As Delivered on Tuesday, October 12, 2021
Thank you and hello, Robin. Thank you for that kind introduction. Greetings to everyone who’s joining us.
I’m honored to be with you and the entire Chatham House team and community for this discussion, as you point out, of the crisis we’re in with COVID-19 and what the world can do to meet this moment.
Eighty years ago, off the coast of Newfoundland, President Franklin Roosevelt and Prime Minister Winston Churchill met on the decks of the USS Augusta to discuss a world war still in its early days. The United Kingdom had been engaged for more than a year. For the United States, the war was still a few months off — and it wouldn’t end for either country for another five years.
But now, that meeting is well known to many here today. It’s part of a relationship that has stood the test of time between the United Kingdom and the United States. Its output, the Atlantic Charter, still embodies many of the values the United States, the U.K., and many others cherish and promote and continue.
And this partnership was shaped in part by our two historic institutions. Chatham House was deeply involved in the war — before, during, and after. And a critical part of its successful conclusion. And the Rockefeller Foundation helped vaccinate allied troops and shape the postwar order as well.
I bring up the Roosevelt-Churchill meetings today because they’re a reminder of how important it is for leaders to see the big picture during a crisis.
On the decks of that ship, they were clearly dealing with urgent and critical, as well as time sensitive, issues. And then in conversations and cables, they debated those issues with intensity, as you would expect. But Roosevelt and Churchill were also thinking bigger — not just about the crisis at hand, but about the opportunity to prevent the next one. And that’s, I hope, the connection that leads us to the conversation I hope we can have today.
The two leaders believed — and history has proven them right — that World War I and the Great Depression created deprivations and divisions. This divergence — and the anger it unleashed — was deeply destabilizing, and it set the stage for World War II. So, to ensure a more durable peace, Roosevelt and Churchill sought to build a global order that prevented persistent fear, want, and inequity. That’s true leadership — and that’s why we remember them so fondly.
Today, 18 months into the Covid-19 pandemic — the gravest global crisis since World War II — I hope all of us can look for the same opportunity. If we follow the example set by Roosevelt and Churchill, I’m confident that we can meet the moment we’re in — ending this pandemic now, but also preventing the next global crisis.
So today, I want to talk about what’s gone wrong, how we can make it right, and why I’m confident we can do so together.
First, in reality, I want to us to remember the world Roosevelt and Churchill left behind.
In the months that followed their meeting in Newfoundland, American and British economic policymakers began postwar planning. Their worry was that persistent fear and want — leaving people to struggle and starve — created risks for everyone. Such suffering might stoke the anger that could fuel communists, nationalists, and worse. And if left unattended, their greatest fear was it could become the kindling for World War III.
To avoid that fate, allied leaders and economic officials sought to not just rebuild the world, but to build back a better one. And they explicitly set the goal of convergence, in which capital and technology and connectivity could flow more freely and help lower-income nations grow fast enough to dramatically improve the living standards of their populations.
One result was the Bretton Woods institutions, designed to industrialize and connect economies to avoid the inequity that had proved so costly before the war. The World Bank lent resources to sovereign nations to rebuild, and then establish the foundations for broader and more inclusive growth. And the IMF was designed put out economic fires before they grew and spread.
Another consequence of this way of thinking was America’s massive commitment to global development. Through the Marshall Plan, American officials invested more than $13 billion — at its peak, 2 percent of U.S. GDP — to rebuild devastated industries and infrastructure in 16 countries across Europe.
Of course, we all know the results were astonishing. Over almost 80 years — and especially during the last 30 years — billions have risen out of poverty, democratic governance largely expanded, and people became freer from fear and from want.
Unfortunately, Covid-19 — and frankly, the insufficient global health and economic response to it — not only put an end to this convergence trend, it also started a great divergence that threatens to be persistent for the coming decade.
Globally, the response has been too under-resourced, too market-reliant, and too uncoordinated.
