A conversation with Gayle Smith
24/10/2022
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A conversation with Gayle Smith

24/10/2022

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A conversation with Gayle Smith

What is your perspective on the impact of the war in Ukraine on international cooperation?

It is enormous. Most notably, it exposes one of the tensions of international cooperation: resources for development are finite, military funds are not.

The economic cooperation basket of resources is fixed and as a result a great deal of assistance is going to Ukraine — as it rightly should —, but the size of the pie is not being increased. Thus, it’s taking a finite amount of resources that were already stretched thin and stretching it even thinner.

The world should be responding to Russia’s aggression in Ukraine in the way it does, but then we have chronic conflicts in Syria, North Africa, Ethiopia, Sudan, or Yemen that are beyond description. Afghanistan has massive needs, Pakistan faced devastating floods. We have a growing demand and far less supply. One of the main impacts on international cooperation is the pressure on the finite amount of assistance.

There is a second aspect: in 2015, when Europe experienced a high influx of refugees trying to escape the war in Syria, some countries were very responsive, but some were very negative and that was the beginning of the very intense anti-refugee anti-immigration stance in many parts of the world. In the case of Ukraine, the good news is that the reception and the welcoming of Ukrainian citizens has been as it should be. Nevertheless, that is not the case for other refugees from other countries. Then, a lot of countries are now using international development assistance and humanitarian assistance for refugees within their own countries. That is further shrinking the overall supply and it’s very easy for people to say or suggest that it’s a tradeoff that Ukraine is being assisted at the expense of someone else.

That is not my view. I believe we need to make the pie bigger and have the same flexibility that we do with military assistance. The situation demands it. We should not have a finite count on humanitarian and economic assistance.

There’s always a danger that the world has difficulty managing more than one crisis at a time and if you look around the world right now there are multiple crises that need to be managed. The conflict in Ukraine adds to that list. But is it really distracting attention? To some extent, sure. However, it is a false choice to say should we be helping the people of Ukraine, or should we be supporting global health and the fight against climate change? We must find a way to do both.

Official Development Assistance increased less than 5% last year despite the COVID huge crisis and there was low debt relief…

It is indeed a very modest increase! Especially because the demand has been growing for years, particularly the humanitarian demand. We must take into account that a lot of the conflicts around the world are chronic.

Regarding the reactions to the war in Ukraine, countries in Africa and Latin America did not align automatically behind the West as most policymakers in Europe assumed they would. Were we wrong about understanding developing countries?

It is always wrong to assume countries will just follow your lead. It is always wiser to check first. We were wrong to assume, after the vote, that so many countries supported Russia, either. It is an oversimplification to assume that their vote was the reflection of supporting Russia. The reality is just very complex. I spoke with several leaders of developing countries and their priority is to manage the impact of the war. Just to give you an example, the prices of fertilizers skyrocketed. Some countries may think the Russian invasion was entirely wrong, but the war needs to end because they cannot afford the cost of food and energy. 

What many observers missed was that if you are looking at Ukraine from the position of a low- or middle-income country, that is quite frankly dependent to some extent on the West and to some extent on China and Russia, it is very hard to take a position. That’s the number one reason why we were wrong. Some countries are too poor to pick sides. One of the most eloquent statements about the state of the world was made by the Kenyan permanent representative. It was exquisite on the rights and wrongs, on the historical meaning of the conflict.

Another reason is that there is a lot of fear that we’re entering a new era very similar to the Cold War. There is a hesitation on the part of countries to fall into the trap of picking a side. I believe that if it was a secret vote, it would have overwhelmingly been against the invasion. 

There’s a tendency of some countries to see this as like the reemergence of the non-aligned movement. During the Cold War nonalignment was translating the rejection of imperialism. It was a very political statement. Today, countries may non-align but I don’t think it is a political stance. It’s very practical. Most African leaders think Russia is out of control and it’s astonishing and horrible what is happening in Ukraine.

Some of them might say that we should also look at conflicts in Africa that nobody seems really bothered about, which are arguably as bad. Lavrov is all over the African continent all the time trying to get votes. It is a huge geopolitical battle between Russia and the West. Africans do not want to get in the middle of that. I worry that their position is overinterpreted.

What could be the consequences of this non-alignment of developing countries?  

