunity for breakthrough on issues which are critical to EI and its member organizations, notably on the global mechanisms for driving forward towards Quality Education for All.

With other Global Union leaders present in Dubai, I wondered at the setting in which we found ourselves. Anita Normark, General Secretary at the Building Workers’ International, was invited with some construction executives to the top of the Burj Dubai Tower, the world’s tallest building, which was supposed to open next month. Anita enquired into the working conditions of the thousands of non-unionized workers on that spectacular building site – all brought in by labour agencies from Asia and African countries. This is the darker underside of the glamour of Dubai.

That glamour has been tarnished by the announcement of Dubai World. There are lessons to be drawn here more broadly about the human cost of exuberant speculation, and about the global impact of such speculation. Dubai wanted to be the centre of world attention, constructing the tallest building, inviting the WEF, and so on. It has however become the centre of attention in a less desired and less glamorous way.