Plenary Session 1: “Global Economic Governance”
Globalization was once perceived as an irreversible transformation toward a uniform and flat-but-prosperous world. It was as if, at least from an economic viewpoint, the so-called “obstacles” of national or regional identity were to be abolished; as if the whole world were to become a single market, regulated by international organizations and headed by competent technocrats. With the financial and economic crisis of the last five years, we now observe quite different tendencies: more aggressiveness in the assertion of collective identities, more demand for renationalization of economic policies, protectionist pressures, etc. This evolution is visible, even within the rather integrated framework of the European Union. The idea that globalization is irreversible can no longer be taken for granted. The purpose of this session is to assess the stability of the global economic system and to make recommendations on how to strengthen it, in order to preserve the benefits of an open world, all the while paying respect to political demands for collective identities and social justice.
Plenary Session 2: “G2?”
Although the United States is likely to remain the only superpower for the foreseeable future, China has become a credible challenger. It is now the second largest world economy and, barring an economic or political accident, might become the first in the coming decades. Not only does it endow itself with all the attributes of power, but it behaves more and more like a power in the classical sense, at least in its “near abroad”. Both countries are somewhat allergic to multilateralism, but while the United States has developed a sense of leadership during the twentieth century, China has no such historical experience. They do experience tough economic and political competition, especially, but not exclusively, in Asia. Are the US and China heading toward confrontation? Or, alternatively, could there be some kind of “entente, detente and cooperation”, to use the old Cold War vocabulary – i.e. some kind of G2? How could such a G2 be acceptable to the rest of the world? What are the forces that will decide which alternative prevails?
Plenary Session 3
We expect President Mario Monti to present his views on the subject of global governance.
Plenary Session 4: “The Future of the EU”
The EU is, on a regional level, a unique laboratory of global governance. Yet, in the last few years, it has suffered two major setbacks: the Euro zone crisis and an identity crisis. Despite a number of significant steps, the first crisis is not yet over. If it survives, the Euro zone should emerge much stronger and as the natural core of a rehabilitated Union. How long can we allow the rescue process to last? Could it fail, and could the EU itself resist such a shock? The second crisis, identity, is illustrated by Britain’s temptation to distance itself and by invigorated nationalist movements, especially, but not exclusively, within certain recent member countries. The spirit of the founding fathers is gone, and the EU seems to have lost its sense of identity. Its institutions are widely perceived as undemocratic and inefficient. Yet, its extraordinary contribution to peace and prosperity is recognized by many internationally and symbolized by this year’s attribution of the Nobel Peace Prize. How might EU members agree on a common vision of their common future? Is such agreement prerequisite for future enlargement?
Plenary Session 5: “Good Governance and Economic Success”
The concept of governance is relevant at various levels. It refers to the art and science of setting and reaching goals in complex systems. Sustainable economic success implies “good governance” at at least three levels: (1) at the corporate level, which means good management; (2) at the national level, which means good public policies to ensure a business climate that promotes growth and employment in the short, medium and long term, while remaining socially acceptable and preserving the environment; (3) at the international level, which means optimizing coordination among national policies, managing externalities and reducing systemic risks. The third level is crucial if globalization is to survive. The purpose of this session is to explore the relationship between the three levels, and therefore the links between business and politics. How should we define Corporate Social Responsibility in this context? Is the diversity of cultures and values an asset or an obstacle? Does the media have a specific role to play?
Plenary Session 6: “The Future of the Middle East”
Whatever its immediate causes, the fundamental cause of the “Arab Spring” is the non-viability of the order that emerged in the MENA region (Middle East – North Africa) in the aftermath of decolonization, and in the context of the Cold War. The “Arab Spring” has released powerful centrifugal forces, which are now at work among and within the region’s countries. The emergence of a new order is probably a matter of at least one generation. External powers will clearly influence the process, as their major economic and security interests are involved. Moreover, there is evidence of a new kind of East-West rivalry in the region. Thus, the permanent members of the Security Council are openly divided over Syria. Be that as it may, the fate of MENA is likely to be determined primarily by internal factors, among which culture and ideology will play a crucial role. The purpose of this session is to look at the future of the Middle East at large, essentially from the viewpoint of the region itself. What are the risks and opportunities, in the region and beyond, in the post-Arab Spring era?
Plenary Session 7: “Africa”
Africa is no longer perceived as a lost continent. It enjoys sustainable growth (5% on average over the last decade), with considerable natural and human (demographic bonus) resources. A huge middle class (300 million people) is emerging, together with urbanization. In the long term, good governance and education – two related factors – will be the key determinants of economic and social success. For the time being, governance is making some progress, although too often strong presidential regimes continue to coexist with weak states. Such a situation feeds both big and small corruption. The fragility of many states is also a major cause for local and regional conflict. It must be recognized, though, that the number and lethality of conflicts in Africa are less than during the Cold War. At the same time, their external effects have become more important in some cases (Mali). The purpose of this session is to look at the state of Africa in the context of globalization and global governance, both from the political and economic viewpoints.
Plenary Session 8: “General Debate”
As in the previous editions of the WPC, the General Debate will focus on current issues in relation to global governance. Of particular importance this year is the prospect of stable, medium-term leadership in three major countries: the United States, China and Russia.