The most glaring example has been inequitable access to vaccination. Right now, 61 percent of those people in richer countries are protected from Covid-19, but 96.5 percent of people in poorer countries are still exposed. Although some new commitments have been announced recently, the world is clearly not on track to achieve sufficient, herd immunity everywhere. And this is for three reasons:
One is we have not funded immunization efforts sufficiently. Most analyses, including Rockefeller’s own analysis, suggests that you need about $50 billion to achieve 70 percent [vaccinations] on a global basis and in every country. But we have barely raised about a third of that today. Second, we’ve left the supply side to private markets, and the result has been exactly what you’d expect — inequitable manufacturing, distribution, and sales. And the third is there’s no global operational initiative with leadership, accountability, and responsibility for ensuring that we not only deliver vaccines to lower-income countries, but achieve shots in arms so that you get to 70 percent herd immunity.
We’ve also seen a similarly insufficient response to the pandemic’s economic crisis. Wealthier countries have spent trillions — more than 24 percent of their total GDP — to stimulate growth, vaccinate their citizens, and adapt or transition their economies to, ideally, a more green recovery. Meanwhile, around the world, we’ve seen huge inequities in economic response. Lower-income countries have been left behind, without the resources to address Covid-19 or recover financially. From a fiscal perspective, emerging and developing economies have been able to respond with economic measures equivalent to only 6 percent and 1.9 percent of their GDPs, respectively.
No one has managed to fill the gap — or even really tried. Advanced economies committed $161.2 billion to overseas development in 2020 — which was really just a small boost from 2019 and only one percent of what they spent at home last year in emergency measures. At the same time, the World Bank and other multilateral development banks have increased year-on-year lending by about 40 percent since 2019. But that’s far short of the 76 percent increase during the global financial crisis in 2008.
The result is a world divided, between those who can endure the pandemic and those who remain at its mercy. Without interventions, this economic divergence could last for a decade or more.
And to understand why this divergence is so risky for all of us, it is important to understand the economic, political, and social impacts of vast increases in poverty. Of the 500 million people expected to have been driven into poverty, about 100 million live on less than $1.90 per day — the kind of extreme poverty that frankly should be inconceivable in the 21st century.
But about 400 million, who live on less than $5.50 per day, are wage laborers who are being pushed downward. Before the pandemic, they were making enough to aspire for more, drive local economic growth, provide political and social stability in their communities — but now, they’re falling behind.
The world is already witnessing the staggering consequences of this kind of poverty and this pushing downward of the middle class in democracies like India, developing nations like Haiti, and borders like that of the southern United States. Unless reversed, this divergence will create additional crises in emerging and developing economies — and for all of us. More frequent, chaotic, and larger migrations. Mass unemployment. Increased authoritarianism and democratic backsliding. Failed states and civil wars. And ultimately, the inability to confront climate change, which will make all of these consequences so much worse, and so much worse in those places that are the lowest income.
— The Rockefeller Foundation (@RockefellerFdn) October 12, 2021
To end this great and dangerous divergence, we really have to do things differently and use this moment to lead. In fact, we have to follow the leadership of Churchill and Roosevelt and do the extraordinary in responding to this crisis in a way that prevents the next one. To do so, the world needs a new, reinvigorated model of global cooperation and convergence. As you mentioned, I recently proposed a 5-point Covid Charter that I believe can reimagine what’s possible for the future of global development.
First, developing economies must mobilize a greater share of domestic revenue to invest at least 25 percent of their GDPs at home.
Right now, low-income countries raise government revenue equivalent, on average, to less than 14 percent of their GDPs, and middle-income countries are nearing 20 percent. Meeting the Covid Charter’s 25 percent commitment could mobilize trillions of dollars for basic human development, especially if reforms are made to address corruption and other issues.
