The Brandt Equation: 21st Century Blueprint for the New Global Economy

Brandt's Challenge
The Danger
The Brandt Equation: A New Round of Negotiations
Consensus for a New Global Economy

Brandt's Challenge

Under the chairmanship of former West German Chancellor Willy Brandt, the Independent Commission on International Development Issues examined the problems facing the global economy in the early 1980s. Brandt's panel of former world leaders and other prominent figures found that developing nations were economically dependent on developed nations, which dominated the international rules and institutions for trade, money and finance. This economic division resulted in political instability, not just in poor nations but across the world.


Said Brandt,

"At the beginning of a new decade, only twenty years short of the millenium, we must try to lift ourselves above the day-to-day quarrels (or negotiations) to see the menacing long-term problems. We see a world in which poverty and hunger still prevail in many huge regions; in which resources are squandered without consideration of their renewal; in which more armaments are made and sold than ever before; and where a destructive capacity has been accumulated to blow up our planet several times over" (North-South, 13).


In North-South (1980) and Common Crisis (1983), the Brandt Commission made a set of bold recommendations to change all that. In a sweeping series of measures addressed to the global public, governments and international agencies, the Brandt Reports called for a full-scale restructuring of the global economy, along with a new approach to the problems of development, including an emergency program to end poverty in developing nations.


Two decades later, the international community has not responded to these propsals in any meaningful way. Although the Brandt Reports were widely read and discussed, developed nations have focused more on their own interests. As documented by the United Nations Development Program, the World Bank, the International Monetary Fund and other agencies, the economic disparities outlined in the Brandt Reports have widened significantly since 1980:

•  Without new family planning programs to slow fertility and birth rates, world population has expanded by 1.7 billion people, more than 90% of whom were born in poor nations.

•  Deprived of increases in global food supplies and local agricultural production to end starvation and malnutrition, the number of people suffering from hunger in developing nations has risen from 500-600 million to 1 billion people.


•  For want of a comprehensive program for sanitation, clean water, health care and education in poor nations, the incidence of people living on poverty has multiplied from 800 million to 1.8 billion persons.

•  Lacking educational and employment opportunities for personal development, women in developing nations have become increasingly destitute from gender discrimination and conditions of impoverishment.


•  Regardless of the official international assistance standard of 0.7% GNP, aid to developing nations has slumped from 3.5% to 2.1% of GNP.

•  Having no international agreement to reduce the difficult loan payments owed to developed nations, the debt of developing countries has surged from $700 billion to nearly $3 trillion.

•  Devoid a framework for the nonviolent resolution of international disputes and the multilateral reduction of weapons, allowing governments to use their resources for the peace and welfare of their people, armaments expenditures around the world have accelerated from $450 billion to more than $800 billion a year.

•  Minus global programs to stabilize energy prices and supplies for developing countries, slow the depletion of renewable energy sources and reverse climate change, environmental pollution and global warming have broadened, incuding a 12% increase in carbon dioxide emissions.


•  Missing out on vast possibilities for international peace and development through sharing with poor nations the benefits of the information revolution, 90% of technology ownership and use remains in developed nations, creating a global 'digital divide'.

•  In lieu of a responsible commitment to raise the income and quality of life of people in developing nations, corporations invest and produce mainly where wages, taxes, trade and financial regulations, and environmental safeguards are the lowest.


•  Instead of promoting accessible, balanced exports of goods and resources between rich and poor nations to build cooperation and enlarge international markets, trade has been hampered by local subsidies and protectionist barriers, driving down the export prices of developing nations.

•  Rather than making global economic rules and institutions equitable for every nation, restoring confidence and trust throughout the world, money and finance remain unregulated at the global level, resulting in currency instability, recession and financial risk in developing nations.

•  Short of a consensus to link all of these issues and coordinate world economic development objectives through effective high-level discussion, global negotiations among heads of state from developed nations have not occurred since 1981.
  Failure to address these needs is a lost opportunity to everyone in the worls. Focused on competition and the 'bottom line', we lose sight of the benefits of mutual advantage and cooperation. As the Brandt Reports remind us, prosperity in the South can lead to prosperity in the North; but economic trouble in the South can wreak havoc in the North as well.

The Danger

With the spectacular growth of production, world trade, foreign investment and international capital flows during the 1980s and 90s, the world's productive and financial surplus expanded but global consumer demand leveled off, and poverty increased substantiallyin developing nations. Monetary, financial and trade deregulation, combined with fast-paced technology and unbridled capital mobility, have also increased the volatility of exchange rates and interest rates, and reduced the capacity for debt repayment in poor countries.

Concentrated in international production, currencies and investment, money has been diverted away from domestic development, local investment, savings, social programs, labor and fair wages, exposing local markets and poor people to the intense ebbs and flows of speculative capital.  
Economic turmoil in a single nation – precipitated by default, devaluation, recesison or deflation – can spread rapidly to its neighbors. The World now faces the real possibility of financial contagion, which can result in internal political instability, further eroding global investment in developing nations.

Two major financial crises have already occurred: in Latin America (1981-86) and Southeast Asia (1997-98). Neither International Monetary Fund bailouts nor guarantees from private investors are likely to stem another major financial meltdown – due to massive increases in global debt and in speculative markets such as derivatives – leaving banks, investment houses and invesotrs at risk, and further strangling the foreign capital needed for development in poor nations. Multilateral copperation for debt forgiveness, major transfers of aid and technology, fair terms of trade, a stable world currency system and new rules for international finance are needed. These measures would generate an increase in the level of consumer purchasing power so that the world's people could buy the world's excess of products and services – before over-supply, unused capacity and unemployment lead to prolonged global recession or worse.