It would be a shame if countries decided to curtail their development assistance because a country abstained from a vote at the UN. Somebody once said to me “talk to people where they are not where you think they should be”. If the purpose of your development cooperation is to get countries to vote for you then you should just give countries a check and tell them how to vote in the next Security Council.

What should Western countries do?

There must be a dialogue. We need to talk to these countries. Most of them would say that if it was a secret vote, they would have absolutely voted with us. Most of them might say that we should never take their vote for granted because that’s just patronizing.

It is important to engage in a conversation of how this is interpreted differently. African countries are seeing the whole world realigning. The AU-EU Summit in February was positive, but will this first impulse grow into something that could have the depth and scope in terms of financing compared to the relationship between African countries and China? Most of them would prefer having that relationship with Europe and the US. But we haven’t put the capital that China does.

This dialogue needs to be part of a longer conversation about how they see the world in this fragmented, dangerous moment, and how they see it over the next 25 years.

We need tables for this conversation to take place. Where can you really listen to the African countries or the Latin American countries and discuss with them?

We do not have a long tradition of strategic deliberations between the world’s wealthiest countries and the world poorest countries. There is dialogue, but the kind of strategic conversation that happens for example between NATO Member States it’s very different. 

A very prominent African business leader told me that he was very worried about the impact of the war in Ukraine on food and fertilizer prices and the economic ripple effects of it. He told me that they don’t know who to talk to and where to have the conversation, because it’s not a simple meeting, it’s a strategic dialogue that looks at the dependencies of the world. It isn’t a conversation about how we can get more food to the World Food Programme, it’s more long term and strategic.

I think the G7 needs to start a series of strategic conversations with Africa, Latin America and Asia. And not just once, not one meeting of two hours and talking points. They need to come together in the same room to define what the war in Ukraine means for us, where we think, this is going to take over the world in the next 10 years and decide what we need to do. That kind of strategic conversation is important. It’s starting to happen but in little bits and pieces.

When it comes to global public goods, such as health and environment, do we have the organizations, the forums to support them?

Looking at vaccines, I would say no. The world tried to create through Covax a mechanism that could address, in part, the issue of global public goods. The initiative was able to deliver a few successes, but it proved insufficient to address the bigger problems. 

The interesting discussion on global public goods right now is about the World Bank. Secretary Janet Yellen made one of the first calls about reforming the development banks a few months ago, and she mentioned that the bank needs to figure out how to deal with global public goods. In the case of Covid vaccine, the World Bank couldn’t play a very effective role because it is very old-fashioned. 

We’ve got some of the institutions that could provide that function, but I don’t think we’ve exercised their muscles sufficiently. Covax was a great idea, but nobody guaranteed that the initiative would have 20% of the vaccines on the market. It was left at the latitude of the companies, if they wanted to sell or not. If we want to manage global public goods, we must design a more deliberate approach.

In 2009, China became the first commercial partner for Africa, and the first partner of Latin America countries such as Argentina, Chile, Brazil, Peru. Did our governments realize that this transformation was taking place? 

I don’t think so. China is thinking about how to fuel its economy over the next 25 years. The Belt and Road is an important part of this larger strategy. I don’t think we, in the West, think about the next 25 years in the same way because if we did, we would have a deeper, more strategic relationship with Africa. The relationship with Latin America would look different. Then, we have the tendency to build on the past, while China is a relatively new player.

Is the Belt and Road initiative still a viable option for China to ensure economic development in the future? 

I suspect it is not. it’s becoming very unwieldy and there’s a bit of a backlash. But China does tend to have a learning process and pay attention to things. I wouldn’t call it a failure. I would say it’s going to be in need of dramatic adjustment to make it sustainable. However, it has  been impactful. We can talk about the quality of the projects but at least there’s all sorts of infrastructure that wasn’t there before, that we didn’t finance in our capital markets.

Do you think that Africa as a continent, especially its regional dimension is taking more and more importance at international level? 

I believe the regional dimension in Africa is much stronger than it’s ever been and in a very positive way. Look at the continental free trade area. When the sustainable development goals were negotiated, Africa came in with a common position that had been agreed by heads of state. When peacekeeping reform was on the agenda of the United Nations, Africa came in with a unifying position because of their unique situation — African troops were mostly in the front lines of the peacekeeping missions, so they came in with a common position. 