Second, advanced economies can encourage that investment by agreeing to devote at least one percent of their GDPs to development. This would increase assistance by about $350 billion dollars. And I know this runs counter to the trend in many countries, including the United Kingdom, which for years has been a model of global development commitment, until it cut that commitment to ODA this summer. It’s also far less than the 2 percent of GDP the United States spent on the Marshall Plan at the peak of its execution. This new commitment would basically triple what advanced economies are doing right now for global development and climate efforts. But we must keep that number in context: it would still be only 3 percent of what those countries spent at home in 2020 to deal with the emergency.
Third, in addition to those measures, leaders and shareholders need to reimagine the Bretton Woods institutions and architecture, and this week’s World Bank and IMF meetings are an important opportunity to do so. And to leverage these institutions much more aggressively and much more creatively.
Although the IMF issued $650 billion in Special Drawing Rights in August, only 3 percent, or $21 billion, of these SDRs have gone to the lowest-income countries. Shareholder nations must commit to reallocate their unneeded Special Drawing Rights to support pandemic response in lower- and middle-income countries. Wealthier nations, including the United States, the U.K., Spain, Italy, and China can and should take immediate steps to recycle at least $100 billion in SDRs, which they don’t need at all, and which would help therefore allow those other countries to access vaccines and support fiscal stimulus in a manner that more closely approximates what’s happened in the industrial world.
The resources of the World Bank and other MDBs can also frankly be much more aggressively deployed and tailored to meet the moment we’re in. At a time of historically low interest rates, these are banks, and they could all raise and lend additional funds. That’s what we did at the Rockefeller Foundation, we turned to the bond markets for charitable purpose for the first time in more than 100 years, because it made sense to leverage our endowment. And because it allowed us to commit to spend $1 billion over a short number of years to address the pandemic, support the recovery, and prevent the next one. Multilateral development banks can effectively do the same by reassessing their capital adequacy requirements. With the right shareholder support, we estimate [they] could lend an additional trillion dollars during this emergency period.
Fourth, we know there are big global challenges where the innovation, technologies, and logistics of the private sector can uniquely pair with the resources of governments, philanthropies, and others. We all need to unlock the potential of public-private partnerships to ensure that critical technologies for humanity — such as vaccinations and renewable energy technologies — are accessible to everyone and not just the fortunate.
And fifth, these commitments — and their results — must be measured by the G7, G20, UN Security Council, or some combination of these institutions. Because that level of transparency enables us to identify what’s working and what isn’t. And that level of accountability ensures political support and direct engagement from global leaders.
In closing, I want to discuss why I think this Covid Charter is possible and why today is the moment to reinvigorate the field of global development.
When you look at the picture of Churchill and Roosevelt from the USS Augusta in 1940, what strikes you is how young they both looked. Churchill still had some of his boyish defiance. Roosevelt still had a jauntiness to his jawline and demeanor.
Years later, at Yalta and Casablanca, those youthful echoes had faded. The war, the fear, the responsibility had taken a toll. But the horrors of World War II — of losing loved ones, of losing resources, of losing not just some of the bloodiest battles in history but also losing entire belief systems — also inspired Churchill and Roosevelt to take bold action.
The fear that they had, in that moment of crisis, gave them the confidence and the courage to ensure that they put in place solutions so that this would never happen again.
In many ways, we have that same experience today. Each of us knows the feeling of loss and suffering individually and in our countries, from the surges in the United Kingdom, to the smoke rising off funeral pyres in India, and to the current wave of death and loss being experienced in the United States.
These memories are a reminder of just how much is riding on getting this right. We know that we are so much better than what we’ve just been through.
And that’s why this crisis must become an opportunity.
We know how to ensure that we create a world defined by convergence and not divergence. We know how to cooperate across the public and private sectors to solve the challenges that face us. And if we can use this moment of crisis to muster our own courage and a willingness to be bold, we can put the resources into the future to ensure that this, in fact, never happens again.
So, thank you, Robin, for having me here. And thank you to Chatham House for all the great work you do. And I look forward to having a discussion with the community that’s joined us today.
# # #