Unilateral redistribution dooms the international order to social and economic crisis---only multilateral governance solves.

The global COVID-19 pandemic is plunging the world into a socio-economic and financial crisis of an unprecedented scale, in addition to the acute health crisis. Many of the gains achieved under the banner of the Sustainable Development Goals (SDGs) are under threat. The crisis has exposed and exacerbated vulnerabilities and inequalities in both developing and developed countries, deepening poverty and exclusion and pushing the most vulnerable even further behind. This is a watershed moment. A sustainable, equitable and peaceful future hinges on the right national and international policy decisions.

For many, the impacts of this crisis are more tangible—given their immediacy and proximity—than the similarly severe damage and threats of climate change or the persistent plight of poverty, hunger and insecurity from which large numbers of people suffer chronically. Even before the pandemic, inequalities in income and multiple other dimensions of well-being, including security of employment and exposure to violence and crime, were rising. The abundant scientific evidence of the catastrophic potential of climate change contrasted sharply with the weak global response. Failure to address these mutually reinforcing problems was pushing people behind and threatening to reverse the already insufficient advances on the 2030 Agenda.1

COVID-19 forces a collective lucidity on the depth of global inter-dependence; on the fact that the world is only as resilient as the least resilient country and person; and that in a context of widespread vulnerability, we are reaching tipping points in different dimensions—social, economic and environmental.2,3 This moment of clarity must be taken advantage of to effectively reboot development towards the people-centric, inclusive, rights-based, participatory development envisioned in the 2030 Agenda for Sustainable Development.

There could be an inclination in the current context to use the COVID-19 crisis as a justification for failing to meet the SDGs and not implementing the Paris Agreement on climate change. The response must instead be to put the SDGs first and foremost, building equal and inclusive societies that are resilient in the face of future pandemics, climate-related disasters and other acute and chronic challenges the world will face within our lifetimes and those of the next generations’. Now is the time to step up international cooperation and strengthen mechanisms that will enable the poorest countries to address the immediate health crisis, stem its social and economic impacts and accelerate SDG implementation.

COVID-19’s ruthless sweep across the world demands a bold multilateral response. There are immense inequalities in the capacities of governments to respond both to the health emergency and to the social and economic fallout. The social and economic damages of COVID-19 will be particularly pronounced in countries with weaker health systems, higher levels of debt, less fiscal space to organize stimulus packages, less easy access to international liquidity, and weak productive capacity and associated low incomes. A strong commitment is needed to maintain open and free trade; to keep open borders, with restrictions only for clear health reasons; and to help the poorest countries, particularly least developed countries (LDCs), weather the economic shock they are facing.4 Measures already under way are encouraging. These include those under the United Nations health response, the COVID-19 Global Humanitarian Response Plan, the United Nations global framework for the immediate socioeconomic response to COVID-19, and the G20 debt moratorium. The response should also include an issuance of the International Monetary Fund’s (IMF) Special Drawing Rights by at least $500 billion, and for the advanced economies to put their shares into a trust fund to finance programs in emerging market and developing economies;5 the establishment of a multilateral currency swap facility within the IMF; debt restructuring and greater debt relief for developing countries; and coordinated use of capital controls. Critically, in the direct response to the pandemic, rapid universal access to quality-assured vaccines, treatments and diagnostics must be ensured in all countries, with need prioritized over the ability to pay, in line with the 2030 Agenda pledges of leaving no one behind and reaching the furthest behind first.6

The COVID-19 crisis only strengthens the call for a new multilateralism in which global rules are calibrated towards the overarching goals of social and economic stability, shared prosperity and environmental sustainability (see the box on “A new multilateralism” on page 5) and where chronic risks are recognized and addressed, for example, through the risk pooling reserve fund proposed further in this document, enabling the protection of the most vulnerable countries.7

At the national level, the COVID-19 crisis gives governments a unique opportunity to set the terms of public, private and third sector interaction, making the SDGs the missions to achieve and adopt innovative approaches to policy, regulation and partnerships. Fundamentally, the COVID-19 crisis is an opportunity to re-evaluate how public and private sectors collaborate to shape a better kind of capitalism.8

Beyond the immediate crisis and the need to strengthen social protection systems and provide specific support for the poor and vulnerable during the crisis, governments must reclaim their role in supporting the development of productive capacities to ensure structural transformation and resilience. The COVID-19 crisis is laying bare how too many countries cannot take care of the basic needs of their own citizens (e.g., medicines, personal protective equipment, ventilators) and how export-oriented economies cannot rely on other countries to supply basic medical supplies or roll-over finance when they need it the most. Strategic industrial strategy can help build structural resilience and capacity in manufacturing food, health services, energy and financial services. The more than 400 national, regional and multilateral development banks around the world can play a vital role not only in minimizing economic decline and supporting recovery but also in financing structural transformation, helping to lay the foundations for a financial model that is conducive to an equitable and greener economy.9 The benefits of globalization will be enhanced in the longer run if the multilateral system and national industrial policies support the development of productive structures that address the great challenges faced by the global community.10

Nationally and internationally, action to address both the COVID-19 health crisis and its social and economic implications must be guided by the principles of the 2030 Agenda for Sustainable Development and respect the pledge to leave no one behind and safeguard human rights. Approaches that establish economic recovery and the protection of health in opposition to each other can create additional challenges to formulating effective responses by distorting policy discussions and leading to polarization.

The response must include special measures to address the particularly high burden of the crisis on women and girls. Women compose the vast majority of health and care workers, paid or unpaid; are subject to domestic violence that has been reported to have increased over periods of lockdown; and, are overrepresented in informal, more vulnerable and low-paying jobs. The crisis risks halting and even reversing progress on gender equality. Response to the crisis needs to include women in decision-making.11

Just over a decade ago, in the context of the economic and financial crisis that began in 2008, there were efforts towards what former United Nations Secretary-General Ban Ki-moon referred to as a global green new deal. The relaunching of the global economy was an opportunity to redirect investment towards a greener and more equitable future. Efforts were insufficient then, and business-as-usual prevailed in the response. An opportunity was lost to set the world on a sustainable and more equitable development path. Having learned from that failure, now is the time for strong, concerted multilateral and domestic action towards a profound change in the direction of green and equitable global development. The articles in this Policy Note show pathways in that direction.

A new multilateralism

The CDP supports five principles to guide the design of a new multilateralism. Formulated before the COVID-19 crisis, these principles remain relevant:

I. Global rules should be calibrated towards the overarching goals of social and economic stability, shared prosperity and environmental sustainability and protected against capture by the most powerful players;

II. States share common but differentiated responsibilities in a multilateral system built to advance global public goods and protect the global commons;

III. The right of States to policy space to pursue national development strategies should be enshrined in global rules;

IV. Global regulations should be designed both to strengthen a dynamic international division of labour and to prevent destructive unilateral economic actions that prevent other nations from realizing common goals;

V. Global public institutions must be accountable to their full membership, open to a diversity of viewpoints, cognizant of new voices and have balanced dispute resolution systems.