Among these are concerns for the future of the world economy stemming from the sub-prime mortgage blowout, climate change, high oil and food prices, and even the risk of falling short of achieving the Millennium Development Goals (MDGs) in the fight against poverty.
The G8 Summit meeting, to be held in Toyako Hokkaido in Japan on 7-9 July, will constitute one of the most important attempts to address these issues. On the agenda for discussion during the summit meeting are world economy, environment, climate change, development and Africa, as well as political issues.
Against the backdrop of the subprime mortgage problem and the dramatic surge of petroleum prices, the slowdown of the world economy is already apparent. The development of new financial techniques and the lack of effective risk management have resulted in the rapid spread of risk through securitisation. We need to enhance the stability of the international financial system through such measures as improving risk disclosures of financial institutions and reviewing the role of credit ratings.
To tackle the financial market turmoil, useful lessons may be drawn from Japan’s painful experience upon the bursting of its own “bubble” economy. The first of these is that a swift response is absolutely imperative. Second, it is critical to nip potential credit crunches in the bud. In this regard, I welcome the efforts of the financial authorities to analyse the causes of the recent turbulence in the financial markets and the oil price hike, as well as examining medium and long-term measures.
Soaring food prices are another concern affecting the global economy. The world’s most vulnerable populations face an increasing threat of hunger and malnutrition. A wide range of people in a number of countries are now affected by the high prices, bringing about social unrest. Emergency humanitarian relief must be coupled with a more long-term socio-economic development perspective. It goes without saying that the situation seriously jeopardises the prospects of achieving the MDGs. I believe a strong sense of urgency must accompany this discussion at the Hokkaido Toyako Summit. In response to this problem, Japan decided to provide emergency food aid of about US$100 million through the World Food Programme this April. Japan had already disbursed about $68 million to the WFP in 2008.
Climate change will be a top priority at the G8 Toyako Summit. Last year, Japan proposed the “Cool Earth 50” initiative, calling for a halving of global greenhouse emissions by 2050. I also proposed the “Cool Earth Promotion Programme” at the World Economic Forum this January, which consists of three parts.
First, on the post-Kyoto framework, I am calling on the United Nations to examine strategies and measures to bring about a peaking and halving in greenhouse gas emissions. To ensure the peaking-out of the emissions, it will be critical to create a mechanism in which everyone participates, including all major emitters.
Second, on international environment co-operation, I proposed to set a global target of 30% improvement of energy efficiency by 2020. Japan will also establish a new financial mechanism, the “Cool Earth Partnership”, on the scale of US$10 billion to assist developing countries in achieving both emissions reductions and economic growth.
Third, on innovation, Japan will accelerate development of technologies such as coal-fired power plants with zero CO2 emission, low-cost, high-efficiency solar power generation, etc.
The OECD is one of the best and largest “think tanks” in the world. It can make a significant contribution to the international community as it tackles the challenges now confronting us. It has a long and outstanding record at analysing crosscutting issues. Climate change is not simply an economic issue; it also involves technology diffusion and development and broadly impacts on individuals’ lifestyles. I hope the OECD can provide us with a well-balanced analysis based upon a realistic assessment of the cost and benefits of various policy measures to reduce CO2 emission.
The 2008 OECD Ministerial Council Meeting will also discuss organisational issues, such as enlargement, Enhanced Engagement and financial contributions. In the era of globalisation, the above-mentioned challenges can no longer be effectively managed by OECD countries alone. In this sense, it is of great importance for the OECD to strengthen co-operation with non-member economies through outreach and Enhanced Engagement.
A few years ago, Japan asked the following question at the OECD Ministerial Council Meeting regarding the future of the OECD: “Today, the OECD stands at a crossroads. Will it become an international organisation with a truly global influence?” If the organisation is to meet the expectations of the OECD countries and the global community, I believe that the only possible answer must be an unqualified “yes.”For more on the G8 Summit, see www.g8summit.go.jp/eng/
The prime minister’s home page is at http://184.108.40.206/
See also www.oecd.org/g8
©OECD Observer No 267 May-June 2008