Over the last several years, in advance of a G7 or a G20 summit, behind the African Union chair a number of African leaders have consistently gotten together to figure out how Africa wants to position itself. During the pandemic, Africa created a supply chain platform for Africa and the Caribbean and set up its vaccine acquisition trust in order to buy vaccines for the continent. 

There’s a regional consciousness of its political and practical rights. It’s about security, economics but also about confidence.

Africa working as a bloc is one of the most significant trends on the world stage. It is a big voting bloc. When they came with a common position to the SDG negotiations, they had real influence. Africa has much more political clout as a block.

How did this play at the European Union – African Union Summit? 

African countries came to the summit with the expectation that if we’re going to talk about a new partnership then it really needs to be a new partnership. It must not be the kind of donor-recipient relationship. They came with the mindset that we should talk about a relationship between equals. 

I also feel there is a lot of dignity. What I found interesting about the summit, after their experience of the vaccine allocations during the pandemic, is that they spoke about health sovereignty. They do not want to be dependent again during a crisis. It’s a positive trend that we have been a bit slow to recognize. We should keep our eyes on COP27 because I believe with Egypt at the wheel, Africa is going to come in with a stronger position.

Do you feel that Europeans also started to see Africa as a possible partner because they need to relocate and diversify supply chains, to diversify energy supply sources in the context of the war in Ukraine. Is this change also perceived on the African side? 

I would be hesitant to speak in the name of Africans. I heard after the EU summit, that there is a growing awareness on the European side. From where I sat a few months before the summit it looked like it could be a little squishy, but it turned out to be much better than was anticipated. 

The impression that I got from Africans was that Europeans are starting to get it, but I don’t think they’re quite there yet. If you look, for example, at the need to replace Russian gas. There are a couple ways to do it: there could be individual conversations between individual European countries and individual African countries or there could be a conversation between Europe and West Africa. One way is a bit more strategic than the other and a bit long term focused. It looks that, so far, Europe is having a hard time to think strategically. 

How about Latin America? 

When I went back to the State department, I saw that other regions were very interested in what Africa did in terms of the supply chain and purchasing vaccines and there’s an interest in doing it in Latin America and ASEAN too. 

So, there were discussions, delegations were sent to the African. The African however have more of a need to unite as a block politically to get on the world stage, more of a perceived need anyway than ASEAN or in Latin America. Regional blocks are likely to grow more in kind of political sense, Africa is much better equipped, and they’re being quite strategic about it.

The special drawing rights have not been redistributed as promised and more and more, African countries will have to turn to the market. Rating matters a lot. What should we do? One idea was the creation of an African rating agency. 

There needs to be some dialogue.  I don’t know if Credit rating agencies are as rigid as they are perceived to be. Maybe that it is entirely possible to say let’s all take a step back.  

If you look at their analysis of how much risk investors could afford: one says 11%, others say 40% which doesn’t make much sense. There could be a dialogue to see whether the standard operating procedures of the credit ratings agencies really applies to the circumstances of countries.

The second element regarding an African credit rating agency is that the capital markets in the US aren’t going to take that. However, Africa’s got a good track record on measuring and then compelling progress because they’ve done a lot of this in agriculture and other things in peer reviews where some countries have been very willing to be rated if it’s by other Africans. And it’s been an incentive to see improvements. The desire that these countries perform well is just as strong, if not stronger on the continent than it is in Brussels or Washington. Thus, there’s merit in looking at what would a domestic African credit rating agency look like. 

In general, there should probably be more credit rating agencies than just three, all of whom evolved and came from the north and from developed wealthy economies. Globally it probably makes sense to have greater balance

Is today multilateralism still effective in a world dominated by power politics?

It’s not as effective as it has been in the past. But it’s needed even more than it has been in the past. The response to the pandemic was extremely difficult. It is difficult to get countries together because of power politics and the fragmentation of the world system. Countries are looking inward. They are focusing on bilateral agreements, and we hope that’s going to prepare us for the next crisis, but we are going to have holes all over the net.

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Ramona Bloj, Mario Pezzini, A conversation with Gayle Smith, Oct 2022,

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