The parallel Workshop on Finance will examine the present state of the financial regulatory reforms that have been launched by the International Community to prevent a new global financial crisis.
The following issues should be examined with a view to respond on each of them to the three following questions:
- · Which progress have been made so far?
- · What are the major remaining weaknesses from the financial stability standpoint?
- · And what are the appropriate avenues to correct the situation in a medium term perspective?
- Building resilient banksA first important point is to assess the present implementation of the Basel III decisions in the various jurisdictions; At this point only 8 of the 22 member jurisdictions of the Basel Committee have issued the full set of the Basel III related regulations.
Passing appropriate legislation as soon as possible in all jurisdictions is of the essence.
Another crucial issue are systemic and moral hazard risks associated with the Systemically Important Financial Institutions (SIFIs). Ending the “too big to fail” concept calls for progress in a number of dimensions which have to be addressed: the reforms of national resolution regimes; the recovery and resolution plans and resolvability assessments for each global SIFI; a more intensive and effective supervision; additional capital requirements above minimum standards. Particular attention should also be given to “Domestically Systemic Important Banks” (D-SIB’s).
- Addressing the issue of shadow banking and non banksThe objective of the International Community is to ensure that shadow banking is subject to appropriate oversight and regulation to address a crisis that could emerge outside the regulated banking system.
The following dimensions should be particularly examined: mitigating the spillover effect between the banking system and the non banks; reducing the vulnerability of Money Market Funds; aligning the incentives associated with securitization to prevent excessive leverage in the financial system; vigilant oversight of new shadow banking activities coming from market mutations.
- Coping with procyclicality in many dimensions of the financial market’s functioningThe stable functioning of financial markets relies not only on resilient financial institutions, whether banks or not banks, but also on a host of factors like, for instance, accounting rules, credit rating agencies, legal entity identifier, market infrastructure –in particular as regards the OTC derivatives market reforms-. The International Community has to make sure that we make all what is possible to minimize the endogenous tendency of the financial system to generate booms and busts and, in so doing, foster stability in the global financial system.
- Preventing systemic risks and reinforcing macroprudential oversightAll previous dimensions are important to minimize the systemic risks at the level of the various individual economies, regions, like the Euro area and the European Union and the global economy itself. It is also necessary to take stock of the actions of the new specific institutions created on both sides of the Atlantic on the prevention of systemic risks, like the “European Systemic risk Board” (ESRB) and the “Financial Stability Oversight Council”.
Amongst many other issues a better handling of macroprudentials and a deeper intellectual understanding of the endogenous systemic instability of global finance, of the new extreme rapidity of shocks transmission and of the financial instability consequences of macroeconomic imbalances, appear of the essence.
Workshop “Energy and Environment”
The quest for energy has always been a key component of international relations, both in times of war and peace. The sustainability of an open world is therefore hardly thinkable without a form of global governance that secures every country’s access to various sources of energy at fair prices. With rising concerns about climate change, this fundamental concern has taken even a greater dimension. So far, the “international community” has failed to reach a consensus on how to cooperate on the matter. This workshop will be organized in three parts, though the majority of the time will be consecrated to Part III.
Part I will provide an overview of the current energy scene from political, economic and environmental standpoints. Part II will specifically address the crucial issue of inconsistencies in energy policies, at regional and international levels. For instance, the European Union has proved thus far unable to create a common energy policy, despite the coal and steel community being the heart of its foundation. Part III will concentrate on energy supply with an emphasis on new sources in the context of climate change. Five topics will be covered: two technical (unconventional oil and gas, and renewables), one social and political (“acceptability”), one economic (energy costs and economic competitiveness), and one international (the geopolitics of energy). The last two topics will certainly raise questions about economic integration and globalization more generally.
Workshop “Major Risks”
Increasing interdependence is accompanied by increasing, and sometimes unpredictable, risk. This is because the number of non-linear relations increases, i.e. non-proportionality between causes and consequences, or the so-called “butterfly effect”. In such a context, classical statistical methods based on the so-called “normal” or “Gaussian law” (bell curve) often become irrelevant. Major catastrophes are likely to happen, whereas in the classical context their probabilities of occurrence were considered negligible. These phenomena raise vital questions on risk prevention and risk sharing, in particular for insurance economics. The workshop will be organized in three parts. Part I will address the issue of major risks from the standpoint of research. Part II will discuss the myopia of states. Historically speaking, governments have proved unable to prevent catastrophes even in favorable contexts when the risks could be clearly identified, as is typically the case for many demography-related issues. How is it possible to improve long-term public decision making under well- or ill-identified risks without falling into the trap of pusillanimity, as with some interpretations of the precautionary principle? Is there a correlation between collective risk taking and political regimes? Does the concept of global public good make any practical sense in the context of major risks? Part III will cover three disparate examples: cyber security, which is now widely recognized as an explosive issue; aging, with its potentially undermining economic and financial consequences; and food security, which much like energy must be considered as a key component of global governance. It should be noted that the two other parallel workshops, particularly “Finance”, carry a important major risk dimension.