President Bush yesterday released his budget request for fiscal year 2007, seeking a sizable increase in defense spending (mainly for equipment and weapons systems) while cutting the budgets of two-thirds of federal agencies. The picture for spending on development is a mixed one.
What a difference a year can make! Davos 2005 had Bono and Sharon Stone among other glitterati talking about global poverty and global health, and featured at least three crowded plenary sessions on Africa, aid, AIDs, malaria and more -- with Tony Blair, Gordon Brown, Bill Gates and Jeffrey Sachs. It was 2005: the year of development announcements and commitments.
Dozens of people packed a previously undisclosed location (The Diner in Adams Morgan) last night for our third annual State of the Union BINGO game. Joining CGD staff was an avowedly wonkish crowd that included people from such organizations as the U.S.
In my first dispatch from Davos, I observed that the atmosphere was upbeat. The business community is not worrying much about the dark predictions of the past year. There is, after all, still no collapse of the dollar despite the U.S. trade deficit; interest rates and inflation worldwide are low, and oil price increases are being easily absorbed. India and China are emerging as the new engines of growth and symbols of why market economies work.
Davos is still largely a "Western" event, with the large majority of participants coming from the U.S. and Europe. Among CEOs, there are alarmingly few from Africa, the Middle East and China or even Japan. There are more than before from India, and perhaps a few more from Latin America. But Davos does not look or feel like a truly global forum.
The article Speak softly and carry a big wallet (pdf) about the nomination of Randall Tobias as the new USAID administrator in the January 26th issue of The Economist highlights recent plans for restructuring the US foreign aid program and reviews some of the debate on the potential politicization of US development assistance.
Davos 2006 is surprisingly upbeat -- with much talk of the success of China and India. These are seen as classic cases of the benefits of markets, openness, competition and the entrepreneurship and creativity those business-friendly characteristics can generate. Much less present in the corridors and in sessions is the issue of risks at the global level--whether economic risk for some countries if the commodity boom and low interest rate regime ends--or risks to the global economy (and to the fight against poverty) of a backlash from those who feel left out of the process.
The African Union has wisely avoided the embarrassment of having Sudan chair its current summit and head the organization for the next two years. This is not only because Sudan is one of the world’s worst regimes, but also because one of the most critical issues for the AU in 2006-07 will be halting genocide in Darfur and protecting civilians from militias backed by Khartoum.