The Brandt Equation: A New Round of Global Negotiations


World leaders can only make major democratic changes with the awareness and backing of the international public. A global citizens' movement, with a focus that goes beyond singular issues and nationalistic viewpoints, is the necessary political counterweight to the corporate and financial policies of globalization. The Brandt Commission proposed that, with broad and informed public support, international representatives could begin two sets of negotiations to link together objectives for meeting the world's basic needs and reforming the international economy.

I. Summit of World Leaders
A representative group of heads of state from developed and developing nations convenes a World Summit Meeting to plan and mobilize a major international relief program, targeting:

•  Hunger – Mobilize immediate supplies of food and clean water for developing nations through the creation of a global clearinghouse for food storage and distribution, a global food assistance program and food financing agency, and local agricultural and rural development programs.

•  Poverty – Provide basic necessities in poor regions of the world, including stable supplies of food, water and energy; health and medical care, including preventable disease control; basic housing and sanitation; education; family planning services; micro-loans; and new agricultural, environmental, industrial and technological infrastructure.

•  Aid – Expand financial assistance to poor nations by increasing contributions from developed nations to 0.7% GNP, and eventually to 1% GNP; ending political and commercial entailments on aid by developed nations; and requiring developing nations to eliminate corruption, restructure their legal and financial institutions and strengthen their democratic institutions.

Debt – Begin partial or unconditional debt forgiveness for developing nations, linking debt relief to effective domestic policy reform.


II. Popular Referendum of the UN General Assembly
Based on the work of the summit of world leaders, the UN General Assembly hosts a multilateral referendum to guide the restructuring of the international economy. Representatives of governments, major corporations, private capital banks, central banks, the World Bank, the Internation Monetary Fund, the World Trade Organization and other international institutions are invited, along with members of nongovernmental organizations and civic and regional groups from around the world. Together, they negotiate an agenda for a new global economy, including major initiatives for:

Environmental ProtectionMake ecological sustainability a cornerstone of global economic policy through financial incentives for encouraging environmental protection, cleaning up the environment, expanding reforestation projects, reducing industrial emissions, slowing climate change, conserving energy and resources, reducing dependence on fossil fuels, and developing clean and renewable energy sources.

Fair TradeExpand world trade by redirecting its focus from international export markets to the domestic markets of emerging economies; curbing protectionist trade restrictions; decreasing commodity subsidies in developed nations; stabilizing international commodity prices; restructuring the World Trade Organization to allow proportional representation and decision-making by developing nations; establishing a new code of conduct for international corporations; developing a new framework for foreign direct investment; and broadening trade agreements to improve working conditions, as well as environmental, wage and labor standards.  
Regulation of the Global Economy Reorganize the global monetary system by redirecting investment from international capital markets into the domestic markets of emerging economies; encouraging stable currencies; stimulating balanced economic growth; maintaining environmental sustainability; restructuring the World Bank and the International Monetary Fund to allow proportionate representation and decision-making by developing nations; expanding and strengthening the United Nations and its development agencies; creating a small oversight body to help coordinate international economic policies and goals; and establishing new international programs for development finance, including a Global Development Fund.

Consensus for a New Global Economy

As the world's issues are interrelated, so too should be the process of global decision-making. The Brandt Reports were a comprehensive, forward–looking plan from a group which, in its own roundtable discussions, exemplified the sort of representative negotiations and good faith needed at international levels to gather consensus on economic issues from a diversity of world opinion.

  The Brandt Commission offered the international community a vision for balancing the creation of wealth with the provision of public services, anticipating new foundations for the future of civilization. In a world where economic growth has become the means to human and social development, the Brandt Reports declared that local development must be the means to growth – "that the focus has to be not on machines or institutions but on people" and the creation of an environment in which they can lead long, healthy and productive lives (N–S, 23).
North–South and Common Crisis had a profound initial impact on the public, governments and international agencies across the world, but went unheeded by developed nations during the prosperous 1980s and 90s. The disparities about which the Brandt Commission cautioned are reaching the breaking point, yet there is no collective effort to resolve them. What divides us now is not a shortage of resources or plans. The only scarcity is the courage to act.
The Brandt Equation © 2002-2007 by James Bernard Quilligan.
Grateful acknowledgement is extended to MIT Press for permission
to use published material from North-South and Common Crisis,
and to the United Nations Department of Public Information (UN/DPI)
and the Food and Agriculture Organization (FAO) for the use of photographs.
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About the Brandt Commission
Biography: Willy Brandt

Members of the Independent Commission on International Development Issues (ICIDI)
Willy Brandt (Chair)
Abdlatif Y. Al-Hamad (Kuwait)
Rodrigo Botero Montoya (Columbia)
Antoine Kipsa Dakouré (Upper Volta)
Eduardo Frei Montalva (Chile)
Katherine Graham (USA)
Edward Heath (UK)
Amir H. Jamal (Tanzania)
Lakshmi Kant Jha (India)
Khatijah Ahmad (Malaysia)
Adam Malik (Indonesia)
Haruki Mori (Japan)
Joe Morris (Canada)
Olof Palme (Sweden)
Peter G. Peterson (USA)
Edgard Pisani (France)
Shridath Ramphal (Guyana)
Layachi Yaker (Algeria)

Ex officio Members
Jan Pronk
Goran Ohlin
Dragoslav Avramovic

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